Social Security: Mass Issuance of Counterfeit-Resistant Cards Expensive,
but Alternatives Exist (Letter Report, 08/01/98, GAO/HEHS-98-170).

Pursuant to a congressional request, GAO reviewed the Social Security
Administration's (SSA) and the Congressional Budget Office's (CBO)
estimated costs of issuing a counterfeit-resistant card social security,
focusing on: (1) the differences in CBO's and SSA's estimates for
replacing the social security card; (2) SSA's estimates of the cost of
issuing a more secure card; and (3) additional issuance options.

GAO noted that: (1) the wide variation between SSA's and CBO's estimates
is due primarily to the different issuance assumptions used by each
agency in their estimates; (2) CBO's estimate was an informal
staff-level estimate of the cost to issue an enhanced card to 172
million number holders who it believed would request the new card; (3)
SSA's estimate is based on issuing enhanced cards to 277 million number
holders; (4) SSA's 1997 estimates of the cost for issuing an enhanced
card generally appear to be reasonable if a new card were to be given to
all 277 million current number holders; (5) regardless of the material
from which the card is made or technology used for security purposes,
issuing an enhanced card to all number holders using current procedures
would cost a minimum of about $4 billion or more; (6) ultimately, SSA's
costs will depend on how Congress decides to implement the issuance of a
new card; (7) alternatives to the high cost associated with a mass
issuance of new cards do, however, exist; (8) one alternative would be
to issue a new enhanced social security card only to those who need it
to verify work eligibility; (9) Bureau of Labor Statistics data suggest
this approach could involve up to an estimated 118 million
individuals--about 43 percent of the 277 million current number holders;
(10) this option would help maximize control over illegal workers while
significantly reducing SSA's costs; (11) in a second approach, SSA could
issue the new card only to those applying for a new social security
number and those who normally request replacement cards; (12) this
option would also substantially reduce the cost of card issuance but
provides no new employment authorization internal controls for many
current number holders; (13) a third alternative could use state
drivers' licenses and identity cards instead of social security cards
for work eligibility verification purposes; (14) states renew these
documents every few years and already include security features and a
photograph; (15) the states could obtain current citizenship information
from SSA for up to 87 million individuals for work authorization
purposes; and (16) this option would avoid the enormous costs associated
with reissuing the current social security card but would likely impose
a significant burden on the states to make work eligibility
determinations for the remaining 190 million individuals, and moreover,
it would not necessarily enhance public confidence in the social
security system.

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

 REPORTNUM:  HEHS-98-170
     TITLE:  Social Security: Mass Issuance of Counterfeit-Resistant 
             Cards Expensive, but Alternatives Exist
      DATE:  08/01/98
   SUBJECT:  Cost analysis
             Fraud
             Social security number
             Eligibility determinations
             Identification cards
             Citizenship
             Forgery
             Internal controls
             Cost effectiveness analysis
             Alien labor
IDENTIFIER:  Social Security Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

August 1998

SOCIAL SECURITY - MASS ISSUANCE OF
COUNTERFEIT-RESISTANT CARDS
EXPENSIVE, BUT ALTERNATIVES EXIST

GAO/HEHS-98-170

Social Security Counterfeit-Resistant Cards

(105157)


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

  AAMVA - American Association of Motor Vehicle Administrators
  BLS - Bureau of Labor Statistics
  CBO - Congressional Budget Office
  DOJ - Department of Justice
  MVA - Motor Vehicle Administration
  OIG - Office of Inspector General
  SSA - Social Security Administration

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


B-280057

August 20, 1998

The Honorable Bill Archer
Chairman, Committee on Ways and Means
House of Representatives

The Honorable Henry Hyde
Chairman, Committee on The Judiciary
House of Representatives

The Honorable William Roth, Jr.
Chairman, Committee on Finance
United States Senate

The Honorable Orrin G.  Hatch
Chairman, Committee on The Judiciary
United States Senate

Since legislation was enacted in 1986 requiring employers to review
documents of prospective employees to establish their right to work
in this country, the Social Security card has become one of the
primary documents to determine employment eligibility.  Following
passage of this legislation, concerns have deepened that the card is
easily counterfeited and does not prevent individuals from illegally
working in the United States due to employers not knowing whether job
applicants' cards are genuine.  While a card with certain security
features was issued in 1983, the media has since reported instances
of thousands of counterfeit Social Security cards being seized.  In
addition, some congressional members believe that the card's
susceptibility to fraudulent use hurts public confidence in the
Social Security program.  To enhance the security of the card, some
Members of Congress have asked, on several occasions, the Social
Security Administration (SSA) and the Congressional Budget Office
(CBO) to estimate the cost of issuing a counterfeit-resistant card. 

In 1996, under the Illegal Immigration Reform and Immigrant
Responsibility Act, the Congress included a mandate requiring SSA to
develop a prototype counterfeit-resistant card made of a durable
tamper-resistant material with various security features that could
be used in establishing reliable proof of citizenship or legal
noncitizenship status.\1 The mandate also required SSA and GAO to
estimate and compare the cost of producing and disseminating several
types of enhanced cards to all living number holders over 3-, 5-, and
10-year periods.  These estimates were to include an evaluation of
the cost of imposing a user fee on those who request a replacement of
the enhanced card and enhanced cards requested prior to the time
individuals were scheduled to receive them.  Earlier that year, a
Member of Congress asked CBO to estimate the cost of issuing a
counterfeit-resistant card, believing an earlier SSA estimate of
producing such a card was high. 

CBO estimated that it would cost SSA an additional $512 million over
its current card issuance costs to issue an enhanced Social Security
card to 172 million people.  SSA's most recent cost estimates of
issuing such a card--provided in its Report to Congress on Options
for Enhancing the Social Security Card, September 1997--range from
$3.9 billion to $9.2 billion, depending on which of seven card
options SSA developed was chosen. 

To avoid duplicating SSA's work, you redirected us to (1) explain
differences in CBO's and SSA's estimates for replacing the Social
Security card, (2) evaluate SSA's estimates of the cost of issuing a
more secure card, and (3) present additional issuance options.  To
assess the cost estimates, we examined SSA's and CBO's basic
assumptions; reviewed their methodology for and data supporting their
workload and cost estimates; as well as discussed with appropriate
staff SSA's estimates of the reasonableness of the time to perform
certain functions such as taking a number holder's picture to place
on the cards.  We discussed available card technologies, such as
including information on a magnetic stripe or microprocessor chip,
and their costs with industry representatives.  We also developed
alternative card issuance options, which we discussed with
knowledgeable officials in federal and state governments, as well as
private industry.  We conducted our work between June 1997 and May
1998 in accordance with generally accepted government auditing
standards.  (For more details on our scope and methodology, see app. 
II.)


--------------------
\1 P.L.  104-208, is the Omnibus Consolidated Appropriations Act of
1997.  Division C is the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996.  For the specific wording of the 1996
mandate, see app.  I, fig.  I.1. 


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

The wide variation between SSA's and CBO's estimates is due primarily
to the different issuance assumptions used by each agency in its
estimates.  For example, CBO's estimate was an informal staff-level
estimate of the cost to issue an enhanced card to 172 million number
holders who it believed would request the new card.  SSA's estimate
is based on issuing enhanced cards to 277 million number holders.  In
addition, CBO's estimate did not include approximately $1.7 billion
in SSA's processing costs to issue new and replacement cards, which
CBO believed SSA would incur regardless of whether or not an enhanced
card was issued.  Further, CBO's estimate, which provided costs for
only one type of card technology, appears to underestimate the
processing costs it did identify for all the cards and excludes the
production cost for about 36 million cards. 

