Social Security Administration: Effective Leadership Needed to Meet
Daunting Challenges (Testimony, 07/25/96, GAO/T-OCG-96-7).
GAO discussed the Social Security Administration's (SSA) efforts to
address future policy changes and program issues. GAO noted that: (1)
SSA is strengthening its strategic management process, developing
performance measures, measuring customer satisfaction, and producing
accurate financial statements; (2) SSA has not performed the research,
analysis, and evaluation needed to inform the public on the future of
social security financing; (3) by 2015, 50 million people will be
receiving social security benefits and 2.6 workers will be paying taxes
into the social security system; (4) the aging of the baby boom
generation, coupled with increasing life expectancy and the declining
ratio of contributing workers to beneficiaries, will place unprecedented
strains on the social security system; (5) SSA disability caseloads have
grown by 70 percent in the last decade; (6) SSA has attempted to
redesign its disability claims process, but it is unable to determine
whether specific process changes will achieve the desired results; (7)
SSA has not sufficiently promoted return-to-work initiatives in the
disability program; (8) SSA faces significant challenges in modernizing
its information systems, managing increasing workloads with a reduced
workforce, and delivering its services; and (9) SSA needs effective
leadership to inform the national debate on social security financing
issues, complete the redesign of the disability claims process, promote
return to work programs, enhance program integrity, and make
technological enhancements.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-OCG-96-7
TITLE: Social Security Administration: Effective Leadership Needed
to Meet Daunting Challenges
DATE: 07/25/96
SUBJECT: Disability benefits
Social security benefits
Federal social security programs
Claims processing
Reductions in force
Federal agency reorganization
Financial management
Human resources utilization
Systems conversions
Customer service
IDENTIFIER: Social Security Program
Supplemental Security Income Program
Old Age Survivors and Disability Insurance Program
National Performance Review
SSA Automation Investment Fund
OASDI
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Cover
================================================================ COVER
Before the Subcommittee on Social Security, Committee on Ways and
Means, House of Representatives
For Release on Delivery
Expected at 10:00 a.m.,
Thursday, July 25, 1996
SOCIAL SECURITY ADMINISTRATION -
EFFECTIVE LEADERSHIP NEEDED TO
MEET DAUNTING CHALLENGES
Statement of Charles A. Bowsher
Comptroller General of the United States
GAO/T-OCG-96-7
GAO/OCG-96-7t
(105935)
Abbreviations
=============================================================== ABBREV
CFO - Chief Financial Officers Act of 1990
DCM - Disability Claim Manager
DI - Disability Insurance
GMRA - Government Management Reform Act of 1994
GPRA - Government Performance and Results Act of 1993
HHS - Department of Health and Human Services
NPR - National Performance Review
OASI - Old Age and Survivors Insurance
PASS - Plan for Achieving Self-Support
SSA - Social Security Administration
SSI - Supplemental Security Income
SOCIAL SECURITY ADMINISTRATION:
EFFECTIVE LEADERSHIP NEEDED TO
MEET DAUNTING CHALLENGES
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to provide our assessment of the Social
Security Administration's (SSA) efforts to address policy and program
issues and to prepare for managing the challenges it faces in the
21st century. With a staff of 64,000, SSA administers the nation's
largest federal program--Social Security--as well as the largest cash
welfare program, Supplemental Security Income (SSI). SSA's
expenditures totaled $363 billion in fiscal year 1995, nearly
one-fourth of this nation's $1.5 trillion federal budget.
SSA's programs touch the lives of nearly every individual in this
country. Social Security\1 provides benefits to retired and disabled
workers and their dependents and survivors; SSI provides assistance
to the needy aged, blind, and disabled. In 1995, 50 million
beneficiaries--nearly one out of every five individuals in this
country--received benefits from SSA each month. In addition to
administering benefits, SSA records the wages of nearly every U.S.
worker and issued almost 17 million Social Security cards in 1995.
Moreover, SSA maintains a large and visible presence in communities
nationwide. In 1995 alone, an estimated 24 million people visited
SSA's 1,300 field offices, and SSA received 62 million calls on the
agency's nationwide toll-free 800 number.
SSA recognizes that the American public depends on SSA to quickly and
accurately provide benefits, properly record workers' earnings, and
effectively safeguard benefit programs from fraud and abuse. Any
failure to do so seriously undermines the public's confidence in
government and its ability to efficiently and cost-effectively
administer programs and protect taxpayer dollars. Yet as SSA
acknowledges, public confidence in its programs is low and has been
low for some time. Although much of this lack of confidence stems
from concerns about the future solvency of the Social Security
system, public confidence is also eroded by reports of fraud and
abuse. Media accounts of prisoners erroneously receiving disability
checks and allegations that immigrants and children are feigning
mental illness to obtain SSI undermine the public's trust in SSA and
in the federal government.
To bolster SSA's ability to address critical policy issues and
correct programmatic weaknesses, the Congress enacted legislation
making SSA independent of the Department of Health and Human Services
(HHS) as of March 31, 1995. In establishing SSA's independence, the
Congress recognized the importance of strong and stable leadership
for the agency. As we noted in our February 1995 report on SSA's
transition to independence,\2 independence heightens the importance
of SSA's playing a strong leadership role in addressing long-standing
problems and preparing for future challenges.
