The Results Act: Observations on the Social Security Administration's
June 1997 Draft Strategic Plan (Correspondence, 07/22/97,
GAO/HEHS-97-179R).

Pursuant to a congressional request, GAO reviewed the draft strategic
plan submitted by the Social Security Administration (SSA), as required
by the Government Performance and Results Act.

GAO noted that: (1) SSA has prepared a draft strategic plan, reflecting
its new status as an independent agency, that provides a solid
foundation for its consultation with the Congress and other
stakeholders; (2) its draft plan is forward-looking, reflects the
agency's key statutory responsibilities, and contains the six components
required by the act, although some of these components could be
strengthened in important ways; (3) moreover, the goals it sets out are
more balanced than past agency goals; SSA has added a goal to emphasize
sound program management as a complement to its existing goal to provide
world-class customer service; (4) however, in some cases, the goals
could be strengthened by clarifying what SSA hopes to achieve and how it
plans to measure its achievement; (5) also, the success of several goals
is predicated on technological improvements or changes in agency
operational processes, such as SSA's initiative to redesign its
disability claims process; (6) SSA has historically encountered some
difficulty implementing some of these changes; (7) the plan would be
more realistic and useful to the Congress and SSA if SSA addressed these
difficulties; (8) in addition, the plan would benefit from SSA's: (a)
more explicitly describing how certain external factors, such as
technology changes, may affect goal attainment; (b) more clearly
explaining how it has used and plans to use program evaluations; and (c)
including a discussion on how SSA has coordinated with other agencies,
such as the Department of Health and Human Services, that serve the same
beneficiaries; (9) SSA's plan is structured to capture and monitor
progress in meeting agencywide priorities and, as such, does not focus
on specific programs or beneficiary groups; (10) as a result, the plan
offers little assurance that SSA will place adequate attention on
certain areas that pose the greatest management challenges; (11)
specifically, SSA's draft plan does not acknowledge the fact that its
Supplemental Security Income (SSI) program was recently placed on GAO's
high risk list, nor does it provide a comprehensive strategy to address
the problems with SSI; (12) SSA's draft plan does reflect the agency's
strong reliance on improved information technology to provide
world-class service and better manage its programs with its current
resources; and (13) however, the plan would be strengthened by adding
more detailed information on how SSA will use information technology to
achieve the agency's goals and objectives.

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

 REPORTNUM:  HEHS-97-179R
     TITLE:  The Results Act: Observations on the Social Security 
             Administration's June 1997 Draft Strategic Plan
      DATE:  07/22/97
   SUBJECT:  Customer service
             Information systems
             Congressional/executive relations
             Strategic planning
             Program evaluation
             Information technology
             Agency missions
             Federal social security programs
             Interagency relations
IDENTIFIER:  Old Age Survivors and Disability Insurance Program
             Social Security Disability Insurance Program
             Supplemental Security Income Program
             
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Cover
================================================================ COVER



September 1997


GAO/HEHS-97-179R

SSA's Draft Strategic Plan

(207008)


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

  BOP - Federal Bureau of Prisons
  CFO - Chief Financial Officers
  DEA - Drug Enforcement Administration
  DI - Disability Insurance
  DOJ - Department of Justice
  DOL - Department of Labor
  FBI - Federal Bureau of Investigation
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  INS - Immigration and Naturalization Service
  IWS/LAN - intelligent workstation/local area network
  NPR - National Performance Review
  OASI - Old Age and Survivors Insurance
  OMB - Office of Management and Budget
  SSA - Social Security Administration
  SSI - Supplemental Security Income

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


B-277406

July 22, 1997

The Honorable Richard K.  Armey
Majority Leader
House of Representatives

The Honorable John R.  Kasich
Chairman, Committee on the Budget
House of Representatives

The Honorable Dan Burton
Chairman, Committee on Government Reform
 and Oversight
House of Representatives

The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives

Subject:  The Results Act:  Observations on the Social Security
Administration's June 1997 Draft Strategic Plan

On June 12, 1997, you asked us to review the draft strategic plans
submitted by the cabinet departments and selected major agencies to
facilitate the consultations between the Congress and the agencies
required by the Government Performance and Results Act of 1993 (the
Results Act).  This letter provides our observations on the draft
plan the Social Security Administration (SSA) submitted to the
Congress on June 30, 1997. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :1

On the basis of guidance provided in your June 12, 1997, letter, we
focused our review of SSA's June 30, 1997, draft strategic plan on

  -- SSA's compliance with the Results Act's requirements and the
     draft plan's overall quality,

  -- whether the draft plan reflects SSA's key statutory
     responsibilities,

  -- how well the draft plan identifies crosscutting functions and
     plans for coordination with other departments and agencies,

  -- the extent to which the plan addresses major SSA management
     challenges we have identified in our reviews of SSA programs,
     and

  -- SSA's capacity to provide reliable information about its
     performance. 