SSA's 1997 estimates of the cost for issuing an enhanced card
generally appear to be reasonable if a new card were to be given to
all 277 million current number holders.  SSA's estimates show that
for five of the seven card options it considered, processing costs
alone accounted for 90 percent of the estimated costs to issue an
enhanced card.  Thus, regardless of the material from which the card
is made or technology used for security purposes, issuing an enhanced
card to all number holders using current procedures would cost a
minimum of about $4 billion or more.  Processing costs include taking
applications for new cards, establishing number holders' citizenship
or alien status to determine their work eligibility, and taking a
picture or capturing a fingerprint for the card.  In making its
estimates, SSA assumed that it would use existing Social Security
card application procedures to issue all enhanced cards and establish
reliable proof of citizenship or alien status for number holders
where necessary.  Ultimately, SSA's costs will depend on how the
Congress decides to implement the issuance of a new card. 

Alternatives to the high costs associated with a mass issuance of new
cards do, however, exist.  These alternatives may provide a more
cost-effective approach to handling work eligibility verification,
although they may not address all concerns about public confidence in
the Social Security system.  One alternative would be to issue a new
enhanced Social Security card only to those who need it to verify
work eligibility.  Bureau of Labor Statistics (BLS) data suggest this
approach could involve up to an estimated 118 million
individuals--about 43 percent of the 277 million current number
holders.  This option would help maximize control over illegal
workers while significantly reducing SSA's costs.  However, many
additional individuals may choose to apply for such a card instead of
waiting until they seek employment or change jobs.  If this occurs,
the savings attributable to this alternative would be reduced.  In a
second approach, SSA could issue the new card only to those applying
for a new Social Security number and those who normally request
replacement cards.  This option would also substantially reduce the
cost of card issuance but provides no new employment authorization
internal controls for many current number holders.  A third
alternative could use state drivers' licenses and identity cards
instead of Social Security cards for work eligibility verification
purposes.  States renew these documents every few years and already
include security features and a photograph.  Also, the states could
obtain current citizenship information from SSA for up to 87 million
individuals for work authorization purposes.  This option would avoid
the enormous costs associated with reissuing the current Social
Security card but would likely impose a significant burden on the
states to make work eligibility determinations for the remaining 190
million individuals.  Moreover, it would not necessarily enhance
public confidence in the Social Security system. 


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

Since the inception of the Social Security program in 1935, the
Social Security number and, to a lesser extent, the Social Security
card have been used for nonwork-related purposes.  For example,
federal, state, and local governments require individuals to have a
Social Security number to receive certain benefits or services, such
as Supplemental Security Income, Temporary Assistance for Needy
Families, and food stamps.  Recent legislation provides strong
incentives for states to include Social Security numbers on death
certificates\2 and drivers' licenses,\3 and private industry uses
them for credit applications and insurance purposes, among other
uses.  In addition, the card is used to establish an individual's
eligibility to work in the United States.\4 This range of uses has
increased the potential for the number to be misused and the card to
be counterfeited, causing concern in the Congress, which has, on
several occasions, considered directing SSA to issue a more
tamper-proof and less easily counterfeited card. 

Originally, SSA assigned a Social Security number to anyone based
solely on the applicant's unverified statements regarding age,
identity, and place of birth, and issued everyone a card that
contained the person's name and Social Security number.  Over time,
SSA strengthened its requirements for assigning numbers and varied
the information shown on the cards it issued.  Since 1978, SSA has
required applicants for original Social Security numbers to provide
proof of age, identity, and citizenship or alien status.  SSA later
began printing legends, noting work restrictions on cards issued to
noncitizens.  Since 1982, SSA has provided Social Security numbers
only to U.S.  citizens, noncitizens authorized to work in the United
States, and noncitizens with an approved nonwork reason for needing a
number.  Beginning in 1982, SSA printed "Not Valid for Employment" on
cards issued to noncitizens who lacked work authorization but needed
cards for nonwork purposes; and since 1992, it printed "Valid for
Work Only With INS Authorization" on cards issued to noncitizens with
temporary work authorization. 

Some Members of Congress have also been concerned about the public's
confidence in the Social Security system in general, and the message
it sends to the public when the card is easily counterfeited and
illegal uses of an individual's Social Security number are easily
made.  In 1983, the Congress sought to combat illegal use of the
number by passing legislation requiring SSA to develop its first
counterfeit-resistant Social Security card.  In response, SSA
introduced counterfeit-resistant and tamper proof cards with security
features including a blue tint random marbleized pattern,
planchettes, and intaglio printing.\5 Members of Congress
subsequently expressed disappointment with the new card SSA
developed, alleging that its security features did not make it
significantly more difficult to counterfeit and that employers could
not easily determine its authenticity for work authorization
purposes.  By law, illegal aliens--as well as legally admitted
noncitizens, such as students and tourists--without valid INS work
authorization are not entitled to work in the United States. 


--------------------
\2 P.L.  104-193, Personal Responsibility and Work Opportunity
Reconciliation Act of 1996. 

\3 P.L.  104-208. 

\4 U.S.  citizens and noncitizens receiving authorization from the
Immigration and Naturalization Service (INS) are legally entitled to
work in the United States.  P.L.  99-603, the Immigration Reform and
Control Act of 1986, made it illegal for employers to hire persons
who could not prove their entitlement to work in this country. 

\5 The blue tint random marbleized pattern is erasable and shows any
attempts at alteration.  Planchettes are small multicolored discs
placed randomly on card stock and can be seen with the naked eye. 
Intaglio printing is used on U.S.  currency and provides a raised
effect that is difficult to replicate. 


      ISSUANCE PROCEDURES FOR NEW
      AND REPLACEMENT SOCIAL
      SECURITY CARDS
---------------------------------------------------------- Letter :2.1

To obtain a Social Security number and card, applicants fill out an
application and submit evidence of their age, identity, and
citizenship status or lawful alien status.  Noncitizens must provide
INS documentation authorizing them to work in the United States or a
valid nonwork reason for needing a Social Security number, such as
receipt of federal benefits.  Applicants 18 or over are required to
have an in-person interview and explain why they never obtained a
Social Security number before.  The Enumeration at Birth program
allows parents to obtain a Social Security number for newborn babies
through the hospital during the birth registration process. 
Applicant information is transmitted through the state to SSA, and a
Social Security number and card are issued. 

When an individual's card is lost or mutilated or the individual
reports changes to information contained in SSA's records (such as a
legal name change after marriage), SSA issues a replacement card. 
However, unlike the process for issuing original cards, SSA does not
verify the citizenship of individuals who indicate to SSA that they
were born in the United States, as long as the information they
previously provided to SSA supports their assertion.  As a result,
the process for issuing replacement cards does not provide for the
cards to be reliable proof of the number holder's entitlement to work
in the United States.  To receive a replacement card, an individual
completes an application for a Social Security number and provides
proof of identity, such as a drivers' license, government or state
identification, or school records.  If, however, an individual is
foreign-born and has not become a naturalized U.S.  citizen,
additional documents must be shown.  These applicants must provide
evidence of current lawful alien status and either INS work
authorization or a valid nonwork reason for needing a number. 

