59

the position that we're not waiting for problems to arise. We are
trying to solve the problems before they arise.

I want to say something about planning. We have always
thought that long-range policy and program planning was impor-
tant, and that’s why I recently approved a reorganization of our
policy office, now known as the Office of Programs and Policy. We
are recruiting about 12 FTEs to fill empty slots in that newly cre-
ated office, and we know that this component will be responsible
for developing research and long-range policy options.

As we enter the 21st century, we’re updating our strategic plan
and beginning to address the challenges that lie ahead. We know
we're faced with increasing numbers of disability insurance claims,
and we’re working, as you know, on a thorough redesign of the dis-
ability claims process. And while this is a long-term initiative, we
have already made some major accomplishments to improve cur-
rent service and prepare for the future.

Preparing for the future also requires us to ensure the solvenc;
of Social Security, and we all recognize and state that changes will
be required to sustain the program in the long term. We know, too,
that those changes should be ideally made sooner rather than later.
The Advisory Council, which has been charged to come up with
some policy options, is close to completing its assessment for long-
range solvency, and we understand its report will be forthcoming
some time in August.

I am confident that, with informed discussion, we can reach a bi-
partisan agreement on the changes that will be needed to ensure
the continuing success of the program. And with the crucial role
that Social Security plays in our society, our efforts are of critical
importance to the Nation and the future of its citizens.

In closing, I would like to give you a larger overview of SSA’s ac-
complishments in the first year of independence, and they, too, ap-
pear before you on the posterboard.

First, we accomplished a seamless transition to independent
agency status, with very, very few problems. We restructured the
SSA policy organization for increased effectiveness; we increased
SSA focus on fraud, waste, and abuse; we have continued momen-
tum in reengineering of the disability program; and we have begun
and implemented a program to increase public confidence in Social
Security.

I would be pleased to have my formal, written testimony entered
into the record, and I would be happy to answer your questions.

Chairman BUNNING. Without objection.

[The prepared statement follows:]


123

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25

Mr. GarciA. I can’t specifically mention any instances, but that
is one of the leverages that a President might have, to postpone
making an appointment or submitting a nomination to Congress.

Mr. CHRISTENSEN. As far as an agency goes, if the Commissioner
is willing to argue his or her case strongly, and is a tough nego-
tiator, do you see that the Commissioner tends to have quite a bit
of independence subsequent to what the President tries to do to
him or her in terms of leveraging their power?

Mr. GarclA. I would say the fact that the President cannot re-
move a head of an agency gives the head of the agency much great-
er authority than someone who can be removed because he or she
disagrees with the President.

Mr. CHRISTENSEN. During your time here over the various Com-
missioners that have served, which Commissioner showed the most
independence as far as being a strong agency head over that time?

Mr. Garcia. Well, the one that comes to mind, and the one that’s
often referred to, is the Federal Reserve Board.

Mr. CHRISTENSEN. No, I meant with the SSA. Which SSA Com-
missioner over the last-——

Mr. GarclA. Sir, I haven’t followed the activities of SSA. I’m not
familiar with its responsibilities or even with its prior Commis-
sioners.

Mr. CHRISTENSEN. OK. On a scale of 1 to 10, with the Federal
Reserve Board being a 10 as the most independent agency, how
would you rank SSA’s degree of independence?

Mr. Garcia. It’s hard to say, because the various factors that I
mentioned before, not all of the agencies have the same character-
istics, so that one agency which could have protection against the
revision of its budget doesn’t necessarily have the ability to submit
its communications to Congress without OMB review.

I would say that, among the multiheaded regulatory agencies,
there are a few others besides the Federal Reserve Board, espe-
cially the banking agencies, that have relatively more independ-
ence. Among the independent singleheaded agencies, it’s unique in
its authority and in the independence that has been granted to it
by Congress. It has a little more independence than the Office of
Special Counsel because the Office of Special Counsel cannot sub-
mit its budget to Congress directly—it goes through OMB, and
Congress has only the budget that OMB has placed into the Presi-
dent’s budget.

Mr. CHRISTENSEN. Thank you, Mr. Garcia.

No further questions, Mr. Chairman.

Chairman BUNNING. Mr. Laughlin, we have about 6 minutes.

Mr. LAUGHLIN. [ll try not to use all that much, Mr. Chairman.

Mr. Garcia, as I listened to your testimony and talking about the
attitude of the independent agency, it reminds me of the time after
I had graduated from law school and was a company commander
in the Army, and had about 110 men under my command. My
mother called me and she wanted me to review what I had been

doing.

After I told her what I had been doing, she wanted to know what
I was going to be doing, and when I told her, at some point she
said, “Well, you’ve got my permission to do that.”


154

\ducts an ongoing customer survey of SSA’s 800 number service. On a semiannual
buss, about 1,500 callers to SSA's 800 number are surveyed to determine their opinions and
perceptions of SSA's service.

Enumeration Quality Appraisal

Objective
To measure the level of quailty of the enumeration process. Enumeration accuracy is a
performance measure included in the Agency Strategic Plan.

Description

OPIR conducts an ongoing end-of-line review of the enumeration process. The Enumeration
Quality Appraisal System is based on a review of a random sample of approximately

2,000 enumeration transactions (non-Enumeration at Birth (EAB) Social Security Numbers
(SSN) selected from daily accretions to the Numident. A copy of the application is obtained and
the application data are compared to the Numident. The alpha-index file is also queried to
Getermine whether the applicant was either assigned an SSN belonging to someone else or
assigned an SSN different from the SSN already assigned to the applicant

Special Studies (in progress and planned for FY 1997)

RSI STUDIES

Disability Insurance (D)) Claims Nonmedical Review (Retirement, Survivors and Disability
Insurance; i.e., nonmedical aspects of title Il, claims)

Obie
To review the quality of the nonmedical aspects of DI claims.

Description

This study is a review of nonmedical payment accuracy of DI cases. In the Office of Inspector
General's (OIG) review of the IDA study, they were critical of the absence of management
information pertaining to nonmedica! DI quality. OPIR began a probe which is carying over to
FY 1997

DI PE Review

Objective
To determine the accuracy of nonmedicai Di PE actions.

Description
Tne nonmedical PE quaiity of disability cases will be included in the ongoing title II PE review.
Reviews will begin in FY 1997 to provide data for the FY 1998 report.


149

SSI Dollar Accuracy Review of Initial Payments and FO Redeterminations to Provide
Agency Performance Measures (IDA)

Objectives
To determine the dollar accuracy of claims adjudicative actions expressed 2s a proportion of
dollars paid accurately over life cycle dollars that should be paid.

To identify which specific dollar accuracy problems are most significant and distinguish those that
appear most correctable.

To initiate a dialogue in SSA that leads to practical action plans for corrective action.

Description

The reviews for the 3,000-case sample of initial claim awards and FO-processed
redeterminations involves an examination of documents in SSA records and verification of dollar
aceyracy through contacts with recipients, their representatives and collateral sources (such as
employers). Dollar impact is described in terms of life cycle effect on benefits

‘SSI Posteligibility Review System

Objective
To measure the impact and quality of significant SSI posteligiblity transactions,

Description

OPIR is expanding its titie XVI quality measurement to posteligibility transactions in addition to
the IDA review of redeterminations, The review selects posteligibility transactions that either
have the potential to affect paymenveligibilty or are major service delivery items,

OPIR sampled about 8,200 transactions in FY 1996 and this will continue in FY 1997. These
transactions are change of address, limited issue, underpayments, terminated cases and
returned checks. ‘The review will consist of both a casefile and field review (FR). To the extent
possible, FRs will be conducted by telephone.

OPIR fully implemented the review of change of address and limited issue transactions in
October 1994, The review of underpayment transactions was implemented in January 1995.
‘The remaining reviews were implemented in April 1995.

Review of Initial Claims Nonmedical Denials

Objective
To determine whether initial nondisabilily determinations of SSI ineligibility are correct

Description

OPIR will review the FO casefiles on 1,000 recent denials. If the casefile documentation
supports the nonmedical denial, further review is not warranted. When the casefile
documentation does not support the denial, contact with the sampled individual is required to
resolve discrepancies, We estimate 5 percent of the sample will require face-to-face contact to
complete the review.


COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois. SAM M. GIBBONS, Florida

BILL THOMAS, California CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ANDY JACOBS, JR., Indiana

JIM BUNNING, Kentucky HAROLD E. FORD, Tennessee
AMO HOUGHTON, New York ROBERT T. MATSUI, California
WALLY HERGER, California BARBARA B. KENNELLY, Connecticut
JIM McCRERY, Louisiana WILLIAM J. COYNE, Pennsylvania
MEL HANCOCK, Missouri SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan BENJAMIN L. CARDIN, Maryland
JIM RAMSTAD, Minnesota JIM McDERMOTT, Washington
DICK ZIMMER, New Jersey GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia

SAM JOHNSON, Texas LF. PAYNE, Virginia

JENNIFER DUNN, Washington RICHARD E. NEAL, Massachusetts
MAC COLLINS, Georgia MICHAEL R. MCNULTY, New York

ROB PORTMAN, Ohio

JIMMY HAYES, Louisiana

GREG LAUGHLIN, Texas

PHILIP S. ENGLISH. Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska
Puiu D. MoseLey, Chief of Staff
JANICE Mays, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY
JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas ANDY JACOBS, J., Indiana

MAC COLLINS, Georgia BARBARA B. KENNELLY, Connecticut
ROB PORTMAN, Ohio LF, PAYNE, Virginia

PHILIP S. ENGLISH, Pennsylvania RICHARD E, NEAL, Massachusetts

JON CHRISTENSEN, Nebraska
GREG LAUGHLIN, Texas

ap


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COMMITTEE ON WAYS AND MEANS

US. HOUSE OF REPRESENTATIVES. ec Rae a
WASHINGTON, DC 20515, July 16, 1996

SUBCOMMITTEE ON SOCIAL SECURITY

Ms, Ruth A. Pierce

Deputy Commissioner for Human Resources
Social Security Administration

Baltimore, MD 21235

Dear Ms. Pierce:

On July 10, 1996, you appeared on the NBC "Nightly News" segment, "The Fleecing
of America." During the segment, you were asked by Lisa Myers if union representatives at
the Social Security Administration engaged in partisan political activities, to which you
replied, "No, not in this organization they do not.”

‘Ms. Myers then showed you a fax sent from the Democratic Leader, Congressman
Richard Gephardt, to a full time union representative at SSA, entitled, "Top Ten Worst
‘Things About the Final Republican Budget.” You replied that the fax was not appropriate
and that you would look into it because it is clearly not something SSA condones. I am glad
to know that SSA does not condone this action and will be conducting an investigation.

Attached are four other correspondences which were distributed via official Social
Security E-mail or fax systems. I advise you to investigate these as well

In your investigation of this matter, 1 would like to be kept completely informed of
your actions as you take them. Please let me know what steps you have taken or intend to
take to ensure that SSA union cepresentatives do not engage in partisan political activities. If
you have not taken any action in this matter, please tet me know when you intend to do this.
1 would appreciate your providing me with copies of all correspondence associated with your
investigation, including agency memoranda and correspondence with SSA unions. Thank you
for your cooperation in this matter. 1 look forward to your reply not later than July 23, 1996

Antachments


152

Consistency Review

Objective
To promote consistency in the review process among geographically separate SSA components.

Description

An automated sample of claims reviewed by the DBs in each of the 10 ORPIRs is selected for
review in central office The DDS determination and the DQB review are scrutinized for accuracy
of the determination and uniform application of SSA policy and procedures.

Continuing Disability Review (CDR) QA Review

Objective
To determine, by sample, accuracy rates for CDR determinations at the DDS level and gather
management information on various aspects of the CDR process.

Description
A random, stratified sample of CDR disability determinations is automatically selected as the
DDSs clear the cases. The cases are forwarded to the DOBs for review.

Quality Review of CDRs-~-Oftice of Disability and International Operations (ODIO)
Obyectwe

To “neasure the accuracy of the disability determination and the application of SSA policy and
procedures, To detect and correct erroneous decisions.

OPIR is to perform a quality review of CDR determinations prepared by disability examiners in
ODIO. A sample of completed ODIO disability determinations will be selected and reviewed for
accuracy and compliance with SSA policy and procedures.

Disability Hearings Quality Review Process (DHQRP)

Obsective
To promote fair hearing decisions and collect sulficient data to permit analysis of other
agjudicative issues at the hearing level

Desenption

‘The DHQRP was inslituted as an Administration response to a General Accounting Office report
inferring possible bias in the adjudication of claims by administrative law judges (ALW), The
mission of the DHQRP is to conduct an ongoing quality review which provides management and
program information about ALJ hearing decisions. (Ad hoc reviews of senior attorney and
adjudication officer decisions are also being carried out.)

The ongoing review consists of all ALJ initial disability decisions, with an equal number of
allowance and denial decisions being sampled. The sample is randomly selected each month on.
a postadjudicative basis by the Office of information Management (OIM) using the Office of


79

36) From: Ralph da Juliie Council 220 at --Ny 7/11/96 3:25PM (2989 bytes: 1 In)
riority: Urgent
ubject: Amendment Introduced to Elimina
nkhown recipient: *APGE_ BROADCAST

o a ff:

te Offioiel Tine in 88a
SBA, *AFGE Council 220 Broadcast at
at --S5A
age Contents

Deni

ene ry
From AFGE National office:

Amendment to RR 3755, As Reported
Offered By Mr. Bunning of Kentucky

page 87, after line 1, insert the following new section:

1 Sect. ___ None of the funds nade available in this

2. Act for transfer from the Federal old-age and survivors
3. Ineurance Trust Fund or the Federal Disability Insurance

4. Trust Fund may be used for expenditures for official tine

5. for employe

of the Social Security Administration pursu>
6. ant to section 7131 of title 5, United States Code, or for
7, facilities or support services for labor organizations pursu-
8. ant to policies, regulations, or procedures referred to in

9. eection 7285(b) of such title.


