Hearing Before the Committee on Appropriations
Subcommittee on Labor, Health and Human Services, Education and Related Agencies
Statement of William A. Halter, Deputy Commissioner of Social Security
March 28, 2000
Mr. Chairman and members of the Subcommittee, thank you for the opportunity to discuss the management of the Social Security Administration (SSA). This hearing is well-timed given the challenges we have addressed and the new demands we are facing. In FY 2001, we will continue our efforts to safeguard the public's investment in Social Security programs, improve our program management, and provide excellent customer service as we meet the challenges of the 21st century. Thanks to the support and interest of this Subcommittee, SSA has achieved significant management successes that are recognized both inside and outside of government. In the two years that Syracuse University's Maxwell School of Citizenship and Public Affairs' multi-year Government Performance Project has been underway, SSA is one of only two federal agencies to receive an "A" grade for its management performance. Across the board, SSA continues to improve the efficiency of its work processes. Our administrative costs remain less than 2 percent of the overall costs of all programs SSA administers.
SIZE AND SCOPE OF SSA's PROGRAMS
I would like to now briefly review the programs that SSA administers. Because virtually all Americans have the benefit protection provided by Social Security's programs and nearly one in five receives benefits, we can say that SSA touches the lives of virtually every American. Social Security provides protection against loss of earnings due to retirement, disability and death. While it is often thought of as a retirement program, Social Security also provides benefits to disabled workers, their families, and to surviving family members of deceased workers. Social Security disability and survivors benefits are a critical source of income for workers and families during a vulnerable time in their lives. And, thanks to the strong, bipartisan effort last year on the Ticket to Work and Work Incentives Improvement Act of 1999, disabled beneficiaries who want to work can take advantage of enhanced return-to-work initiatives. SSA also administers the Supplemental Security Income (SSI) program which is funded not through Social Security taxes, but from general revenues, and provides payments to financially needy individuals who are aged, blind or disabled. A new program, title VIII of the Social Security Act, that authorizes benefit payments for certain World War II veterans, also is funded from general revenues.
For FY 2001, 98 percent of the $461 billion that SSA will outlay will be paid in the form of monthly benefits to 50 million Old-Age and Survivors Insurance (OASI), Disability Insurance (DI), Federal SSI, and Black Lung beneficiaries. On average, each workday about 100,000 people visit one of our 1,300 field offices and over 240,000 people call our 800-telephone number. Each workday, we process an average of 20,000 initial claims for retirement, survivors, disability or SSI benefits, and hold 2,400 hearings before Administrative Law Judges. Each year, we ensure that over 250 million earnings items are correctly credited to workers' accounts to ensure that future benefit payments are accurate. In all our programs Social Security strives for sound, effective management, and this past year has been one of significant accomplishments. Nevertheless, we recognize that the Agency faces continuing pressures, changes and management challenges.
STRATEGIC MANAGEMENT AND ACCOUNTABILITY
Thank you, Mr. Chairman, for your early recognition that SSA needed to base its budget request on performance measures. That early start on performance planning has served us well. SSA is committed both to the concepts of the Government Performance and Results Act and to improving our ability to manage for results on a day-to-day basis at all levels of the organization. SSA has published an Agency Strategic Plan since 1988. Our latest, entitled "Keeping the Promise," was SSA's first as an independent agency and was published in September 1997. SSA issued its most recent Accountability Report in November 1999 to document the results of the Agency's performance in FY 1999. We are proud that both the Strategic Plan and the Accountability Report have been well received by the Congress. At SSA, we continue to respond to the concerns of this Subcommittee, the Congress, our employees, and other stakeholders in shaping the overall direction of the Agency and the specific performance goals for which we will be held accountable. We are pleased that SSA's Annual Performance Plan for FY 2000 received one of the highest scores from the GAO among federal agencies last year. SSA's Annual Performance Plan for FY 2001 was delivered to Congress earlier this month.