Our overall assessment of SSA's draft strategic plan was generally
based on our knowledge of SSA's operations and programs, our numerous
reviews of the agency, and other existing information available at
the time of our assessment.  Specifically, the criteria we used to
determine whether SSA's draft strategic plan complied with the
requirements of the Results Act were the Results Act itself,
supplemented by OMB's guidance on developing the plans (OMB Circular
A-11, part 2).  To make judgments about the overall quality of the
plan, we used our May 1997 guidance for congressional review of the
plans.\1 To determine whether the plan contained information on
interagency coordination and addressed management problems we have
previously identified, we relied on our general knowledge of SSA's
operations and programs and the results of our previous reports.  In
determining whether SSA's draft strategic plan reflects the agency's
major statutory responsibilities, as you requested, we coordinated
our review with the Congressional Research Service.  To determine
whether SSA had adequate systems in place to provide reliable
information on performance, we reviewed the draft plan for Chief
Financial Officer, Chief Information Officer, and financial
management information.  We also relied on the results of our
previous reports.  We performed our evaluation between July 1 and
July 11, 1997.  SSA officials provided comments on a draft of this
correspondence, which are reflected in the Agency Comments section. 

It is important to recognize that under the act, agencies' final
plans are not due until September 30, 1997.  Developing a strategic
plan is a dynamic process, and SSA is continuing to revise the draft
with input from OMB, congressional staff, and other stakeholders. 
Furthermore, in passing the Results Act, the Congress anticipated
that several planning cycles might be needed to perfect the process
of developing a strategic plan and that the plan would be continually
refined.  Thus, the following comments reflect our analysis of SSA's
first draft of its plan submitted to the Congress for consultation. 


--------------------
\1 Agencies' Strategic Plans Under GPRA:  Key Questions to Facilitate
Congressional Review (GAO/GGD-10.1.16, May 1997). 


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

SSA's programs touch the lives of nearly every individual in the
nation.  SSA administers three major federal programs.  The Old Age
and Survivors Insurance (OASI) and Disability Insurance (DI)
programs, together commonly referred to as "Social Security," provide
benefits to retired and disabled workers and their dependents and
survivors.  The Supplemental Security Income (SSI) program provides
means-tested assistance to the needy aged, blind, or disabled.  The
agency's expenditures totaled $382 billion in fiscal year 1996,
nearly one-fourth of the nation's $1.6 trillion federal budget.  In
1996, 50 million beneficiaries--about one out of every five
individuals in this country--received benefits from SSA each month. 
SSA serves the public through a nationwide network that includes
1,300 field offices, 132 hearings offices, and a national toll-free
telephone number. 

To administer these programs, SSA must perform the following
essential tasks:  issuing Social Security numbers to individuals,
maintaining earnings records for workers by collecting wage reports
from employers, using these records to determine the dollar amount of
OASI and DI benefits, and processing benefit claims for all three
programs.  SSA must also determine applicants' continuing
eligibility, maintain the beneficiary rolls, provide hearings and
appeals for denied applicants, and disseminate information about the
programs it administers. 

To enhance 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.  As we reported in February 1995, it was
believed that, with independence, SSA could achieve better program
management, continuity of leadership, and an organization more
accountable to the public and more responsive to the Congress.\2

SSA faces dramatic challenges in the future.  Some of these include
the long-range solvency of the Social Security trust funds, growing
DI and SSI caseloads, increased workloads and integration of new
technologies to process workloads and provide public service.  All
call for effective leadership.  We have identified and documented
these challenges in numerous reports, testimonies, and management
reviews of SSA over the last several years. 

SSA has a history of strategic planning.  Its original strategic plan
was published in 1988 and was significantly revised in 1991.  SSA is
revising its plan--the first plan that SSA has prepared as an
independent agency--to reflect the requirements of the Results Act. 
Before finalizing the draft plan, SSA is required to consult with the
Congress and solicit and consider the views and suggestions of other
stakeholders potentially affected by or interested in the plan. 

In 1994, the agency was selected by OMB for a total agency pilot for
implementation of the act's performance planning and reporting
provision.  The purpose of the pilot program was to help federal
agencies gain experience in using the key provisions of the act and
provide lessons for pilots and for other agencies before the act's
governmentwide implementation later this year. 


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


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :3

SSA has prepared a draft strategic plan, reflecting its new status as
an independent agency, that provides a solid foundation for its
consultation with the Congress and other stakeholders.  Its draft
plan is forward-looking, reflects the agency's key statutory
responsibilities, and contains the six components required by the
act, although some of these components could be strengthened in
important ways.  Moreover, the goals it sets out are more balanced
than past agency goals; SSA has added a goal to emphasize sound
program management as a complement to its existing goal to provide
world-class customer service.  However, in some cases, the goals
could be strengthened by clarifying what SSA hopes to achieve and how
it plans to measure its achievement.  Also, the success of several
goals is predicated on technological improvements or changes in
agency operational processes, such as SSA's initiative to redesign
its disability claims process.  SSA has historically encountered some
difficulty implementing some of these changes.  The plan would be
more realistic and useful to the Congress and SSA if SSA addressed
these difficulties.  In addition, the plan would benefit from SSA's
(1) more explicitly describing how certain external factors, such as
technology changes, may affect goal attainment; (2) more clearly
explaining how it has used and plans to use program evaluations; and
(3) including a discussion on how SSA has coordinated with other
agencies, such as HHS, that serve the same beneficiaries. 

SSA's plan is structured to capture and monitor progress in meeting
agencywide priorities and, as such, does not focus on specific
programs or beneficiary groups.  As a result, the plan offers little
assurance that SSA will place adequate attention on certain areas
that pose the greatest management challenges.  Specifically, SSA's
draft plan does not acknowledge the fact that its SSI program was
recently placed on our high risk list,\3 nor does it provide a
comprehensive strategy to address the problems with SSI.  SSA has
recently agreed, however, that a comprehensive strategy, including a
complete set of measures, should be crafted for SSI.  In addition,
the plan does not disclose the challenges SSA has faced in
redesigning its disability process and does not fully integrate a
return-to-work strategy for its disabled beneficiaries throughout the
agency's operations. 

