SSA's Management Challenges: Strong Leadership Needed to Turn Plans Into
Timely, Meaningful Action (Testimony, 03/12/98, GAO/T-HEHS-98-113).
Pursuant to a congressional request, GAO discussed the Social Security
Administration's (SSA) progress in addressing its management challenges,
focusing on: (1) SSA's need to strengthen its research and policy
capacity in order to address the future solvency of the Social Security
Trust Funds; (2) SSA's management and oversight problems with its
Supplemental Security Income (SSI) program; (3) its disability programs;
and (4) its future workload demands.
GAO noted that: (1) SSA recognizes the challenges GAO has identified and
has taken or plans to take steps to address many of these problems; (2)
in 1997, for example, SSA conducted even more eligibility reviews of
disabled beneficiaries than it had planned; (3) also, after changes in
the childhood disability program were enacted, SSA rapidly reviewed the
cases of over 260,000 children receiving SSI benefits; (4) nevertheless,
the pace at which the agency is moving does not seem adequate to resolve
most of its challenges within a meaningful timeframe; (5) for example,
SSA's efforts to bolster its research, evaluation, and policy analysis
capabilities have a long lead time before useful products will be
available; (6) in the meantime, SSA will not be able to fully contribute
to the current debate on social security reform; (7) in addition, in
some areas, SSA's efforts have also been too limited; (8) its steps to
date, for example, to address deep-seated problems in its SSI program
have been piecemeal and have not addressed the root causes of the SSI
problems; and (9) given the long-standing nature of challenges SSA faces
and their far-reaching implications for current and future
beneficiaries, the new Commissioner will need to assert strong
leadership to spell out the expected changes and marshal the agency's
resources to translate SSA's plans into timely action.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-HEHS-98-113
TITLE: SSA's Management Challenges: Strong Leadership Needed to
Turn Plans Into Timely, Meaningful Action
DATE: 03/12/98
SUBJECT: Strategic planning
Federal agency reorganization
Eligibility determinations
Federal social security programs
Social security benefits
Trust funds
Internal controls
Disability benefits
General management reviews
IDENTIFIER: Old Age Survivors and Disability Insurance Program
Supplemental Security Income Program
Social Security Disability Insurance Program
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Cover
================================================================ COVER
Before the Subcommittee on Human Resources and the Subcommittee on
Social Security, Committee on Ways and Means, House of
Representatives
For Release on Delivery
Expected at 10:00 a.m.
Thursday, March 12, 1998
SSA'S MANAGEMENT CHALLENGES -
STRONG LEADERSHIP NEEDED TO TURN
PLANS INTO TIMELY, MEANINGFUL
ACTION
Statement of Jane L. Ross, Director
Income Security Issues
Health, Education, and Human Services Division
GAO/T-HEHS-98-113
GAO/HEHS-98-113T
(207028)
Abbreviations
=============================================================== ABBREV
ALJ - administrative law judge
CDR - continuing disability review
DDS - disability determination service
DI - Disabiltiy Insurance
IWS/LAN - intelligent workstation/local area network
OASI - Old Age and Survivors Insurance
SSA - Social Security Administration
SSI - Supplemental Security Income
SSA'S MANAGEMENT CHALLENGES:
STRONG LEADERSHIP NEEDED TO TURN
PLANS INTO TIMELY, MEANINGFUL
ACTION
============================================================ Chapter 0
Messrs. Chairmen and Members of the Subcommittees:
I am pleased to be here to discuss the challenges the Social Security
Administration (SSA) faces today. With 1997 expenditures of about
$400 billion-- constituting nearly one-fourth of the federal
budget--SSA's programs touch nearly every American family. When SSA
became an independent agency in March 1995, it gained a new measure
of control over its resources as well as the authority to deal with
its management challenges and to help guide the policy debate
regarding the future solvency of the Social Security Trust Funds.
These challenges are many, and their solutions are complex, in part
because they are closely linked to profound changes in our country.
The baby boom generation is nearing retirement age, people are living
longer, and technology and its applications are changing rapidly. At
the same time, the public is expecting better services from
government agencies even though resources are constrained.
Over the past few years, we have commented on the challenges facing
SSA several times: as it became an independent agency; after 1 year
of independence; and, most recently, while the agency was awaiting a
new commissioner.\1 We identified as SSA's greatest challenges its
need to strengthen its research and policy capacity in order to
address the solvency issue, address management and oversight problems
with its Supplemental Security Income (SSI) program, redesign its
disability programs and heighten their focus on work, and meet its
future workload demands. Now that SSA has been an independent agency
for nearly 3 years and has a new commissioner, you asked us to
discuss SSA's progress in addressing these challenges. The
information I am providing is based on our previous and ongoing work,
much of it performed for these two Subcommittees. (See the list of
related GAO products at the end of this statement.)