Further, SSA is one of only two federal agencies to receive the Association of Government Accountants' Certificate of Excellence in Accountability Reporting Award for our FY 1998 Accountability Report. In addition, the Inspector General has determined that SSA has produced reliable financial statements for six straight years.
Most importantly, our customers also think we are doing a good job. In December 1999, the results of the American Customer Satisfaction Index, which surveyed SSA customers currently receiving retirement benefits, revealed that SSA's customer service was rated one of the highest of participating Federal government agencies and almost 10 points higher than the comparable private sector index.
SSA's RECENT ACCOMPLISHMENTS
SSA has accomplished a great deal in the recent past. We have made great strides in detecting and deterring fraud and abuse. A full year in advance, we successfully renovated our computer systems to be Y2K compliant. We significantly enhanced our public education efforts through the issuance of annual Social Security Statements to workers age 25 and over who are not receiving benefits. We strengthened our policy development and research processes. We continued to heighten the efficiency of our work processes through technological and process improvements. Finally, we made accessing SSA information and forms easier through electronic service delivery. These recent accomplishments are highlighted below.
Year 2000 Compliance
SSA paved the way for both government agencies and private industry in our Y2K efforts. We were one of the first federal agencies to start work on the Y2K problem in 1989. Nearly 2,800 systems employees, including 700 programmers, were involved in some way in preparing for the year 2000. Thanks to their hard work and dedication, SSA completed renovation of its mission critical systems by November 1998, a full year ahead of time. In addition to becoming a leader and a model for other agencies and industries, we worked closely with our partners to ensure a smooth transition. We collaborated with the Treasury Department, the Federal Reserve, the financial community, and the Postal Service to ensure that Social Security benefit payments were paid timely and without interruption.
Social Security Statements
One of SSA's basic responsibilities to the public is to help Americans understand Social Security and its importance to them and their families. As part of our public education efforts, SSA has begun sending out annual Social Security Statements. On October 1, 1999, SSA started sending Social Security statements to every American age 25 and over who currently is not receiving benefits. We are now issuing approximately 10 million statements each month. To my knowledge, this is the largest customized mailing ever undertaken. The statements provide personalized, individual estimates of Social Security retirement, disability and survivors' benefits, together with a record of the worker's earnings.
Anti-Fraud Initiatives and Program Integrity
Ensuring the integrity of our programs is an SSA priority. The public rightfully expects us to be vigilant stewards of its tax dollars. SSA is committed to improving the administration of its programs while maintaining a policy of zero tolerance for fraud and abuse.
SSA's field office employees, whose commitment to maintaining the integrity of the Social Security program is unswerving, are tremendous contributors to our anti-fraud efforts. Often, it is SSA and Disability Determination Services employees who are able to uncover suspicious or fraudulent schemes. We will continue to provide training in anti-fraud practices and seek additional tools to make anti-fraud efforts more effective.
Since becoming an independent agency in March 1995, we have had our own Inspector General whose mission is to protect the integrity of SSA's programs. A strong Inspector General, working together with SSA employees in local offices, is the most effective means we have to control fraud and abuse in the programs we administer. To strengthen the Inspector General's capacity to accomplish its mission, the Inspector General's staff has more than doubled since FY 1996.
SSA's commitment to combating fraud and the Inspector General's expertise have resulted in a very successful partnership venture. SSA and the IG have set up investigative teams called Cooperative Disability Investigation Units (CDI) consisting of an IG special agent, two investigators from a State or local law enforcement agency and two DDS and/or SSA personnel. The purpose of this initiative is to provide greater investigative support to the State DDSs so that they may make more accurate decisions on disability claims. Fostering an exchange of information between disability decision makers and investigators, the CDI process enhances the potential for identifying fraudulent disabiiity applications, and ensures timely investigation and termination of benefits when fraud is detected during Continuing Disability Reviews. In addition, the CDI Units investigate and pursue criminal prosecution of doctors, lawyers and other third parties who commit fraud against the disability program. There are currently six CDI Units in operation and four more are scheduled to become fully operational by September of this year.