SSA's draft plan does reflect the agency's strong reliance on
improved information technology to provide world-class service and
better manage its programs with its current resources.  However, the
plan would be strengthened by adding more detailed information on how
SSA will use information technology to achieve the agency's goals and
objectives.  In addition, the draft plan could discuss in more detail
SSA's plans to cope with two technology-related high risk areas--the
"year 2000" computer problem, which stems from the common practice in
automated systems of abbreviating years by their last two digits, and
the need to adequately protect the sensitive data in its computer
system.  Both of these areas represent significant future challenges
for SSA.  Finally, SSA has experience in developing and reporting on
performance measures, but the agency recognizes the need to develop
some new measures that better reflect its progress in meeting its new
goals. 


--------------------
\3 In 1990, we began a special effort to review and report on the
federal program areas our work identified as high risk because of
vulnerabilities to waste, fraud, abuse, or mismanagement. 


   DRAFT PLAN REFLECTS REQUIRED
   ELEMENTS OF RESULTS ACT, BUT
   SOME ASPECTS COULD BE IMPROVED
------------------------------------------------------------ Letter :4

SSA's draft strategic plan includes all six elements required by the
act and is SSA's attempt to address past criticisms of its mission
statement and general goals.  The six elements are (1) a
comprehensive mission statement, (2) general goals and objectives,
(3) approaches to achieve goals and objectives, (4) an explanation of
the relationship between general goals/objectives and annual
performance goals, (5) key external factors beyond the agency's
control, and (6) how program evaluations were used in drafting the
general goals and plans for future evaluations. 

These elements are necessary to provide a meaningful starting point
and foundation for SSA's consultation with the Congress and
stakeholders; SSA has provided such a foundation.  However, we found
the quality of the elements to be varied, and we offer the following
observations for information and consideration as the plan evolves. 


      COMPREHENSIVE MISSION
      STATEMENT
---------------------------------------------------------- Letter :4.1

According to OMB Circular A-11, the mission statement should be
brief, defining the basic purpose of the agency, with particular
focus on its core programs and activities.  SSA's draft plan contains
a new mission statement:  "To promote the economic security of the
nation's people through compassionate and vigilant leadership in
shaping and managing America's social security programs." We found
SSA's mission statement to be generally appropriate and reflective of
its relatively new status as an independent agency.  For example, the
statement focuses on leadership in shaping and managing America's
social security system, and we have identified leadership as critical
to SSA's success as an independent agency in the next century. 


      GENERAL GOALS AND OBJECTIVES
---------------------------------------------------------- Letter :4.2

OMB Circular A-11 specifies that strategic plans are to set forth
long-term management goals as well as programmatic and policy goals. 
Plans are to explain what results are expected and when to expect
them. 

SSA's draft plan contains the following five goals: 

(1)to promote valued, strong, and responsive social security programs
through effective policy development and research;

(2)to deliver customer-responsive, world-class service;

(3)to make SSA program management the best in business, with zero
tolerance for fraud and abuse;

(4)to be an employer that values and invests in each employee; and

(5)to strengthen public understanding of the social security
programs. 

SSA's strategic goals and objectives reflect a positive attempt to
define results that SSA expects from its major functions and
operations.  The goals are based on the premise that SSA's three
programs rely on a common set of services and business processes and
thus appropriately represent agencywide priorities, rather than
program-specific concerns.  Although this crosscutting focus is an
essential element of a departmental strategic plan, a programmatic
focus is also needed.  Without it, SSA's strategic plan is not likely
to focus sufficient attention on some of its greatest management
challenges.  SSA's plan should contain a more detailed discussion of
major management challenges and how the agency plans to meet them. 
We will describe these challenges in greater detail later.  However,
SSA could provide this more detailed attention to its major
management challenges through several alternative approaches.  For
example, it could develop program-specific goals, include a program
focus in its objectives under its third management goal, or develop
the challenges further in its discussion of strategies to achieve
goals. 

The draft plan's first three goals are central to SSA's functions,
while the other two play a more supportive role.  Overall, the goals
appear more balanced than those in SSA's previous plan and more
recent planning documents because they go beyond focusing on service
delivery by including an additional focus on effective program
management.\4 Most of the goals are stated in a manner that allows
for future assessment of their achievement.  However, SSA could
improve the presentation of its goals if, in three cases, it more
clearly explained the results its hopes to achieve.  The following
are our specific comments on these goals. 

  -- SSA's first goal recognizes that program leadership, as
     envisioned in the mission statement, cannot be achieved without
     a strong policy and research capability--the lack of which we
     have criticized SSA for in the past.\5 Yet, the goal itself and
     the supporting discussion are difficult to understand.  The
     results SSA expects and how it plans to measure them are
     unclear.  It appears that this goal is, in part, trying to
     address the issue of long-term solvency of the trust funds, but
     this is not clearly articulated.  In addition, the goal is not
     stated in a manner that allows for future assessment of its
     achievement.  Greater clarity on the results SSA is aiming to
     achieve would be beneficial. 

  -- In SSA's second goal, the meaning of "world-class service" is
     not clear in the draft plan.  To help the reader fully
     understand the goal, SSA could define what it means by
     world-class service. 

