MARCH 23, 1999





Statement by the Principal Deputy Commissioner of Social Security

On Agency Management


Mr. Chairman and members of the Committee, I am pleased to be here today to discuss management of the Social Security Administration.

As you are aware, we have been devoting a lot of attention and effort to the President's recent proposals aimed at preserving and strengthening Social Security. We have been participating in activities across the country aimed at informing the public about the Social Security program currently and the implications of various reform proposals. I plan to devote my remarks today to our management strategies and accomplishments in ongoing program areas, as well as some of our efforts at addressing management challenges.

Over the past decade we have focused on improving customer service. In the past few years we have also broadened our focus to include increased management attention to improving our stewardship of the Social Security and Supplemental Security Income programs.

The Maxwell School of Citizenship and Public Affairs at Syracuse University recently gave SSA the highest marks among federal agencies surveyed, in one of the most comprehensive studies of government management ever conducted. All 50 State governments and 15 federal agencies were graded on the management systems critical to effective public service. SSA was the only federal agency awarded an overall "A" grade on the study, which evaluated the five critical areas of financial management, human resources management, information technology management, capital management and managing for results. This is a high honor indeed, and a tribute to the dedication of every SSA employee.

Certainly, the interest and support of this Committee over the past several years have played a large part in the management successes that SSA has achieved, and we are very appreciative-not only for the budgetary support, but for our joint early efforts to move to performance budgeting. These efforts have paid off by giving you a better basis on which to make your funding decisions and helping us identify and demonstrate results.

We handle enormous workloads, many of which we delineate in multiples of millions. In fiscal year (FY) 2000 we will pay benefits to more than 49 million people every month, issue over 16 million new and replacement Social Security number cards, post 259 million earnings items to workers' earnings records, and handle nearly 60 million calls to SSA's 800-number. Our overall budget for FY 2000, at roughly $441 billion in total outlays, represents about one-fourth of all federal spending.


Strategic Management, Accountability and Performance

SSA is committed both to the concepts of the Government Performance and Results Act (GPRA) and to improving our ability to manage for results in improved customer service, as well as strengthening the integrity of our programs. SSA has been operating with an Agency Strategic Plan (ASP) since 1988 and has led the way in producing an annual Accountability Report, which includes audited financial statements.

SSA's financial statements have been audited since FY 1987. We have received an unqualified opinion on our financial statements for each of the past two years from PricewaterhouseCoopers, an independent public accountant. We are proud of our financial management program at SSA and strive to lead the way in new and innovative financial management programs.

SSA's Annual Performance Plan (APP) for FY 2000 was recently forwarded to the Committee. We have changed the APP significantly this year to make it more useful as a management tool and as a primary means of communicating overall direction and specific agency performance targets to our employees, the Congress and our stakeholders.

Last year, we made workload and performance commitments for FY 1998 and FY 1999. The FY 1999 Operating Plan subsequently revised certain commitments to reflect the enactment of SSA's FY 1999 appropriation and updated workload estimates. Our current FY 2000 commitments are based on our analysis of past performance and reflect what we believe can be accomplished at the resource level reflected in our budget request.

We are pleased to report that, in FY 1998, we met or exceeded our commitments in initial disability claims pending and processing time; hearings pending; CDR case processing; SSI non-disability redeterminations; 800-number service; Personal Earnings and Benefit Estimate Statements (PEBES) issuance; and the length of time the public spends waiting in a field office. Although we did not meet all of our ambitious hearings and appeals commitments, we were able to meet the goal of reducing our hearings backlog.


Ensuring Secure and Effective Automated Systems

SSA's ability to provide world-class customer service depends on a complex infrastructure that is crucial to our ongoing operations. Power, data, and voice telecommunications, along with the Agency's computer operations hardware and software, are essential to ensuring that SSA's business processes are able to continue uninterrupted. Our automated systems are the means by which SSA is able to provide service on demand to the public.

Year 2000 Compliance: SSA has been at the forefront of government-wide efforts to ensure that our systems are Year-2000 compliant. We are proud of our long-standing reputation as a leader when it comes to providing customer service and we are confident that we will be prepared to continue that tradition when the new millennium arrives.