As of February 2000, the CDI Units have processed 2,231 case referrals and developed evidence to support 699 denials for a projected program savings of nearly $37 million. This is more than 10 times the project's cost so far. In addition, the project has produced more than $11.7 million in related State program savings.
Electronic Service Delivery
As we move into the 21st century, the Internet has become a central business channel for America and a growing number of customers want to conduct government business electronically. SSA's award-winning website (www.ssa.gov) has been up since May 1994. Last year, almost 10 million customers visited our site, double the number from the year before. Today, our website is primarily informational, allowing SSA customers to request a Social Security Statement; locate the nearest Social Security Office; and download forms, brochures and pamphlets.
By providing online access to public information and forms, SSA is improving customer service as well as realizing savings. A recent Harvard University study compared the relative cost of requesting Social Security Statements through traditional means via field offices or 800-number to the cost of requesting these statements over the Internet. The cost of supplying each statement through traditional means was over $2.00, while the cost of doing so when the requester supplied the information over the Internet was less than fifty cents.
SSA must continue to carefully monitor the ongoing shift in our customers' preferences and prepare to expand service delivery options in response to customer expectations.
Expansion of electronic service delivery is contingent upon appropriate and robust security and privacy protections.
Earlier this month we launched another initiative to respond to our customers. On March 1, 2000, SSA released the first issue of a free electronic newsletter, Social Security e-news, designed to keep the public informed about the Social Security, SSI, and Medicare programs. In the first three weeks, 36,000 individuals have subscribed by visiting our website and simply providing their E-mail address. Subscribers to Social Security e-news receive monthly electronic newsletters containing general Social Security news. In addition, subscribers can elect to receive timely news updates on specific topics. The specialized news areas include disability, retirement, survivors, SSI, Medicare, laws and regulations, press releases, wage reporting and data, studies and research.
Conducting Effective Policy Development and Research
Since becoming an independent agency, we have made significant investments in our policy development and research infrastructure. For example, SSA established a separate Office of Policy, which designs, coordinates, and effectively undertakes research and policy development efforts that respond to the needs of Agency policy makers, the Congress, and the public.
Improving and Safeguarding the Integrity of Social Security's Disability Programs
SSA has undertaken a number of initiatives to improve and safeguard the disability programs including a 7 year program of continuing disability reviews (CDRs), improvements to the disability adjudication process, a hearings process improvement initiative and an Appeals Council improvement plan.
Continuing Disability Reviews: While committed to providing timely and compassionate service to our customers, SSA is equally committed to ensuring that only those individuals who meet program eligibility requirements come onto the beneficiary rolls and that only those who continue to be disabled remain on the rolls. In support of that objective, our budget plan calls for processing additional continuing disability reviews (CDRs) in order to ensure program integrity, to rebuild public confidence in our programs, and to carry out Congressional mandates. We are confident that our CDR strategy will lead to reliable and cost-effective monitoring of the disability rolls.
I want to take this opportunity to thank the Committee for providing additional funds, through an adjustment to discretionary spending caps, for this crucial workload. We are now in our fifth year of a seven-year plan to become current in processing periodic CDRs and have made very good progress towards our goal. In FY 1996, the first year of the plan, we processed approximately 500,000 CDRs. As of the end of FY 1999, we have completed almost half of our 7-year plan. With our FY 2000 budget, we expect to meet our commitment to become current in title II CDRs by the end of this year. Over the course of our seven-year plan, we expect, on average, to realize lifetime program savings of at least $6 for every $1 in administrative cost.
Improving the Disability Adjudication Process: After testing various process improvements over the past several years and examining the results of the tests, we are prototyping the most successful features of these process changes in 10 State Disability Determination Services. These prototypes will improve the initial disability adjudication process by providing better service through improved accuracy and simpler processes, such as:
-Providing greater decisional authority to disability examiners and making more effective use of medical consultant expertise;
-Ensuring appropriate development and explanations in initial claims;
-Increasing claimant interaction with the decision maker; and
-Simplifying the appeals process by eliminating the reconsideration step.