In that report, we highlighted the challenges that SSA would face as
an independent agency: the shortfall in funds to pay future Social
Security benefits, growing and changing disability caseloads, and
public concerns about SSI program growth. Today, I will describe
these policy and program challenges and assess SSA's progress in
addressing them and in preparing to manage its future challenges. I
will also assess what additional actions are needed to help SSA meet
these challenges. These observations are drawn from completed and
ongoing GAO work on Social Security issues. We also spoke with SSA
officials, selected officials of the Social Security Advisory Council
and Advisory Board, and other experts to determine SSA's progress so
far, what problems remain, and what else is needed to make SSA a
premier agency.
In summary, SSA is ahead of many federal agencies in managing for
results and improving financial accountability. This gives the
agency a sound base from which to manage its current and future
challenges, which are significant. SSA, however, has not performed
the research, analysis, and evaluation needed to inform the public
debate on the future financing of Social Security--the most critical
long-term issue facing SSA. The aging of the baby boom generation,
coupled with increasing life expectancy and the declining ratio of
contributing workers to beneficiaries, will place unprecedented
strains on the Social Security program in the next century. Unless
the Congress acts, the Social Security trust funds are expected to be
exhausted by 2029. More than a year after gaining independence, SSA
is just now strengthening its research, policy analysis, and
evaluation capabilities to more actively participate in the financing
debate.
Also challenging SSA have been disability caseloads that have grown
by nearly 70 percent in the past decade. To its credit, SSA has
undertaken an important effort to fundamentally redesign its
inefficient disability claims process. However, while SSA has begun
many of its planned initiatives, none is far enough along for the
agency to know whether specific proposed process changes will achieve
the desired results. Moreover, SSA has not sufficiently promoted
return-to-work efforts in the administration and design of its
disability programs. If even an additional 1 percent of the 6.6
million working-age people receiving disability benefits were to
leave SSA's disability rolls by returning to work, lifetime cash
benefits would be reduced by an estimated $3 billion. In addition,
SSA has not done enough to combat fraud and abuse in the SSI program
and address program weaknesses.
SSA faces increasing responsibilities in the future and must manage
its growing workloads with reduced resources. SSA estimates that it
would need over 76,000 workers to handle its growing workloads if it
conducts business as usual. Instead, SSA expects to do this work
with about 62,000 workers--fewer than it has today. To successfully
meet its workload challenges, SSA knows that it must increasingly
rely on technology and build a workforce with the flexibility and
skills to operate in a changing environment. SSA faces significant
challenges, however, in modernizing its information systems--a
complex, multiyear effort that could easily cost billions of dollars.
Compounding this challenge will be the possible loss of many senior
managers and executives--over the next 5 years, nearly half of SSA's
senior executives will be eligible to retire. Moreover, SSA faces
difficult decisions on how best to deliver services in the future.
At this critical juncture, effective leadership is needed so the
agency can take the following actions to better ensure its success in
the 21st century: inform the national debate on Social Security
financing issues, complete its redesign of the disability claims
process and promote return to work in its disability programs,
enhance efforts to ensure program integrity, and make the technology
enhancements and workforce decisions needed to meet increasing
workloads with fewer resources.
--------------------
\1 The Social Security program has two parts--Old Age and Survivors
Insurance (OASI) and Disability Insurance (DI).
\2 Social Security Administration: Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb. 15, 1995).
SSA STEPS AHEAD WITH
RESULTS-ORIENTED MANAGEMENT AND
IMPROVED FINANCIAL
ACCOUNTABILITY
---------------------------------------------------------- Chapter 0:1
At this time of heightened attention to the costs and effectiveness
of all federal programs, the Congress and the Administration have
acted to promote a more efficient federal government that stresses
managing for results and accountability. These efforts include the
Chief Financial Officers Act of 1990 (CFO Act), the Government
Performance and Results Act of 1993 (GPRA), and the Government
Management Reform Act of 1994 (GMRA). In addition, the
Administration has undertaken, under the Vice President's direction,
the National Performance Review (NPR) aimed at making government work
better and cost less. We strongly support these efforts as important
and necessary steps to improving federal management.
SSA has surpassed many other federal agencies in these areas. For
example, as a pilot agency under GPRA, SSA has worked to strengthen
its strategic management process and to identify and develop
performance measures that help its managers, the Congress, and the
public assess its performance. In addition, for several years now,
it has measured satisfaction levels among some of its customers and
used focus groups to understand its customers' and employees' views,
reflecting the customer service focus promoted by NPR. SSA is also a
leader among federal agencies in producing complete, accurate, and
timely financial statements as required by the CFO Act and GMRA. For
example, for fiscal year 1995, SSA issued audited financial
statements 3 months before its legal mandate. Moreover, SSA was
among the first federal agencies to produce an accountability report,
which is designed to consolidate current reporting requirements under
various laws and provide a comprehensive picture of an agency's
program performance and its financial condition.
To be most effective, SSA's ongoing efforts in strategic management,
performance measurement, and accountability reporting will need to be
continually improved and integrated into the agency's daily
operations and management. SSA has a foundation in place on which it
can build to manage the significant policy and program challenges it
faces in the future.