15

regulations to OMB for clearance before being published.®® Moat independent multi-headed regulatory

‘agencies cited under 44 U.S.C. 3502(10), have been exempted from having to submit their regulations
to OMB.

Although SSA is not a multi-headed regulatory agency, ite independent status may protect it from
having to send ita regulations to OMB for clearance, since such clearance is required by Presidential
direction and not by statute. However, the agency sends ite regulations to OMB for clearance before
publishing them.

Paperwork reduction

The unique status of independent multi-headed regulatory agencies also is reflected in the
Paperwork Reduction Act, where, for the first time, the individual commissions were singled out as

independent regulatory agenclies]* in the United States Code.” In an effort to reduce the cost of
paperwork to the public, all agencies in the executive branch are required to submit proposed new
information collection requests to OMB for approval before they may be sent to the public in the form
of new questionnaires or other data collection requests. Under the Act, only the multicheaded
indopondent regulatory agoncioe, by majority vote oftheir members, may override OMB if it disapproves
one of their requests;

SSA lacks the independence of the regulatory agencies regarding its ability to collect data from
the public, sinea it cannot override OMB if it denies a request to approve such data collection.

Litigation

Finally, an agency's independence is affected by the degree of litigation authority it has. Under
Sections 616, 518, and 519 of Title 28, the Justice Department serves as the central litigating authority
for executive agencies, While the genoral litigating authority is vested in the Attorney Genoral, most
of the agencies enjoy a certain measure of independent litigating authority on civil matters. That
litigating authority, however, is a confused hodgepodge of exceptions to the genoral statutes.

‘The authority varies considerably, depending on whether it involves defensive litigation, offensive
litigation, or appeals to the Supreme Court. Some agencias have complete or near complete authority in
all three areas, others have partial authority in some or all of the areas, and a few have no formal
authority without the approval of the Attorney General. In some instances it is unclear whether agenciea
have certain litigating authority.®* Some of the agencies participate in judicial review, or defensive
litigation. Moat have statutory authority to do g0,¢° while others apparently do so as a matter of custom
without having specific authority:

3 Executive Order 12291, 46 Fed. Reg. 19139 (1981), nd Executive Order 12866, 58 Fed. Reg. 61735 (1993),
which revoked the earlier order but continued the clearance process.

5 Sec, 1(d) of E.0. 12291 Executive Order 12291, and See. 3(b) of Executive Order 12866.
8 44 U.S.C. 50210). See note 29 for a list of the agencies.
% 44 USC. s50710).

3 While the Study on Federal Regulation, Vol. 5 (Regulatory Organization), U.S. Congress, Senate. 95th Cong,
24 sees. Gov. Print. Off, Washington, D.C., 1977, remains « key source regarding commission litigating authority,
two more recent sources include, a CRS memorandum Litigating Authority of Federal Entities by P.L. Morgan of
the American Law Division, dated July 7, 1988; and U.S. Administrative Conference of the United States. Multi-
Member Independent Regulatory Agencies: A Preliminary Survey of their Organization, (Revised Edition), May
1092. hie section relies heavily on these three sources,

«© Federal Communications Commission (28 U 8.C. 2348 and 2350, and 47 U S.C. 184(0(1), Federal Deposit
Insurance Corporation (12 U.S.C. 1819), Federal Energy Regulatory Commission (42 U S.C. 710} et.60q and 71714),
Federal Labor Relationa Authority (5 U.S.C, 7105(h), Federal Maritime Commission (28 U.S.C. 2348 and 2350),
Federal Trade Commission (16 U.S.C. 56), National Labor Relations Board (29 U.S.C. 28 U.S.C. 154(a)), Nuclear
Regulatory Commission ( 28 U.S.C. 2948 and 2350), and Securities and Exchange Commission, (12 U.8.C. 1109(a),
1125(4) and 1129(€)). See ACUS Preliminary Survey, p. 5, 9, 12, and 15; and Study on Federal Regulations, Vol. V
(Regulatory Organization), pp. 67-58.

41 See P.L. Morgan, p.7, 9, 11, and 18, ACUS Preliminary Survey, p. 6, 11, 18, and 18, and Study on Federal
Organization. Vol. V (Regulatory Organization), pp. 87-58. The Department of Justice will often agree to allow
‘agency counsel to participate, or even totally conduct litigation where the knowledge, expertise and interest on the
subject matter resides in the agency.


197

io (ene hiring un r_lea a
that anstead sf hiring polic.*sl people as "temporary" or
dule C" (political) you ‘ave hired (or converted) some as

“casce: "or permanent status This means that these polit val
empl ayees who are loyal to the current party in the white 42 +.

or to the political appoint-+2 who actually hire them, wisl a
mat SSA during future admiuistrations, and encumber scarce FTE
positions, which are severely limited within agencies.

How many "career" status employees have you hired ar Baltimore

adquarters rue Washington office who report to a
cep papepe "career" status
mployees have hired for the Office of Legislation? Sw
vi ior Social 2 hire these

employees as permanent "carser," rather than temporary
“political” as would have bein wie appropryste” How many of the

2. -compet itive political slats Jonoiess provided

in statute when it made SSA independent have

w many employees origin: ired as "non-career" or
"political" have you since converted to "caz-.1"

How can you justify hiring any and giving them peymanent
“career,” rather than temporary “political” status, given how
overstaffed Baltimore headquarters 1s, sn} how upde.stafted SSA
field offices are? And how can yor ‘ify anyone as a permanent
ncareer" employee, rather than as a tenporary “political”
employee if their qualifications are basically political?

The number of individuals appointed to competitive service
positions (Baltimore and Washington, D.C.) who report to a
political appointee is as follows:

Office of the Deputy Comissioner
for Legislation
& Congressional Affairs (ODCLCA) 6

Office of Disability 1 (career transfer from
another Federal agency)

During my tenure as Commissioner, only one individual appointed
initially as a Schedule C in SSA has been converted to career
status following appropriate competitive examining procedures.
With the exception of the career transferee (who previously
competed for appointment in the former Agency), competitive
examining procedures were also followed for the six ODCLCA
appointments in accordance with law and regulation.

All of the appointees referred to above met the applicable
qualification requirements and were determined to be the best
qualified for the positions to which appointed.

Of the 20 positions allotted under the independent agency
legislation which may be held by either noncareer SES or
Schedule C appointees, 10 are currently filled


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189

13. In your testimon yu discussed the progre. of 4 redesign
anitiativ GAQ has "14 us there are a total of 83 ininat:
planned, and that the -. op mi f S mr
Limited any real pregisis in implementing them, How do you reavr
to GAO's findings regarding redesign?

GAO recommended that SSA concentrate on those initiatives m
crucial to the redesign's ability to produce significant,
measurable reductions in claims processing time and
administrative cost--including those initiatives intended to
achieve process unification, establish new decision making
positions, and enhance information systems support; and combine
those initiatives into an integrated process, test that process
at a few sites, and evaluate testing results before proceeding
with full-scale implementation.

SSA responded by stating that we agree in general with the
recommended approach, and have been proceeding in a manner
consistent with it. We stated further that we have identified a
small number of redesign areas in which we are concentrative Tost
of our redesign efforts to support critical, long-term
efficiencies. These are:

--Single Decision maker testing;
--Full Process Model (FPM) testing;

--Disability Claims Manager testing;

--Adjudication Officer test evaluation and implementation;

--Process Unification;

--Quality assurance;

--Simplified disability methodology research; and
--Development of systems enablers.

We advised GAO that the FPM will serve as an integrated redesivn
test site for several other redesign features. FPM testing,
which will begin in early 1997, will incorporate several key
redesign elements, including the single Decision maker, the pre-
decision interview, elimination of the reconsideration and the
adjudication officer.

Redesign is our highest priority. Our redesign investment is
critical to providing a far more efficient and equitable process
that will benefit our customers and $SA’s ability to meet the
workload demands of the future.


178

= _

Tv ADUNGSAY SVSSO LEEL AT


74

and Gellver the best possfble scrvics to the Amcricen people.

4 With these mutual goals serving as the foundation for partnership, unlon representatives ot

SSA sad elsewhere throughout govermapent are osing official tims to wok togerber with

Management to improve productvity, efficlency, asd service delivery. Official ime is aa
essential tool for bringing about ¢ government tbat works belter and cnety fexr

THE CRALLENGB FOR SSA

1 SSA touches mors Lives than any other government agency, maintaining records on almort
140 million ‘Americans and paying out beneéty wtuling pear) pearly $300 billion to some $0
million cusamers every moth.

1 The federal workforce is smaller thin at any tine since 1963, yet there is 0 tess demand

for efficlent, high-quality public service. SSA is 2 prime example of an agency thar has to
do more with Iess. Even as Ite workforee bss shrunk frocs 80,000 in the Jale 19805 to 65000
today, over 3.5 million sew beneficiaries are séded to Use Social Security rolls every year

1 SSA employees field over 60 milllon telephone calls om the agency's toll-free numba each
year, tometimes as many as 1.7 avilion on a tingle day.

HOW UNIONS AT SSA ARE WORKING FOR THE TAXPAYER

1 SSA is setting the gold standard for high-quality performance and customer service.
These gains are being made for the Anerican txpiye not is épite of “union activity," bot
because of what unions and management have beca able to sccompllsh by working together

ip partoership.

1 Here's a8 cxample. When Dalbar Minanclal Services, the largest financial news publisher
in North America went looking for the bes toll-lree customer sorvies im the world, it was
‘SSA that ranked aumber ope, beating out such service-oriented companies as Federal
Express, LL Bean, Sourbwest Airlines, Dieney, and Nordstrom.

1 This success did not come by accident. By working with won representatives aod weir
members on the front lines, SSA was able (0 taosform the way work is done and ausomens

served.

« Here's another example. Faced with angry austomer and 1 mouming backlog of disability


32

STATEMENT OF CHARLES A. BOWSHER
COMPTROLLER GENERAL OF THE UNITED STATES
SOCIAL SECURITY ADMINISTRATION
U.S. GENERAL ACCOUNTING OFFICE

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 2ist century. With a staff 2f 64,000, SSA administers
the nation's largest federal progran--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’ provides benefits co recired and
disabled workers and their dependents and survivors; SSI provides
assistance to the needy aged, blind, and disabled. rn 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 immigrancs and
children are feigning mental illness to obtain SSI undermine the
public's trust in SSA and in the federal government

To bolster SSk‘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,’ 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

‘The Social Security program has two parts--Old Age and Survivors
Insurance (OASI) and Disability Insurance (DI)

ial Secucity Administration: Leadership Challeng: pany.
2an Independent Agency (GAO/HEHS-95-59, Feb. 15,


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39

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 chat the
testing of process redesign features involved too many
uncertainties for SSA to develop an integrated plan

Weak Return-to-Work Efforts

Although SSA has focused on improving its processes for moving
eligible claimants onto the disability rolls, it has placed little
priority on heiping them move off the rolis 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.” 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 ¢
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.” However, SSA has
not translated the Congress’ broad goals for the PASS work

“see ity: 2 Returs
kg Work (GAO/HEHS-96-62, Apr. 24, 1995) and r
in Pr nto Work (GAO/T- HEE:

147, June 5, 1996).

rhe 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
i P

Managed (GAO7HEHS-96-51, Feb. 26, 1996)


164

Human Immunodeficiency Virus (HIV) Focus Review

Objective

To determine whether policy and procedures are adequate to permit adjudicators and quality
reviewers to arnve at correct decisions in cases involving HIV and to provide management with
an assessment of the extent to which policies and procedures for adjudicating HIV cases are
being consistently followed since revision of the HIV listings.

Description
For 6 months the DQBs will select 500 initial allowances/denials and reconsideration
alfirmations/reversals from the QA sample in which HIV is the primary or secondary impairment
Data resulting from a review of selected cases will be collected and analyzed

Drug and Alcohol Addiction (DAA) EIS

Objective
To determine if the new rules governing eligibility for title 1, tille XVI and concurrent benefits are:
being applied propery by the DDSs. Recent legisiation changed the eligibiliy requirements
where DAA is material to the finding of disability.

Description
‘The first 25 allowance cases (DDS decides DAA is not material under the new rules) and the first
25 denial cases (DDS decides DAA is material) from each State will be reviewed. Also, the first
25 DAA redetermination appeal decisions from each Disability Hearing Unit will be reviewed. If a
predefined number are found {o be correct, no additional sampling is required: if a predefined
number are not correct, additional sampling would be done and continued until the State
performs satisfactoniy

PER of ALJ Decisions

Objective
To develop actions to support consistent disability decision at all steps of the adjudicative
process

Desenption
The Inteccomponent Policy group has been asked to enforce all changes needed for PU, A PER
of OHA allowances has been proposed using the Appeats Council's own-motion review authority,
to review 10,000 allowances a year, Unsupported cases will be sent to the Appeals Council to
review for possible reversal or remand to the deciding ALJ. Sample cases where OPIR and the
Appeals Council disagree are to be reviewed by an SSA Intercomponent Panel

Probe for Performance Measure of Initial Title Il and Title XVI DI Claims Payment Accuracy

Qbiective

To measure the accuracy of title II and title XVI Dl claims, both medical and nonmedical, and to
report on the accuracy of the first payment made to newly awarded claimants as well as any
payments that should have been made in erroneous denial cases. OPIR is assigned the task of
developing performance measures dealing with stewardship accuracy of DI and SS! payments.


64

to increase the number of criminal investigators, from 124
investigators to be employed as of August 1 to 158 investigators
by September 30.

Another challenge we face is administering the prohibition
against paying benefits to prisoners. Toward this end, SSA has
undertaken affirmative steps to ensure that institutions report
inmates timely and accurately and that ineligible individuals do
not. receive Social Security and Supplemental Security Income
(SST) benefits. We now have agreements to receive prisoner data
from 47 States, the District of Columbia, Puerto Rico, the
Federal Bureau of Prisons, and all but a small percentage of the
more than 3500 local jurisdictions. This represents an almost 20
fold increase of those jurisdictions reporting now over the
number reporting in 1993, We are renegotiating the agreements
with the 3 States whose agreements have lapsed. However, we have
received prisoner reports from those States.