By taking this incremental approach, we will be able to assess and refine subsequent process improvements before moving to national implementation. Furthermore, we are testing a Disability Claim Manager protocol in which we provide a single point of contact for individuals who file for disability benefits.
Hearings Process Improvement Initiative: Over the past several years, the Agency has taken steps to improve the quality and timeliness of service provided during the hearing process. In fact, in FY 1999 we reduced the number of hearings pending and decreased the average number of days to receive a decision. However, we recognize that further improvements are needed. Last August, SSA released the Agency's Hearing Process Improvement (HPI) Plan. Our goal is to reduce hearings processing time to less than 200 days in FY 2002 by achieving administrative efficiencies, implementing group-based accountability, and improving our automation and data collection. Through the HPI initiative, we seek to make hearings more timely, efficient, and customer-focused. In January 2000, HPI was initiated in 37 hearing offices across the country.
Appeals Council Process Improvement Plan: The Appeals Council provides the final level of administrative review for claims under the Social Security Act. The Appeals Council is also responsible for overseeing the preparation of the administrative record filed in Federal court proceedings and for initiating further administrative actions as required by those court proceedings. As a result of its burgeoning workloads, processing times at the Appeals Council have reached unacceptably high levels.
We recently released the Appeals Council Process Improvement Plan which focuses on reducing pending workloads and processing times in the near term and developing an operational structure that can continue to deliver high-quality, timely and efficient case processing for the long term. In the meantime, we have redirected resources in FY 2000 to help deal with the Appeals Council backlog, and we have budgeted for a further increase in FY 2001.
SSI Non-Disability Redeterminations
SSA administers the Supplemental Security Income program that will pay out $30 billion this year to about 6.4 million people. This program provides a safety net for aged, blind and disabled. As the steward of this program, SSA must assure that benefits are paid in the right amount to the right people.
The most powerful tool available for improving the accuracy of Supplemental Security Income payments is the redetermination process, which focuses on the income and resource factors affecting eligibility and payment amounts. Periodic redeterminations are required by law, and hundreds of millions of dollars in payment changes are made as a result. By continuing to conduct substantial numbers of redeterminations, we are making significant improvements in overall payment accuracy and, ultimately, significant reductions in SSI overpayments.
Although we were forced by budget limitations to reduce the number of redeterminations processed this year, we still plan to process more than 2 million SSI non-disability redeterminations in both FY 2000 and FY 2001. This will ensure that those who receive SSI payments are meeting the program requirements and are receiving the correct payment amount. In order to maximize the effectiveness of this process, SSA implemented a new profiling methodology for selecting high error profile cases. SSA's investment in high error profile redeterminations produced overpayment reductions of about $7 for every $1 spent conducting these redeterminations in FY 1999.
While SSA's objective in managing the OASDI and SSI programs is to achieve the highest accuracy rate possible, it is inevitable that some debt will be created because of the dynamics of the programs. Our stewardship responsibilities require that we recover as much of this debt as possible. Our goal is to achieve an annual average 7 percent increase in debt collections over the five-year period from FY 1998 through FY 2002. In FY 1999, SSA met this goal by collecting more than $1.8 billion in debt.
We have also strengthened our debt collection methods through offsets of other Federal payments and collecting from Federal income tax refunds. In addition to those tools available under existing law, in FY 2001 we will implement mandatory Cross-Program Recovery and Administrative Wage Garnishment. SSA also plans to develop and utilize other debt collection authorities. These include Federal salary offset, use of private collection agencies, charging interest, expansion of the Treasury Offset program and credit bureau reporting.
Given the volume and complexity of SSA's work, our Agency requires and benefits from extensive use of information technology. By the end of FY 1999, we had successfully installed more than 70,000 intelligent workstations and nearly 2,000 local area networks in SSA and State Disability Determination Services offices throughout the country, without any disruption in our ability to serve the public. SSA will depend upon current and future information technology investments to address the large projected growth in our workloads and to meet rising customer expectations for service improvements.