SSA has issued new versions of Social Security cards while allowing
existing cards to remain valid.  As a result, current number holders
may conceivably have one of 47 valid versions of the card that SSA
has issued since the inception of the program.  For example, cards
issued before 1982 to noncitizens without work authorization do not
contain legends indicating their lack of work authorization.  The 40
versions of cards issued before 1983 lack counterfeit-resistant and
tamper-proof security features.  Likewise, cards issued before 1992
to noncitizens authorized to work for a limited time do not bear
legends indicating their temporary work authorization. 


      COSTS OF ISSUING CARDS
      HISTORICALLY BORNE BY SOCIAL
      SECURITY'S TRUST FUNDS
---------------------------------------------------------- Letter :2.2

The Social Security trust funds have historically borne the costs of
issuing original and replacement cards.  SSA currently issues cards
free-of-charge and does not limit the frequency or number of
replacement cards.  SSA has 1,300 field offices nationwide, which
handle most applications for original Social Security numbers and
replacement cards.\6

While not labor intensive, handling Social Security number
applications constitutes the largest volume of transactions for field
offices.  In fiscal year 1996, it cost SSA about $200 million to
issue about 6 million original and 10 million replacement cards. 
However, under section 274A of the Immigration and Nationality Act (8
U.S.C.  1324a), payment for major changes, such as implementation of
an enhanced counterfeit-resistant Social Security card, cannot be
paid for by the trust funds or general appropriations.  The Congress
would need to specifically provide funding for such changes. 


--------------------
\6 Requests for Social Security numbers received from outside the
United States are handled by SSA's Office of International
Operations, and the electronic enumeration of newborns using birth
registration data is handled by independent hospitals or other
entities and SSA's Office of Systems. 


      INCREASING ROLE FOR THE
      SOCIAL SECURITY CARD IN WORK
      AUTHORIZATION
---------------------------------------------------------- Letter :2.3

Under the Immigration Reform and Control Act of 1986, employers are
required to review documents that establish prospective employee's
identity and eligibility to work in the United States before hiring
them.\7 The law further requires employers to sign statements
certifying that the documents they review appear genuine and refer to
the prospective employee.  The documents are provided by the
prospective employees, and the law allows them discretion as to which
of numerous approved documents they provide to employers.  However,
the Illegal Immigration Reform and Immigrant Responsibility Act of
1996 required a reduction in the types of documents individuals can
use to prove their identity and eligibility to work and gave the
Department of Justice (DOJ) the authority to set conditions for
implementing the reduction.  To date, DOJ has eliminated some
documents that previously could be used to establish eligibility to
work, but implementation of this provision has not been completed. 
(See app.  III.)

Presently, the Social Security card, U.S.  birth certificate, and
U.S.  passport remain the primary documents used by citizens to prove
their eligibility to work.  Noncitizens are currently limited to
using either the Social Security card, if they possess one, or one of
eight documents they may receive from INS that authorizes their
employment.  However, DOJ proposes to eliminate birth certificates
from among the list of approved work eligibility documents.  With
these recent and proposed reductions in the types of work
authorization documents allowed, reliance on the Social Security card
as reliable proof of the prospective employee's entitlement to work
could increase the card's vulnerability to forgery and misuse. 


--------------------
\7 This includes U.S.  citizens; certain aliens, including those with
permanent resident or refugee status; or aliens who lack INS work
authorization but were issued Social Security cards before SSA noted
work restrictions on the cards. 


   CBO AND SSA ESTIMATES ARE
   DIFFICULT TO COMPARE
------------------------------------------------------------ Letter :3

On several occasions, the Congress has asked CBO and SSA to estimate
the cost of issuing an enhanced card.  CBO's and SSA's estimates have
been widely divergent due to the assumptions each used regarding the
number of people who would receive an enhanced card and the
recognition of various costs in the issuance process. 

In 1994, SSA estimated that it would cost about $2.8 billion to $5.3
billion to issue enhanced cards to all 270 million number holders.\8
This included $2.8 billion for processing the card and an additional
$2.5 billion to include pictures or capture fingerprints on the
cards.  However, SSA's estimates were much higher than some in the
Congress anticipated they would be; so in 1996, a Member of Congress
asked CBO for an independent estimate to coincide with proposed
legislation making the Social Security card the primary work
authorization document.  In its 1996 informal staff-level estimate,
CBO said it would cost SSA about $512 million to issue an enhanced
card. 

These CBO and SSA estimates were so different that the Congress
mandated SSA to develop a new estimate as part of the 1996 Illegal
Immigration Reform and Immigrant Responsibility Act.  The Congress
also required GAO to develop its own estimate to compare with
SSA's.\9 Our analysis of the CBO and SSA estimates shows that they
are the result of very different assumptions, including the size of
the population to whom the proposed card would be issued and
consideration of ongoing card-processing costs.  These differences
make it difficult to compare the estimates.  CBO's estimate, for
example, was for a single card option with security features similar
to a drivers' license, while SSA's most recent and most comprehensive
estimate considered seven different card options in response to the
1996 congressional mandate. 

In addition, CBO's and SSA's estimates were based on significantly
different numbers of enhanced cards to be issued.  CBO estimated the
cost of issuing an enhanced card to 172 million number holders. 
These number holders consisted of 136 million people who CBO
estimated would normally request original and replacement cards over
an 8-year period,\10

plus an additional 36 million people who it estimated would request
the enhanced card.  SSA, on the other hand, was mandated to estimate
the cost of developing and issuing an enhanced card to all current
number holders, which it estimated at 277 million.  SSA's issuance
thus represents a 61-percent increase over CBO's with respect to the
number of individuals who would get an enhanced card. 

CBO's estimate also did not include the processing costs SSA would
normally incur issuing or reissuing cards for 136 million
people--approximately $1.7 billion in costs over the 8-year period of
the CBO estimate--because staff considered them costs SSA would incur
whether the card was enhanced or not.  SSA's 1997 estimate included
all costs associated with producing and disseminating the enhanced
card, as if they were new costs for the 277 million number holders,
without consideration of its ongoing costs for enumeration and
reissuance.  CBO also did not include other pertinent card and
processing costs for the 172 million number holders included in its
estimate.  For example, CBO did not include the personnel costs
associated with SSA employees taking pictures for the new card for
all 172 million cards.  SSA currently estimates this cost at $1.00
per card.  For roughly 85 million individuals who have not previously
proven their work eligibility status, CBO did not include costs for
time necessary to review original documentation.  SSA currently
estimates this cost at $2.00 per card.  For 36 million individuals,
CBO did not include the cost of producing the card itself (CBO
estimates this cost at $1.50 per card) and underestimated the average
processing costs for these cards.  SSA included all these costs
(personnel, review of documentation, and production costs) for all of
the 277 million people in its estimate.  In addition, SSA included
$177 million for the cost of informing number holders of the
reissuance.  CBO did not include an estimate of this cost in its
overall estimate. 


--------------------
\8 SSA prepared the card estimate for use in hearings before the
House Subcommittee on International Law, Immigration, and Refugees,
Sept.  29, 1994. 

\9 This mandated requirement was later changed by the committees
involved in drafting the mandate to require GAO to verify the
accuracy of SSA's new estimate, rather than to develop a parallel
estimate. 

\10 CBO's estimate covered the 8 years prior to implementation of the
proposal to make a secure Social Security card the primary work
authorization document. 