In order to provide an additional incentive for state and
local institutions to provide prisoner data on a timely basis
SSA supports legislation which would provide State and local
correctional institutions with a one-time $400 payment (from
program funds) for each prisoner identified as receiving a Social
Security or SSI benefit if the data is supplied to SSA within 30
days of confinement. $SA would provide a $200 payment if the
information 1s supplied from 31 through 90 days after
confinement.

SSJ_Reform

P.L, 104-121, enacted on March 29, 1996, eliminates drug
addiction and alcoholism as the basis for receiving SSI and D
benefits. This change was effective immediately for new
applicants and will be effective January 1, 1997 for current
recipients. SSA is expeditiously implementing the new
provisions. Notices have been sent to approximately 200,000
effected beneficiaries advising them of the change in the law.

In the pending welfare reform legislation, the criteria used
to determine eligibility for disabled children are revised. This
legislation would eliminate the individualized functional
assessment as well as the double counting of maladaptive
behavior. §SA supports these changes. Also contained in welfare
reform are provisions that would restrict benefits to certain
noneitizens. All of these provisions would result in significant
workloads for SSA

Euture Challenges

Despite two furloughs and thirteen continuing resolutions
during our first year as an independent agency the Social
Security Administration has made progress toward its gocis and
increased employee productivity. Still, we are also aware of the
significant challenges that lie ahead

© Policy Development

To enhance policy development, I recently approved a
reorganization of the former Office of Programs, Policy,
Evaluation, and Communications, renamed the Office of Programs
and Policy, which will be responsible for developing long-range
policy opticus, and for improving SSA's ability to engage in
rapid decisionmaking. Through this new office, SSA will
intensify its focus on policy planning and development by working
with the management of other components, the Administration
Congress, advocacy groups and our customers

© Advisory Board

The Independent Agency legislation established a bipartisan
Social Security Advisory Board composed of seven members. Three



148

‘The PSCs process exceptions and alerts from the various computer processing systems. in this
project, a series of large volume exceptions and alerts from each of the postentitlement (PE)
computer processing systems will be reviewed. Each exception and alert will be analyzed to
identify assumptions that could be made to process the action with a high degree of accuracy.
These assumptions would be made part of the processing logic for the processing system. In
essence, this would overlay the logic of expert systems into the logic of processing systems. A
determination will be made concerning the accuracy percentage each assumption would need to
achieve to be adopted, The project will help to reduce folder dependency and eliminate
qualityiservice inconsistencies resulting from technicians with different levels of expertise
manually processing computer exceptions

Field Office Assistance Visits (FAV) to Provide Direct, Local Feedback and Advice in the
Spirit of Total Quality

Objectives,
To provide regional support through field office (FO)-related activities designed to: 1) Reduce
dollar error indicated by national IDA data; 2) obtain new insights into the root causes of error, 3)
provide timelylindepth feedback to regionalilocal management on selected offices/issues; and 4)
provide information on program simplification through "best practices” analysis

Description
FAV is focused at the FO tevel where day-to-day transactions have the greatest potential for
reducing payment errors and improving the quality of workload processing. individually tailored
mettiodologies for each region will employ case and field reviews and individual FO visits
according to the needs of the region.

SUPPLEMENTAL SECURITY INCOME (SSI) STUDIES

SSI Stewardship Payment Review of Existing Active Accounts to Provide Congress with
Accuracy of Payments

Objectives
To monitor the doliar accuracy of monthly SS! payments

To identify which specific dollar accuracy problems are most significant.

Descnphion

‘OP.2 anaually reviews samples of the SSI recipient rolls. In FY 1897, OPIR will review 4,000
payments. The review involves an examination of documents in SSA records and verification of
Payment accuracy through contacts with recipients, their representatives and collateral sources
(such as employers)


‘Social Security Benefici
1950-2030

les (OAS)

tense Yaar,

Note: Includes recipients of OAST only

Source: 1996 Annual Report of the Board of Trustees of the Federal
Qld-Ase and Survivors Insurance and Disability Insurance Trust
Funds:

This retirement explosion threatens the long-term solvency of
the Social Security system. Seginning 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,’ 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.‘ 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.

*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.

‘Social Security payroll taxes that accumulate in the trust fund
reserves are currently invested in U.S, Treasury bonds.



67

Chairman BUNNING. Commissioner Chater, before we get into
questions on the substance of this hearing, I would like to ask you
a very straightforward question.

Why is it that you and your agency can’t seem to provide this
Subcommittee with even the most routine information in a reason-
able amount of time? For example, since the June 27 hearing, I
have been trying to obtain through GAO copies of regional award
agreements documents that were signed some time ago. You deliv-
ered them this morning. That is, all but two were delivered this
morning, before this hearing.

Then Ruth Pierce promised to provide various information on
how employees can decertify the union as their representative.
GAO followed up on Ms. Pierce’s promise several weeks ago, and
yet, we have had no response. And last week I sent Ruth Pierce
a letter regarding the revelations by NBC news that political activ-
ity was being conducted on government time by SSA union rep-
resentatives.

I have a copy of it, without objection, I will put into the record.

[The following was subsequently received:]


190

14. GAO repor.=d that SSA now plans to complete 8 million
continuing 1_stility reviews (CDRs) in the next 7 year:

A would have to conduct about twice as -1, reviews as at
has conducted over the past 20 years combined? 3s you believe

SSA is really up to this + and can realistically mec this

goal

Budget and staffing reductions, and historically high workloads,
limited our ability to remain current in processing CDR cases
Due to the resulting high CDR backlogs SSA redesigned li.e., the
CDR mailer/profiling process) the CDR process.

In FY 1996, SSA cleared almost 518,000 CDRs which was the second
highest number of CDR clearances ever and the most since FY 1983.
In FY 1996, a machine-readable CDR mailer form was implemented
substantially increasing the number of CDRs that could be
processed via the CDR mailer/profiling process. In fact, there
were twice the number of mailer clearances in FY 1996 than in FY
199s.

We are confident that our CDR strategy will lead to reliable and
cost-effective monitoring of all beneficiaries and the
elimination of this backlog in the next 7 years.


196

Als regarding the $40,000 plus

17. Please provide complete Js. 1
Si' to hire two of SSA's political

chat you "head put

appointees: ard ial rity tiast,
fund money. amount of the for «hb
hire, the firm to whom tl< tees were p- 2, the names and da +- ci
the persons hed, an) the .esumes of qualifications they

in ree tone
is i! true that the rvo ind v duals you hired for these large
tens | no se sya) =~. urit ground?
How would you justify this ~ap--siture from the trust funds to
hardworking Americans who p. ~.. se FICA taxe: upposedly for
Social Secuviry benefits? To your Knowledge, has =ny other

1s: 16} trust funds in thie “ame iUf e4 ples
poode s cise)

It is within my legal authority to use the services of a
headhunter to assist in finding the best candidates for
specialized executive positions at the Social Security
Administration. The firm used, Goodwin & Company, received
$49,000 - half from trust funds and half general revenues which
is in the same proportion as every item in the Social Security
Administration's administrative budget as required under section
201(g) (1) of the Social Security Act. This fee was not broken
down specifically respective to each search.

One candidate so hired was Joan Wainwright, Deputy Commissioner
for Communications and the other was Carolyn Colvin, Deputy
Commissioner for Programs and Policy. Resumes as submitted were
previously provided with my letter to you of August 7, 1996.

I have no knowledge whether previous Commissioners used search
firms.


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167

Employer Satisfaction Survey

Objective

To determine employers’ expectations of the kind and quality of service SSA provides, as well as
measures of their satisfaction with SSA.

Description

PIR will survey employers to identify their expectations in service from SSA and to measure
their satisfaction with service provided. We will also solicit comments on their experience with
‘SSA's wage reporting system. The survey will provide information that will assist SSA in setting
‘employer-related customer service standards, provide feedback on the usefulness of the
SSAlinternal Revenue Service (IRS) Reporter newsletter for employers, and provide specific
filing information that will be integrated into SSA's electronic filing initiative. The survey will
involve a random sample of 3,000 employers in 3 strata based on number of employees.

National FO Teleservice Monitoring Pilot

Qbiective
To determine the review protocol and procedures to be used if the Agency decides to implement
‘ongoing monitoring of FO teleservice

OP 8 conducted a Phase | study of FO telephone service in 1995 using six pilot sites. The
cutrent study will be Phase !! and will involve 50 FOs. The purpose of these pilots is to further
review the protocol and procedures thal would be used if the Agency implements,

Evaluation of Automated Teleservice initiatives to Achieve PERFECT ACCESS

Objective
To obtain data on caller reaction to use of automated scripts on 800 number calls to possibly
improve access rates and queue times.

Description

A special caller recontact survey was conducted in May 1996 to gather data on caller reaction to
the new automated scripts/services initiated in February 1996. This project, PERFECT
ACCESS, was designed to increase access rates and improve queue times. However, during
the time the survey was conducted, AT&T had not delivered all previously agreed upon
enhancements; e.g., enhancements were not provided to nighttime callers and the voice
recognition and Spanish language features were not available. OPIR will conduct another survey
in FY 1997 when all the PERFECT ACCESS features are operational. The survey wil involve
Tecontacting callers who used the new 800 number automated features with the sample stratified
‘on the options available,

HCFA 800 Number Medicare Pilot

Object
To determine if the contractor hired by HCFA to answer 800 number Medicare calls can properly
identify and refer/respond to SSA-related issues.


126

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45

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

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

For more information on this testimony, please call Jane L. Ross,
Director, Income Security.Issues, Health, Education, and Human
Services Division, at (202) $12-7215, or Cynthia M. Fagnoni,
Assistant Director, at (202) 512-7202.

(105935)


87

Ms. CHATER. I think the law did not mention numbers of posi-
tions. It——

Mr. ENGLISH. But it said “substantially.”

Ms. CHATER. It said substantial.

And your question was did I alert Congress to that effect? No.

Mr. ENGLISH. This Subcommittee. OK.

Ms. CHATER. Or this Subcommittee.

Mr. ENGLISH. According to GAO and OPM, compared to all other
Federal agencies, SSA has fewer SESers on board than any other
agency, except two—Education, which has 75 for a staff of 5,000,
and OPM, which has 39 for a staff of 4,000. By comparison, HHS,
with a staff similar in size to the SSA, 58,000 as opposed to 65,000
for SSA, has 540 SES positions to your 104.

What action are you taking with OPM to correct this imbalance,
and isn’t SSA just as important as HHS?

Ms. CHATER. Yes, of course it is. The action that we’re taking is
continuing to have conversations with the Office of Personnel Man-
agement.

Mr. ENGLISH. So you intend to pursue additional positions be-
yond, say, the five that you’ve requested and so far have been
turned down for?

Ms. CHATER. Yes.

Mr. ENGLISH. OK.

GAO also reported that 47 percent of your senior executives and
30 percent of your senior managers are eligible to retire in the next
5 years. This, I know, is a real challenge to any public organiza-
tion.

What are you doing to prepare for the loss of this experienced
personnel?

Ms. CHATER. Well, this year we're able to do some recruiting, so
that’s part of it. We are also trying very, very hard to redeploy peo-
ple who work in headquarters and move them out to direct service
positions.

We have in place new and different training opportunities with
our interactive distance learning, so that internally we can train
lots of people at one time and bring them up to speed on manage-
ment techniques and other content that would ordinarily be shared
with people who we would want later on.

Mr. ENGLISH. I have a related question.

Is it true that only 91 of your current 104 SES positions are per-
manently filled right now?

Ms. CHATER. We have 11 vacancies at the moment, 8 of which
are in the recruitment process now, and 3 are still to be allocated.

Mr. ENGLISH. So how many positions at the Deputy and Associ-
ate Commissioner level are currently filled by temporary can-
didates in an acting capacity?

Ms. CHATER. J can’t give you that information off the top of my
head, but I will certainly provide it to you.

Mr. ENGLISH. I would be very interested. Our information was
that only 91 of the 104 SES positions allocated to SSA are perma-
nently filled, and I would like to determine if that’s true.

Thank you for your testimony.

[The following was subsequently received:]


8

Chairman BUNNING. Now let’s begin the hearing.

I would ask Mr. Garcia to take a seat at the table. Mr. Garcia
is a specialist in American National Government with the Congres-
sional Research Service. He has extensive background in the analy-
sis of management of government agencies, particularly independ-
ent agencies.

He was involved with the legislation that made SSA an inde-
pendent agency, and he will discuss what factors contributed to an
agency’s independence, in particular SSA’s.

Welcome, Mr. Garcia. Would you please begin.

STATEMENT OF ROGELIO GARCIA, SPECIALIST IN AMERICAN
NATIONAL GOVERNMENT, GOVERNMENT MANAGEMENT
AND OPERATIONS SECTION, GOVERNMENT DIVISION,
CONGRESSIONAL RESEARCH SERVICE

Mr. Garcia. Thank you, Mr. Chairman. Thank you for inviting
me to testify regarding the characteristics of an independent execu-
tive agency and how the Social Security Administration fits into
that category. In its broadest sense, the term “independent execu-
tive agency” refers to agencies in the executive branch that are lo-
cated outside of and are independent of executive departments.

Among independent agencies, we may distinguish between two
types, those that are under the direction and control of the Presi-
dent, and those that are not under such direction and control. The
President may summarily remove the official or officials heading
agencies under his direction and control, but he needs cause to re-
move those heading agencies that are not under his direction and
control. It is the latter type of independent executive agency that
Iam addressing today.

Several other factors to consider regarding an agency’s independ-
ence include its involvement with the Office of Management and
Budget regarding budget review, communications with Congress,
rulemaking, and data collection, and finally, its authority to liti-
gate.

Let me touch briefly on each of these matters.