In summary, our work shows that SSA recognizes the challenges we have
identified and has taken or plans to take steps to address many of
these problems. In 1997, for example, SSA conducted even more
eligibility reviews of disabled beneficiaries than it had planned.
Also, after changes in the childhood disability program were enacted,
SSA rapidly reviewed the cases of over 260,000 children receiving SSI
benefits. Nevertheless, the pace at which the agency is moving does
not seem adequate to resolve most of its challenges within a
meaningful time frame. For example, SSA's efforts to bolster its
research, evaluation, and policy analysis capabilities have a long
lead time before useful products will be available. In the meantime,
SSA will not be able to fully contribute to the current debate on
Social Security reform. In addition, in some areas, SSA's efforts
have also been too limited. Its steps to date, for example, to
address deep-seated problems in its SSI program have been piecemeal
and have not addressed the root causes of the SSI problems. Given
the long-standing nature of the challenges SSA faces and their
far-reaching implications for current and future program
beneficiaries, the new Commissioner will need to assert strong
leadership to spell out the expected changes and marshal the agency's
resources to translate SSA's plans into timely action.
--------------------
\1 Social Security Administration: Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb. 20, 1997); Social Security
Administration: Effective Leadership Needed to Meet Daunting
Challenges (GAO/HEHS-96-196, Sept. 12, 1996); and Social Security
Administration: Leadership Challenges Accompany Transition to an
Independent Agency (GAO/HEHS-95-59, Feb. 15, 1995).
BACKGROUND
---------------------------------------------------------- Chapter 0:1
SSA administers three major federal programs. The Old Age and
Survivors Insurance (OASI) and the Disability Insurance (DI)
programs, together commonly known as "Social Security," provide
benefits to retired and disabled workers and their dependents and
survivors. Monthly cash benefits are financed through payroll taxes
paid by workers and their employers and self-employed people. The
third program, SSI, provides means-tested assistance to needy aged,
blind, or disabled people. SSI payments are financed from general
tax revenues. In 1997, 50 million beneficiaries--about one 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 system.
To administer these programs, SSA must perform certain essential
tasks: issue Social Security numbers to individuals; maintain
earnings records for individual workers by collecting wage reports
from employers, using these records to determine the amount of
benefits an applicant may receive; and process benefit claims for all
three programs. In addition, SSA must determine beneficiaries'
continuing eligibility, provide hearings and appeals for denied
applicants, and disseminate information about its programs.
The OASI and DI programs are facing significant financial problems as
a result of profound demographic changes. As a share of the total
U.S. population, the elderly population grew from 7 percent in 1940
to 13 percent in 1996; this share is expected to increase to 20
percent by 2050. As it ages, the baby boom generation will increase
the size of the elderly population. However, other demographic
trends are at least as important. Life expectancy has increased
continually since the 1930s, and further increases are expected.
Moreover, the fertility rate has declined from 3.6 children per woman
in 1960 to around 2 children per woman today and is expected to level
off at about 1.9 by 2020. Combined, increasing life expectancy and
falling fertility rates mean that fewer workers will be contributing
to Social Security for each aged, disabled, dependent, or surviving
beneficiary. While 3.3 workers support each Social Security
beneficiary today, only 2 workers are expected to be supporting each
beneficiary by 2030. In addition, as the population ages, the number
of disabled individuals is expected to rise. Beginning in 2012--14
years from now--Social Security's expenditures are expected to exceed
its tax income. By 2029, without corrective legislation, the trust
funds are expected to be depleted, leaving insufficient funds to pay
the current level of OASI and DI benefits.
These demographic changes will also affect SSA's workload and
approach to customer service. When the baby boom generation begins
to retire shortly after the turn of the century, the agency must look
for ways to cope efficiently with its increasing workloads without
adding substantial numbers of employees. In addition, SSA knows that
this new set of beneficiaries will likely prefer to be served
differently from those whom SSA has served in the past. While SSA
has traditionally delivered face-to-face service through its network
of field offices, the public has begun to conduct more and more
business by telephone. In the future, even more individuals may
prefer to do business by telephone or other electronic means, such as
the Internet. As a result, SSA must increasingly rely on the use of
new technology to meet its workload challenges and provide service in
the ways its new customers will expect. In addition, SSA currently
relies heavily on information technology to support its
administrative processes, and it has acknowledged that its goals for
improved operations outlined in its strategic plan are not achievable
unless the agency invests wisely in information technology.
Planning for the future is not new to SSA; SSA published its first
strategic plan in 1988 and then significantly revised it in 1991.