   SSA ESTIMATES ARE REASONABLE
   FOR A MASS ISSUANCE TO ALL
   NUMBER HOLDERS
------------------------------------------------------------ Letter :4

SSA's 1997 estimates of the cost for issuing a more enhanced card
generally appear to be reasonable if a new card is to be given to all
277 million current number holders.  SSA reported that total costs to
issue a more enhanced Social Security card to all number holders
range from $3.9 billion to $9.2 billion,\11 depending on the card
option selected.\12 SSA refined its methodology for estimating the
cost to issue a new Social Security card in its 1997 estimates.  The
estimates include the cost of producing the card; the cost of
equipment; the postal cost of notifying number holders that they must
apply for a new card; and the cost, where necessary, to establish the
number holder's work eligibility status.  (See app.  IV.) However,
the estimates also appear to overstate some implementation costs and
not fully consider others. 

In response to the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 mandate, SSA developed cost estimates for
seven different card technologies, as shown in table 1. 



                                Table 1
                
                      SSA's Proposed Card Options

Option            Card description
----------------  ----------------------------------------------------
Option 1          Basic plastic card with the number holder's name and
                  Social Security number printed on the front of the
                  card. There are two versions of this card: one with
                  and one without a statement concerning the number
                  holder's citizenship/noncitizen status.

Option 2          Plastic card with the number holder's name and
                  Social Security number printed on the front of the
                  card, and an electronically captured picture, sex,
                  and date of birth on the back of the card.

Option 3          Plastic card with the number holder's name and
                  Social Security number on the front of the card and
                  a secure bar code data storage stripe on the back to
                  hold identifying information and a biometric
                  identifier.\a

Option 4          Plastic card with the number holder's name and
                  Social Security number on the front of the card and
                  an optical data storage stripe on the back that can
                  store large amounts of identifying information about
                  the number holder.

Option 5          Plastic card with the number holder's name and
                  Social Security number on the front of the card and
                  a magnetic stripe on the back.

Option 6          Plastic card with the number holder's name, Social
                  Security number, and picture on the front of the
                  card and a magnetic stripe on the back.

Option 7          Plastic card with the number holder's name, Social
                  Security number, and a microprocessor (computer
                  chip) on the front of the card, a magnetic stripe on
                  the back and a picture.
----------------------------------------------------------------------
\a Biometric identifiers are mechanisms to capture a living personal
characteristic such as a fingerprint in a digital or analog form. 

Source:  SSA, Report to Congress on Options for Enhancing the Social
Security Card (Sept.  1997). 

Several assumptions regarding how cards would be reissued also have a
significant effect on SSA's estimates.  Since the agency was mandated
to estimate the cost of providing the enhanced card to all living
number holders, SSA assumed that all such individuals would have to
complete a Social Security card application, as they do in its
current card issuance and reissuance process.  Using both Census
Bureau data and its analysis of its own records of numbers issued
since the beginning of the program in 1935, SSA estimated that there
are 277 million living number holders.  This number appears
reasonable based on our analysis of SSA's estimate and review of
Census Bureau-based projection data.  SSA further assumed that out of
the total number of number holders, it would add the verification of
citizenship for about 190 million individuals who would need to
provide to SSA proof of their work eligibility status.\13 SSA field
offices would review applications and documents establishing the
number holders' identity; verify their citizenship status, as
appropriate; and take pictures, capture fingerprints, or both, if
required for the new card.  For the remaining 87 million people, SSA
would only need to take new applications, establish identity, and
take individuals' pictures because SSA has already documented their
citizenship status.  SSA proposed mailing at least two
correspondences to inform number holders of the reissuance and
request that they contact the agency.  SSA estimates that this effort
will require a total expenditure of up to 73,000 work years, or about
7,000 to 24,000 work years annually, depending on the issuance period
and option selected.  To put this effort into perspective, SSA
currently has a total workforce of about 65,500 employees. 


--------------------
\11 These estimates are made in 1996 dollars; the actual costs could
be more, depending on when implementation is started. 

\12 SSA's estimate consists of processing costs (ranging from $3.6
billion to $3.9 billion); correspondence to number holders ($177
million); and card, equipment, and technology costs (ranging from
$100 million to $5.2 billion). 

\13 Includes 177 million individuals, mainly those issued cards prior
to 1978, who have not previously proved citizenship for SSA's records
and 13 million who have previously proven they are noncitizens but
for whom SSA will need to update the status of their work
authorization. 


      COST TO PRODUCE THE CARD
---------------------------------------------------------- Letter :4.1

While SSA's total estimated costs of issuing an enhanced card are
high, the cost of the card itself and the cost of personalizing it
are relatively low on a per card basis for most card options.  For
five of the technology options, the costs range between $.36 and
$.69.  For the two higher technology card options--those with optical
storage or a microprocessor (options 4 and 7)--the estimated costs
were considerably higher--$18.30 and $11.34, respectively.  Table 2
shows card and card personalization costs for all seven card options. 



                                Table 2
                
                  Card and Card Personalization Costs

                                                                  Card
                                                                   and
                                                                  card
                                                                person
                                                                alizat
                                                                   ion
Card option                                                      costs
--------------------------------------------------------------  ------
Option 1: basic plastic card                                      $.36
Option 2: plastic card with picture                                .42
Option 3: plastic card with secure bar code                        .36
Option 4: plastic card with optical storage                      18.30
Option 5: plastic card with magnetic stripe                        .66
Option 6: plastic card with magnetic stripe and picture            .69
Option 7: plastic card with microprocessor, magnetic stripe,     11.34
 and picture
----------------------------------------------------------------------
Source:  SSA, Report to Congress on Options for Enhancing the Social
Security Card. 

These costs are based mostly on an estimate by SSA's contractor who
manufactured the seven card prototypes; however, an SSA official
stated that the final estimated costs in most instances are somewhat
lower than the contractor's estimates because of the volume of SSA's
card issuance and the anticipated downward effect of competitive
contracting on costs. 

To determine whether SSA's costs were roughly equivalent to those
experienced by others, we discussed card costs with officials from
the Maryland Motor Vehicle Administration and Schlumberger Malco, a
large manufacturer of a variety of card technologies.  The Maryland
officials provided us with cost information for a Maryland drivers'
license, which is probably most similar to SSA's option 6--an
identification-style magnetic stripe card with a picture on the
front.  State officials stated that it costs them $.89 for each
personalized license.  This compares to SSA's estimate of $.69 for
its most similar card option.  We also discussed SSA's seven card
options with an official from Schlumberger Malco who stated that
SSA's range of card costs and card personalization estimates
generally appear reasonable.  He told us that without detailed
specifications, it would be difficult to be more precise but noted
that card volume is the major factor in any card cost estimate.  On
the basis of these statements, it would appear that SSA's estimate of
card and personalization costs are reasonable.  When these card and
personalization unit costs are applied to the universe of 277 million
number holders, the cost of the card ranges from $100 million for a
simple plastic card to $5.2 billion for a card with optical storage
technology.\14


--------------------
\14 Card costs are for the card stock itself.  Card personalization
costs include items such as printing a name and number on the card
and adding pictures or including data on magnetic stripes to the
cards. 