As President Clinton recently reported, our benefit payment system is 100 percent Year 2000 compliant. SSA has worked closely with the Treasury Department, Federal Reserve and the Postal Service to ensure that the Social Security and Supplemental Security Income (SSI) benefit payments due in January 2000 will be paid on time. Since last October our payments have been made with Year 2000 compliant systems at both SSA and Treasury.

In the event that some banks are not able to credit direct deposit payments, SSA has worked with Financial Management Service and the Federal Reserve to develop a Benefit Payment Contingency Plan. It provides alternate ways of getting payments to Social Security beneficiaries. In dire need situations, SSA field offices can issue third-party payments immediately.

All of SSA's mission-critical systems have been made Year 2000 compliant, tested and implemented. The automated systems for 50 State Disability Determination Services (DDSs) have also been made Year-2000 compliant. In addition, we have been working with all of our trading partners, and I am pleased to say that over 99 percent of our data exchanges are Year-2000 compliant. We are working with our partners to test the remaining exchanges and get them implemented as quickly as possible.

Our independent verification and validation contractor, Lockheed Martin, completed a comprehensive review of SSA's Year 2000 program and submitted their finding in October 1998. Their report covered all aspects of Year 2000 preparedness activities and found our Year 2000 methodology to be sound and feasible.

Acknowledging that our systems are dependent on infrastructure services beyond our control, such as the power grid, the telecommunications industry and third parties, SSA has developed a Business Continuity and Contingency Plan. The plan was first issued in March 1998 and is updated quarterly. The plan is consistent with General Accounting Office guidelines and is being used as a model by other agencies and private sector organizations.

To sum up our Year 2000 compliance status: we are confident that the January 2000 payments will be issued on time, that our systems will function smoothly and that we will deliver all of our services to the American public.

Automation Investments: SSA is completing installation of the Intelligent Workstation/Local Area Network (IWS/LAN), which establishes a national computing network of intelligent workstations for SSA and the State DDSs that moves the Agency toward cooperative processing in a paperless environment.

The IWS/LAN is one of several automation initiatives SSA continues to employ to save workyears and achieve service delivery improvements. In comparison to FY 1997, which was the base we used to build the FY 2000 budget, we expect our investments in IWS/LAN to save more than 2,500 workyears. Other investments bring the total savings to 5,100 workyears. If we hadn't made these investments, we would be asking for $300 million more in FY 2000 to deliver the same level of service.

Systems Security: In a FY 1998 audit report, the public accounting firm of PricewaterhouseCoopers said that SSA had made "noteworthy" progress in strengthening controls to protect our information and in improving and fully testing our plan for continuity of operations. They also said we had improved significantly in the area of software development and change control procedures to the extent that this area was no longer a reportable condition.

We have taken both preventive and enforcement actions to protect information in Social Security files from any wrongful use by our own employees and from unauthorized access by outsiders. It is important to emphasize that SSA's mainframe computers have never been successfully penetrated by outside parties. That is not to say that we are resting on our laurels. We constantly reevaluate and, when necessary, upgrade the security features necessary to maintain the public's confidence that our systems are secure.

Anti-Fraud Initiatives and Program Integrity

Because the public rightfully expects us to be vigilant stewards of its tax dollars, SSA has a policy of zero tolerance toward fraud and abuse in our programs. A strong Office of Inspector General (OIG), working together with SSA employees, is the most effective means we have to control fraud and abuse in the programs we administer.

To strengthen the OIG's capacity to accomplish its mission, SSA has continued to increase the resources available to the OIG, effectively doubling its investigative staff.

Our FY 2000 budget supports increased attention by both the OIG and Social Security offices across the country for deterring fraudulent activities and identifying and bringing to justice those who commit fraud, whether members of the public or employees. SSA's anti-fraud activities include:

  • Enhancing on-line access to State records;
  • Expanding residency verifications for SSI applicants and recipients in our border offices;
  • Establishing additional State Disability Determination Service (DDS) fraud investigation units to detect and prevent fraud at the initial disability decision; and
  • Improving systems security measures.

Evaluation Plan: SSA has an extensive evaluation effort based on annual plans developed jointly by our Offices of Inspector General, Quality Assurance, Workforce Analysis, Policy and Disability and Income Security Programs. Our evaluation efforts have helped us develop targeted plans to address two areas requiring special attention: management of the SSI program; and our disability program, where most of our discretionary resources are expended.