However, the Government Performance and Results Act of 1993 (the
Results Act) provides agencies with a new uniform framework with
which to develop their plans and monitor their progress. The agency
submitted its current strategic plan, the first required under the
Results Act, in 1997. The plan outlines the agency's strategic goals
and objectives for the next 5 years. As also required by the Results
Act, SSA has recently published its fiscal year 1999 performance
plan. This plan provides more detailed information on how the agency
intends to achieve its goals and the measures it will use to hold
itself accountable over the next year. The two documents together
chart SSA's future course.
SSA's strategic plan and its performance plan demonstrate that the
agency recognizes its most pressing problems. In addition, they
highlight the importance of leadership and recognize the need to
ensure that the agency changes at the pace necessary to meet the
goals it has set.
SOLVENCY DEBATE UNDERSCORES
NEED TO STRENGTHEN SSA'S
RESEARCH AND POLICY CAPACITY
---------------------------------------------------------- Chapter 0:2
The national debate on Social Security solvency has begun. The
Advisory Council on Social Security and others have advanced a range
of proposals to address the system's solvency. Some proposals
represent a significant departure from the current program. The
President has made Social Security reform a top priority, and the
Congress is beginning to discuss options. Given the magnitude of the
financial problems facing the system, the nature of the proposals for
change, and the growing interest in these topics across the country,
we can expect the debate over Social Security's financing and
structure to continue and intensify in the coming years. To
understand and debate the proposals, policymakers and the general
public need thoughtful and detailed analyses of their likely effect
on workers, beneficiaries, and the economy--as well as the impact of
their implementation on SSA and other government agencies. SSA is in
a unique position to inform policymakers and the public about the
long-term financing issues, yet we have reported that the agency has
not undertaken the range of research, evaluation, and policy analysis
needed to fully contribute to the debate.\2
In addition to the solvency debate, other issues call for enhanced
research, evaluation, and policy analysis. For example, from 1988 to
1996, SSA's disability programs grew significantly. The number of
beneficiaries receiving SSI increased by about 70 percent, while the
number of DI beneficiaries grew by about 49 percent. In addition,
beneficiaries are staying on the disability rolls longer. To better
manage these programs, policymakers need more information on the
causes of these changes, whether the programs are meeting their
objectives, and the impact of possible changes. By improving its
research and evaluation capacity, SSA also would be in a better
position to propose legislative changes.
In its current strategic plan, SSA committed itself to a new goal:
"to . . . conduct effective policy development, research, and
program evaluation." The agency is taking steps to strengthen its
capacity in these areas. It has increased its funding for external
research; plans to expand its ability to use modeling techniques to
predict the effects of proposed program changes; and, by the end of
this fiscal year, plans to have established a research consortium to
advise it on relevant research and policy activities. However, these
efforts have a long lead time before useful products will become
available. In the meantime, SSA will not be fully contributing to
the current debate on Social Security reform. In addition, a recent
report by a private consultant recommended that SSA substantially
increase the number of its research and evaluation staff and combine
the research and evaluation office with the policy analysis office.\3
To date, the agency has added only a fraction of the recommended
staff and does not have a long-range plan to add many more.\4
SSA's need to strengthen its research, evaluation, and policy
analysis capacity is not new; we and others have highlighted this
weakness for a number of years. We are concerned that the agency has
not seized the opportunity to build its capacity. Without an
adequate number of skilled staff and a vital, responsive research,
evaluation, and policy analysis agenda, the agency cannot fulfill its
current and future role as the nation's expert on Social Security
issues.
--------------------
\2 Social Security Administration: Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb. 20, 1997).
\3 Institute for Health and Aging, Strengthening Policy Development
Work Within the Social Security Administration: A Review of the
Mission, Resources and Capabilities in the Office of Research,
Evaluation, and Statistics (San Francisco, Calif.: University of
California, San Francisco, Dec. 1997).
\4 The report recommended adding 50 staff to SSA's research and
evaluation office, and SSA's Advisory Board supports this
recommendation. SSA officials told us they hired 9 researchers in
fiscal year 1997 and have approval to hire 5 more in fiscal year
1998. However, even as they hire new staff, 7 key experienced staff
recently retired and the office will likely lose more. In addition,
SSA's policy office is permitted to have as many as 18 staff, yet the
office currently has only 14 staff and knows of no plans for future
increases.