      COST OF EQUIPMENT AND
      CAPACITY
---------------------------------------------------------- Letter :4.2

While most of the work to produce an enhanced card would be done by a
contractor, SSA would need to purchase specialized equipment to take
pictures, capture fingerprints, read bar codes and magnetic stripes,
or interact with microprocessors, depending on the card option
selected.  SSA estimates that purchasing and installing such
equipment in each of its 1,300 field offices would cost between $62
million and $86 million.  SSA based its equipment estimates, in large
part, on those provided by its contractor, a large producer of card
manufacturing equipment, as well as estimates by state and local
government operations participating in its survey on the amount of
time necessary to take a picture.\15

Officials from Schlumberger Malco stated that because there are so
many equipment variations, it is difficult to give specific equipment
estimates without exact equipment specifications, but a large
application such as SSA's would keep prices low; moreover, equipment
costs tend to decline as new technology is introduced.  In addition
to the equipment at SSA's 1,300 field offices, employers would need
equipment to read biometric or other identifying information of
prospective employees.  SSA's report does not discuss these costs,
and a decision would need to be made with regard to who would pay
these costs. 

SSA estimated that it would need at least four equipment
installations per field office to meet the issuance requirements
within a 3-year period.  However, based on our analysis of the
equipment capacity, it appears that fewer than four installations
would be necessary to handle projected workloads.  In addition, SSA
could reasonably expect equipment demand to be lower for an extended
issuance over 5 or 10 years, thereby reducing the need for four
equipment installations per office, if those options were chosen. 
Also, if SSA limited the number of offices taking card applications,
particularly in geographic areas where several field offices are
located in close proximity, it could reduce the total number of
equipment installations necessary. 


--------------------
\15 SSA conducted a survey of federal, state, and local government
agencies that used photographs or biometrics on their cards to
determine the amount of time that would be added to the application
process to take a picture or capture a fingerprint.  As part of this
survey, they also discussed the cost of equipment to perform this
function. 


      COST TO NOTIFY THE PUBLIC
---------------------------------------------------------- Letter :4.3

To issue new cards, SSA proposed mailing at least two correspondences
to all number holders at a cost of $177 million.  This estimate
consists of 277 million people receiving mail at a cost of $.64 each
(two mailings of $.32, which includes postage of $.26 and printing
costs for the notice, paper, and envelope).  The first correspondence
would be a general announcement about the new card; the second would
include specific information about when to contact SSA and the
documentation needed for the new card.  SSA proposed customizing the
correspondences in the case of individuals who have previously proven
their citizenship status in SSA records to reflect that only proof of
identity would be needed.  SSA did not include in its estimate the
additional costs for preparing the customized correspondence or for
handling phone calls and walk-in traffic in response to the
correspondences.  SSA's success in contacting some number holders to
reissue new cards may be contingent upon obtaining addresses from the
Internal Revenue Service.  If SSA does not receive addresses for
everyone, it is likely that fewer cards would be issued. 


      COST OF PROCESSING
      REAPPLICATIONS FOR THE CARD
---------------------------------------------------------- Letter :4.4

A significant portion of SSA's estimate is attributable to the
personnel costs of taking applications for new cards, establishing
number holders' citizenship or alien status to determine their work
eligibility, and the time to take a picture or capture a fingerprint. 
For five of the seven options in SSA's estimate, these costs
constitute 90 percent or more of the total cost of issuing a new
card.  Table 3 shows the relationship of these processing costs to
total card issuance costs for each of the seven options.  This
relationship is particularly significant because it shows that
regardless of the material from which the card is made or the
technology used on the card for security purposes, reissuance of a
new card to all number holders will cost a minimum of approximately
$4 billion, using SSA's current procedures. 



                          Table 3
          
          Card Processing Costs as a Percentage of
                 Total Card Issuance Costs

                                                Processing
                                       Total     cost as a
                    Processing    reissuance    percentage
                        cost\a          cost      of total
Card option         (billions)    (billions)          cost
----------------  ------------  ------------  ------------
Option 1:               $3.6\b          $3.9           92%
 plastic card
Option 2:                  3.9           4.3            91
 plastic card
 with picture
Option 3:                  3.9           4.3            91
 plastic card
 with secure bar
 code
Option 4:                  3.9           9.2            42
 plastic card
 with optical
 storage
Option 5:                3.6\b           4.0            90
 plastic card
 with magnetic
 stripe
Option 6:                  3.9           4.3            91
 plastic card
 with magnetic
 stripe and
 picture
Option 7:                  3.9           7.3            53
 plastic card
 with
 microprocessor,
 magnetic
 stripe, and
 picture
----------------------------------------------------------
\a Processing cost includes the labor and indirect costs to process
an application and review evidence of citizenship or noncitizen
status and, if applicable, the time to take a picture or capture a
fingerprint. 

\b Processing costs are somewhat lower for options that do not
include a picture or biometric identifier. 

Source:  SSA, Report to Congress on Options for Enhancing the Social
Security Card. 

SSA's estimate for the cost of processing each new card includes
handling applications; verifying citizenship or alien status; and, if
appropriate for that particular option, taking a picture or capturing
a fingerprint.  This estimate is based on cost and workload data
associated with SSA's current process for issuing or reissuing cards. 
SSA used fiscal year 1996 workload counts and costs from its cost
analysis system for Social Security number related activities to
estimate that it would take about 27 minutes each for processing
applications at its 1,300 field offices.  To this, it applied an
average cost of about $.43 per minute, which included the salary for
affected employees plus other indirect costs.\16 This results in a
unit cost of $11.70 for processing each application.  (See app.  V.)
Similarly, SSA estimated it would take an additional 5 minutes to
verify an individual's citizenship status at an average cost of $.40
per minute, producing a unit cost of $2.00 per card, which was
applied to the 190 million number holders who have not had their
citizenship status determined.  SSA also estimated it would take an
additional 2.5 minutes per card, also at $.40 per minute, to take a
picture or capture a fingerprint producing an average cost of $1.00
per card.  SSA based its estimates of time to take pictures and
capture fingerprints on a survey of federal, state, and local
government agencies that produce similar cards with pictures or
fingerprints. 


--------------------
\16 Indirect costs include items such as rent, utilities, and data
transmission costs. 


      OTHER FACTORS NOT CONSIDERED
      IN SSA'S ESTIMATE COULD
      INCREASE OR REDUCE COSTS
---------------------------------------------------------- Letter :4.5

SSA's estimate did not include all costs associated with issuing a
new card that would include a picture or fingerprint.  Costs for
activities such as maintaining equipment, training personnel to
operate the new picture taking or fingerprint recording equipment,
and modifying SSA's systems to store picture or biometric data and to
allow employees to access this information have not been included in
this estimate.  SSA stated that these costs would need to be added in
a complete assessment of a card issuance that included these
particular options. 

In addition to these ongoing costs, SSA did not estimate the costs
for certain future workloads, such as updating number holders'
pictures (possibly as often as every 5 to 10 years) over their
lifetime, or replacing cards that use magnetic or electronic storage
technology, such as magnetic stripes or microprocessors, which may
have to be replaced periodically to ensure the reliability of stored
data.  SSA stated that while it did not estimate the cost of these
future workloads, each would involve some or all of the same types of
costs and workloads associated with issuing an enhanced card to all
number holders. 

SSA's estimate would be somewhat lower, but not significantly, if it
considered several circumstances.  First, any potential for
streamlining the process for a card issuance of this magnitude would
save money when compared to the current annual card issuance process. 
Second, the cost that SSA currently incurs to issue replacement cards
would be redirected to any new issuance program, offsetting some of
the costs.  Third, as previously noted, options such as limiting the
number of offices that receive specialized equipment to take a number
holder's picture or capture a fingerprint for a new card, especially
in areas where several field offices are in close proximity, could
provide additional savings. 