To summarize, SSA has achieved significant improvements recently, including implementation of initiatives to deter fraud and abuse in our programs, successful completion of the Year 2000 transition, and enhanced public education through the issuance of annual Social Security Statements. We have also strengthened policy development and research processes, improved the administration of our disability and SSI programs, and made advancements in electronic service delivery.
OUR SERVICE DELIVERY CHALLENGES
Our successes notwithstanding, SSA recognizes the many difficult challenges we face in the years ahead. We will implement three significant new laws that pay higher benefits to some retirees, help return people to work and create an entirely new benefit program. We will face the challenge of increasing workloads at the same time the retirement wave of our own employees will crest. We will provide expanded and improved service delivery options via phone, the Internet and through electronic payment services while increasing the public's understanding of our programs and the service delivery options available to them.
Repeal of the Retirement Earnings Test
We appreciate the recent and unanimous Congressional action repealing the Retirement Earnings Test for beneficiaries aged 65 to 70. This legislation will allow senior citizens to contribute their energy and experience to the workforce without being penalized for doing so. SSA will implement this legislation as quickly as possible. However, with the passage of this legislation, SSA will have one-time costs in FY 2000 to make benefit adjustments, respond to inquiries, process additional claims, and modify our computer systems. We are working on a priority basis to ensure individuals receive all benefits due them as quickly as possible. In addition, our goal is to send benefits automatically so that beneficiaries do not have to take action on their own to receive higher payments. I would like to express SSA's support for the President's $35 million FY 2000 supplemental appropriation request to fund one-time costs for implementation of The Senior Citizens' Freedom to Work Act of 2000. These funds are necessary to cover SSA's one-time costs to implement this important legislation and to pay out $6 billion in benefits this year as quickly and efficiently as possible.
Enhancing Beneficiaries' Opportunities to Work
Last year's passage of the Ticket to Work and Work Incentives Improvement Act of 1999 further supports our efforts to enhance disability beneficiaries' opportunities to work by providing a combination of incentives and supports to individuals who want to work, including:
- Program management contracts to administer the Ticket to Work and Self-Sufficiency program;
- Demonstration projects to enable beneficiaries to return to work;
- Establishment of a corps of SSA employment support specialists; and
- Implementation of work incentives planning, assistance and outreach program grants.
The Foster Care Independence Act of 1999
Congress also passed other legislation affecting programs administered by Social Security, including an entirely new entitlement program, title VIII of the Social Security Act, that provides special cash benefits to certain World War II veterans. Some of the other provisions in this legislation include:
- Expanded SSA's authority to collect overpayments by extending the debt collection practices used to collect Social Security debt to the SSI program;
- Gave SSA authority to conduct computer matches with Medicare and Medicaid records to uncover unreported admissions to institutions (which may cause SSI payments to stop);
- Imposed a penalty for disposing assets in order to qualify for SSI benefits;
- Gave SSA greater access to information held by financial institutions.
Workforce and Workload Planning
SSA's experienced and dedicated workforce is one of the Agency's greatest strengths. However, growing retirements within this workforce represent one of our greatest challenges. We are already experiencing significant strains due to increased workloads coupled with higher than usual retirement attrition.
The aging of the baby boom generation will place significant pressure on SSA to find ways to keep pace with the workload growth. These pressures are exacerbated by the fact that a significant portion of the workload growth will be in the disability programs, which is a more time-consuming workload. Between 1999 and 2020, SSA's actuaries expect the number of Old Age and Survivors beneficiaries to grow by 52 percent, while the number of disability beneficiaries is expected to grow by 71 percent.
SSA's workforce has declined 22 percent since 1985 due to downsizing and streamlining. With limits on recruitment of new employees, we now face a rapidly aging workforce. The number of losses due to retirement at SSA is expected to peak in the years 2007-2009, when about 3,000 employees are projected to retire each year. Our data indicate that a majority of the losses will impact higher graded management positions and the front-line employees who provide direct service to the public.