Stronger Management of the Supplemental Security Income (SSI) Program

Our plan to strengthen management of the SSI program is embodied in the report "Management of the Supplemental Security Income Program: Today and in the Future," which resulted from a comprehensive review of the SSI program released by Commissioner Apfel last October. Our review identified areas in which the SSI program can be better managed: improving overall payment accuracy, increasing continuing disability reviews, and expanding our efforts to combat program fraud and improving debt collections. In each area, we have set aggressive but achievable goals to improve our management of the program.

We have always been committed to administering the SSI program as efficiently and accurately as possible. It is important to our nation and to the needy aged, blind and disabled individuals that the program serves.

In FY 1997 the payment accuracy rate-a widely employed gauge of how well the program is being administered-increased to about 94.7 percent. However, we believe we can improve our administration of the SSI program in ways that will further increase the accuracy rate and reduce erroneous payments. Our goal is to increase the accuracy rate to 96 percent by 2002 through management improvements and through the changes that we have recommended in our legislative proposals.

Electronic Information Exchange: As part of our effort to improve payment accuracy, we have expanded our electronic information exchanges significantly over the years. These matches have proven very successful. By FY 2002, we estimate that they will prevent about $230 million in overpayments each year.

Processing Additional Non-Disability Redeterminations: Redeterminations are periodic reviews of SSI beneficiaries' non-medical eligibility that focus on income and resource factors affecting eligibility and payment amounts. These reviews have proven to be the most effective tool available to SSA for improving the accuracy of SSI payments.

We are grateful for the FY 1999 funding provided to help SSA conduct additional redeterminations. Our FY 2000 budget request includes resources to enable SSA to continue to increase the number of redeterminations conducted-from 1.9 million in FY 1998 to 2.1 million in FY 1999 to 2.2 million in FY 2000. SSA plans to increase the number of redeterminations with a high risk of overpayment. These increases could result in an estimated annual reduction in overpayments of $260 million by FY 2002.

Proposed Legislation: Our budget also includes some important legislative proposals, which we believe will give SSA valuable tools to further our efforts. Three of the proposals are intended to improve SSA's ability to gather information that is material to an individual's eligibility or correct amount of assistance. These improvements will enable us to identify unreported changes earlier so we can prevent overpayments or reduce the amount of overpayments flowing from the unreported event. The proposals would expand the pool of data available to SSA or make the data available on a more timely and economical basis.

Another proposal would allow SSA to improve efforts to collect SSI overpayments by extending to SSI all of the debt collection authorities currently available for the collection of overpayments under the Old-Age and Survivors and Disability Insurance (OASDI) programs.

Two of the Administration's proposals are designed to strengthen program provisions that now allow individuals to qualify for the program by disposing of resources for less than fair market value, and by transferring assets to a trust.

The Administration has also advanced a proposal that would authorize SSA to impose specified periods of ineligibility for SSI and OASDI benefits. These

administrative sanctions will provide SSA field office employees a tool that they can use to respond appropriately to individuals who knowingly furnish inaccurate or misleading information material to eligibility or payment amount. These sanctions will act as a disincentive for those who may mislead SSA in their attempt to claim benefits.

These proposals were sent to the Congress in May 1998, and included in H.R. 631, the SSI Fraud Prevention Act of 1999, pending before Congress. These proposals have received bipartisan support.


Improving Administration of the Disability Programs

Earlier this month, SSA issued a plan called "Social Security and Supplemental Security Income Disability Programs: Managing for Today, Planning for Tomorrow," which presents a broad, comprehensive framework for improving the management of the disability program which provides benefit payments to over 10 million disabled at an annual cost of over $75 billion. The plan addresses several areas for improving disability program management.

Improving the Disability Decisionmaking Process: SSA proposes changes that will improve the disability decisionmaking process to ensure that decisions are made as accurately as possible, that those who should be paid are paid as early as possible, and that the adjudication process is consistent throughout. The plan incorporates the results of the various pilots we conducted over the last two years in looking at how to improve the processing of the more than 2 million new disability claims per year. SSA will conduct prototypes in 8-10 States, combining process improvements including pre-decision interviews and elimination of the reconsideration step in the appeals process.