  -- It is unclear how the results of SSA's fifth goal, "to
     strengthen public understanding," differ from those of the first
     goal.  SSA has linked the public's lack of confidence in Social
     Security with a lack of understanding about its programs.  The
     fifth goal is designed to help the public gain a greater
     understanding of Social Security, while the first goal aims to
     promote programs that are valued and supported by the public. 
     Also, the discussions of the first and fifth goals both refer to
     finding solutions for the issues facing Social Security and
     helping the nation's leaders make decisions. 


--------------------
\4 The goals in SSA's fiscal year 1998-2002 Business Plan were to (1)
rebuild public confidence, (2) provide world-class service, and (3)
provide a supportive environment for employees. 

\5 Social Security Administration:  Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb.  20, 1997) and GAO/HEHS-95-59,
Feb.  15, 1995. 


      HOW THE GOALS AND OBJECTIVES
      ARE TO BE ACHIEVED
---------------------------------------------------------- Letter :4.3

According to OMB Circular A-11, this element describes the means the
agency will use to achieve the general goals and objectives.  SSA
provides a discussion of how it plans to achieve each goal.  As
required by the Results Act, the draft plan describes certain
operational processes, staff skills, technologies, and human capital
that SSA will need to achieve the goals.  Yet, for the most part, the
plan simply describes the process or technology and does not provide
any details about timeframes and schedules.  In addition, the success
of several of SSA's goals and objectives is predicated upon changes
in agency operational processes or technology improvements.  SSA has
experienced problems implementing some of these changes, and this
component would be more realistic if SSA addressed how it plans to
confront these problems.  For example: 

  -- SSA asserts throughout the plan the importance of technology and
     the implementation of the intelligent workstation/local area
     network (IWS/LAN) and other key supporting software initiatives. 
     Yet the full benefit of the IWS/LAN has yet to be realized, and
     SSA has experienced problems with software implementation, which
     is behind schedule. 

  -- SSA's initiative to redesign its disability process is key to
     improving aspects of customer service and program management
     (goals two and three).  However, in late 1996, we reported that
     the scope and complexity of SSA's redesign initiative had put at
     risk the likelihood of accomplishing the project's goals. 
     Although SSA revised its redesign plan in February 1997, the
     success of this scaled-down initiative remains uncertain, and
     some stakeholders continue to question SSA's approach.  We will
     describe the challenge of redesigning the disability program in
     greater detail later in this letter. 

SSA also cites many initiatives that it will begin or continue over
the next 5 years.  It is difficult to determine which will occur
first and which carry the greatest priority.  Setting priorities and
delineating time frames would be helpful, because it is difficult to
see how SSA will accomplish all of these initiatives, given its
assumption of level funding and no growth in staffing levels. 
Finally, while SSA states that it has developed an approach for
communicating the contents and concepts of the plan to employees,
there is no discussion of how managers and staff will be held
accountable for achieving objectives. 


      RELATING ANNUAL PERFORMANCE
      GOALS/MEASURES TO GENERAL
      GOALS
---------------------------------------------------------- Letter :4.4

According to OMB Circular A-11, the strategic plan should briefly
outline:  (1) the type, nature, and scope of the performance goals to
be included in the agency's performance plan; (2) the relation
between the performance goals and the general goals and objectives;
and (3) the relevance and use of performance goals in helping
determine the achievement of general goals and objectives. 

Going beyond the requirement, SSA has provided numerous performance
measures to relate to its strategic goals and objectives.  SSA also
discusses plans for developing new measures for certain objectives. 
However, it is sometimes difficult to link the measures with the
appropriate objective.  The second general goal, for example, has 6
objectives and 17 performance measures, and, in some cases, it is
difficult to determine which measures link to which objectives.  It
is also difficult to discern which objectives do not yet have
performance goals.  It would be helpful to have a matrix that details
the general goals, objectives, and associated performance measures so
the reader could quickly link measures with objectives. 

In our review, we found that some of the performance measure data are
expressed in terms of SSA's three programs individually, while others
are aggregated across the three programs.  Aggregating the data, in
some cases, may not provide sufficient detail for SSA to monitor
progress in dealing with management problems.  For example, an
aggregated measure of the percentage of debt collected may mask
problems with debt collections in specific programs, such as SSI, and
weaken accountability for program-level results. 


      KEY EXTERNAL FACTORS
---------------------------------------------------------- Letter :4.5

OMB Circular A-11 notes that agencies' achievement of their goals and
objectives can be affected by external factors that change or emerge
during the time period covered by their plans.  The Circular states
that these factors can be economic, demographic, social, or
environmental and that the strategic plan should describe each
possible factor, indicate its link with a particular goal(s), and
describe how it could affect achievement of the goal. 

SSA's draft plan describes several key external factors that may
affect its programs, such as the aging of the baby boom generation
and advances in information technology.  In fact, while SSA expects
only a small increase in its workloads over the next 5 years, the
agency explicitly recognizes that the aging of the baby boomers will
have a dramatic effect on its future workloads, and, as a result, it
must look beyond 5-year planning horizon.  However, despite its
discussion of external factors, the plan would be stronger if SSA
more explicitly linked such external factors to its general goals and
stated how these factors could affect goal attainment and how SSA
will mitigate such effects.  For example, SSA discusses changes in
technology that may permit more disabled individuals to rejoin the
workforce, but it does not specifically link this external factor to
its objective (under the first goal) of helping people return to the
work place. 