Starting first with the term and tenure of the head or heads of
agencies, the most effective weapon that a President has to control
presidential appointees is his power to remove them from office.
The Commissioner of Social Security serves a 6-year term of office
and may be removed only for neglect of duty or malfeasance in of-
fice. Heads of numerous other independent agencies also have fixed
terms of office and are also removable only for cause.

Turning to budgetary affairs, executive agencies are required by
Jaw to submit their appropriations requests, which include staffing
levels, to OMB, which may change the requests when they are con-
solidated into the President’s budget. The Social Security Adminis-
tration sends its budget to OMB which transmits it, without revi-
sion, along with the President’s budget to Congress. Only a handful
of independent, multiheaded regulatory agencies are exempt from
OMB review. Several have authority to send their budget request
to Congress and OMB concurrently.

Turning to communications with Congress, OMB directs execu-
tive branch agencies to send to it for clearance communications
that are being transmitted to Congress, unless the agency is au-


REVIEWING THE PERFORMANCE OF THE
SOCIAL SECURITY ADMINISTRATION AS AN
INDEPENDENT AGENCY

THURSDAY, JULY 25, 1996

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON SOCIAL SECURITY,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m., in room
B-318, Rayburn House Office Building, Hon. Jim Bunning (Chair-
man of the Subcommittee) presiding.
(The advisory announcing the hearing follows:]

iy)


150

Analysis of Payment Changes Resulting from Redeterminations

Objective

To identify the amount of payment change and the reason(s) for the payment changes resulting
from each type of FO redetermination, i.e., from each of the following redetermination categories:
High-error profile cases, Data Operations Center (DOC) transfers, DOC exclusions, previously
unredetermined and unscheduled cases.

Description
‘OPIR conducted the original study of the dollar impact of redetermination (DIRZ) for FY 1988. in
April 1992, OPIR established the DIRZ review as @ piggyback to the IDA review. Currently,

OP IR's DIRZ review is the only management information on the dollar impact of FO
redeterminations (RZ) and the cost-effectiveness of these actions. The Otfices of Regional
Program and Integrity Reviews (ORPIR) staffs conduct casefile reviews to identify the amount of
payment change discovered at FO RZs and the reason(s) for the changes. Study results are
input to the quality assurance (QA) data base via the special studies screen. For Y 1994 and
FY 1995, the sample size was increased to allow for more reliable reporting of data by RZ
category. An 8,000-case sample was reviewed--4,000 piggybacked IDA RZs and a supplemental
sample of 4,000 cases selected from the universe of FO RZs. For FY 1996 the sample was
reduced to a total of 3,600 cases--2,000 piggybacked IDA RZs and 1,500 suppiemental RZ cases
including 600 cases where the RZ resulted in suspension or nonpayment of benefits.

FAV to Provide Direct, Local Feedback and Advice in the Spirit of Total Quality

Objectives
To provide regional support through FO-related activities designed to’ 1) Reduce dollar error
indicated by national IDA data; 2) obtain new insights into the root causes of error; 3) provide
timely/indepth feedback to regionai/iocal management on selected offices/issues; and 4) provide
information on program simplification through "best practices" analysis,

Leescnption
FAV 15 focused at the FO level where day-to-day transactions have the greatest potential for
reducing payment errors and improving the quality of workload processing. Thirteen of the
38 FAVS scheduled for FY 1996 have been completed.

Four regions--Philadelphia, Kansas City, Dallas and Seattie~have developed different
approaches to FAVS. Philadelphia offers a menu of various FAV services from which to choose;
Kansas City focuses on process review, e.g., Overpayments (OP) for 1996; Dallas is exploring
work approaches that are similar to both RSI and SSI; Seattle will be doing only telephone
reviews. All other FAV reviews consist of casefile reviews and field/telephone interviews tailored
to the particular needs of the individual FO.


42

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 chat
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 2." c.averting Software Top Priorit
on as'=fits Disruption

anther systems challenge--one’ of the highest
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 berween
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 benefics

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 developrert work

Developing a Trained and Flexible Workforce I conial

SSA recognizes that to maximize the effectiveness of its
reengineered work processes and investments in technology, it mus=
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 reduc
its number of supervisors, as part of the Administration's effort:
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


161

Tiers 1, 2 and 3 of Sections 401-403 will be sampled to determine continuing eligibility for the
more than 400,000 recipients who will be redetermined by FOs. Scope will include Goldberg-
Kelly notices through decision and continuing payments. Sample reviews of the remaining
600,000 cases will also be completed, beginning no earlier than September 1997 to determine
the accuracy of the suspension actions.

DISABILITY

Disability Redesign: Process Unification (PU) Training Assessment

Objective

To determine the effectiveness of the PU training in improving adjudicators’ and reviewers’
understanding and application of clarified policies governing the evaluation of pain and other
symptoms, the evaluation and weighing of medical evidence and medical source opinions, the
assessment of residual functional capacity and other aspects of case review.

Description

In June 1995, the Commissioner approved a group of initiatives prepared by the Disability
Process Redesign Team aimed al unifying the process of disability adjudication at all levels
under SSA's purview. OD prepared a series of Social Security Rulings and a related training
program to address the above-noted adjudicative policies, OPIR's assessment will involve case
review of determinations and decisions made at a variety of adjudicative levels beginning with
the intial determination and extending to the hearings decisions.

Disability Redesign: Single Decision Maker (SDM)

Objective
To evaluate the SOM process.

Description

One of the redesign actions is to empower an SDM to make disability determinations. OPIR is to
evaluate the SOM process to determine effectiveness, cost implications and other impacts. A
test and control group of cases will be reviewed to gather data on the SDM process. The data
will be compiled and a report issued on the evaluation of the process

Disability Redesign: Early Decision List (EDL)

Objective
To evaluate the EDL. process.

Description

One of the redesign actions is to empower claims representatives to make "eariy" disability
allowance decisions in specific types of cases, OPIR is to evaluate the process to determine
effectiveness, cost implications and other impacts. A sample of EDL cases will be reviewed to
gather dala on the EDL process. The data will be compiled and a report issued on the evaluation
of the process.


73

TALKING POINTS FOR POSSIBLE AMENDMENT
TO LABOR-BHS APFROPRIATIONS ON
UNIONS’ OFFICIAL TIME AND 584

REPUBLICAN ATTACKS ON OFFICIAL TTMB ARE PART OF GOP Ss
ANTI-WORKER

(Ways and Means Subcommincs on Soclal Security Chairman Sim Bunning (R-KY) said be
wanted to know why some unite moresealadves at SSA sre allowed to perform “uniaa work”
fulltime “foetead of serving the pubUe.” His faiplickt aspumpdon that unjon ectivitics are
Incoraparfole with public service demonetraiag jutt how out of touch the Republican
leadership is with the pew fedora) workplace and the changing face of labor unions.

1 It is unfortunate tbar the Comaiittes bas choses to use the GAO as part of the GOP
majority's witchont against the democratically elected represeotarives of working men and
womeo. The Committee will find tha: federal employees sad their union representatives at
proud Of the service they provide for the Amigrican people, and they will not shrink from aa
attack on their good work.

WRAT JS OFFICIAL TIM?

1 All federa) employees represcated by # union are entitled to receive the bescfits of the
union's services sod representation even if they are ot union members. When Congress
enacted the Civil Service Reform Aci in 1978, 8 deliberate decision was made to direccty
support caruia unlon functions by allowing the use of “official time’, rather than requse
non-members to pay their fair share Of tbe meprescoution and services the union is obligated
by law to provide.

1 Union representatives can use offical time only for those activities which are reasonable,
necettary, and te the public interest. These mandards are imposed by law. Legally permined
union activites tactude pegodating collective bargaining agreements, handling employee
pievances, snd coodveting and recelving taining.

1 Union represemtatives are probibited trom using official time on any Internal usion cutters.
This mess they cannot ose official dime to organize workers, solldt sew meabent, ompign
fot office, of conduct union elections. Union representatives are also forbidden to use offcis!
time for any pastisan political setivittes.

1 The emergence of labor-management partocrsbip ia the federal sector over the past Sew
years ia based on the understanding thal genuine changes In the effectiveness of goveramest
‘ase possible only where labor and management ae working hand-in-band to improve quality


82

Ms. CHATER. A recent one.

Chairman BUNNING. Yes.

Let’s get on with the hearing and get on with what we're trying
to accomplish here.

Do you agree that Congress and the American public should be
able to look to SSA to frame the debate over national Social Secu-
rity policy, as far as the overall policy and where we are heading
with SSA in the future? Do you think that’s the independent agen-
cy’s job?

Ms. CHATER. Yes, I do. And toward that end, as I said, we are
putting together our Office of Research, under the Office of Pro-
grams and Policy, so that we can better respond to long-range pol-
icy issues and become much more proactive than this agency has
been in the past.

Chairman BUNNING. Did it take you 14 months as an independ-
ent agency to discover that, or is that something you were trying
to put off? Explain to me why it took 14 months to get a research
group at Social Security?

Ms. Cnarter. Well, why did it take so long? Because we studied
the problem, because I personally, for example, went over to our re-
search office and interviewed our researchers, and talked with
them about the kind of research they’re doing, trying to make a de-
cision about what we needed and how best to organize.

It isn’t that we were just looking at that unit independently of
all the others. We're trying in Social Security to change the culture,
to create an atmosphere where we can work together as teams, be-
cause I feel strongly that each individual component, when it
makes a decision, influences another component. So as we work to-
gether and sort out these issues, it does take time.

I don’t believe in coming in with a command and control attitude
and saying it shall be done. I want us all to work together to figure
out how to do this, so that our management team buys into the
kinds of initiatives that we put on the table.

Chairman BUNNING. Well, I’m going to let Andy go ahead.

Mr. Jacoss. Mr. Chairman, on that point of the July 22 fax, 1
think it would be important for the record——

Chairman BUNNING. I’ve entered it.

Mr. Jacoss. No, I think it would be important for the record if
we can identify the person who sent it and determine whether it’s
the person that Dr. Chater says was ordered not to use the fax.

Chairman BUNNING. It says who it’s to, and it says who it’s from.

Mr. Jacoss. I just wonder if we could tell Ms. Chater so that she
could say whether that person was the one she was referring to.
I think that would be pretty important for the record. If you told
somebody not to do it and he or she did it, I think that would be
really egregious.

Chairman BUNNING. That’s Marjorie Johnson.

Mr. Jacoss. Is that the employee?

Ms. CHATER. No, it is not.

Mr. Jacoss. Not the employee.

Chairman BUNNING. Since it’s in the record, you will be able to
discover very quickly who it went to and the contents.


REVIEWING THE PERFORMANCE OF THE SOCIAL
SECURITY ADMINISTRATION AS AN INDEPEND-
ENT AGENCY

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION

JULY 25, 1996

Serial 104-78

Printed for the use of the Committee on Ways and Means

ee

U.S. GOVERNMENT PRINTING OFFICE,
39-773 CC WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-055079-3



108

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182

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only 92 ex: = n_board. OPM staff ajviged thu” this
allocation is fa:ed on the only request it Jias fcc “3A, one from
Ruth Pierce daz: i May 26, 1995, requesting “wil, J0 the "213
suppor 3E5 positions." “!% staff futher adv

£ positives in part

basel its allocation of 103 a
made for additional positisi> a weak one and the fac. Lhal

fewer than the full allocation of slots has n_filled

Please explain why only 92 SES positions are >urrently filled
what additions. 3E3 slot u_pelieve SSA in=J3_ (including
positions for -310.nal Offices and “expert Such ai

economas Specific action you have undertaken with OPM to cain
addi* onal SES slots, and what you have been advised by OPM
Blea submit copies of any relevant corresponden:

As of January 6, 1997, the Agency had 8@ SES slots filled, with
recruitment and staffing activities underway to fill a number of
SES vacancies. For example, we are actively staffing several
positions in the Office of General Counsel as well as 2
leadership positions in the Regions.

As a vacancy occurs, we carefully assess the most appropriate use
of the slot. In keeping with mission priorities, we refill the
vacancy, redescrike it, or abolish it--transferring the slot to a
more critical leadership need if necessary. Since the SES
recruitment process takes considerable time because of numerous
legal and regulatory requirements, it may appear that little is
underway to utilize our allocation--but this is far from true.
Further, OPM final decisionmaking on our May 1995 request for a
slot increase was protracted by their need to address
Governmentwide executive resource needs. Therefore, we have been
doubly prudent in weighing the often competing factors at play in
determining the best use of SES slots since the SSA allocation
has been so limited.

In a number of communications with OPM staff and Director King,
including the May 1995 request you reference, we went on record
asking for an increase in allocation to address our needs.
Specifically, we spoke on behalf of high quality executive
direction in the Offices of General Counsel and Inspector General
(two new agency components). In addition, we underscored our
need to ensure strong leadership in the areas of:

communications, legislation and congressional affairs, policy
research, program development and evaluations, actuarial science,
human resources, finance, systems, information technology, and
regional management. We pointed out that all these areas have
greatly expanded roles and responsibilities stemming from our
independent agency status.

OPM recently agreed to respond favorably to our May 1995 request
for 113 SES slots, an increase of 10, and to work with us on the
allocation of additional slots provided such could be
accommodated within the Governmentwide ceiling. Wath my closest
advisors, we are now carefully developing strategies for optimum
placement and expeditious filling of our newly augmented number
of slots.


131

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159

FOs will be asked to participate in a time study to determine the administrative costs of the
present policies. OPIR staff will determine the administrative costs of the benefit proposal

Plans for Achieving Self-Support (PASS)

Objective
To ensure POMS compliance

Descnpton

Resources have been committed to continue the review of PASS cases as the regional PASS
units begin adjudication of these cases. A commitment was made by OPIR to complete an Early
‘Warning review of these cases to ensure POMS compliance.

Supervisory Review Waiver Tolerance Study

Objectives
To measure accuracy of FO OP waiver decisions (approvedidenied).