LONG-STANDING SSI PROBLEMS
REQUIRE COMPREHENSIVE PLAN TO
ENSURE DILIGENT MANAGEMENT AND
OVERSIGHT
---------------------------------------------------------- Chapter 0:3
Early last year, after several years of reporting on specific
problems with the SSI program, we designated SSI as a high-risk
program because of its susceptibility to waste, fraud, and abuse and
insufficient management oversight of the program.\5 Since the program
began in 1974, it has grown significantly both in size and
complexity. Moreover, SSI poses a special challenge for SSA because,
unlike OASI and DI, it is a means-tested program; thus, SSA must
collect and verify information on income, resources, and living
arrangements to determine initial and continuing eligibility for the
program.
Our previous and ongoing reviews have highlighted long-standing
problem areas. SSA does not pay enough attention to verifying
eligibility information in a timely way, has failed to recover
millions of dollars in SSI overpayments, has not installed adequate
internal controls, and has failed to curb SSI program fraud and
abuse. The program's complex policies and SSA's insufficient
management attention exacerbate these problems.\6 We have also
criticized SSA for not initiating legislative proposals to improve
program operations. Together, these deficiencies have eroded program
integrity and contributed to significant annual increases in SSI
overpayments to recipients. During 1997, current and former
recipients owed SSA more than $2.6 billion, including $1 billion in
newly detected overpayments for the year. On the basis of the
agency's prior experience, SSA is likely to collect less than 15
percent of the outstanding debt in a given year.
SSA has acknowledged the need to attack this problem aggressively,
and the agency is taking steps to address some of the weaknesses in
the SSI program. For example, it is developing a new automated
system to track and recover SSI overpayments and is expanding its use
of on-line access to state data to obtain real-time applicant and
recipient financial information. To address the overpayment problem,
the fiscal year 1999 budget requests $50 million to complete
redeterminations for recipients who have been designated by SSA as
having a high probability of having been overpaid.\7 Finally, SSA has
recently taken a stronger role in addressing fraud and abuse. For
example, it has initiated several pilot programs aimed at detecting
fraud and abuse earlier in the SSI application process.
While these efforts may help correct certain program weaknesses, we
believe the problems with the SSI program are so fundamental that
they require a broad program review to identify and address their
root causes. This comprehensive strategy is not evident in SSA's
current approach to the program. The agency's steps, in the absence
such a broad review, will not be adequate to change the agency
culture and produce the needed program overhaul. To help remove the
SSI program from our high-risk list, SSA must address the root causes
and ensure that the program receives adequate long-term management
attention. In its new annual performance plan, SSA has made a
commitment to complete a comprehensive action plan to improve the
management of the SSI program in fiscal year 1998. This step links
to SSA's strategic goal of making "SSA programs the best in the
business, with zero tolerance for fraud and abuse." To be effective,
the SSI action plan must include a carefully designed set of measures
to evaluate progress and hold the agency accountable.
--------------------
\5 See High Risk Series: An Overview (GAO/HR-97-1, Feb. 1997) and
our ongoing work.
\6 Supplemental Security Income: Long-Standing Problems Put Program
at Risk for Fraud, Waste, and Abuse (GAO/T-HEHS-97-88, Mar. 4,
1997).
\7 These redeterminations would be for nondisability factors of SSI
eligibility.
MORE WORK NEEDED TO IMPLEMENT
NEW DEFINITION OF CHILDHOOD
DISABILITY ACCURATELY AND
CONSISTENTLY
---------------------------------------------------------- Chapter 0:4
The 1996 welfare reform legislation changed the definition of
childhood disability for the SSI program, and in February 1997, SSA
issued regulations to implement the legislative changes. Under the
new regulations, SSA reviewed the cases of 263,000 children and
conducted an extensive review of the outcome of this process.\8 The
regulations represent a stricter standard of severity than existed in
previous law. Under this standard, a child's impairment generally
must result in marked limitations in two areas of functioning or an
extreme limitation in one area, such as social functioning, cognition
and communication, personal functioning, and motor functioning.
Previously, a child was eligible if his or her impairment resulted in
one marked and one moderate limitation or three moderate limitations.
In supporting the "two marked or one extreme" severity standard in
its regulatory analysis, SSA concluded that the Congress meant to
establish a stricter standard of severity than had previously
existed. Nevertheless, some children whose impairments are at the
prior, less severe threshold have been awarded benefits because SSA
has not updated some of its medical listings, which are set below the
two marked or one extreme functional limitation level. SSA has not
quantified how many children are in this situation and may have
difficulty doing so because its listing codes are not always
reliable. Some of these less severe listings, however, are for
prevalent impairments, including mental retardation, cerebral palsy,
epilepsy, and asthma. SSA is aware that these listings are below the
two marked or one extreme level, but has not established a schedule
for updating its listings. This update is necessary to ensure that
all children are awarded benefits on the basis of a uniform standard
of severity.