In its discussion of external factors, SSA does not mention the
changes to Social Security that the Congress may make to ensure the
program's financial stability.  Congressional action on this and
other program design issues is likely to have a significant effect on
how SSA operates in the future.  Although the substance and timing of
future program changes are not acknowledged as key external factors,
SSA discusses its intent to inform and shape the public debate and to
support the executive and legislative branches under the first goal. 

Although not required to do so by the act, SSA also discussed key
internal factors that it believes will influence its work.  This
discussion includes the aging of the SSA workforce and the loss of
critical knowledge and experience that is likely to occur over the
next 5 years as senior staff retire but does not provide explicit and
detailed mitigation strategies. 


      PROGRAM EVALUATION
---------------------------------------------------------- Letter :4.6

OMB Circular A-11 states that agencies should describe the program
evaluations that were used in preparing the strategic plan and
include a schedule for future program evaluations.  SSA generally
discusses program evaluation at the end of its draft plan; however,
its broad treatment of the topic might leave stakeholders confused as
to how these tools have been and will be used.  SSA does not clearly
describe the evaluations used to prepare the plan and how they were
used to establish or revise specific goals and objectives.  Moreover,
although SSA mentions in several places throughout the plan future
studies and evaluations it hopes to complete,\6 it does not refer to
these studies in its overall discussion on program evaluations, offer
a schedule for completing these evaluations, or discuss the
methodologies to be used and the scope of the evaluations. 


--------------------
\6 For example, under the first goal, SSA refers to its intent to
test and evaluate return-to-work alternatives, and, under the fifth
goal, SSA states its plans to measure the impact of various efforts
to better inform the public about SSA's programs. 


   KEY STATUTORY RESPONSIBILITIES
   ARE REFLECTED IN DRAFT PLAN
------------------------------------------------------------ Letter :5

SSA's draft plan generally reflects its key statutory
responsibilities:  title II of the Social Security Act, pertaining to
the OASI and DI programs, and title XVI of the Social Security Act,
pertaining to SSI.  Major recent legislation affecting the agency
includes the Social Security Independence and Program Improvements
Act of 1994, which established the Social Security Administration as
an independent agency in the executive branch of the government.  SSA
explicitly acknowledges its independent status in the plan and, as we
have discussed, reflects its new responsibilities as an independent
agency in its mission statement and its first strategic goal. 


   CROSSCUTTING ACTIVITIES AND
   STAKEHOLDER INVOLVEMENT NOT
   FULLY DISCUSSED
------------------------------------------------------------ Letter :6

To the extent that SSA relies on the resources or activities of
another agency to achieve its goals and objectives, SSA should
describe this relationship.  SSA is involved in a number of
crosscutting issues for which successful performance depends on
actions by SSA and other agencies, yet the draft plan is silent on
these issues.  We were therefore unable to determine whether SSA has
coordinated with these other agencies or assessed potential overlap. 
For example: 

  -- Under the DI program, SSA is responsible not only for providing
     benefits, but also for helping recipients move off the
     disability rolls by obtaining employment.  This responsibility
     overlaps with responsibilities of the Departments of Labor (DOL)
     and Education.  Yet, the draft plan does not include any
     discussion of the relationships among these agencies or the
     responsibilities they share. 

  -- In its draft plan, SSA notes that it will continue to provide
     services through its state Disability Determination Services. 
     Yet the plan is silent on how SSA works with and obtains input
     from these offices. 

  -- The SSI program is clearly linked with Medicaid, a program
     administered by the Health Care Financing Administration (HCFA)
     within HHS.  Recipients of SSI are, for the most part, also
     eligible for Medicaid.  Any changes to the SSI program will have
     a probable impact on Medicaid.  However, this critical link with
     HCFA is not mentioned. 

  -- SSA and other agencies have similar retirement-related
     responsibilities and may serve the same populations.  Generally,
     when individuals are eligible for Social Security benefits, they
     are also eligible for Medicare coverage, yet this important
     interrelationship is not discussed in the plan.  In addition,
     SSA is responsible for replacing a portion of income loss due to
     retirement, yet private pensions often provide additional
     retirement income.  Within DOL, the Pension Welfare Benefits
     Administration and the Pension Benefit Guaranty Corporation
     oversee private pensions and, in some cases, provide benefits. 
     The plan does not mention these agencies. 


   STRATEGIC PLAN DOES NOT ADDRESS
   SOME OF SSA'S MAJOR MANAGEMENT
   CHALLENGES
------------------------------------------------------------ Letter :7

By designing its strategic plan so that its goals and objectives cut
across the entire agency, SSA enables agency managers and the
Congress to refer to a small set of goals and objectives to monitor
agencywide performance.  However, because these goals and objectives
generally do not focus on specific programs or problem areas, they
offer little assurance that SSA will focus on those areas that pose
the greatest management challenges. 