To evaluate the need for supervisory review of SSI waiver decisions and, if needed, determine
the appropriate dollar threshold for the reviews.

‘To measure compliance with POMS instructions for processing SS! OP waiver decisions.

Description

In FY 1995, the threshold of required supervisory review of approved SSI OP waiver decisions
was increased from $1,000 to $2,000. The Office of Program Benefits Policy requested that
OPIR conduct a study to assess the continued need for a supervisory review and, if needed, to
determine appropriate dollar threshold for the review of title XVI waiver decisions.

‘A sample of cases with recent waiver decisions will be selected for review each month, The FOs
will forward case folders to the ORPIR staff for review of the accuracy of the waiver development
and decision. The folders with review results will be retumed to the FOs for approprate action,

Financial Accounts and interest Tolerance Study

Objective
To determine the effect of the interest income tolerance on interest income errors in RZS.

Description

‘A sample of cases where financial accounts are alleged will be identified, The alleged amount(s)
from the RZ and from the FR will be compared with the verified amount provided by the financial
institution, Cases with alleged interest income on the RZ form after appiying the interest
tolerance will be compared with actual value of interest alleged and verified during the FR.




191

_ You ¢icioned that SSA successfully rehabilitated 6,200
sabled « at's 6,200 our of :.er 4.3 mio

a little over one-tenth of one percent. How ~. workers did SSA
ae _atulitate in previous years? Hasn't the iu'cer been roughly
tle same since 1990, when it hit a high of 7,300? Have you
developed a strategy to return 4:-‘bled individuals to work
Seif sufficiency? If you have, piszase submit a copy for the
Lecord.

d

In fiscal year (FY) 1995 SSA reimbursed the State Vocational
Rehabilitation agencies for rehabilitating 6,238 beneficiaries
with disabilities. Attached is a chart of our reimbursement
history from FY 1983 through FY 1996. In an effort to increase
the number of SSA beneficiaries with disabilities who are
successfully rehabilitated, SSA is actively involved in the
development of a comprehensive strategy to increase the number of
beneficiaries who work despite their impairments, thereby
lessening their dependence on the benefit rolls.

To this end, we are collaborating with a number of other agencies
within the Federal government who have a responsibility to our
citizens with disabilities; these agencies include the Department
of Education, the Department of Labor, and the Health Care
Financing Administration within the Department of Health and
Human Services.

SSA has been working on a specific strategy that we expect to be
ready to release to you shortly.


109

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30

As more applied, SSA became slower in processing these claims
and appeals. Currently, the disability claims process accounts for
about 50 percent of SSA’s administrative budget. They are now try-
ing to reengineer the processes in this disability area. SSA’s rede-
sign plans include 82 initiatives over a 6-year period, from 1995 to
the year 2000. Forty are supposed to be done in the next 2 years.

GAO has some concerns about this program. It seems to be very
slow to move into implementation. What you really need in a pro-
gram like this, for Congress and the Commissioner to understand
how much progress is being achieved, is milestones and regular re-
porting on outcomes and the return on investment.

GAO recently issued a report on improving performance through
technology, and this is one of the things we have stressed, not only
for the Social Security Administration but for IRS and other agen-
cies, and that is, you have got to have a program on your tech-
nology improvement that shows what kind of progress we’re sup-
posed to be making at key times. The Congress, by the way, has
passed CIO, Chief Information Officer legislation based on this
work that we have done.

On the return to work efforts, we have reported to you that So-
cial Security has placed little priority on helping claimants to move
off the rolls by obtaining employment, and we have pointed out
that if only an additional 1 percent of the 6.6 million working aged
people receiving disability benefits in 1995 were to leave the rolls,
lifetime cash benefits would be reduced by an estimated $3 billion.

We have reported on the inadequate oversight of SSI. There is
where we've been concerned about some of the fraud, waste and
abuse in that program. We have also reported on some specific
things, like prisoners receiving millions of dollars in cash payments
and problems in the eligibility process for SSI children with disabil-
ities.

So in summary, let me say that SSA must manage the growing
workloads that they are facing, with reduced resources. The Fed-
eral downsizing here in the future is going to be dictated by the
budget resolutions that have been passed, which show a 20 to 30
percent decline in discretionary funding. SSA is down from higher
staffing levels of the mideighties to approximately 64,000 staff now.
Sa one of the great things they need to do is to reengineer proc-
esses and to make sure the technology investment really is a payoff
for less cost and more efficient improvement.

I think you need strong, capable leadership in an organization
like this. I’m a strong believer in the 6-year term. I believe that the
Congress made the right decision there. I think that you need a
strong SES, Senior Executive Service, to manage an organization
of this size, and I think you need some very good personnel devel-
opment and training programs.

We see four major issues, really, that are badly needed. You need
the research and the options being developed by the SSA, so that
the leadership of the Congress and the President can debate these
issues.


89

Ms. CuHaTEr. I checked to make sure that it was, indeed, legal,
as it is. And yes, I feel very good about having made the decision.

When I came to Social Security, we had vacancies, and I wanted
the best possible person to do what I knew had to be done in the
future. I wanted people with lots of experience, expertise, qualifica-
tions, for the expectations that we had to meet in the future. I was
determined to have the very best.

Mr. CHRISTENSEN. Do you consider political lobbyists to be the
type of positions that you're looking to fill, that would experi-
ence——

Ms. CuaTeEr. I did not hire political lobbyists in those two slots.

Mr. CHRISTENSEN. It’s our understanding that you did.

Ms. CuaTER. No, I didn’t.

Mr. CHRISTENSEN. Did you supply GAO with the information
that they repeatedly asked for concerning this area?

Ms. CHATER. Well, I would think so.

Mr. CHRISTENSEN. It’s our understanding that you did not.

Ms. CHaTER. Oh, they just asked yesterday. I’m sorry. If it was
yesterday. I don’t know that.

Mr. CHRISTENSEN. I think they have asked earlier than that as
well.

I have one more question before my time runs out, Mr. Chair-
man.

In your testimony you discuss that there’s 8 million continuing
disability reviews in the next 7 years, which means SSA would
have to conduct about twice as many reviews as it has conducted
over the past 20 years combined.

Do you believe you’re up to the task and can realistically meet
this goal of continuing disability reviews?

Ms. CHATER. We have set a goal for ourselves that I hope very
much that we can meet, and we fully expect to meet it. We plan
to do about 1 million CDRs a year over the next 7 years, so we will
eventually catch up.

This year so far, for example, we already have done approxi-
mately one-half of our CDR target, and I am hopeful that we'll
meet our 1 million target by the end of the year. If we do, we will
have even more success at reaching the overall target in a 7-year
period.

Mr. CHRISTENSEN. OK. I’m running out of time. Maybe the
Chairman can follow up on my previous question.

Thank you, Mr. Chairman.

Chairman BUNNING. Dr. Chater, we want to thank you for com-
ing today, and discussing these things with us.

1 am going to submit some questions to you for answers.

(The questions and answers follow:]


199

Chairman BUNNING. We are pressed a little bit for time, since we
do have some other Committee assignments today. I want you to
know that you don’t have to go directly to OMB and OPM. If they
don’t cooperate with you, there’s an alternative method of getting
funding, you can come to Congress and tell us that OPM and OMB
are not funding at the level that you might, as an independent
agency, want for personnel, just like we did for CDRs. We can take
the bull by the horns when we have to.

I can tell you that the cooperation between this Subcommittee
and you will continue to be as Andy Jacobs made it for a long time,
if we have mutual cooperation, a two-way street, not a one-way
street. So I thank you for your testimony.

Mr. Jacoss. Mr. Chairman, before the witness leaves, because
the question was raised, I wonder if I may be recognized for just
one question.

Chairman BUNNING. Go right ahead.

Mr. JAcoBs. It’s about this confirmation business.

Dr. Chater, will you state for the record what the then-Chairman
of the Senate Finance Committee told you about his disposition to-
ward your confirmation when you made your courtesy call after you
were nominated by the President?

Ms. CHATER. Yes.

Mr. Jacoss. Do you recall?

Ms. CuaTER. I do recall. He said there won’t be any problem, and
he elaborated on it.

Mr. Jacoss. I understand he went on to say, “You have my
vote”?

Ms. CHATER. Yes.

Mr. Jacoss. Thank you.

Chairman BUNNING. Anything else to come before the Sub-
committee? Thank you, Dr. Chater.

The Subcommittee is adjourned.

(Whereupon, at 12:45 p.m., the hearing was adjourned.]

ie)


84

nology improvements? Obviously. So ultimately, roads tend to lead
back to “luc mentus luc orbis,” the “light of the mind is the light
of the world.”

If our educational system in this country produces better sci-
entists and better mousetraps and better economics and better pro-
ductivity, if some kid who today is in a ghetto somewhere, who's
a genius but whose destiny is to sack up groceries, and for enter-
tainment demonstrates to everybody else on the payroll that he can
look at a bushel of apples and see the size of the apples and tell
you exactly how many apples are in that bushel just at a glance,
that that same kid ends up at Cal Tech and learns to invent a
paint that will erase gravity for manufacturing purposes, can you
even begin to imagine what that does to productivity in the coun-
try?
So ultimately, there will be a lot of discussion about who should
be taxed, who should not, whose benefits should be cut and all
that, and all that is very worthwhile. But I am only laying out for
the record the forest itself and ask that future Members of Con-
gress and executives give that some exercise.

I thank you, Mr. Chairman.

Chairman BUNNING. Mr. Collins.

Mr. Couuins. Thank you, Mr. Chairman.

In reference to your question about the two to one, Mr. Jacobs,
if I live to be 30 years older, I hope that it does work. Because
these young people today who will continue working at that time,
will enable me to receive my benefits.

Under the current status and situation as it deals with politics
in the Social Security Administration, and the political atmosphere
that surrounds it as well as a lot of other agencies, I doubt very
seriously if we’re going to be able to come up with any type of seri-
ous proposals that will address beneficiaries and benefits and such,
because it makes everybody politically vulnerable.

You know, Ms. Chater, I regret the shutdowns. I regret that the
President chose the veto route on those appropriation bills and
budget that led to those shutdowns. But in view of the shutdowns,
I was under the assumption—and maybe assuming can get you in
trouble—but those workers who were affected were supposed to be
nonessential.

Do you consider people who handle the applications and the ben-
efit problems of those beneficiaries of the system, do you consider
those nonessential workers? Are they classified as nonessential? If
not, then why would it affect the processing of that paperwork? I
mean, those were supposed to be essential workers, but the way
you were shaking your head—for the record, you were shaking
sideways, which means no.

Ms. CHATER. Our agency never ever used the word “non-
essential.” We feel very strongly that every employee we have is
most essential to the work of our business.

In the first furlough, we had almost everyone go home, and we
kept only people in the agency to take emergency kinds of ques-
tions and claims and to maintain the security of the buildings.
That didn’t last very long. The next one, the next furlough, we had
many, many more people working.


12

allowing the President to remove an official for causes other than those specifiod in statute, because the
official was “performing predominately executive or administrative functions."!® Recent decisions,
however, indicate that the Court may rule differently today."

‘The Social Security Administration enjoys the key characteristic of an independent agency-the
Commissioner has a six-year term of office and can be removed by the Prosident only pursuant to a
finding by the President of neglect of duty or malfeasance in office."® In making the ageacy
indepondent, Congroos sought to assure that “policy errors reaulting from inappropriate influence from
outside the agency such as thoee occurring in the early 1980s do not recur in the future."*

‘The absence of a removal provision regarding a fixed-term position, however, does not mean that
the President can remove an incumbent at will. In 1958 the Supreme Court ruled that unleas specifically
authorized by statute, the President may not remove members of a body croated to exercise purely
adjudicatory functions that are not subject to review by any other executive branch official.'” Since then
the Court has expanded and extended the grounds under which Congress can impose limits on the
President's power to remove incumbents before their term of office expire.'*

Under criteria established by the Court, at least thirteen agencies without a removal provision
in their statutes, all multi-beaded and involved primarily in regulatory activities, appear to fall under the
independent executive agency category."

Lot me turn now to other factors bearing upon the degree of Presidential involvement in the
‘management of independent agencies,

Budget and Staff Needs

‘The degree of independence enjoyed by an agency also is affected by the amount of control it has
in preparing ite appropriations request and sending it to Congress. The Budget and Accounting Act of
1921, a8 amended and now codified in 31 U.S.C. 1108(b)(1), requires executive agencies to submit thei
appropriations requosta to the Prosident. The requests generally are changed by the Office of
Management and Budget (OMB) when it consolidates them into the comprehensive budget that is
‘submitted to Congreas. Unless specifically authorized, agencies may not send budget requosts directly
to Congress.

Since Congress generally relies on the recommendations in the President's budget, a President
may use the process to curb an agency's independence, ‘The budgot and staffing requests of many
independent agencies were cut significantly during the last decade.

In some instances, OMB's impact may be due more to its “specific reprogramming guidance" than
to ita budget cuts, There is evidence that auch OMB guidance has affected agency programs by
channeling agency actions into cortain activities and curbing it in others.”°

18 Morgan v. Tennessee Volley Authority, 116 F 24 990 (6th Cir. 1940), cortiorari denied, 912 U.S. 701 (1941).

1 800 Morrison v. Olson, 487 U.S. 686-86 (1988), and Mistretta v. United States, 488 U.S. 961 (1989) n. 18,
(quoting Nizon v. Administrator of General Services, 438 US. 443 (1979),

18 42 U.S.C. 902{a)(9), P-L. 109-296, Sec. 102(a)(3) (1994), 108 Stat. 1466.

1 YS. Congreas. House, Conference Committee Report 109-670. Social Security Administration Reform Act
of 1994. 103d Congress, 2d seas, Govt, Print. OM, Washington. 1994. p. 90,

17 Wiener v. United States, 3517 U.S. 249 (1968). See also Securities Buchange Commission v, Blinder, Robinson,
‘and Co,, 855 F.2d 677 (10th Cir. 1988), (SEC commissioners may only be removed for cause despite statutory lence
‘on removal.)