      ESTIMATE OF USER FEE COST IS
      OVERSTATED
---------------------------------------------------------- Letter :4.6

It appears that the Congress is considering offsetting some of the
costs of the enhanced card by charging a user fee for replacement
cards.  In addition to requiring that SSA estimate the costs
associated with producing and issuing enhanced Social Security cards,
the 1996 mandate directed SSA to "evaluate the feasibility and cost
of imposing a user fee for replacement cards and cards issued prior
to the scheduled 3-, 5-, and 10-year phase-in options." In its
report, SSA estimated that the cost of collecting these fees would be
$1.3 billion.  We believe this estimate to be substantially
overstated. 

SSA's estimate applied the unit cost to all 277 million current
number holders, which it believes was required by the mandate. 
However, our interpretation of the mandate was that user fees would
only be applied to those individuals who either request a replacement
of the new enhanced Social Security card (currently about 10 million
people request replacement cards yearly) or request the new card
before they are scheduled to receive it.  In our discussions with
members of congressional staffs involved in drafting the mandate,
they said they agree with our interpretation and never intended for
everyone who receives the new card to be charged a user fee. 

However, SSA opposes charging for any cards because participation in
the program is generally mandatory and it fears charges for cards
could lead individuals not to report important changes, such as name
changes due to marriage.  This would in turn cause recordkeeping
problems for the agency and potentially inaccurate records for number
holders.  Yet SSA acknowledges in its report that the fee could be
waived under some circumstances, such as in the case of a name change
due to marriage, to encourage individuals to report such changes and
enable SSA to keep its records current.  This may also be true for
hardship reasons for individuals who cannot afford to pay for the
replacement card.  In addition, SSA also fails to recognize in its
report that the costs of collecting the user fee would be offset to
some extent by the fees paid.  Consequently, the cost to SSA of
collecting a user fee should be much less than the $1.3 billion SSA
estimated. 

SSA's estimate of the cost for handling user fees was based on a unit
cost of $4.60 per card, which it derived from its estimates of the
amount of time necessary for handling three alternative forms of
payment from all 277 million number holders.  SSA reported that it
based its estimates on its experience in receiving remittances in its
field offices, primarily recipients' repayments of overpaid benefits. 
However, it does not track workload and cost data for handling these
payments, and SSA officials told us that the agency has no
measurement system for determining, and has not conducted studies of,
how long it takes field offices and processing centers to handle
these payments.  Consequently, we cannot determine whether SSA's unit
cost is reasonable or not.  To handle the collection of user fees,
SSA said it would redesign the current process used by its field
offices for handling remittances to accommodate the substantially
higher volume of payments for the new card.  SSA stated that it would
liberalize existing procedures that only allow individuals to make
cash or check payments at field offices by providing them with the
option of being billed and mailing payments to SSA processing centers
or paying by credit card at field offices. 

SSA's per card cost is the average unit cost for field offices and
processing centers to handle payments based on SSA's assumptions
about the rate applicants would select among three payment
methods--pay cash or charge at an SSA facility or be billed and pay
by mail.  SSA assumes that of these options--each of which has a
different cost to SSA--one-half of the applicants would elect to be
billed by mail at a cost of $4.09 each, one-fourth would opt to pay
at a field office by credit card at $1.71 each, and one-fourth would
opt to pay at a field office by cash or check at $8.45 each.  To the
extent the percentage of applicants who select payment methods vary
from those assumed by SSA, the average cost of handling payments will
also change.  However, we have no basis for assessing the accuracy of
SSA's assumptions. 


   ALTERNATIVES TO THE MASS
   REISSUANCE OF SOCIAL SECURITY
   CARDS
------------------------------------------------------------ Letter :5

The mass reissuance of Social Security cards to all number holders
would have a significant impact on SSA's resources and potentially
cost billions of dollars.  Alternatives to a mass reissuance of a new
Social Security card may constitute a more cost-effective approach to
preventing those individuals who are ineligible to work from
obtaining jobs and, in some instances, could also help to improve
public confidence in the Social Security system. 

However, we identified four alternative approaches that would cost
less than the approach SSA evaluated: 

  -- extending the mandated issuance time frame,

  -- issuing cards only to individuals who change jobs,

  -- issuing enhanced cards to new applicants and those requesting
     replacement cards, and

  -- using drivers' licenses as an alternative to the Social Security
     card. 

These alternatives are only a few of the many available and each has
advantages and disadvantages.  But they are representative of ideas
for accomplishing the congressional objectives for a new card at a
reduced cost. 


      EXTENDING THE MANDATED
      ISSUANCE TIME FRAME
---------------------------------------------------------- Letter :5.1

Extending the current mandated issuance time frame beyond 10 years
could help reduce costs.  This alternative would provide a new card
for everyone eventually, and there would be less disruption on SSA
resources than the 3-, 5-, or 10-year options.  However, this option
would delay improving controls over the work authorization process. 


      ISSUING ENHANCED CARDS ONLY
      TO INDIVIDUALS WHO CHANGE
      JOBS
---------------------------------------------------------- Letter :5.2

For retired individuals who are no longer working and the very young
who have not entered the workforce, there may be little advantage to
issuing a new card.  Also, most individuals would not need to show
their card to an employer unless they were to change jobs. 
Consequently, it may be more effective to meet the goals of the
mandate by issuing new cards only to those who may be seeking new
jobs or changing jobs.  A new legislative requirement could be
written to require that all those seeking employment would have to
show the enhanced Social Security card for identification and work
authorization purposes. 

This alternative maximizes control over illegal workers and reduces
the impact on SSA resources.  It could potentially reduce the number
of new cards SSA has to issue and remove the need for SSA to locate
and contact number holders in order to issue new cards--because
individuals would be responsible for obtaining a new card.  Public
confidence in the system would also be addressed for a significant
portion of the population since all individuals entering the
workforce and changing jobs would be required to get the new card. 
For those who do not get the new card, they would know that the
Social Security system was protected from those who were not entitled
to work. 

Under this alternative, the number of individuals who would require a
card would be much smaller than for a mass reissuance.  Based on BLS
data, in February 1996, there were 110 million employed wage and
salary workers age 16 and over and an additional 7.9 million
unemployed individuals.  However, BLS data do not capture individuals
not currently in the workforce who could obtain employment in the
future.  In addition, SSA could be unable to control the flow of
applications for an enhanced card.  Many people may choose to apply
for an enhanced card to avoid having to wait until they are seeking
employment or changing jobs.  If this occurs, savings attributable to
this alternative would be reduced. 


      ISSUING ENHANCED CARDS ONLY
      TO NEW APPLICANTS AND THOSE
      REQUESTING REPLACEMENTS
---------------------------------------------------------- Letter :5.3

Another alternative would be to issue enhanced Social Security cards
only to first-time applicants for Social Security cards and to those
who voluntarily request replacement cards.  SSA currently spends only
about $200 million yearly enumerating 6 million people and replacing
10 million cards.  The added costs of this alternative would be those
associated with enhancing the card (card cost and required
equipment), any additional processing time required for taking
pictures or capturing biometric information, and the time necessary
to verify citizenship status for those whose status has not
previously been verified.  It is possible, however, that legislation
to consolidate the number of acceptable work eligibility documents
and an individual's desire to have the new card will increase the
number of requests for replacement cards that SSA is currently
experiencing.  But the overall cost savings from prospective issuance
of the new card would be substantial.  Although this option would be
less costly to SSA, it would allow the current work authorization
problem to continue until all current number holders either
voluntarily replace their cards or stop working.  In addition, since
this alternative would not require those seeking jobs to have the
enhanced card, there may be an incentive for those seeking illegal
employment to avoid obtaining the new cards. 