The experience of SSA's senior managers has been a significant factor in our ability to keep up with growing workloads. To minimize the impact of the projected future retirements, we have established national, component, and regional development programs to assure that people are gaining the experience they need to progress in their careers and to fill leadership and other positions in the future.
SSA is also faced with the challenge of hiring and training replacements who will be able to carry out the work of this agency efficiently and effectively, particularly in direct service positions. Ensuring that new employees are adequately mentored and trained in all the program complexities and methods of providing high-quality customer service will be difficult, if there is no period of overlap with experienced employees prior to their retirements. For example, new Claims Representatives typically require three years of training and on-the-job experience to realize their full potential. Between FY 1999 and 2010, we project that 45 percent of current Claims Representatives will retire.
Although SSA has been extremely successful in increasing the numbers of minority and disabled employees, we are continuing recruitment strategies to increase the diversity of our workforce. Over the last ten years, these strategies have resulted in a 40 percent increase in Hispanic employment, a 64 percent increase in Asian/Pacific Islanders employment, and a 63 percent increase in the employment of individuals with severe disabilities. In addition, the number of African-Americans at higher salary levels has increased 78 percent over this same period. We firmly believe that by having a workforce that is representative of the people we serve, we will be better able to communicate with and understand the needs of our customers.
SSA recently released a report entitled, "Workforce Planning at the Social Security Administration." This report provides a foundation for a workforce transition plan for the next five years. This transition plan will consider the changing nature of SSA customers, workloads, and technology, and will identify new strategies for employee development and training. The primary focus of the plan will be to assure that the strong skills and abilities of our workforce are fully utilized.
In order to plan for the expected workload growth created by the baby boomers in an environment of limited resources and a maturing workforce, the Agency is developing a vision that looks beyond our current 5-year planning horizon. This product, called the "2010 Vision," will be fully integrated with the Agency Strategic Plan, will consider the changing nature of SSA's customers, workloads, and technology, and will identify new strategies for employee development and training.
While the Agency has, for years, been considered a leader in high-quality telephone service delivery, increasing demands have made it more difficult to maintain that capability. Despite budget resource limitations and expanding service demands, SSA remains committed to taking proactive steps toward responding to customer needs and expectations. In addition, SSA seeks a better understanding of how other large public and private sector organizations are managing their telephone services. Specifically, we want to know what standards, other than access rates, these organizations emphasize in measuring the quality of the telephone service they provide, and what level of resources they make available for doing so.
Expanding Electronic Service Delivery
A growing number of customers want to conduct government business electronically as they become accustomed to doing commercial business in this way. SSA must continue to carefully monitor the ongoing shift in our customers' preferences and prepare to steadily expand service delivery options in response to customer expectations. SSA will continue efforts to increase the services offered electronically to allow customers to complete their business with SSA at the initial point of contact. Consistent with and contingent upon appropriate privacy and security safeguards, the Agency will add online service delivery on an incremental basis. This will enable SSA to improve customer service and realize some savings by increasing access to public information and forms while developing more complex online data collection and processing functions.
Social Security is the most successful domestic program in the nation's history and arguably the single most effective anti-poverty program ever created. It allows millions of people, who would otherwise suffer economic devastation in old age, to live with dignity. Without Social Security, one-half of today's elderly would be living in poverty. One of the top priorities of the Administration is to continue the fiscal discipline of the past seven years to help preserve and strengthen Social Security for current and future generations.
SSA is considered by the public to be among the most responsive public service agencies in government, and the recent Syracuse University report indicates that Social Security is one of the best-managed as well. Critical successes notwithstanding, we recognize both our continuing obligation to be responsible and careful stewards of the programs we administer, and the ongoing challenges in managing for results as we push the organization to get our work accomplished.
Meeting these expectations, in light of a growing workload, will be heavily dependent on continued success in harnessing technology to get our jobs done more efficiently as well as success in securing adequate funding to deliver world-class service. While this transition will cause stresses on the organization, with your continued support, we will meet the challenges that face us.
Thank you for the opportunity to highlight some of SSA's management accomplishments and challenges. I welcome any questions you may have.