18 See Morrison v. Olson, 487 U.S. 685-86 (1988), and Mistretta v. United States, 488 U.S. 961 (1989) n. 13
(quoting Nizon v. Administrator of General Services, 433 US. 443 (1979) ‘

'8Theae agunciea include the Commodity Futures Trading Commission, Defense Nuclear Facilities Safety Board,
Equal Employment Opportunity Commission, Farm Credit Administration, Federal Communications Commission,
Federal Deposit Insurance Corporation, Federal Housing Finance Board, Federal Election Commiasion, National
Credit Union Administration, Railroad Retirement Board, Securition Exchange Commission, United States
International Trade Commission, and United States Parole Commission.

® Brigman, Wiliam E. The Executive Branch and the Independent Regulatory Agencen. Presidential Studies
Quarterly, v.13, Spring 1981. p. 256.



54

Mr. BOWSHER. Well, I think that often heads of independent
agencies try to avoid that, for the very reason that—In other
words, they certainly should be out there explaining the program,
but just what you're referring to, as to any statements made by the
Commissioner, I don’t have that background.

But I think it’s important, in a role like this, to try to be as inde-
pendent of other politics as you can, other than the program that
you are in charge of.

Chairman BUNNING. You said that the Social Security Trust
Funds would be solvent until approximately 2015, and if we don’t
do something prior to that, we’re going to run into some funding
problems, and confidence problems between the individuals who
are waiting to retire and the retirement program itself.

Wouldn’t it be better to address funding and confidence problems
sooner rather than later?

Mr. BowsHERr. Very definitely. In other words, we have issued
some reports on the overall budget deficit problem, and the entitle-
ment programs, of course, are a big part of the problem that is
building, and the retirement program is there, too.

The 2013-15 period is when you start to have greater expense,
and you still have the trust fund balances at that point in time.
But the confidence level is a very important factor here. I think the
sooner that decisions can be made on whatever changes are need-
ed, I think it helps both the running of the Federal Government
but also very much helps the individual Americans out there who
have to plan for their retirement.

Chairman BUNNING. Do you think it’s very important for the So-
cial Security independent agency to lead in those suggestions on
how we can solve these funding problems?

Mr. BOWSHER. | think it’s important that they do the research
so that you can be looking at various options and policy changes.
I think eventually it’s the Congress and the President that will, of
course, have to make the final policy decisions that get enacted and
signed into law.

I think it is very much appropriate for the agency to do a great
deal of policy and research to help shape that final product.

Chairman BUNNING. Mr. Bowsher, I’ve been getting suggestions
from everyone; Latin America, think tanks up here in Washington,
other individuals, who know how to solve this problem. I have yet
to have a suggestion or a policy suggestion from SSA on how we
can eventually solve this funding problem. I await their sugges-
tions, so that we can take a look at what the agency itself believes
is a solution.

You also suggested there might be an independent commission
set up to do that. The last commission that was set up in 1983 got
us through this century. I would like to see the funding issue
solved on a more permanent basis, even though it has been solved
for 20 or 30 years. That time span doesn’t give the confidence that
I think is necessary for those that are dependent on the Social Se-
curity Administration to deliver what they said they would deliver
and what the Congress promised to deliver. So I look forward to
their suggestions.

Does anyone else have any other questions?

am.


171

Monitoring of 800 Number Telephone Calls Handled by Office of Central Records
Operations (OCRO) Employees

Piyect ve
Tc evaluate the quality of 800 number service being provided by OCRO employees.

Description

OCRO employees are currently handling 800 number calls involving Personal Earnings and
Benefit Estimate Statement(PEBES)-related issues. Callers who select the automated PEBES
option during daytime hours are routed to OCRO employees. Assuming equipment can be
obtained to permit remote monitoring, OPIR will conduct a special monitoring study to evaluate
the quality of the 800 number service that OCRO provides,

‘Monitoring of 800 Number Calls Handled by the Direct Service Unit (DSU) in Central Office
Objective
To measure the quality of 800 number service provided by DSU employees,

Description

‘A major activity of the DSU in central office is to help answer 800 number calls during peak
periods. If equipment can be obtained to permit monitoring from a remote site, OPIR will conduct
4 special study to measure the quality of service in calls handied by the DSU. The protocol used
will be the same as used in OPIR's ongoing monitoring of other 800 number calls.

IRS Address Acquisition Match

Qbjective
To determine the cost-effectiveness of the matching operation that obtains the IRS address of
record for unlocatable overpaid individuals so that collection efforts can be re-instituted.

Description
For those cases where a "better" IRS address has been obtained, the ROAR will be periodically
reviewed to determine the amount of OPs collected and other disposition information

Evaluation of State Wage and Unemployment Compensation (UC) Data Files with the SSR

Obiective
To determine if revised tolerance (evels can be established to reduce the number of unproductive
alerts,

Description

OPIR will determine the cost/benefit ratio of this matching operation to see if revised tolerance
levels can be established to reduce the number of unproductive alerts. A sample of recently
alerted wage and UC reports will be tracked to determine their impact on SS! payment amounts
andior continued eligibility.


96

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185

Sea tari mates

GENERAL FUND RECEIPT ACCOUNTS
Ge nto a sium)

‘As directed by Section 304 of PL. 108-296, the Social Secu-
i; Independence and Program Dmprovementa Act of 1994,

sins npecoer wie the Prendeaty aasca bouget for SOA.

‘The Commissioners annua) budget for Gace) year 1997 10
cludes a total of $6,267,944 thosaand io diaretionary re
sources, This total scludes $6,239,410 thousend for SSA a2
inuwasive expenses, including $300,000 thousand ia ne
‘Year funds for the Automation Invesimest Fund, SSA ela
Tequerte £26.534 thousand for the newly formed Office of
Tegpector General

‘This request ia based on current lew Actual needs will
spy lament forthe tapas of any aly oad lepe



170

if duplicate prisoner reports can be identified so that a more accurate SSN verification rate can
be estimated. OPIR is also evaluating the back-end of the prisoner match, i.e., the alerts.
‘Samples of recent prisoner alerts, as well as aterts produced from the "March 1” files and also
tne 1995 alerts, have been sampled and are being reviewed to determine the effectiveness of
the alert process.

Evaluation of the SSN Telephone Replacement Card (TRC) Pilot

Objective
To determine whether SSA should start issuing replacement SSN cards based on information
applicants provide over the telephone.

Description

The TRC pilot is a 1-year test OPIR will conduct a study to determine whether the TRC process
would be more fraud prone than the current SSN replacement card procedures. In order to
provide baseline data, there will be a review of replacement card applications processed under
current procedures. In addition, applicants will be required to submit a photo identification. This
phase of the study will be conducted in the 20 pilot FOs prior to the beginning of the pilot. During
the pilot, there will be a review consisting of a sample of replacement cards issued using the pilot
procedures and will provide data similar to the baseline data. In addition to the 20 pilot FOs,

{wo TSCs and related FOs will be included.

Notice Improvement Evaluation

Objective
To measure whether language used in SSA notices is easy to read and understand and
accurately communicates the necessary information in support of the Agency's Tactical Plan

Description

OPIR conducted a study of a fle XVI notice to measure whether the notice language was easy
to read and understand: accurately communicated all necessary information, and clearly
indicated any action/information SSA expected from the recipient of the notice The draft report
was released in March 1996, OPIR is planning in FY 1997 an evaluation of another notice, the
RSDISSI Notice of Disapproved Claims in FY 1997.

800 Number TSC Referral Study

Objective
To identity types of actions referred by TSCs for FOs and to track actions taken in response.

Description

Slightly over 13 percent of the TSC workload for the period March through September 1995
involved nonappointment referrals to FOs. A speciat study is proposed to track TSC referrals to
completion to provide information on whether of not actions were taken on the issue and what
the action was. The study data would also provide information on the types of actions actually
taken on TSC referrals. These data may warrant further analysis to determine the necessity of
the TSC referral, whether additional steps could be taken by teleservice representatives (TSR)
within a relatively short time penod (so as not to adversely affect call handie time), etc., and
recommendations made so that TSRs could handle more types of actions to completion


15

edaims that could take as long a6 two and 8 ball years 10 reactive, SSA got together with
AFGE tnd completaly teengincered the way csabllity claims ws handled, Working together,
SSA and hs unions designed 4 ocw disability system which will bs able to process wore
claims Lo lea time with fewer people. Fashioned with the customer -- snd tuxpayer — ip
mind, this pew fystem promises to cist the total waiting time by ocarly 20 months, saving
buedreds of millloas of doUars

4 SSA learned that Jf you wast government to oparais with the efficiency and productivity of
the best private sector compenies, you bave to learo the right lessons and study the best that
peivate industry has to offer, That's what SSA and many otha federal agencies bave done,

2 And what they've learned is that, bo a antonized workforce, long-term success and real
gains in qualty aod customer service are linked directly to effective working partnerships
‘beqween labor sod management.

4 Union activities* and greater ualon lavolvemest do cot come at the expense of the
Asmericaa people, but ratber in their service.

4 By any reasonable measure, SSA\s investment fn berter labor-management relations fs
parlog dig dividends through better service to tht American trpayer.

f) E represents over $5,000 employees at SSA, and yet Chere are ooly 145 full-time

~and=file union leaders, os threo—teaths of doe~percent of te unionized workforce. This
Kap, cffictent ase of agency and salon resoarces is right in Boe with other government
agencies 45d a5 good or better chan Large private rector compeaics.

§ fis federal workers, American citizens, end texpayers, union lesders and members want
berjer government.

LEADING AMERICAN COMPANIES KNOW THAT PARTNERSHIPS WITH LABOR
ARE GOOD FOR BUSINESS

1 SSA's workplsce parmersblp with 1% unions is simply good business, High-performance
organizations like Saturn, Coroing Glass, aad Harley Oavidsos have demonstroted that work

gineering exd quality improvements are doomed to fall without the support and active
tavolverment of anions apd their elected representatives.

1 The beet and the brightest in borh the private and public sectors all preach the some


36

Is Now Taking Steps to Be More Acti

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.’ SEA
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 iong-
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

‘tn 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.


181

Wht are your views on the role and importance of the new
Adviscry Board to SSA?

Don't you soye= thar the Board must function as the jndependent

credible, bya: ..2n s v)sory board that Congress jnve* 1 if at
is. to be belpcul 2. the Administration, the public, anu
Congress?

As I have testified before Congress during the past year,
experience has shown that basic changes to the Social Security
program should occur only after extensive bipartisan debate and
public discussion regarding the reasons for changes and the
options available for addressing problems. I consider the
Advisory Board to be an important element in the development of
bipartisan consensus, and I agree with you that it must function
in an independent manner if it is to play a meaningful role in
the future of Social Security

As set forth by law, the specific functions of the Advisory Board
are:

© Analyze the Nation's retirement and disability systems and
make recommendations with respect to how Social Security and
the Supplemental Security Income (SSI) programs, supported
by other public and private systems, can most effectively
ensure economic security;

© Study and make recommendations relating to coordination of
programs that provide health security with Social Security
programs;

© Make recommendations to the President and Congress with

respect to policies that will ensure the solvency of Social
Security programs in both the short-term and the long-term;

© Make recommendations with respect to the quality of service
that SSA provides to the public;

© Make recommendations with respect to policies and
regulations regarding Social Security programs and $1;

© Increase public understanding of Social Security;

© Make recommendations with respect to a long-range resear

and program evaluation plan for SSA;

© —- Review and assess any major stuci-- = Social Security as
may come to the attention of the — 1.4: and

9 Make recommendations with
Board determines to be apero;

otner matters as the



48

[The articles were not available at the time of printing.]

Mr. Jacoss. I only have one question for you, Mr. Bowsher. Have
you an opinion as to whether the independent agency of Social Se-
curity should be allowed by law to submit directly its budget to the
Congress?

Mr. Bowsue_Rr. Well, I think you have a history here that’s impor-
tant, and that is, when you created the OMB in 1921, you were
bringing all of the budgets of the Federal Government under the
President, you might say. That was started by Teddy Roosevelt.
You remember the executive budget movement. It finally got
passed in 1921.

Mr. Jacobs. Except the correct pronunciation in that case was
Roosevelt. He was Roosevelt and Franklin was “Rosevelt,” and
most people think Eleanor did not change her name when she mar-
ried Franklin, but, in fact, she changed the pronunciation of her
name.

Mr. Bowsue_R. I see. I’ll keep that in mind.

Mr. Jacoss. Little known and less useful facts. [Laughter.]

Mr. BOWSHER. So I think what you did set up here by legisla-
tion—in other words, the Congress can see what SSA has submit-
ted to OMB. OMB has the right to modify that when OMB sends
over the President’s budget, and then the Congress has the right
to appropriate whatever they think is appropriate. So I think you
have the information available for you at this time.

Mr. Jacoss. Thank you.

Mr. JOHNSON. Thank you, Mr. Jacobs.

Mr. Collins.

Mr. CouLins. Thank you, Mr. Chairman.

Mr. Jacobs, my daddy’s name was Henry Roosevelt Collins. He
was born in 1903, and I’ll give you a guess at which Roosevelt he
was named after.

Mr. Jacoss. Well, my dad continued to call Franklin Roosevelt,
and I always wondered why everybody else was saying “Rosevelt”
but he was old enough as a kid to remember Ted.

Mr. BowsuHer. If I could just take 1 minute, you know, I grew
up in Elkhart, Indiana, and I went to Roosevelt school, which was
named after Teddy. So, you know——

Mr. JAcoss. You’ve got to admit that in Indiana, Versailles is
“Versales.” [Laughter.]

Mr. JOHNSON. Now that this history class is over——

Mr. JAcoss. Wait 1 minute, Mr. Chairman. I have to add one
other thing, since we’re both—By the way, you said when you did
this in 1921. Like you, I’m retiring, but I wasn’t here in 1921.