Data on the accuracy of decisions on childhood cases raise other
concerns. Although nationally the accuracy rate for decisions on new
childhood cases and redeterminations exceeds 90.6 percent, which SSA
considers its minimum standard for accuracy, many states fall below
the standard. SSA is taking steps to improve decisional accuracy by
training its adjudicators and quality assurance staff in areas SSA
has found to be problematic. Moreover, it will be reviewing a larger
sample of new childhood claims to identify problems unique to these
cases so that it can issue policy clarifications and additional
guidance as necessary. Under our mandate to report on the
implementation of the legislation, we will continue to monitor the
accuracy and consistency of decisions on childhood cases.
--------------------
\8 For more information, see SSA, Social Security: Review of SSA's
Implementation of the New SSI Childhood Disability Legislation
(Baltimore, Md.: SSA, 1997).
DISABILITY PROGRAMS REQUIRE
PROCESS OVERHAUL AND HEIGHTENED
FOCUS ON WORK
---------------------------------------------------------- Chapter 0:5
SSA's disability programs face several challenges. The agency's
disability claims process is time-consuming and expensive, but the
agency's efforts to redesign the process are disappointing.
Moreover, SSA's disability caseloads for its DI and SSI programs have
grown by nearly 65 percent in the past decade;\9 SSA has not
developed a plan that sufficiently addresses actions needed to help
beneficiaries fully develop their productive capacities, and few
people have left the rolls to return to work. Despite these systemic
problems, however, SSA recently has been making progress in reducing
its continuing disability review (CDR) backlogs.
--------------------
\9 After rising significantly for a number of years, pending initial
disability claims recently dropped 10 percent--from 442,000 in fiscal
year 1996 to 398,000 in fiscal year 1997. Many experts attribute
much of this decline to the strength of the economy and low
unemployment rates.
DISABILITY REDESIGN
-------------------------------------------------------- Chapter 0:5.1
Making disability decisions is one of SSA's most demanding and
administratively complex tasks, and SSA has struggled to keep pace
with applications for disability benefits and appeals of disability
decisions. Disability claimants 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 redesign the way it makes disability decisions.
The agency developed an ambitious plan for change that included
testing and implementing 26 key initiatives over a period of 6 years.
In December 1996, we reported that SSA was already one-third of the
way through the 6-year period but had made little progress with
testing and implementing the initiative. We identified a number of
problems: SSA had delayed testing and project development, expanded
the scope and complexity of certain initiatives, changed executive
leadership, and risked losing stakeholder support. In that report,
we recommended that SSA (1) focus on the initiatives most likely to
reduce claims-processing time and administrative costs and (2)
combine those initiatives in an integrated process and test them at a
few sites before full-scale implementation. Responding to these
concerns and those of other stakeholders, SSA revised its redesign
plan in February 1997. It developed a scaled-down plan that focused
on testing and implementing eight key initiatives. However, the new
strategy retained plans to first test certain initiatives
individually at a large number of sites nationwide.
On the basis of our ongoing work, we have determined that the success
of SSA's scaled-down plan may also be threatened. SSA continues to
experience delays in testing or implementing initiatives--anywhere
from 2 months to 3 years. More importantly though, test results for
the first two initiatives are disappointing.\10 As tested, they will
not result in dramatic improvements in efficiency and quality of
claims processing. In addition, SSA has encountered performance
problems with the software it considers vital to support the redesign
effort, and the pilot tests have been delayed. On a more positive
note, SSA is also conducting a test that combines a number of the
initiatives into an integrated process, and the early results are
more promising, according to SSA officials.\11
It is too early to tell whether these positive results will continue
and be significant enough to lead to the needed improvement in the
claims process. If the results of these efforts do not demonstrate
significant improvements, SSA will have some hard choices to make
about whether and how to proceed with its current redesign plan.
Even before receiving the disappointing test results, SSA had reduced
or deferred its projected 5-year savings from disability redesign by
more than 25 percent, or more than 4,500 work-years.\12
Finally, as we have reported, one redesign initiative--process
unification--is the linchpin of SSA's efforts to improve the
integrity and efficiency of the disability claims process.\13 This
initiative focuses on reducing the inconsistency of decisions made by
examiners at the state disability determination services (DDS), who
make initial decisions, and by administrative law judges (ALJ), who
decide appeals. We have supported SSA's efforts to improve
consistency and have also recommended that SSA develop a performance
goal to measure and report its progress in doing so. While SSA does
not believe such a goal is appropriate and has not included one in
its new performance plan, the agency has taken some steps toward
reducing the inconsistency between decisions. The agency has (1)
provided initial common training to decisionmakers at all levels and
developed plans for follow-up training, (2) issued several rulings to
clarify and reinforce current policy, and (3) initiated a pilot
effort in 10 states to study the effects of providing more detailed
explanations of the reasons for decisions at the initial level. By
improving these explanations, SSA hopes to give ALJs a better
understanding of the basis for the initial decision and to lay the
foundation for greater consistency. Following the training and the
new rulings, SSA officials told us they have seen some decline in the
allowance rates at the appellate level.