LONG-TERM SOLVENCY IS
THREATENED; SSA IS NOT YET
ACTIVELY PARTICIPATING IN
FINANCING DEBATE
---------------------------------------------------------- Chapter 0:2
As the baby boom generation ages, growing numbers of people will
receive Social Security retirement and survivors benefits in the
years to come, as shown in figure 1. By the year 2015--as baby
boomers begin entering their mid-60s--the numbers of individuals
receiving benefits will reach an estimated 50.4 million: more than
one-third greater than the 37.4 million people receiving Social
Security retirement and survivors benefits in 1995. Once on the
rolls, retirees can be expected to receive benefits for longer time
periods than past recipients. A 65-year-old male who began receiving
Social Security benefits in 1940--the first year SSA began paying
monthly benefits--was expected to live, on average, about an
additional 12 years. By 2015, a 65-year-old male will have a life
expectancy of 16 years--a 35-percent increase. During that same time
period, the life expectancy for women aged 65 will increase by almost
50 percent--from an average of over 13 years to an average of nearly
20 years. Meanwhile, the ratio of contributing workers to
beneficiaries will decline. By 2015, an estimated 2.6 workers will
be paying taxes into the Social Security system per beneficiary; in
1950, 16.5 workers were paying Social Security taxes per beneficiary.
Figure 1: Growth in Social
Security Beneficiaries,
1950-2030
(See figure in printed
edition.)
Note: Includes recipients of OASI only.
Source: 1996 Annual Report of the Board of Trustees of the Federal
Old-Age and Survivors Insurance and Disability Insurance Trust Funds.
This retirement explosion threatens the long-term solvency of the
Social Security system. Beginning in 2012--16 years from now--the
program is projected to start running a deficit. By 2029, without
corrective legislation, the trust funds are expected to be depleted,
leaving insufficient funds to pay the expected level of retirement,
survivors, and Disability Insurance (DI) benefits.
Concerns about the long-term solvency of the Social Security system
are fueling a public debate about the fundamental structure of this
system. The Advisory Council on Social Security,\3 for example, has
put forth three different approaches to addressing the Social
Security system's long-term deficit. All three approaches call for
some portion of Social Security payroll taxes to be invested in the
stock market.\4 Two of these approaches, however, call for allowing
individuals to invest some portion of their payroll taxes in
individual retirement accounts. This would be a significant
departure from the original program design, in which all trust fund
monies are invested and managed centrally. Given the magnitude of
the financial problems facing the Social Security system and the
nature of the proposals for changing the system, we can expect the
debate over the financing and structure of the Social Security system
to continue and intensify in the coming years.
--------------------
\3 Before the independence legislation (P.L. 103-296), the Social
Security Act provided for the appointment of a nonpartisan Advisory
Council every 4 years to examine issues affecting the OASDI and
Medicare programs. P.L. 103-296 provided that the current Council
will be the last.
\4 Social Security payroll taxes that accumulate in the trust fund
reserves are currently invested in U.S. Treasury bonds.
SSA IS NOW TAKING STEPS TO
BE MORE ACTIVE
-------------------------------------------------------- Chapter 0:2.1
In our report on SSA's transition to independence, we noted that the
agency's independence would heighten the need for it to work with the
Congress in developing options for ensuring that revenues are
adequate to make future Social Security benefit payments. More than
a year after gaining independence, however, SSA is not yet ready to
fully support policymakers in the current public debate on financing
issues.
SSA has been involved in financing issues through its Office of the
Actuary, which has provided data and analyses to the Advisory Council
and policymakers developing financing options. The Office of the
Actuary plays a unique role within the agency because it serves both
the Congress and the Administration.\5 SSA will also be providing
assistance to the Social Security Advisory Board, which was
established by the independence legislation to advise the
Commissioner and make recommendations to the Congress and the
President on SSA program policy.
These supportive roles represent SSA's major activities related to
long-term financing issues. SSA has acknowledged that it has not
undertaken the policy and research activities it needs to examine
critical issues affecting its programs, including long-term
financing, and to provide additional support to policymakers. The
agency recognizes the need to be more active in these areas and, in
May of 1996, took steps to reorganize and strengthen its policy
analysis, research, and evaluation offices. It believes this
reorganization will better position it to take a leadership role in
critical policy and research issues related to its programs. At the
time of our review, however, the reorganization had just begun, and
the office responsible for coordinating all policy planning
activities was only partially staffed. Although SSA did not have a
specific time frame for when the reorganized policy office would be
fully staffed and operational, it did expect to be better prepared to
join the public debate over the next year.
SSA is in a unique position to inform policymakers and the public
about the critical nature of long-term financing issues. Focus
groups conducted by SSA have demonstrated that the public's knowledge
of Social Security programs is generally low and the public's
confidence in the Social Security system is undermined by its future
financing problems. To address these issues, SSA is conducting a
public education campaign that discusses what the current system
offers in disability, retirement, and survivors benefits. It also
emphasizes that the Social Security system can pay benefits for many
more years and that the Congress has time to act before the trust
funds are depleted. SSA, however, is not discussing options for
maintaining or changing the current system. Feedback SSA has
received from its focus groups indicates that addressing the public's
lack of knowledge without also discussing possible options for
ensuring the system's future solvency does not instill confidence and
weakens the agency's credibility with the public.