T should add, too, so Indiana can be better understood by the
world, that they say the Hoosier rule of grammar is that if it
sounds wrong, it’s right. [Laughter.]

Mr. BowsuHeR. Right.

Mr. CoL.ins. One other bit, tidbit. My father was short in stat-
ure but he toted a big stick. I have felt that big stick on occasions.

Mr. Bowsher, let me get back to my question.

What issues should the Social Security Administration focus on
to improve the public’s confidence in it as an agency and the pro-
grams it administers? Every townhall meeting that I have, I’m
asked about Social Security and about the IOUs and the notes and


117

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53

have are trained in the mainframe environment. That means that
everybody needs to get trained in the new environment, and SSA
recognizes that that’s a problem.

Also, some of the tools that they used in the software develop-
ment didn’t work the way they were supposed to, so that means
they ended up doing a lot of manual entry of data and that’s part
of that 10-month delay.

Now, the remaining 18 months, though, are due to SSA’s re-
sponse to feedback from outside consultants, who said that their
initial rollout schedule was too ambitious from the very beginning,
so they have made some adjustments there.

Also, their consultants told them that they needed to do at least
one more pilot test than what they were originally planning to do
and that test should be in the reengineered environment. I think
we would be in support of that. That’s a little bit more conservative
approach.

Mr, PoRTMAN. So they were unrealistic in their initial expecta-
tions?

Ms. TaYLor. Right, which we see a lot.

Mr. PORTMAN. Again, getting back to the CDRs, do you have
some solutions that you would recommend in terms of more private
contractors, anything else? I’m about to run out of time here.

Ms. Taytor. I’m not sure how the technology supports the CDRs,
because we haven't really——

Mr. PoRTMAN. I’m just making an analogy to CDRs, whether
there are some specific recommendations you would make with re-
gard to the technology.

Mr. BowsHER. Whether we need to have more privatization of
the effort, you might say, with outsourcing of the effort.

Ms. Taytor. Right. Really, about 90 percent of the software de-
velopment and systems they do in-house, and they really haven’t
contracted out much at all.

I think the caution there, as we’ve seen in other places, is that
even if you bring in outside consultants or contractors, you need to
know how to manage them. I think SSA, since they haven’t had
that experience a lot, that’s going to be one thing we'll probably
need to watch.

Mr. PoRTMAN. Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Christensen.

Mr. CHRISTENSEN. No questions.

Chairman BUNNING. OK.

In my letter to you, I specifically asked GAO to analyze the ex-
tent to which SSA is establishing a research agenda, and you ad-
dressed that by saying it should be bipartisan. If we’re going to
solve the problem on funding, for the Social Security Administra-
tion, it has to be bipartisan.

I couldn’t agree with you more. It’s very difficult when the Com-
missioner of Social Security is out speaking on behalf of the admin-
istration on political issues, to have bipartisan cooperation between
the two parties that sit at this table.

I would just ask you, as a personal observation, do you think the
head of an independent agency should be out speaking politically
on issues that the administration and the Congress might have a
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49

the use of the money, the robbing of the till. What should the SSA
focus on so that we can build confidence back in people of all ages,
and what would especially be effective among young adults?

Mr. BowsueEr. Well, I think what you've got here is you've got
a financing issue. In other words, will the money be there for the
younger people. That’s being asked. So you've got to develop a pro-
gram, Congress working with the President at some point in time,
that will put the program on a very sound financial basis in the
next century.

It’s on a sound basis at the moment. The big concern is, as the
baby boomer comes to retirement, and we have fewer workers and
more beneficiaries, you have got to have some change in the pro-
gram. I think that’s one of my strong recommendations here, to
have a strong policy group in SSA that is developing the research
and the policy options and everything like that, to see what can be
done here.

1 think what you need also is a good explanation of how the
money actually does flow. I think there’s a lot of confusion on that.
I think if that was articulated in a brochure of some sort and could
be given out to people, that could be distributed, I think that might
be very helpful.

Then I think the other big thing is to run the department suc-
cessfully. In other words, you’ve got to get rid of the fraud, waste
and abuse in the SSI area, to the extent that you can. You have
got to be able to have your programs operated with modern tech-
nology.

I think a good example of this is—you know, there's a big insur-
ance firm down in San Antonio that has insurance for the military,
but a lot of retired military. Ten years ago they said they had to
hire every college kid in the neighborhood at night to find missing
files. Then they actually got their system in and working, which is
on a PC, where if you call up, they can get your file right up, who-
ever takes your call. That’s what more and more organizations are
going to. That’s the basic thrust of the reengineering that they’re
trying to do at SSA.

If that could become successful, then the calls that would come
in, people would feel that, boy, they’re on top of my problem. So
I think it’s the reengineering and the technology program. It’s get-
ting the proper controls on your SSI programs.

Mr. CoLuins. Those proper controls would answer a lot of the
questions, or the problem. But the real issue is, you know, people
have these funds deducted from their paycheck, and it’s their
money.

Mr. BOWSHER. Yes.

Mr. CouLins. Of course, it’s hard for any of us to trust other peo-
ple with your money. Of course, this is a mandated deal. We have
no choice. It’s going to come out of our paycheck and it’s going to
the government. There’s a lot of distrust there.

You heard my questions earlier about the cash flow. How could
we establish that cash flow that would take away some of that re-
luctance or that distrust?

Mr. BowsHERr. I don’t think you can create a new bank account.
In other words, I think that would be destroying what was set up
here in 1921 and in 1967 with the unified budget. But I think if


78

presRU2i% IRMA. ww. -Jth good reaso: Pad

What hae triggered their concern is the AFL-ciO’e radio and
televieion advertisements which heve portrayed Republicans in
Congress ae flint-hearted ananies of the working poor for
opposing an increase in the minimun wage. While the ad campaign
targeted to 27 Republicans and two Democrats, it has had a
nattonal impact, so that the minimum wage igsue has moved to the
forefront in the election debate.

Since 1989, the last time federal minimums were increased,
Republicans have had no problen about opposing an increase in
minimum wages. While being showered with huge campaign con-
tributions from fast-food chains and other ratai] businesses,
they have insisted, hypocritically, that their opposition ie
based on studies that thousands of low-paid workers will lose
their Jobs if the minimum wage is raised fron $4.25 an hour to
$5.15 Over tvo years. Now, many Republicans seaking re-election
ax that unless they approve an increase in the minimum wage,
they may loge the votes of the Reagan Denocrata and the 40
percent of union merbers who voted for them in the 1994
Congressional elections.

‘The division among Republicans on this issue is now out in
the open. Candidates in the Northeast and Midwest, where unions
reprasent important constituencies, favor passage of minimum
wage legislation, while those in the South and Southwest oppose
a Like abortion , it has become a "wedge' issue, provoking
heated debste and diszeneion within the Rapubl ican Party.

There are also sharp differences in what attitude Co take to
a revitalized union movement that haa launched a vell-ginanced
political campaign to oust anti-labor lawmakers from Congre
Wawt Gingrich and other right-wing Republicans refer to the AFL-
CIO as "Big Labor" and co labor leaders as "bosses,’ steaped in
corruption. But a growing number of Republicans consider these
epithets counter-productive, serving to further eltenate union
membars who have become disillusioned with the G.0.P, record in
Congress.

It de significant that a prominent Republican, Senator
Alphonse D/Amato, hardly a friend of labor, attacked the House
leadership. "We make a mistake if wa just say labor is the
enemy," he said. "Sometimes we're deeply wrong when we simply use
hareh rhetoric and label them ag thieves, That just antagonizes
people."

Republicans have other causes for worry, The AFL-CIO will
have 200 voll-truined political operatives campaigning in each of
75 congressional districts where their incumbents face a
difficult race. and they haven’t figured out how they'll respond to
the AFL-C10’s "union summer” campaign when 1,000 articulate
college students and young workere start ringing doorbells,
Siscelbuting handbills and teiiag to voters on issues Like the
minimum wage, education, Medicare and Medicaid

It is hard to predict whether the right-wing control of
Congress will be ended this Novenker, but the possibility is
chere--and growing



88

SSA has 103 Senior Executive Service (SES) allocations. As of July 25, 1996, 92
SES positions were permanently filled. Recruitment activities are underway to fill
8 of the remaining 11 positions, and we are evaluating the appropriate organiza-
tional placement of the other 3 positions.

It is normal for an agency to have a number of SES vacancies at any given time
As vacancies occur, agency heads must examine the most appropriate use of the va-
cated position: The position may be refilled, or either redescribed or abolished, in
keeping with organizational needs.

In addition, the recruitment process is a lengthy one. Positions must be adver-
tised, applicants rated, and careful consideration given to determine the selectees
While this time-consuming process takes place, SSA calls on current SES employees
or GS-15 employees to perform temporarily in the vacant positions.

Chairman BUNNING. Mr. Christensen.

Mr. CHRISTENSEN. Thank you, Mr. Chairman, and welcome,
Madam Commissioner.

You mentioned the word “recruiting” and I wanted to explore
that a little bit. I also think it’s important that Americans know
how their trust funds are being used, and trying to find the most
talented people to fill these positions, to work in an area that’s very
important to all of us.

It is my understanding—and I wanted to make sure this is the
correct situation—that your office spent $30,000 of trust fund
money on a “headhunter,” to hire two of SSA’s political appointees;
is that correct?

Ms. CHATER. I actually spent $49,000 to hire two political ap-
pointees.

Mr. CHRISTENSEN. $49,000?

Ms. CHATER. But could I point out that because our budget comes
from multiple sources, only approximately one-half would have
come from the trust fund.

Mr. CHRISTENSEN. OK. And it was my understanding that SSA
refused to provide that information to GAO.

Is it true that the two individuals that you hired for this $49,000
fee had no Social Security background? In fact, weren’t both former
political lobbyists, and one was a former city of New York adminis-
trator and the other was a former State of Maryland adminis-
trator? Is that correct?

Ms. CHATER. No.

Mr. CHRISTENSEN. Yes or no.

Ms. CHATER. No, sir. That is not correct.

Mr. CHRISTENSEN. What is incorrect about that statement?

Ms. CHATER. One of the employees was, indeed, the former Sec-
retary of Human Resources from a nearby State.

Mr. CHRISTENSEN. What State was that?

Ms. CHATER. Maryland. But the other part of your statement is
not correct.

Mr. CHRISTENSEN. And the other individual did not have any So-
cial Security Administration experience?

Ms. CHATER. No, she did not, but she had health-related and
welfare-related experience.

Mr. CHRISTENSEN. In light of the fact that a lot of hardworking
Americans are paying their FICA taxes and they're being used for
headhunter fees instead of Social Security benefits, I’m not saying
its illegal but do you consider that a right justification of taxpayer

ollars?


43

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. 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
Kowever, 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.

ult R ng Ds Abs

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 co 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 o£ tei ice centers

silE_NEEDED

ya

Bs the 2lst century apprcaches, 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

“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.



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151

DISABILITY

Legislative Requirement to Review 50 Percent of Disability Determination Services (DDS)
Title il and Concurrent Title WXVI Allowances Prior to Effectuation (Preeffectuation Review
(PER)

Objectives
To detect and correct erroneous title !! and concurrent title litle XVI favorable determinations
before they are effectuated.

To monitor DDS compliance with SSA policy and procedures in adjudicating disability claims.

Description

A profiled sample of DDS favorable determinations (initial medical allowances and
reconsideration reversals) is selected thcrugh the automated sample selection process and
reviewed for accuracy and uniformity. The profiles are designed to identify error-prone cases,
The cases are forwarded to the disabilty quality branches (DQB) and central office for review.
Ona yearly basis, SSA is required to submit a report on the review to Congress.

Legislative Requirement to Review a Representative Sample of DDS Initial Determinations
(initial QA Review)

Dojecrve
“5 review a sample of all initial DDS disability determinations for accuracy and provide
management information on various aspects of the initial claims process.

Description

A random, stratified sample of initial disability determinations is automatically selected as the
DDSs clear the cases. If, for 2 consecutive quarters, a DDS fails to meet the threshold accuracy
rate and fails to meet one of the processing time standards, then the DDS is in noncompliance
with the Standards of Performance Regulations, The cases are forwarded to the DOBs for
review.

Reconsideration QA Review

Objective
To measure accuracy for all reconsideration determinations at the DDS level and gather
management information on various aspects of the reconsideration process.

Description
A random, stratified sample of reconsideration disability determinations is automatically selected
as the DDSs clear the cases. The cases are forwarded to the DQBs for review.


155

Representative Payee Pilot

Objective

To develop and test a review of the representative payee changes and accounting processes for
inclusion in the ongoing Postentitlement Quality Manual System (PEQMS). Representative
payee accountability is a performance measure for which OPIR has responsibility,

Description
The four noncolocated regions will develop and test the procedures for reviewing representative
payee changes and accounting using the general principles in the PEQMS,

Claims Systems Utilization

Objective

To further improve the application, use and efficiency of SSA's basic RSI claims processing
system,

Description
‘SSA has improved many aspects of the RSI claims processing system over the past few years.
This study will be a comprehensive examination of the pieces of that system.

‘Tne study will focus on Modernized Claims System, Claims Automated Processing System, the
automated SSA-101 (A101) and manual processing. It will include the following topics: Reasons
and causes for the selection of a particular back-end processing option; implementation of prior
recommendations to improve the A101 and its processing and additional corrective actions, the
level of identifying information, accuracy and integnty of proofs certified electronically; the effect
of mcreased automation of dual-entitlement processing, as that facility becomes operational; the
impact of the earnings item correction process on payment accuracy; and the use of the earnings
‘computation facility and its exceptions and alerts to increase the accuracy of earnings records
during claims taking. The study will also feature the collection of subjective data, especially the
evaluation by users of the features of the system and how to make them better. Objective data
will be obtained via collection of additional information from ongoing IDA cases and special study
samples.

Mid-Atlantic PSC Claims Authorizer Screening/Backlog

Objective

To determine the relationship between erroneous or incomplete actions and subsequent PSC.
workloads.