--------------------
\10 The test of the single decisionmaker initiative was completed in
November 1996. The test of the adjudication officer is still
ongoing, but SSA officials have evaluated results through August
1997.
\11 The full process model combines five different initiatives in an
integrated test: (1) the single decisionmaker model, (2) the
predecision interview, (3) the elimination of reconsideration, (4)
the adjudication officer, and (5) the elimination of the Appeals
Council review.
\12 These data are based on SSA's work-year savings estimates for
fiscal years 1998 through 2002, as presented in the President's
fiscal years 1997 and 1998 budgets.
\13 Social Security Disability: SSA Must Hold Itself Accountable for
Continued Improvement in Decision-making (GAO/HEHS-97-102, Aug. 12,
1997).
RETURN-TO-WORK EFFORTS
-------------------------------------------------------- Chapter 0:5.2
Today, more than ever, people with disabilities have new
opportunities to return to work, yet very few DI and SSI
beneficiaries do so. New technologies and medical advances have
provided people with disabilities with greater independence and
ability to function. Also, the Americans With Disabilities Act
supports the premise that people with disabilities can work and have
the right to work, and the Social Security Act calls for
rehabilitating benefit applicants to the maximum extent possible.
Yet not more than 1 in 500 DI beneficiaries, and few SSI
beneficiaries, have left the rolls to return to work.
Over the past few years, we have issued a series of reports
recommending that SSA place a higher priority on helping DI and SSI
beneficiaries maximize their work potential. The lengthy disability
determination process encourages applicants to emphasize their
inabilities, not their abilities. Beneficiaries receive little
encouragement to use rehabilitation services. Also, work incentives
may not make it financially advantageous for people to work to their
full capacity.
In its recent strategic plan, SSA pledged to pursue the objective of
helping people return to work. As a first step, the agency's new
"ticket to independence" proposal would permit SSI and DI
beneficiaries to use a "ticket" (similar to a voucher) to obtain
vocational rehabilitation or employment services from a public or
private vendor of their choice. SSA believes that this new access to
employment services and SSA's long-range disability research agenda
place a higher priority than in the past on return to work. However,
we believe that, to succeed, SSA must develop a comprehensive
return-to-work strategy integrating, as appropriate, earlier
intervention and provision of return-to-work assistance as well as
changes in the structure of cash and health benefits.\14
--------------------
\14 Social Security: Disability Programs Lag in Promoting Return to
Work (GAO/HEHS-97-46, Mar. 17, 1997).
CONTINUING DISABILITY
REVIEWS
-------------------------------------------------------- Chapter 0:5.3
CDRs are required by law for all DI and some SSI beneficiaries to
help ensure that only those eligible continue receiving benefits. In
the past, however, SSA has not conducted the number of reviews
required by law. We have reported on several occasions that SSA's
failure to consistently complete these CDRs has led to hundreds of
millions of dollars in unnecessary costs each year and has undermined
program integrity.\15
For almost a decade, budget and staff reductions and large increases
in initial claims have hampered SSA's efforts to conduct these
reviews. Consequently, more than 4 million beneficiaries were due or
overdue for CDRs by 1996. As a result of congressional attention to
this problem, SSA developed a plan to conduct 8.2 million CDRs
between 1996 and 2002, and the Congress authorized funding of about
$4.1 billion over 7 years for this purpose. SSA is currently
revising this plan to incorporate new CDR requirements included in
the August 1996 welfare reform legislation.
In 1997, we found that SSA's experience in conducting CDRs was
encouraging. In that year, SSA conducted 690,000 CDRs, exceeding its
goal of 603,000. In addition, the agency increased its goal to
1,245,000 for 1998 and 1,637,000 for 1999. The more quickly SSA can
remove those who are no longer eligible from the rolls, the more it
can save in program costs. However, key issues, such as deciding
which beneficiaries should undergo a full medical review--a lengthy
and costly process--are still unresolved but will determine how
expeditiously and at what cost SSA can become current on its CDR
caseload. Finally, we have noted that many beneficiaries whose
health will not improve could nevertheless have or regain work
capacity. Therefore, we believe SSA should consider how the CDR
point of contact with beneficiaries could be integrated with
return-to-work initiatives.