      SSI PROGRAM REQUIRES A
      COMPREHENSIVE APPROACH
---------------------------------------------------------- Letter :7.1

In early 1997, after years of reporting on problems with the SSI
program, we designated SSI as a high risk program because of its
susceptibility to waste, fraud, abuse, and insufficient management. 
Since the program began in 1974, it has grown significantly in size
and complexity.  SSI poses a special challenge for SSA because,
unlike OASI and DI, it is a means-tested program, and SSA must often
rely on the applicant to provide key financial information.  Our
previous and ongoing reviews have highlighted long-standing problem
areas, such as (1) determining initial and continuing financial
eligibility for beneficiaries, collecting SSI overpayments, and
addressing SSI program fraud and abuse; (2) insufficient attention
paid to the need to provide data, analysis, and proposals to
policymakers regarding whom the SSI program should assist and how
that assistance should be provided; and (3) inadequate return-to-work
assistance for recipients who could be assimilated back into the
workforce.\7 In addition, we have demonstrated that the SSI program
has been adversely affected by internal control weaknesses, complex
policies, and insufficient management attention overall.\8

SSA's draft plan does not acknowledge these serious problems with the
SSI program, nor does it lay out a comprehensive strategy to address
the problems, which would help achieve agency goals.  Although
certain performance measures in SSA's draft plan would track progress
in the long-standing problems areas we have identified, in some
cases, the measures are not disaggregated for the SSI program, and in
others, the measures are yet to be developed.  On the basis of our
ongoing work in this area, we have determined that SSA is taking
steps to address some of the weaknesses in the SSI program.  However,
to help remove the SSI program from our high risk list and achieve
the goal of "best in business" program management, SSA must develop a
long-term, comprehensive strategy to address the root causes of the
problems and include specific measures to evaluate its progress.  The
strategic planning process affords a valuable opportunity for SSA to
take these steps and ensure that the SSI program receives adequate
long-term management attention.  SSA officials have recently agreed
to develop a comprehensive strategy, including performance measures,
to monitor the agency's progress in addressing long-standing problems
in the SSI program.  At a minimum, the plan should include a
discussion of SSA's plans to do so. 


--------------------
\7 See High Risk Series:  An Overview (GAO/HR-97-1, Feb.  1997) and
our ongoing work. 

\8 Supplemental Security Income:  Long-Standing Problems Put Program
at Risk for Fraud, Waste, and Abuse (GAO/T-HEHS-97-88, Mar.  4,
1997). 


      SUCCESS OF DISABILITY
      PROCESS REDESIGN IS KEY
---------------------------------------------------------- Letter :7.2

Making disability decisions is one of SSA's most demanding and
administratively complex tasks, and SSA has struggled to keep up with
applications for disability benefits and appeals of disability
decisions.  SSA's disability caseloads for its DI and SSI programs
have grown by nearly 70 percent in the past decade.  Processing of
claims has been delayed, creating hardship for disabled claimants,
who often wait more than a year for a final decision.  To manage the
disability caseload growth, increase efficiency, and improve service
to its customers, SSA began a major effort in 1993 to change how
disability decisions are made.  In December 1996, we reported that
SSA's redesign plan might not accomplish all that SSA hoped it
would.\9 We identified a number of implementation difficulties,
including schedule delays in testing and project development,
expansion of initiatives' scope and complexity, turnover of executive
leadership, and uncertain stakeholder support.  Responding to these
concerns and those of other stakeholders, SSA revised its redesign
plan in February 1997.  However, it is not yet clear that this
scaled-down initiative will achieve the desired results, and some
stakeholders have continued to criticize SSA's approach. 

Successfully overhauling the disability process is key to achieving
several of SSA's goals and objectives.  Under its goal of providing
world-class service, SSA's draft plan states that a successful
redesign initiative is the most important element for achieving its
objectives related to timeliness of service.  Also, under its goal to
improve program management, the plan links the disability process
redesign initiative with improvements in payment accuracy.  Despite
the importance of the success of this initiative to goal attainment,
SSA's draft plan does not acknowledge the problems SSA has
encountered in implementing the initiative, nor does the plan discuss
SSA's renewed efforts to ensure the success of the initiative. 


--------------------
\9 SSA Disability Redesign:  Focus Needed on Initiatives Most Crucial
to Reducing Costs and Time (GAO/HEHS-97-20, Dec.  20, 1996). 


      EMPHASIS ON RETURN TO WORK
      NOT FULLY INTEGRATED INTO
      DRAFT PLAN
---------------------------------------------------------- Letter :7.3

Each week, SSA pays more than $1 billion in cash benefits to people
with disabilities who receive DI and SSI, yet despite advances in
medical technology that have opened new opportunities for people with
disabilities to work, not more than 1 in 500 DI beneficiaries, and
few SSI beneficiaries, have left the rolls to return to work.  The
Social Security Act states that, to the maximum extent possible,
individuals applying for disability benefits should be rehabilitated
to productive activity.  In addition, recent societal and legislative
changes have shifted to support the economic self-sufficiency goals
of people with disabilities and their right to full participation in
society.  We have reported that, although faced with constraints, SSA
could create opportunities to help and encourage more of SSA's
beneficiaries to return to work.\10 If even 1 percent of the 6.6
million working-age SSI and DI beneficiaries were to leave SSA's
disability rolls by returning to work, lifetime cash benefits would
be reduced by an estimated $3 billion.\11

As the plan is currently written, SSA places an emphasis on return to
work only as it relates to planned research initiatives.  A
return-to-work initiative would be more likely to succeed and receive
the proper attention if it were strategically integrated throughout
the plan.  As with the SSI program, SSA has begun some new
operational initiatives to help people work, but the agency has not
highlighted these measures in the plan and has no comprehensive
strategy to ensure that the return-to-work agenda is supported
throughout the agency.  At a minimum, we would expect SSA to add a
more complete set of return-to-work performance measures and a more
explicit discussion of planned program evaluations in this area. 


--------------------
\10 Social Security:  Disability Programs Lag in Promoting Return to
Work (GAO/HEHS-97-46, Mar.  17, 1997). 