We are concerned that SSA has not seized the opportunity as an
independent agency to speak out on the importance of addressing the
long-term financing issues sooner rather than later. As we have
noted in our previous work,\6 the sooner action is taken to resolve
the future funding shortfall, the smaller the changes to the system
need to be and the more time individuals will have to adjust their
financial and retirement plans.
--------------------
\5 In recognition of this, in March of this year, the Contract with
America Advancement Act of 1996, P.L. 104-121, established the
Actuary as a permanent position within SSA and required that the
Actuary report directly to the Commissioner. The Actuary had
previously reported to a Deputy Commissioner; this change is expected
to better ensure the Actuary's objectivity and independence.
\6 Deficit Reduction: Opportunities to Address Long-Standing
Government Performance Issues (GAO/T-OCG-95-6, Sept. 13, 1995).
SSA IS REDESIGNING ITS
DISABILITY CLAIMS PROCESS BUT
HAS PLACED LITTLE PRIORITY ON
RETURN-TO-WORK EFFORTS
---------------------------------------------------------- Chapter 0:3
In recent years, disability caseloads have faced unprecedented
growth. To manage this caseload growth and the resulting slow
processing times, SSA plans to redesign and dramatically improve its
disability claims process. However, SSA's redesign effort has
encountered serious implementation problems. Moreover, while SSA is
taking steps to improve the process for moving eligible individuals
onto the disability rolls more quickly, it has not sufficiently
emphasized helping beneficiaries return to work and leave the
disability rolls.
DISABILITY CASELOADS
CONTINUE TO GROW
-------------------------------------------------------- Chapter 0:3.1
During the past decade, SSA has faced significant increases in
caseloads and expenditures for its two disability programs--DI and
SSI. DI, enacted in 1956 and funded through payroll taxes, provides
monthly cash benefits to severely disabled workers and their
families; SSI was enacted in 1972 and provides assistance to needy
individuals with insufficient work histories to qualify for DI.
Unlike DI, SSI is funded through general revenues.\7 DI and SSI
caseloads and expenditures increased dramatically between 1986 and
1995, and the pace of this growth accelerated in the early 1990s. In
1986, 4.4 million blind and disabled persons under age 65 received DI
or SSI benefits; by 1995, this number had soared to 7.5 million--a
69-percent increase.\8 As the number of DI and SSI beneficiaries
increased, so did the amount paid in cash benefits. The combined DI
and SSI cash benefits increased from $25 billion to $57 billion in 10
years.\9 Adjusted for inflation, the increase in the value of these
cash benefits was 66 percent.
As these programs have grown, the characteristics of new
beneficiaries have changed in ways that pose additional challenges
for SSA. Beneficiaries are, on average, younger and more likely to
have longer lasting impairments. Increases in beneficiaries with
mental illness or mental retardation, especially, have driven this
trend. Between 1982 and 1992, for example, mental impairment awards
to younger workers increased by about 500 percent. This growing
proportion of younger beneficiaries with longer lasting impairments
means that the beneficiary population, on average, is likely to spend
more time on the disability rolls. In 1992, for example, new DI
awardees were, on average, 48 years old. Depending on the type of
impairment that qualified them for benefits, these beneficiaries
could spend nearly one-third of their adult lives on disability
before reaching age 65.
--------------------
\7 Some states supplement federal SSI funds with their own funds.
\8 This number includes about 900,000 children receiving SSI
disability benefits.
\9 This includes DI payments to disabled workers aged 18 to 64 and
federal-only SSI payments to all SSI blind and disabled beneficiaries
regardless of age.
IMPLEMENTATION OF REDESIGNED
CLAIMS PROCESS FACES
PROBLEMS
-------------------------------------------------------- Chapter 0:3.2
As more and more people have filed for disability benefits, SSA has
been slow to process initial claims, and appeals and backlogs have
grown. To manage the disability caseload growth, increase
efficiency, and improve service to its customers, SSA has started a
massive effort to fundamentally change how disability decisions are
made. Making disability decisions is one of the agency's most
important tasks; it accounted for more than half of SSA's total
administrative budget--about $3 billion--in fiscal year 1995. Even
so, claimants face long waits for disability decisions. As of June
1996, the wait for initial decisions averaged 78 days for DI claims
and 94 days for SSI claims, with an additional 373-day wait for
appealed decisions. Overall, the current disability claims process
is not meeting the needs of claimants, the agency, or taxpayers.