--------------------
\15 Social Security Disability: Alternatives Would Boost
Cost-Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2,
Oct. 16, 1996); Social Security Disability: Improvements Needed in
Continuing Disability Review Process (GAO/HEHS-97-1, Oct. 16, 1996);
and Social Security: New Continuing Disability Review Process Could
Be Enhanced (GAO/HEHS-94-118, June 27, 1994).
SSA MUST MEET FUTURE WORKLOAD
DEMANDS WITH NEW TECHNOLOGY, A
FLEXIBLE SERVICE DELIVERY
STRUCTURE, AND A TRAINED
WORKFORCE
---------------------------------------------------------- Chapter 0:6
In the near future, SSA will be challenged to serve increasing
numbers of customers with fewer staff.\16 The agency is counting on
its effective use of technology to cope with these changes, although
it is currently facing challenges with the installation of its
crucial new computer network. In addition, SSA must accommodate the
increases in workload and changing customer preferences with a
flexible service delivery structure. Difficult choices about the
future service delivery structure lie ahead. The agency is, however,
taking positive steps to better prepare for the retirement of large
numbers of its management staff and is taking advantage of new
technologies to provide more accessible training to its staff around
the country.
--------------------
\16 As part of the governmentwide staff reduction plan, SSA has
committed to reducing its staffing levels from approximately 65,000
to 62,000. SSA has planned a staff decrease of 1,700 for fiscal year
1999.
EFFECTIVE USE OF TECHNOLOGY
IS KEY TO COPING WITH
WORKLOAD AND SERVICE
DELIVERY DEMANDS
-------------------------------------------------------- Chapter 0:6.1
To handle increasing workloads and improve public service, SSA is in
the midst of a multiyear, multibillion-dollar systems modernization
effort. The cornerstone of this modernization effort is the
intelligent workstation/local area network (IWS/LAN) initiative. SSA
plans to install up to 56,500 workstations and 1,742 local area
networks in SSA field offices and state DDS offices throughout the
country. The initiative is expected to improve productivity and
customer service in field offices and teleservice centers and lay the
needed foundation for further technology enhancements. SSA is
depending on the success of this initiative and has stated that it
cannot achieve its strategic goals unless it invests wisely in this
infrastructure. However, the size and complexity of the IWS/LAN
initiative pose significant challenges for SSA. We are monitoring
SSA's progress as it installs its IWS/LAN and have some concerns,
which we will present in a separate testimony today.\17
As technological change opens doors to new ways of providing service,
SSA faces difficult choices about how to provide cost-effective,
world-class service to its customers. While SSA has traditionally
delivered a considerable amount of its service through face-to-face
contact in its network of field offices, other types of service are
becoming more popular. The demand for SSA's 800 number telephone
service continues to grow, and SSA's surveys show that callers prefer
to use the telephone for more of their business. While these and
other factors may affect how SSA delivers its services to the public,
SSA has not developed plans to reassess its existing service delivery
structure, including its network of field offices and teleservice
centers. Over time, SSA will likely need to restructure how it does
business to take advantage of new technologies, cope with staff
reductions, and cost-effectively meet changing customer preferences.
--------------------
\17 For more details on these challenges, see Social Security
Administration: Information Technology Challenges Facing the
Commissioner (GAO/T-AIMD-98-109, Mar. 12, 1998).
SSA HAS BEGUN TO REVITALIZE
ITS TRAINING AND DEVELOPMENT
PROGRAMS
-------------------------------------------------------- Chapter 0:6.2
One of the major challenges facing SSA in the future is its aging
workforce. More than 57 percent of SSA employees are over the age of
45 and, therefore, approaching retirement. In addition, many of
those retiring will be managers; over the next 5 years, 40 percent of
SSA's staff at the middle management level and above will be eligible
for retirement. In the past, we have criticized SSA for not
adequately preparing for the loss of its experienced workforce.
However, SSA has recently begun to better prepare for this retirement
attrition. Officials told us the agency is in the process of
conducting a detailed analysis of retirement patterns in order to
predict when staff will retire and which offices or geographic areas
will be most affected. The study is showing that SSA can expect a
dramatic wave of retirements over the next 10 years. To help train
staff to replace its retiring management corps, SSA plans to conduct
a series of management development programs. It has formally
announced plans for a Senior Executive Service Career Development
Program and expects to complete selections in early spring of this
year. SSA also plans to conduct a mid-level management development
program and a management intern program.