\11 Our estimate is based on fiscal year 1995 data provided by SSA's
actuarial staff and represents the discounted present value of the
cash benefits that would have been paid over a lifetime if the
individual had not left the disability rolls by returning to work. 


      SUCCESS DEPENDS ON USE OF
      INFORMATION TECHNOLOGY
---------------------------------------------------------- Letter :7.4

SSA's draft plan reflects the agency's strong reliance on improved
information technology to support its administrative processes and
enable its workforce to provide world-class services
cost-effectively.  Recent legislation designed to reform information
technology management, including the Paperwork Reduction Act of 1995
and the Clinger-Cohen Act of 1996, set forth requirements that
promote more efficient and effective use of information technology in
support of agencies' missions and improved program performance. 
Under these information technology reform laws, agencies are to (1)
tighten controls over technology spending, (2) better link their
technology plans and information technology use to their programs'
missions and goals, and (3) establish performance measures to gauge
how well their information technology supports their program efforts. 
SSA's draft plan demonstrates an awareness of most of these
principles, but it could be improved by providing additional
information on how information technology strategies will be used to
achieve the agency's goals and objectives. 

In its plan, SSA acknowledges that its strategic goals are
essentially unachievable unless the agency invests wisely in
supporting information technology and refers to the agency's process
for reviewing major investments of information technology funds. 
However, we have expressed concerns relating to SSA's systems
modernization approach, including the need for SSA to better manage
its investments in its modernized information systems and to link its
modernization with its business strategy.\12 In this context, the
plan could benefit from a more detailed discussion of its investment
review principles, how these principles are incorporated into SSA's
planning and budgeting systems, and how SSA intends to prioritize
information technology projects to reflect the agency's overall goals
and priorities.  In addition, as SSA develops its annual performance
plan, it should more explicitly link its technology advances with
operational goal achievement.  For example, in its draft strategic
plan, SSA frequently cites the IWS/LAN modernization effort as a
major vehicle for achieving its strategic goals. 


--------------------
\12 Social Security Administration:  Risks Associated With
Information Technology Investment Continue (GAO/AIMD-94-143, Sept. 
19, 1994). 


      OTHER TECHNOLOGY-RELATED
      CHANGES POSE CHALLENGES
---------------------------------------------------------- Letter :7.5

As rapid changes in technology provide SSA with new ways to conduct
its business, SSA faces difficult choices about how to balance its
goal of providing the best possible service to its customers with its
responsibility to provide services in the most cost-effective manner
available.  We have reported that, 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.\13 We have also recommended that SSA develop and implement a
plan for reducing the number of call centers for its 800-number
service to save money and enhance service.\14 Customers are
increasingly expressing a preference for using the telephone to
conduct business, and SSA acknowledges in its plan that
nontraditional methods of access to SSA services are likely to
increase in popularity.  Moreover, in its draft plan, SSA emphasizes
its intent to balance service with cost.  Yet SSA does not include
any plans to reassess its existing service delivery structure,
including its network of field offices and teleservice centers. 
Reassessing its service delivery structure will include sensitive
decisions that may have negative impacts on communities and certain
SSA staff and will require input from a number of stakeholders,
including unions, employee groups, and the Congress.  To accomplish
this reassessment, SSA will need to begin work on a more
comprehensive plan for restructuring how it does business to
cost-effectively meet changing customer preferences with improved
technologies. 

We have identified as high risk two technology-related areas that
represent significant challenges for SSA.  The first, the "year 2000
problem," stems from the common practice in automated systems of
abbreviating years by their last two digits.  Thus, miscalculations
in all kinds of activities--such as benefit payments--could occur at
the turn of the century because the computer system would interpret
00 as 1900 instead of the year 2000.  Unless SSA converts its
software before the new century, it could encounter major service
disruptions, including erroneous payments or failure to process
benefits.  SSA officials have previously reported that the amount of
resources dedicated to the year 2000 efforts could affect staff
availability to tackle new systems development work,\15

but SSA's plan does not address this year 2000 problem. 

The other high risk area relates to information security, or the need
to adequately protect the sensitive data in federal computer systems. 
Earlier this year, SSA began making personal earnings and benefits
statements available through the Internet; after a public outcry over
concerns about the privacy of this sensitive personal information,
SSA suspended on-line access to the statements.\16 SSA has plans for
other similar initiatives to make greater use of technology over the
next few years.  In its draft plan, SSA refers to a new strategy that
the agency is developing to deal with security in the information
age.  However, the plan would benefit from a more detailed discussion
of this strategy and the steps the agency will take to identify and
resolve any significant information security issues. 


--------------------
\13 GAO/HEHS-97-53, Feb.  20, 1997. 

\14 Social Security Administration:  More Cost-Effective Approaches
Exist to Further Improve 800-Number Service (GAO/HEHS-97-79, June 11,
1997). 

\15 GAO/HEHS-97-53, Feb.  20, 1997. 

\16 Social Security Administration:  Internet Access to Personal
Earnings and Benefits Information (GAO/T-AIMD/HEHS-97-123, May 6,
1997). 