To deal with these problems, in 1993 SSA formed a team to
fundamentally rethink and develop a proposal to redesign the
disability claims process. This labor-intensive and paper-reliant
process has changed little since the DI program began in the
1950s.\10 Efforts like SSA's--business process reengineering--have
been used successfully by leading private-sector organizations to
dramatically improve their operations. In April 1994, we informed
the Congress that the agency's redesign proposal was its first valid
attempt to address the fundamental changes needed to cope with
disability workloads. At that time, however, we also acknowledged
that implementing this needed change would be difficult and that we
would be monitoring SSA's progress.\11
During this past year, we have been reviewing various aspects of
SSA's redesign effort for this Subcommittee and have identified
several implementation problems. SSA's redesign plan includes 83
initiatives to be started during a 6-year period (1995-2000), with 40
of these to be completed or under way in the first 2 years. On the
basis of our ongoing work, we have found that the scope and
complexity of many initiatives have limited SSA's progress toward its
redesign goals. Although SSA has begun many of its planned
initiatives, none is far enough along for SSA to know whether
specific proposed process changes will achieve the desired results.
Moreover, we are concerned that SSA has undertaken too many complex
tasks and has not given sufficient priority to those redesign
initiatives most likely to reduce processing times and administrative
costs.
Some of its planned initiatives require extensive design and years of
development before full implementation can begin. For example, a key
initiative of the redesign involves consolidating the duties, skills,
and knowledge of at least two current positions into a new Disability
Claim Manager (DCM) position. SSA plans to establish over 11,000 DCM
positions in about 1,350 federal and state locations, recruiting
these DCMs from its current workforce of federal claims
representatives and state disability examiners. SSA is currently
struggling to resolve stakeholder disagreements among representatives
of federal and state employees about how to proceed with testing this
new position. SSA must also develop training plans, conduct tests at
pilot sites, post vacancy announcements for positions, and select and
train DCMs.
Developing software designed to allow SSA to move from its current
manual, labor-intensive process to an automated process is critical
to the success of SSA's disability redesign. The scheduled
implementation of this new software, however, has been delayed by
more than 2 years. Moreover, although SSA has separate
implementation schedules for its various redesign initiatives and for
its systems development activities, these two schedules are not
linked. In addition, although SSA has developed individual plans for
its redesign initiatives and for its system development activities,
it has not developed a comprehensive detailed plan that integrates
these two efforts. Such a plan should reflect priorities, resource
allocations needed, key milestones, and decision points and identify
relationships among ongoing and planned process and systems changes.
For example, SSA cannot effectively develop software to support its
key DCM position until it has completed a pilot for this position and
determined in more detail what its duties will be and what
information will be needed by the new claims manager. Although SSA
officials recognize the need to develop such a plan, in June 1996
they noted that the testing of process redesign features involved too
many uncertainties for SSA to develop an integrated plan.
--------------------
\10 The same disability claims process is used for the SSI program.
\11 Social Security Administration: Major Changes in SSA's Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr. 14, 1994).
WEAK RETURN-TO-WORK EFFORTS
-------------------------------------------------------- Chapter 0:3.3
Although SSA has focused on improving its processes for moving
eligible claimants onto the disability rolls, it has placed little
priority on helping them move off the rolls by obtaining employment.
This spring, we reported that policies guiding SSA's disability
programs are out of sync with today's view of the capabilities of
individuals with disabilities.\12 At one time, the common business
practice was to encourage someone with a disability to leave the
workforce. Today, however, a growing number of private companies
have been focusing on enabling people with disabilities to return to
work.
In contrast, SSA's programs lack a focus on providing the support and
assistance that many people with disabilities need to return to work.
Eligibility requirements, for example, focus on applicants'
inabilities, not their abilities; once on the rolls, beneficiaries
receive little encouragement to use rehabilitation services. A
greater emphasis on beneficiaries' returning to work is needed to
identify and encourage the productive capacities of those who might
benefit from rehabilitation and employment assistance. Although the
main reason for emphasizing returning to work is so that people
maximize their productive potential, it is also true that an
estimated $3 billion could be saved in subsequent years if only an
additional 1 percent of the 6.6 million working-age people receiving
disability benefits in 1995 were to leave the rolls by returning to
work.
SSA needs to develop a comprehensive return-to-work strategy that
includes providing return-to-work assistance to applicants and
beneficiaries and changing the structure of cash and medical
benefits. As part of an effort to place greater priority on
beneficiaries' returning to work, we recommended that SSA identify
legislative changes required to implement such a strategy. Although
evaluating any SSA response to our recommendations would be
premature, we will be assessing SSA's efforts to help beneficiaries
return to work.
SSA has also missed opportunities to promote work among disabled
beneficiaries where it has the legislative authority to do so. In
1972, the Congress created the plan for achieving self-support (PASS)
program as part of SSI to help low-income individuals with
disabilities return to work.\13 However, SSA has not translated the
Congress' broad goals for the PASS work incentive into a coherent
program design. We recently reported that SSA needs to improve PASS
program management, and it has taken steps to better manage the
program in accordance with our recommendations.
--------------------
\12 See SSA Disability: Program Redesign Necessary to Encourage
Return to Work (GAO/HEHS-96-62, Apr. 24, 1996) and Social Security:
Disability Programs Lag in Promoting Return to Work
(GAO/T-HEHS-96-147, June 5, 1996).
\13 The PASS program provides for work-related expenses, such as
training or transportation, to be excluded when an individual's
eligibility or benefit amount is determined. In some cases, this
allows DI beneficiaries who would not otherwise be eligible for SSI
to receive SSI benefits in addition to their DI benefits. See PASS
Program: SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb. 28, 1996).