Enhancing Beneficiaries' Opportunities to Work: As a nation, we are best served when all of our citizens have the opportunity to contribute their talents, ideas and energy by removing barriers to work. SSA will work to improve the return-to-work opportunities for disability beneficiaries so that individuals who want to participate in the nation's workforce may do so.

The cornerstone of our return-to-work strategy remains our commitment to the "Ticket to Work" program, which was first proposed in 1997, and is the basis of the bipartisan proposal included in the FY 2000 budget. Under this program, all disabled Social Security and SSI beneficiaries will be eligible to participate. Beneficiaries can use the ticket to obtain services from any enrolled public or private provider of their choice. The provider of services would be paid only after the beneficiary returns to work.

The incentives to work also include a proposed rule change which would increase the substantial gainful activity level, permitting some individuals with disabilities who have earnings in excess of the current regulatory monthly limit ($500) but less than the amount in the proposed rules ($700), to receive benefits.

Safeguarding the Integrity of Disability Programs: While committed to providing timely and compassionate service to claimants, SSA is equally committed to ensuring that only those individuals who meet program eligibility requirements come on to the 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 proud of our recent accomplishments and 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 for this crucial workload. We are now in our fourth 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 .5 million CDRs. By FY 1998, we had increased our processing to almost 1.4 million per year. We expect to complete 1.6 million CDRs in FY 1999 and 1.8 million in FY 2000. Over the course of our 7-year plan, we expect, on average, to realize lifetime program savings of about $6 for every $1 in administrative cost.

Creating a Knowledge Base for the Next Century: SSA is committed to increasing understanding, through research, of both the incidence of disability in the U.S. and disability programs, in general, so that policy makers can craft more responsive policies and legislation to assist individuals with disabilities.

Our research budget will support major projects to (1) improve the disability decision methodology, (2) estimate the size of the population potentially eligible for disability, and (3) create a Disability Research Institute to ensure a continued infrastructure to provide policymakers with the best information possible.

Conducting Effective Research for the Future

SSA has established a new Office of Policy, which has already taken significant strides to strengthen our policy research, evaluation and analysis capacities. We have several simulation models being developed to inform policy makers about the impact of various proposals. Many of the nation's top Social Security scholars are associated with a retirement research consortium we have established under cooperative agreements with Boston College and the University of Michigan to broaden and deepen the scope of our research.

We have also awarded a contract to undertake the Disability Evaluation Study, the most far-reaching disability survey in decades, to help us understand potential disability growth and also what enables individuals who are disabled to remain in the work force.

Our proposed FY 2000 research budget will enable SSA to continue research efforts on long-range solvency issues, the effect of demographic and economic changes on program beneficiaries, and return-to-work strategies for disabled beneficiaries.


SSA's goal is to be considered by the public to be among the most responsive public service agencies in government. The recent Syracuse University report would indicate we have the management processes in place. 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.

Before I conclude I would like to say a word about our outstanding workforce and the need for workforce planning. SSA's greatest strength lies in the attitudes, skills and drive of its employees. However, we know that we will experience higher-than-usual workforce retirement attrition over the next decade. Our number of retirees will grow gradually each year from about 1,000 in 1998, to a peak of approximately 3,000 workers in 2007. We expect that over 2,500 employees will retire each year between 2004 and 2012.

Our analysis of this upcoming "retirement wave" shows that the losses will be relatively balanced among SSA components and major occupations. We have paid special attention to looking at the impact of retirement losses in operational components that provide direct service to the public. Our overall conclusion is that the gradual and even nature of the losses should not impede the delivery of SSA services.

We have started to develop a Workforce Transition Plan as part of the Agency Strategic Plan. The plan will consider the changing nature of SSA customers, workloads and technology, and 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.

The approach in our FY 2000 budget plan calls for maintaining level staffing and overall workyears, which will permit us to replace losses to continue to do our work.

Commissioner Apfel is scheduled to appear before this Committee next month and will be prepared to discuss how our overall budget request will provide the resources needed to respond to the challenges addressed today.

Thank you for this opportunity to highlight some of SSA's management accomplishments and challenges. I welcome any questions you may have.