      USING STATE DRIVERS'
      LICENSES AS AN ALTERNATIVE
      TO THE SOCIAL SECURITY CARD
---------------------------------------------------------- Letter :5.4

Another alternative to reissuing the Social Security card would be to
enhance state drivers' licenses so that they could be used to verify
workers' employment eligibility.  This approach could save
significant SSA resources, and could make the reissuance of an
enhanced Social Security card unnecessary.  States already issue to
residents drivers' licenses and state identification cards, which are
renewed every few years.  According to the American Association of
Motor Vehicle Administrators (AAMVA), an organization that helps
establish uniform licensing standards and practices for state Motor
Vehicle Administrations (MVA), most people already have drivers'
licenses or state identification cards.  All licenses include the
individual's picture, have various security features, and are already
widely accepted as identification documents.\17 Currently, 40 states
use digital pictures as a security feature on their licenses.  This
digital technology allows an individual's image to be viewed
electronically from a database in order to help ensure the proper
identification of an individual whose license has been lost or
stolen. 

This alternative, however, would impose a significant burden on state
MVAs, because they would have to review original documents to prove
an individual's citizenship or alien status and indicate their status
on drivers' licenses.  States would have the same difficulty SSA
would have in securing original documentation from older and
foreign-born individuals to support their claim of citizenship and
work eligibility in order to certify their work status.  In addition,
state MVA workloads would increase because individuals who do not
currently have a license or identification card may need one for work
purposes. 

While AAMVA believes that states would strongly oppose this
alternative because of the additional burden it would place on their
already limited resources,\18 recent legislation provides strong
incentives for states to include Social Security numbers on drivers'
licenses.  Doing so would likely help eliminate some of the burden on
state MVAs because SSA may be able to provide citizenship information
to the states for up to 87 million number holders whose work
eligibility status SSA has already established.  While this
alternative would address the worker eligibility verification aspect
of the mandate, it would do little to increase public confidence in
the Social Security system, since no enhanced Social Security card
issuance is involved. 


--------------------
\17 According to the AAMVA, in certain very limited circumstances, a
license may be issued without a picture.  This could occur if an
individual is out of the country for an extended period or if there
is a religious objection to putting their picture on the license. 

\18 To the extent a legislative requirement for states to determine
citizenship or alien status imposed additional costs on them, it
could be subject to the Unfunded Mandates Reform Act of 1995.  This
law, in effect, makes it more difficult to enact legislation imposing
unreimbursed costs on states. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

SSA's estimate of the cost for issuing new Social Security cards
meets the literal interpretation of the mandate, but alternatives
exist to the high costs of replacing every card.  SSA estimates that
it would cost $3.9 to $9.2 billion for the new card, depending on
which of seven alternative technologies is chosen.  These costs are
so high because SSA was mandated to estimate the costs of reissuing a
new card to all 277 million number holders.  Moreover, most of the
costs, $3.6 billion to $3.9 billion, represent the personnel costs
for retaking applications, establishing work eligibility status, and
taking a picture or capturing a fingerprint, if applicable. 
Therefore, regardless of the material the new card is made from and
the technologies built in to increase its security, a complete
reissuance of cards is very expensive. 

Given the high estimated cost of issuing cards to all current number
holders, we believe that there are alternatives, such as using less
costly technology, limiting the universe of number holders who will
be required to have the new card, and extending the time period over
which the new card will be disseminated.  If the primary goal is to
control work authorization, there is little need for a new enhanced
card for those not seeking or changing jobs, particularly the very
young and very old.  Ultimately, the costs associated with meeting
the congressional goals of work eligibility verification and public
confidence in the Social Security system will be dependent on a
congressional decision as to the specific role of a new Social
Security card. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

SSA informed us that it would not provide formal comments on this
report.  Instead, it provided technical comments, which we have
included as appropriate.  CBO informed us that because it did not
have any objections to the information we presented, it would not be
providing formal comments. 


---------------------------------------------------------- Letter :7.1

Copies of this report are being sent to the Commissioner of SSA and
other parties interested in Social Security matters.  If you have any
further questions, please contact me on (202) 512-7215.  Other major
contributors were Roland H.  Miller III, Assistant Director; Jeff
Bernstein, Evaluator-in-Charge; and Jacquelyn Stewart, Senior
Evaluator. 

Cynthia M.  Fagnoni
Director, Income Security Issues


ILLEGAL IMMIGRATION REFORM AND
IMMIGRANT RESPONSIBILITY ACT OF
1996
=========================================================== Appendix I

   Figure I.1:  Public Law
   104-208, 110 Stat.  3009-719,
   September 30, 1996

   (See figure in printed
   edition.)


SCOPE AND METHODOLOGY
========================================================== Appendix II

The objectives of our work were to explain differences in CBO's and
SSA's estimates for replacing the Social Security card; evaluate
SSA's 1997 estimates of the cost of issuing a more secure Social
Security card, including the feasibility and cost implications of
charging user fees for a new card; and presenting additional card
issuance options.  To clarify the legislative intent of the mandate
with respect to the mandate's overall goals and the handling of user
fees, we reviewed the legislative history of the provision, the
congressional record, and members' public statements.  We also
discussed congressional interests and concerns with the congressional
staffs of congressmen who helped draft the mandate. 

To gain a general understanding of Social Security card issues, we
reviewed past reports by GAO and SSA's Office of Inspector General
(OIG) on Social Security number enumeration problems, Social Security
card fraud, and other issues related to issuing a new Social Security
card.  We also discussed fraudulent Social Security number and card
practices with cognizant SSA and OIG officials.  We visited SSA field
offices in Florida, New York, Maryland, and the District of Columbia
to interview staff to discuss basic enumeration and replacement card
practices, card fraud, and other enumeration problems.  We selected
these sites because of their mix of populations and use of the Social
Security number in their programs. 

To assess SSA and CBO estimates of the cost to issue a new Social
Security card, we identified and examined the assumptions on which
they based their estimates.  We reviewed SSA's methodology for
estimating the number of cards that would need to be issued.  In
addition, we reviewed SSA's methodology for estimating the costs,
both past and current, and overall resource requirements to issue a
new card.  We reviewed documents from SSA's cost accounting system,
which SSA used as a basis for estimating costs and workloads.  We
discussed the reasonableness of SSA's estimates of the time it takes
to perform certain functions--such as taking a picture, reviewing
citizenship status, and handling payments--with SSA headquarters and
field office staffs.  To determine SSA's ability to locate number
holders to issue new cards, we reviewed SSA's past experience in
locating number holders to send out Personal Earnings and Benefit
Estimate Statements.\19

We reviewed CBO's methodology and cost estimate and discussed it with
the responsible official. 

To assess card and equipment costs, we discussed the methodology and
basis for these costs with SSA's contractor, Datacard.  We discussed
card costs, types of card technology, and the use of security
features locally with the Maryland MVA and with Schlumberger Malco, a
large card manufacturer. 