INADEQUATE OVERSIGHT OF SSI
UNDERMINES PUBLIC CONFIDENCE
---------------------------------------------------------- Chapter 0:4
Limiting opportunities for fraud, waste, and abuse in government
programs is an important goal and essential to promoting public
confidence in the government's ability to wisely use taxpayer
dollars. Moreover, problems in any one of the programs that SSA
administers can undermine confidence in all of its programs. Recent
media reports on SSI fraud and abuse have focused attention on SSA's
management of this program. Several of our recent reviews of the SSI
program have shown that SSA's oversight and management of SSI have
been inadequate and that the agency is not aggressively pursuing
opportunities to increase program efficiencies. Although quantifying
the extent of fraud, waste, and abuse is difficult, we have
repeatedly identified program weaknesses that SSA needs to address
either on its own or with the Congress to better control these
problems.
For example, the media have reported allegations that some parents
coach their children to fake mental impairments so that they can
qualify for cash benefits. These benefits can total almost $5,500
per year for each disabled child. Our review of SSI for children
with disabilities found that part of the process for determining
eligibility is overly subjective and susceptible to manipulation.
The Congress may want to consider legislation to improve eligibility
determinations for children with disabilities.\14
Current legislative proposals incorporate changes addressing this
problem.
In addition, in our review of the fraudulent use of translators to
help individuals become eligible for SSI, we reported that SSA could
reduce this type of fraud if it had a more comprehensive, programwide
strategy for keeping ineligible applicants from ever receiving
benefits.\15 Moreover, we have several reviews under way of other
program weaknesses. For example, in our ongoing work for the
Subcommittees on Human Resources and Oversight of the House Committee
on Ways and Means, we have found that even though prisoners are
ineligible for SSI if they have been in jail for 1 calendar month or
longer, prisoners in many large county and local jail systems have
received millions of dollars in cash benefits. This means that
taxpayers have been paying twice to support these individuals--both
for SSI benefits and the cost of imprisonment. SSA has taken steps
to review information on current prisoners to stop inappropriate
payments; however, it is not taking action to develop information
that would allow it to recover benefits paid to those who may have
been incarcerated and received benefits in prior years, although this
information is available.
SSA acknowledges that it needs to do more to prevent and detect
fraud, waste, and abuse. It has several initiatives under way to
accomplish this, and we will be monitoring these efforts. In
addition, the new SSA Inspector General's Office, created when SSA
gained independence from HHS, is increasing its emphasis on fraud and
abuse.
--------------------
\14 Social Security: New Functional Assessments for Children Raise
Eligibility Questions (GAO/HEHS-95-66, Mar. 10, 1995).
\15 Supplemental Security Income: Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31,
1995).
SSA FACES DIFFICULT CHALLENGES
IN PREPARING FOR FUTURE
WORKLOADS
---------------------------------------------------------- Chapter 0:5
In addition to its policy and program challenges, SSA will need to
meet customer expectations in the face of growing workloads and
reduced resources. SSA expects to redesign inefficient work
processes and modernize its information systems to increase
productivity, knowing that its customer service will deteriorate to
unacceptable levels if it continues to conduct business as in the
past. In addition, it faces the urgent need to complete year-2000
software conversion to avoid major service disruption at the turn of
the century. SSA will also need to effectively manage its workforce
and consider what service delivery structure will work best in the
future.
SSA MUST MANAGE GROWING
WORKLOADS WITH REDUCED
RESOURCES
-------------------------------------------------------- Chapter 0:5.1
As the baby boom generation ages, more and more people will be
applying for and receiving SSA program benefits. In addition to
increasing retirement and disability caseloads, SSA's other workloads
will grow because of increasing responsibilities. For example, SSA
must meet a legislative requirement that most workers be mailed
annual statements of their earnings and estimated retirement
benefits,\16 called Personal Earnings and Benefit Estimate
Statements. The creation and mailing of these annual statements to
all workers aged 60 and older, begun in 1995, must be expanded to
those aged 25 and older--about 123 million individuals--by the year
2000. We are currently reviewing for this Subcommittee whether the
usefulness of these statements can be improved and what impact they
will have on SSA's workloads.
Moreover, SSA has been unable to fully meet legislative requirements
to periodically review the status of disabled beneficiaries to ensure
that those who are no longer disabled are removed from the rolls.
SSA now has plans to review the status of more than 8 million
beneficiaries in the next 7 years. To accomplish this, SSA would
have to conduct about twice as many reviews as it has conducted over
the past 20 years combined.\17
SSA knows that it must meet these increasing demands in an era of
federal downsizing and spending reductions. SSA has estimated that
it would need the equivalent of about 76,400 workers to handle its
workloads by the end of the century if it conducted business as
usual. Instead, it expects to handle this work with about 62,000
workers--fewer than it has today.
--------------------
\16 Under the legislation, SSA must provide individuals aged 50 and
over estimates of their potential monthly retirement benefits,
beginning no later than Oct. 1, 1999.
\17 Special funding has been authorized for 7 years for SSA to
complete these reviews.