   SSA HAS A HISTORY OF REPORTING
   ON PERFORMANCE BUT WILL BE
   CHALLENGED TO DEVELOP NEW
   MEASURES
------------------------------------------------------------ Letter :8

Although SSA is ahead of many agencies in this area, it still faces
challenges in measuring performance.  SSA has developed and utilized
performance measures for several years.  SSA described performance
measures in the agency's 1991 strategic plan, and SSA also developed
measures when it was a Results Act pilot agency.  More recently, SSA
has disclosed many of its measures in its Annual Financial Statement
Report and in its Accountability Report.  SSA has regularly produced
auditable financial statements as required by the Chief Financial
Officer's Act of 1990 and the Government Management Reform Act of
1994, and the audits of these statements provide at least limited
assurance of the reliability of SSA's performance measurement
data.\17

SSA will be challenged, however, to gather useful data to track
progress in some areas.  For example, SSA plans to increase debt
collections under its goal of making SSA program management the "best
in business," with zero tolerance for fraud and abuse.  However,
since fiscal year 1991, SSA has reported its SSI, debt management
system as a material weakness under the Federal Managers' Financial
Integrity Act because it cannot identify overpayment amounts or
collections related to those overpayments.  As a result, SSA has
developed a manual system to track overpayments and related
collections, but manual systems can be less reliable and more prone
to problems.  In the absence of system improvements or enhancements,
SSA may need to develop additional manual processes to gather
reliable data needed for performance measures. 

In addition to using existing measures, SSA also has laid out
ambitious plans to develop new and, in some cases, more
results-oriented performance measures.  For each strategic goal in
SSA's draft plan, SSA has identified a need for new performance
measures.  Identifying the data needed to measure performance and
collecting reliable data to support these new measures could prove
challenging.  For example, SSA plans to establish a method for
determining access and service accuracy rates for telephone calls to
local offices.  Adding this measure to SSA's collection of customer
service information would be helpful, but the necessary data will be
especially difficult to collect--only 830 of SSA's 1,300 field
offices have published telephone numbers, and these offices are
served by many different telephone companies; thus it will be
difficult to obtain comparable automated data across the country.  In
addition, SSA plans to create a new measure of the percentage of
individuals who are knowledgeable about Social Security programs.  To
accomplish this, SSA plans a multistep process to define what
"knowledgeable" means in each area, design and administer a testing
instrument, develop a baseline level of knowledge, and periodically
administer the test to representative samples of the public. 


--------------------
\17 SSA has been a leader among federal agencies in producing timely
financial statements.  For example, for fiscal years 1995 and 1996,
SSA issued audited financial statements 3 months early.  Moreover,
SSA was among the first federal agencies to produce an Accountability
Report, which is designed to consolidate current reporting
requirements and provide a comprehensive picture of an agency's
program performance and its financial condition. 


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

In commenting on this correspondence, SSA stated that we accurately
depicted its history of strategic planning and that it will consider
our correspondence as it continues to work on its plan.  However, SSA
disagreed with our view that the plan should include additional
information to clarify how the agency will meet its strategic goals. 
Although SSA believes this information should be included in the
agency's management plans rather than in its strategic plan, our
comments on the required elements of a strategic plan are based upon
OMB's instructions in its Circular A-11.  The changes we suggest
would more effectively communicate the agency's plans to the Congress
and the public.  In addition, SSA must give adequate attention to the
management challenges we have identified if it is to achieve its
goals of world-class service and best-in-business program management. 
While SSA states that performance measures for the SSI program will
be thoroughly examined, we continue to believe that a long-term,
comprehensive strategy to address the root causes of the program's
problems is needed.  SSA's comments appear in enclosure I. 


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

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this letter
until 30 days from its issue date.  At that time, we will send copies
of this letter to the Minority Leader of the House of
Representatives; Ranking Minority Members of your Committees; the
Chairmen and Ranking Minority Members of other committees that have
jurisdiction over SSA activities; the Acting Commissioner of SSA; and
the Director, Office of Management and Budget.  Copies will be made
available to others on request. 

Please contact me at (202) 512-7215 or Kay E.  Brown, Assistant
Director, at (202) 512-3674 if you or your staff have any questions
concerning this letter.  Major contributors to this letter are listed
in enclosure II. 

Jane L.  Ross
Director, Income Security Issues




(See figure in printed edition.)Enclosure I
COMMENTS FROM THE SOCIAL SECURITY
ADMINISTRATION
============================================================== Letter 


MAJOR CONTRIBUTORS TO THIS LETTER
========================================================== Appendix II

Barbara D.  Bovbjerg, Associate Director
Valerie A.  Rogers, Senior Evaluator
George Bogart, Senior Attorney
Valerie C.  Melvin, Assistant Director
Debra B.  Sebastian, Senior Auditor
Vernette G.  Shaw, Evaluator


============================================================ Chapter 0


============================================================ Chapter 1


RELATED GAO PRODUCTS
============================================================ Chapter 2

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/HEHS-97-46, Mar.  17, 1997). 

High Risk Series:  An Overview (GAO/HR-97-2, Feb.  1997). 

Social Security Administration:  Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb.  20, 1997). 

SSA Disability Redesign:  Focus Needed on Initiatives Most Crucial to
Reducing Costs and Time (GAO/HEHS-97-20, Dec.  20, 1996). 

Social Security Disability:  Alternatives Would Boost
Cost-Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2,
Oct.  16, 1996). 

Supplemental Security Income:  SSA Efforts Fall Short in Correcting
Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug.  30, 1996). 

Supplemental Security Income:  Administrative and Program Savings
Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug.  29,
1996). 

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

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

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

Social Security Administration:  Risks Associated With Information
Technology Investment Continue (GAO/AIMD-94-143, Sept.  19, 1994). 

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


*** End of document. ***