To determine the feasibility and cost of imposing a user fee when
issuing a new card, we discussed Canada's recent experience in
charging user fees with SSA's OIG staff who had published a report on
the subject in 1997.  We reviewed SSA's methodology for estimating
the costs of user fees, both for past and current estimates.  Because
we disagreed with SSA's assumptions about imposing a user fee, we
discussed the intent of the mandate with congressional staff involved
in drafting the mandate. 

To determine alternatives to a complete reissuance of all 277 million
current Social Security cards, we contacted AAMVA to discuss using
state drivers' licenses as an alternative to issuing a new Social
Security card; the willingness of the state MVAs to undertake such a
task; and the status of state MVA use of security features, such as
digital pictures. 

We performed our work between June 1997 and May 1998 in accordance
with generally accepted government auditing standards.  Because SSA's
cost analysis system had been recently reviewed by independent
auditors, we did not assess the validity of its data. 


--------------------
\19 These statements show earnings that have been credited to the
individual's record, the number of quarters of coverage needed for
insured status, and an estimate of benefits. 


CURRENT LIST OF ACCEPTABLE
DOCUMENTS FOR EMPLOYMENT
ELIGIBILITY VERIFICATION
========================================================= Appendix III

              A                             B                             C
-----------------------------  ----------------------------  ----------------------------
Documents that establish both
identity and employment        Documents that establish      Documents that establish
eligibility                    identity                      employment eligibility
-----------------------------  ----------------------------  ----------------------------
U.S. passport (unexpired or    Driver's license or           U.S. Social Security card
expired)                       identification card issued    issued by SSA (other than a
                               by a state or outlying        card stating it is not valid
                               possession of the United      for employment)
                               States, provided it contains
                               a photograph or information
                               such as name, date of birth,
                               sex, height, eye color, and
                               address

Unexpired foreign passport,    Identification card issued    Certification of Birth
with form I-551 stamp          by federal, state, or local   Abroad issued by the
                               government agency or entity,  Department of State (form
                               provided it contains a        FS-545 or form DS-1350)
                               photograph or information
                               such as name, date of birth,
                               sex, height, eye color, and
                               address

Alien registration receipt     School identification card    Original or certified copy
card with photograph or        with a photograph             of a birth certificate
permanent resident card (INS                                 issued by a state, county,
form I-551)                                                  or municipal authority or
                                                             outlying possession of the
                                                             United States bearing an
                                                             official seal

Unexpired temporary resident   Voter's registration card     Native American tribal
card (INS form I-688)                                        document

Unexpired employment           U.S. military card or draft   U.S. citizen identification
authorization card (INS form   record                        card (INS form I-197)
I-688A)

Unexpired employment           Military dependent's          Identification card for use
authorization document issued  identification card           of resident citizen in the
by INS, which contains a                                     United States (INS form I-
photograph (INS form I-766)                                  179)

Unexpired employment           U.S. Coast Guard Merchant     Unexpired employment
authorization document issued  Mariner card                  authorization document
by INS, which contains a                                     issued by the INS (other
photograph (INS form I688B)                                  than those listed under A
                                                             list)

For aliens authorized to work  Native American tribal
for a specific employer,       document
unexpired foreign passport
with form I-94 containing an
endorsement of aliens'
nonimmigrant status

                               Drivers' license issued by a
                               Canadian government
                               authority

                               School record or report
                               card\a

                               Clinic, doctor, or hospital
                               record\a

                               Day-care or nursery school
                               record\a
-----------------------------------------------------------------------------------------
Note:  For employment eligibility verification purposes, one document
from list A or one each from list A and B are required. 

\a For persons under age 18 who are unable to present a document
listed above. 

Source:  INS, "List of Acceptable Employment Eligibility Verification
Documents for Form (I-9)," under interim rules, as of Sept.  30,
1997. 


BREAKDOWN OF SSA'S ESTIMATES OF
COST TO ISSUE ENHANCED SOCIAL
SECURITY CARDS
========================================================== Appendix IV

                                                                 Card, equipment, and technology costs              Processing costs
                                                            -----------------------------------------------  ------------------------------
                                                                                                                 Review
                                                                                                 Total card  applicatio  Pictures
                                                                                                        and          n,    and/or     Total     Total
                                           Cost to contact       Card  Personalizat   Equipment   equipment  citizenshi  biometri  processi       all
Card option                                 number holders      stock      ion cost        cost       costs    p status        cs  ng costs   costs\a
--------------------------------------  ------------------  ---------  ------------  ----------  ----------  ----------  --------  --------  --------
Option 1: plastic card                                $177      $33.2         $66.5          $0       $99.7      $3,621        $0     3,621    $3,898
Option 2: plastic card with picture                    177       38.8          77.5        62.4       178.7       3,621       277     3,898     4,254
Option 3: plastic card with secure bar                 177       33.2          66.5        75.4       175.1       3,621       277     3,898     4,250
 code
Option 4: plastic card with optical                    177    1,690.0       3,379.1        86.3     5,155.4       3,621       277     3,898     9,231
 storage
Option 5: plastic card with magnetic                   177       61.0         121.8         3.9       186.7       3,621         0     3,621     3,985
 stripe
Option 6: plastic card with magnetic                   177       63.7         127.4        66.3       257.4       3,621       277     3,898     4,333
 stripe and picture
Option 7: plastic card with processor,                 177    1,047.0       2,094.2        71.5     3,212.7       3,621       277     3,898     7,288
 magnetic stripe, and picture
-----------------------------------------------------------------------------------------------------------------------------------------------------
Note:  Dollars in millions. 

\a May not add due to rounding. 

Source:  SSA, Report to Congress on Options for Enhancing the Social
Security Card. 


SSA'S 1997 ESTIMATE OF COST AND
WORK YEARS FOR PROCESSING SOCIAL
SECURITY NUMBER APPLICATIONS
=========================================================== Appendix V

                                                                 Total cost    Total work
                       Minutes to     Unit cost     Number of            of      years to
                          process           per  applications    processing       process
                      application   application    (millions)    (millions)  applications
-------------------  ------------  ------------  ------------  ------------  ------------
Base-level                     27      $11.70\a           277        $3,241        59,928
 application
 processing using
 current process
Verifying U.S.                  5        2.00\b           190           380         7,612
 citizenship or
 work authorization
=========================================================================================
Total Social                           $13.07\c           277        $3,621        67,540
 Security number
 applications
 process
Obtaining picture             2.5        1.00\d           277           277         5,549
 or biometrics
 identifier
=========================================================================================
Total applications                       $14.07           277        $3,898        73,089
 process
-----------------------------------------------------------------------------------------
\a Includes (1) average personnel cost for field office, program
service center, and the Office of Disability and International
Operations--components directly involved in Social Security number
processing--and (2) indirect costs, such as rent, utilities, and data
transmission costs.  These totaled $.43 per minute. 

\b Average cost for field office staff citizenship/work authorization
activities at $.40 per minute. 

\c Average cost per card calculated by GAO.  This is less than adding
$11.70 and $2.00 because not all 277 million number holders would
need citizenship or work authorization established; 87 million are
already completed. 

\d Average cost for field office staff to take pictures or capture
fingerprints at $.40 per minute. 

Source:  SSA, Report to Congress on Options for Enhancing the Social
Security Card. 


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