TECHNOLOGY CRITICAL TO SSA'S
FUTURE SUCCESS
-------------------------------------------------------- Chapter 0:5.2
To handle increasing workloads and improve public service, SSA has
begun to redesign inefficient work processes and develop supporting
modernized information systems. SSA is in the process of a
multiyear, multibillion dollar systems modernization effort expected
to support new ways of doing business and improve productivity.
SSA's Automation Investment Fund of $1.1 billion supports its 5-year
plan, from fiscal years 1994 to 1998, of moving from reliance on
computer terminals hooked to mainframe computers in its Baltimore
headquarters to a state-of-the-art, nationwide network of personal
computers. The new network is expected to improve productivity and
customer service in field offices and teleservice centers and allow
for further technology enhancements.
Although this new computer network environment may yield productivity
improvements, it poses significant challenges for SSA. The
usefulness of new computer systems will depend on the software
developed for them. Software development has been identified by many
experts as one of the most risky and costly aspects of systems
development. To mitigate the risk of failing to deliver high-quality
software on time and within budget, SSA must have a disciplined and
consistent process for developing software. SSA has already
experienced problems, however, in developing its first major software
application for use in its new network. These problems include (1)
using programmers with insufficient experience, (2) using software
development tools that have not performed effectively, and (3)
developing initial schedules that were too optimistic. As we noted
earlier, these problems have collectively contributed to a delay of
over 2 years in implementing this new software. Although SSA has
begun to take steps to better position itself to successfully develop
and maintain its software, it faces many challenges as it works to
develop software in its new computer network environment.
YEAR 2000: CONVERTING
SOFTWARE TOP PRIORITY TO
AVOID BENEFITS DISRUPTION
------------------------------------------------------ Chapter 0:5.2.1
SSA faces another systems challenge--one of the highest
priority--that affects not only its new network but computer programs
that exist for both its mainframe and personal computers. Most
computer software in use today is limited to two-digit date fields,
such as 96 for 1996. Consequently, at the turn of the century,
computer software will be unable to distinguish between 1900 and 2000
because both would be designated "00." By the end of this century,
SSA must review all of its computer software--about 30 million lines
of computer code--and make the changes needed to ensure that its
systems can handle the first change to a new century since the
computer age began.
This year 2000 software conversion must be completed to avoid major
service disruption such as erroneous payments or failure to process
benefits at the turn of the century. Errors in SSA programs could
also cause difficulties in determining who is eligible for retirement
benefits. For example, an individual born in 1920 could be seen as
being 20 years old--not 80--and therefore ineligible for benefits.
Similarly, someone born in 1980 could be seen as 80 years old--not
20--and therefore entitled to receive Social Security benefits.
Beginning work on this problem as early as 1989, SSA has reviewed and
corrected about 20 percent of the computer code that must be checked,
according to its Deputy Commissioner for Systems. To complete the
job, SSA estimates that it will take 500 work- years, the equivalent
of about $30 million. Agency officials reported that the amount of
resources dedicated to the year 2000 effort could impact staff
availability for lower priority projects and SSA's ability to tackle
new systems development work.
DEVELOPING A TRAINED AND
FLEXIBLE WORKFORCE IS
ESSENTIAL
-------------------------------------------------------- Chapter 0:5.3
SSA recognizes that to maximize the effectiveness of its reengineered
work processes and investments in technology, it must invest in
ongoing employee training and career development. Ultimately, SSA
envisions a less specialized workforce with a broader range of
technical skills that can be flexibly used in areas of greatest need.
In addition, SSA has taken steps to reduce its number of supervisors,
as part of the Administration's efforts to eliminate unnecessary
bureaucracy by working with fewer supervisory layers. To manage
these changes, SSA is training some of its headquarters employees on
the concepts and techniques of teamwork. To manage with fewer
supervisors in its field operations, SSA also plans to work with its
unions to test a number of team concepts.
Complicating SSA's efforts is its aging workforce: 47 percent of
SSA's senior executives and 30 percent of its grade 13 to 15
personnel are eligible to retire over the next 5 years. In the 2
fiscal years ending this September alone, SSA will have lost, and
have needed to replace, two of its seven Deputy Commissioners to
retirement.\18 SSA has acknowledged the importance of having skilled
managers to prepare for the demands of heavier workloads, new
technology, and expected changes in its employee and client base.
However, it has been 4 years since SSA participated in HHS' executive
level management development program, and it has not announced its
own program since becoming an independent agency. SSA also has not
selected candidates for its mid-level management development program
since 1993. The agency recognizes the need for management
development programs but has not yet scheduled future programs.
--------------------
\18 SSA currently has seven Deputy Commissioners, who oversee the
following functions: operations; systems; finance, assessment, and
management; programs and policy; communications; human resources; and
legislation and congressional affairs.
DIFFICULT RESTRUCTURING
DECISIONS LIE AHEAD
-------------------------------------------------------- Chapter 0:5.4
Although SSA has begun to discuss its use of improved technology and
a more flexible workforce to conduct its business in new ways in the
future, it has maintained its traditional service delivery structure,
including 1,300 field offices. Given the significant changes facing
SSA, it has not adequately considered whether its current service
delivery structure is really what is needed for the future. This
important issue needs serious consideration.