SSA has also begun to revitalize its training programs to enhance the
skills of current staff and to prepare them for future challenges and
changes in their job expectations. For its current managers, SSA is
developing a series of seminars designed to deliver a common message
concerning leadership and change management related to the goals and
objectives described in its strategic plan. SSA expects to have
trained 100 percent of its DDS and SSA managers by the end of fiscal
year 1999. SSA is also taking advantage of technology advances to
provide training. Employees will be able to access a variety of
training tools via the new intelligent workstations provided in SSA's
technology roll-out. In addition, SSA is greatly enhancing its
capacity to provide interactive video training/interactive distance
learning throughout its entire service delivery structure. By the
end of the summer of this year, SSA hopes to have deployed enough
video training sites that 89 percent of its staff will be within 20
minutes of a site. This offers SSA the advantage of providing
training to a wide audience at once, ensuring that most of its staff
throughout the country receive the same message.
SSA believes that its workforce is the single most important element
contributing to its success. Given the large number of predicted
pending retirements and the certain future technological changes, it
is especially important that SSA complete its retirement study,
disseminate the detailed results, and sustain its momentum in ongoing
employee training and career development.
RECENT INDEPENDENT AUDIT
FINDINGS RAISE CONCERNS
---------------------------------------------------------- Chapter 0:7
A recent audit by an independent accounting firm found that SSA's
fiscal year 1997 financial statements were fairly presented, in all
material respects. However, the audit did identify significant
deficiencies in the design and operation of information systems'
internal controls that raise some concern for the future.\18 The
audit identified vulnerabilities that expose SSA and its systems to
both internal and external intrusion; subject sensitive information
such as Social Security numbers and benefit-related data to
unauthorized access, modification, and disclosure; and increase the
risk of fraud. For example, the audit found that SSA's agencywide
security program does not provide the comprehensive protection needed
to safeguard the sensitive information its systems maintain. The
audit also found that, because of deficiencies in the agency's
contingency plans, SSA's systems are vulnerable to disruptions in the
event of a long-term emergency. These deficiencies could
significantly affect SSA's ability to continue critical operations
without interruption in the event of a long-term emergency. The
audit also reported that SSA's controls do not adequately protect the
integrity of its systems' applications. These weaknesses expose
SSA's application systems to unauthorized or undetected changes that
could affect the integrity of processed information. Finally, the
audit noted that SSA continues to have insufficient separation of
duties or compensating controls to reduce, to an acceptable level,
the risk of undetected errors, irregularities, or both. When SSA
streamlined its business processes, the agency gave workers
increasing control over information processing without imposing
effective mitigating controls over their activities. As a result,
SSA has limited its ability to prevent errors, fraud, waste, and
abuse in a timely manner.
While the audit did not specifically disclose instances in which
these vulnerabilities led to a misuse of sensitive information, SSA's
Office of the Inspector General has reported on similar instances,
such as ones in which access to confidential information was abused
by SSA employees. The independent audit highlighted a series of
corrective actions SSA should take to enhance its systems controls
and security, and we support these recommendations. The Commissioner
of SSA has stated that agency officials are working with the auditors
to resolve any differences. He further stated that the agency will
make every effort to take the steps necessary to ensure that
information in its systems is protected and that SSA is able to
continue operations in a time of emergency.
--------------------
\18 Although the audit identified these deficiencies, overall, it
found that management's assertion that SSA's systems of accounting
and internal controls were in compliance with the internal control
objectives outlined in Office of Management and Budget Bulletin No.
93-06 was also fairly stated. This opinion on management's assertion
was based on whether internal controls existed that would prevent or
detect errors and irregularities in amounts large enough to be
material to the financial statements.
OBSERVATIONS
---------------------------------------------------------- Chapter 0:8
Overall, our work suggests that SSA recognizes each of the challenges
we have identified and, in almost every case, has taken some action
to address them. However, in some cases the steps have been too
fragmented, and the results have often been slow in coming and
disappointing. Yet, we recognize the issues are complex, and
solutions are not easy. To effect meaningful change, SSA must
address the root causes of its problems and ensure sustained
management oversight. The new Commissioner will need to effectively
lead the agency to move with a sense of urgency to address its
long-standing problems.
-------------------------------------------------------- Chapter 0:8.1
Messrs. Chairmen, this concludes my prepared statement. I would be
pleased to answer any questions you or Members of the Subcommittees
may have.
RELATED GAO PRODUCTS
Social Security: Restoring Long-Term Solvency Will Require Difficult
Choices (GAO/T-HEHS-98-95, Feb. 10, 1998).
Social Security Disability: SSA Is Making Progress Toward
Eliminating Continuing Disability Review Backlogs (GAO/T-HEHS-97-222,
Sept. 25, 1997).
Social Security Disability: SSA Must Hold Itself Accountable for
Continued Improvement in Decision-making (GAO/HEHS-97-102, Aug. 12,
1997).
Social Security Disability: Improving Return-to-Work Outcomes
Important, but Trade-Offs and Challenges Exist (GAO/T-HEHS-97-186,
July 23, 1997).
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).
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).
*** End of document. ***