According to SSA officials, the agency has not developed specific
plans for restructuring its organization and redeploying staff in
response to demographic and workforce changes and shifting customer
expectations. The demand for SSA's 800-number telephone service
continues to grow, and SSA's surveys show that callers prefer to use
the telephone for more and more of their business. Customer feedback
also indicates that customers would like to complete their business
in a single contact. Over time, SSA will likely need to restructure
how it does business to cost-effectively meet changing customer
preferences; this may ultimately involve office closures. Issues of
where, how, and by whom work will be done entail sensitive human
resources issues and may have negative impacts on local communities;
to resolve these, SSA will need to work closely with its unions,
employee groups, and the Congress.
To improve its 800-number service, for example, SSA has many
initiatives under way, which we are reviewing at your request. SSA
currently has 39 teleservice centers. Studies indicate that this is
far too many teleservice centers to operate SSA's 800-number system
in the most cost-effective way. A 1990 report from HHS' Inspector
General, for example, indicates that SSA could operate more
efficiently and cost-effectively with one-third the number of centers
it currently has. SSA is studying and plans to work with employee
groups on this issue but has not developed specific plans for
reducing the number of teleservice centers.
LEADERSHIP NEEDED TO MANAGE
CHALLENGES
---------------------------------------------------------- Chapter 0:6
As the 21st century approaches, SSA faces dramatic challenges:
funding future retirement benefits, rethinking disability processes
and programs, combating fraud and abuse, and restructuring how work
is performed and services delivered. How SSA performs in these areas
can have a powerful effect on its success in fulfilling its mission
and on the public's confidence in this agency and the federal
government.
To help SSA meet these challenges, the Congress took steps through
the independence legislation to build public confidence in and
strengthen the agency. The independence legislation provides that
SSA's Commissioner be appointed by the President with the advice and
consent of the Senate for a fixed 6-year term, with removal from
office by the President only for a finding of neglect of duty or
malfeasance in office. As the Congress was considering the
legislation, we testified that a fixed term of several years for
Commissioner would help stabilize and strengthen SSA's leadership.
We continue to support the need for a fixed term. The legislation
also calls for a fixed 6-year term for a Deputy Commissioner, also to
be appointed by the President with the Senate's advice and consent.
The Commissioner and Deputy Commissioner head the leadership team
needed to address the agency's existing problems and manage its
future challenges. SSA's efforts to maintain an effective cadre of
leaders are complicated by the impending retirement of many of its
executives and managers and by the absence of a Commissioner and
Deputy Commissioner with the stability of fixed terms.\19 This
leadership must be in place for SSA to progress on the four fronts we
have highlighted.
First, SSA must step up to its role as the nation's expert on Social
Security issues; it is uniquely positioned to inform the public
policy debate on the future financing and structure of Social
Security.
Second, SSA must redesign the disability claims process and place
greater emphasis on return to work in its disability programs. To
increase the redesign project's likelihood of success, SSA needs to
ensure that those initiatives most likely to save significant costs
and time are implemented. Because of the scope and duration of SSA's
redesign, it should report on an annual basis the extent to which it
is meeting its processing time reduction goals. It must also sustain
its efforts to build and maintain stakeholder support. In addition,
SSA must develop a comprehensive detailed plan that integrates its
redesign initiatives and systems development activities. The
Commissioner also needs to act immediately to place greater emphasis
on return to work by changing both the design and the administration
of the disability programs.
Third, SSA must better protect taxpayer dollars. As the
administrator of the nation's largest cash welfare program, SSA must
ensure program integrity in SSI. Reports of fraud and abuse trigger
public perceptions that SSA is not making cost-effective and
efficient use of taxpayer dollars.
Finally, SSA must manage technology investments and its workforce,
and--when needed--make difficult decisions about handling increasing
workloads with reduced resources. It must also continue to focus on
and closely manage its year-2000 conversion to help ensure that SSA
will move into the 21st century with systems that function correctly.
Moreover, as SSA prepares to meet greater demands and changes in its
employee and client base, it may have to make difficult workforce
decisions to better respond to customer needs. For example, SSA may
need to close offices and move its workers to different locations to
better meet growing demand. In an environment of shrinking budgets
and increased expectations for government agency performance,
ensuring that agency decisions are based on comprehensive planning
and sound analyses will be even more essential.
SSA's success in meeting these challenges is critical. The agency is
all important, accounting for one-fourth of federal spending and
touching the lives of almost all Americans. How it meets its
challenges as it moves into the next century can make a significant
difference in the well-being of America's vulnerable populations--the
aged, disabled, and poor--and in how the public feels about its
government.
--------------------
\19 The current Commissioner was appointed by the President and
confirmed by the Senate before the agency gained independence; the
current Deputy Commissioner serves in an acting capacity.
-------------------------------------------------------- Chapter 0:6.1
Mr. Chairman, this concludes my formal remarks. I would be happy to
answer any questions from you or other members of the Subcommittee.
Thank you.
CONTRIBUTORS
For more information on this testimony, please call Jane L. Ross,
Director, Income Security Issues, Health, Education, and Human
Services Division, at (202) 512-7215, or Cynthia M. Fagnoni,
Assistant Director, at (202) 512-7202.
*** End of document. ***