Description

Claims authorizers’ work will be sampled and examined to determine whether the workload is
related to prior SSA errors. About 600 actions will be reviewed. This is the third in a series of
reports on backlogs in the Mid-Atlantic PSC. The first two reviewed the check claims review
examiner and the benefit authorizer backlogs. Both prior reviews resulted in a number of
systems and operational improvements.


CONTENTS

Advisory of July 12, 1996, announcing the hearing ....

WITNESSES

Congressional Research Service, Rogelio Garcia, Specialist in American Na-
tional Government, Government tMisnogement and Operations Section, Gov-
ernment Division ..

U.S. General Accounting Office, Hon. Charles A. Bowsher, Comptroller Gen-
eral of the United States; accompanied by Jane L. Ross, Director, Income
Security Issues, Health, Education, and Human Services Division; Cynthia
M. Fagnoni, Assistant Director, Income Security Issues, Health, Education,
and Human Services Division; and Patricia T. Taylor, Director, Information
Resources Management for Health, Education, and’ Human Services, Ac-
counting and Information Management Division ..

Social Security Administration, Hon. Shirley 8. Chater, Ph.D., Commissioner .

SUBMISSION FOR THE RECORD

Brown, Hon: George E., Jr. a Representative in Congress from the State
of California, statement

iti)

28
57


145

The OPIR work plan tor list) for FY 1997, including th:
staff resources estimated to accomplish each item of th
plan (or list).

OFFICE OF PROGRAM AND INTEGRITY REVIEWS (OPIR)
FISCAL YEAR (FY) 1997 WORKPLAN,

Ong

1g Workload Commitments. ]

RETIREMENT AND SURVIVORS INSURANCE (RSI) STUDIES

RSI Dollar Accuracy Review of Initial Claims to Provide SSA and Oversight Agencies with
Payment Accuracy Data (Index of Dollar Accuracy (IDA)

Objectives,
To determine the dollar accuracy of claims adjudicative actions expressed as a proportion of
dollars paid accurately over life cycle dollars that should be paid

To identify which specific dollar accuracy problems are most significant and distinguish those that
appear most correctable,

To initiate a dialogue in SSA that leads to practical action plans for corrective action

Description

‘The reviews for the IOA samples involve an examination of documents in SSA records and
verification of payment accuracy through contacts with beneficiaries, their representatives and
collateral sources (such as employers). The determination of whether payment is accurale is not
limited to whether or not procedural developmental guidelines and tolerances were followed.
Doliar impact is described in terms of life cycle effect on benefits.

RSI Stewardship Payment Review of Existing Active Accounts to Provide Congress with
Accuracy of Payments

Objectives
To monitor the dollar accuracy of monthly RS! payments.

To identify which specific dollar accuracy problems are most significant.
To distinguish payment accuracy problems that are eventually corrected from those that are not,

Description

OPIR annually reviews samples of the RSI beneficiary rolls. The reviews involve an examination
of documents in SSA records and verification of payment accuracy through contacts with
beneficiaries, their representatives and collateral sources (such as employers)

RSI Postentitlement (PE) Payment Change Accuracy Review Requested by the Agency

Objectives
To determine the amount of payment changes that occur and the accuracy and timeliness of
those changes.


106

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66

Nation, I have had countless people tell me how much they
appreciate getting their PEBES, and how useful they are in
helping to plan for retirement. The people I meet are consistent
in tueir praise of the information provided

We launched a multi-media ‘National Education Campaign" on
August 14, 1995. This includes a series of public service
announcement

to educate the public about the value of Social
Security benefits sent to $000 TV und radio stations-over $1.2
million worta of air time has been donated in 46 states. These
announcements point out that Social Security is a family program
covering dependents and survivors as well as retirees. Thus we
cannot analyze Social Security's value to young workers strictly
by projecting retirement benefits.

In conclusion. Mr. Chairman, SSA has successfully completed
its transition to an independent agency and is hard at work on
meeting the challenges that lie ahead



52

reports, the PEBESs, are going to help with regard to that, but I
couldn’t agree with you more, that they have a role there to edu-
cate our constituents, the American public in general, as to what
the situation is currently and how we will have to deal with an in-
creasing aging population and fewer and fewer workers.

But on the management side, which is really where you have
given us a lot of good input, as a service organization, you have in-
dicated some shortfalls, and I want to focus on a couple of those.

One is the disability area, and particularly the CDRs. In your
testimony I think you talk about the fact that there’s a rather am-
bitious plan to complete 8 million CDRs in the next 7 years. Do you
think that’s realistic?

Mr. Bowsuer. I think it’s going to be tough, yeah.

Jane, would you want to add anything to that? You’re pretty
close to that.

Ms. Ross. Yes. We think it’s an ambitious goal. SSA says they
can make it, but some of the assumptions on which they base their
optimism is that they will be able to put some fairly major im-
provements in place in order to do more CDRs.

We are in the process now of looking for this Subcommittee at
whether we think they can complete their work on the backlog.

Mr. PoRTMAN. Do you think, Ms. Ross, that by more private con-
tracting, more aggressive contracting than the pilot programs that
are out there, that there’s a better chance that that ambitious
number could be reached, based on GAO’s study of this?

Ms. Ross. I think this is an area where contracting out would
be something that SSA might want to look at. We haven’t done any
looking at it. But they have pretty much thought about how you
would do this strictly internally, and perhaps that’s another option
they ought to examine.

Mr. PORTMAN. Any thoughts on that, Mr. Bowsher?

Mr. BowsHeER. I think they ought to consider it and do some pi-
lots maybe.

Mr. PorTMAN. In terms of technology, the whole notion of bring-
ing a Federal Government agency into the nineties, if not into the
21st century, how would you judge SSA as compared to other agen-
cies? The IRS comes to mind, and others.

Mr. Bowsue_r. I used to consider SSA one of the worst, and I was
wondering whether they were ever going to get beyond their tape
drives over there. But they have made some progress in recent
years on that. So I think now they have got a department that has
made real improvements and I would hope that this technology
program that they’re currently involved in would be successful.

But one thing, of course, that now worries us is we hear about.
the 28-month slippage on the software, that is a concern. Pat might
just add a few words on that. Because this is very important.

Mr. PoRTMAN. If you could also address the redesign issues and
kind of the bigger issue of whether there is, I guess, an architec-
ture for design.

Ms. TayLor. Right. On the 28-month delay, though, only 10
months of the delay is really due to the software development prob-
lems. SSA knows about those. Right now their biggest challenge is
they’re moving from the old mainframe computers and going to a
more modern, PC-based network system, and the people that they


173

Benefit and Tax Statement Survey

Objective
To determine the efficacy of providing retired workers with information about their Social Secunty
benefits and taxes, as required by H.R. 3136,

Dese
This S.atcment, to be sent to retired beneficiaries whose entitlement began after 1983, would contain
an esiimale of the individual's aggregate covered earnings, the aggregate Social Security taxes
{including the employer share) and the total amount of benefits paid on that record. OPIR would
conduct a customer satisfaction survey to obtain public reaction to receiving this statement.

Employee Perception of Fraud

Objective “
To determine employee perceptions regarding the extent of fraud in SSA's programs, as recommended
in the tactical pian.

Ces:ipnon

In December 1995, additional proposals were made for inclusion in the existing tactical plan on fraud,
waste and abuse. To support the need to have a way to measure SSA's success in reducing fraud,
waste and abuse, it was recommended that an employee survey be conducted by OPIR. Before a
decision is mace to conduct the full survey, focus groups will be held (scheduled for August 1996) to
obtain baseline data on employee's perceptions of fraud in SSA and to get feedback on the survey
instrument. {further information on employees perception of fraud issues is required by the Agency,
OPIR 1s prepared to conduct a statistical survey

Electronic Service Delivery - PEBES on Internet,

Objective
To determine customer reaction to using the Internet to request a PEBES,

Description

Users of the Internet who request a PEBES through Intemet will be recontacted by OPIR to participate
ima customer survey to determine their impressions of this service,


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26

As I listened to some of your testimony, it kind of reminded me
of that relationship. Here was my mother, who I had deep love and
affection and respect for—and we're talking about an independent
agency that may have that political connection to the President—
yet in my instance I had far greater independence than what I’m
hearing you talk about, because I was solely dependent upon my
Army paycheck as a means of living, and I had a clear understand-
ing of the court martial procedure if I didn’t follow what the battal-
ion commander told me.

As I listened to your talking about the independent head here in
the agency we're talking about, who submits communications, regu-
jJations, to OMB—and I’m not sure I understood about the budget—
dependent upon the President’s agency for litigation, it seems that
the independent agency head that we're talking about here doesn’t
quite have the independence I had from my mother in this military
relationship.

Is that kind of what you’re telling us here today?

Mr. Garcia. I’m only trying to say what authority or what inde-
pendence Congress has given to the agency through statute. The
heads of all executive agencies are to an extent members of an ad-
ministration and they have to depend to a certain extent on the ad-
ministration for legislation, for support of its policies, legislation
through Congress, and so forth.

Mr. LAUGHLIN. Very quickly, is there anything you would rec-
ommend that Congress do other than pass legislation? Are there
any actions that you would recommend that we take?

Mr. Garcia. I’m really not qualified to get into that because
that’s primarily in political areas, sir.

Mr. LAUGHLIN. OK. So we’re talking about altering a political re-
lationship then?

Chairman BUNNING. Mr. Laughlin, I’m going to ring the bell just
a little prematurely, because we have 5 minutes to get to the vote
on the floor-——

Mr. LAUGHLIN. And there’s four votes.

Chairman BUNNING. And we will recess until we finish our vot-
ing. We apologize.

Mr. LAUGHLIN. Thank you, Mr. Garcia.

Mr. Garcia. Thank you.

[Recess.]

Chairman BUNNING. The Subcommittee will resume.

I would like to ask Mr. Garcia a couple of questions.

You mentioned political considerations numerous times in your
testimony. What do you mean by political considerations for the
record?

Mr. Garcia. The political environment, the various constituency
groups that would be involved and interested in particular issues,
the support or opposition generated by these groups, the political
dynamics that are involved in any policy, any action that the ad-
ministration is pursuing.

I don’t know anything beyond that. I’m not really qualified to get
into Social Security issues.

Chairman BUNNING. In lieu of what you just said, what recourse
would the President have if the Commissioner chooses to commu-
nicate to Congress directly and not submit communications to the


22

Mr. Garcia. It’s possible, sir, but the fact that the agency was
made independent—Let me back up.

It’s possible. Why they did not do so, I don’t know.

Mr. NEAL. That’s the only question I had, Mr. Chairman.

Chairman BUNNING. Mr. Collins.

Mr. COLLINS. | just have one question, Mr. Chairman.

Mr. Garcia, without passing additional legislation, what can Con-
gress do to further the Social Security Administration’s independ-
ence and insulation from political pressures?

Mr. GarciA. I would venture to say, to provide SSA greater inde-
pendence or to see that the independence it has is utilized, would
likely depend on the support given to it by its oversight committees
and the Congress. Support in the sense of backing the agency when
it may have a conflict with the administration over budget and
staff, policy and other matters.

But I’m not—I don’t have sufficient knowledge to go into those
areas. The area that I’m particularly involved with is simply what
is in the statutes and how the particular characteristics of the
agencies are applicable, or of their independence, are applicable to
one agency or another agency.

Mr. CoLiins. As a followup, without additional legislation,
though, it primarily would depend on the person appointed as Com-
missioner and their interpretation and their attitude toward loyalty
to the congressional intent to establish an independent agency or
to the President?

Mr. Garcia. I would assume, sir, that any head of agency that
is independent, how he or she exercises his or her independence,
is determined by various factors—the attitude of the individual
heading the agency and various political considerations.

Beyond that, the Congress could look at certain reports that are
required to be filed, to determine how the agency is operating. I’m
thinking now, for instance, of the Senior Executive Service. The
level of Senior Executive Service positions are established by the
Office of Personnel Management, in consultation with OMB. The
statute establishing the agency as an independent agency stipu-
lates that when OMB establishes the number of senior executive
positions for the agency, the number should be substantially great-
er than it was when the agency was in HHS, and also stipulates
that whatever numbers are established by OPM, that OPM pro-
vides that information to the Committees. So I would imagine that
scrutinizing those reports would help the Committees determine
what is happening in that area.

Mr. CoLtins. Another followup question. I thought I just had
one, but it’s getting interesting.

Chairman BUNNING. The green light is still on.

Mr. CoL.ins. The cash flow of the Social Security Administra-
tion, too, can drive the attitude, not only of the chief executive offi-
cer of the country but those political pressures upon the Commis-
sioner who handles that cash flow, as to how independent that
agency will be; is that not true?

Mr. Garcia. Sir, I’m not qualified to comment on those issues.
I don’t know what the pressures are. I have no knowledge, really,
of the substantive issues that the agency is involved with, apart
from what I read in the newspaper.


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162

Disability Redesign: Full Process (FP)

Objective
To determine if the FP process can produce an accurate and appropriately documented disability
determination more efficiently than the current process in terms of time and resources and the
number of administrative steps a claimant must go through to receive a final decision

Description
One of the redesign actions is to test the full process model. OPIR is to evaluate the quality of
the proposed process with an FP test conducted in seven States. During the test period, data
willbe collected from each site and from control groups to answer questions which the test will
adaress.

Disability Redesign: Disability Claims Manager (DCM)

Obiective .
To evaluate the DCM process and to assist the Agency in implementing the DCM position

Description
As part of the Disability Process Redesign, OPIR is reviewing the DCM workioad and process. 1)
The nonmedical quality of title Il eligibility; 2) the nonmedical portion of the title XVI entitlement;
and 3) the medical aspects of both tile (and title XVI disability claims OPIR will establish a
nonmedical review baseline evaluation with which to compare actions processed by the OCMs
‘and analyze the results with the baseline information

Adjudication Officer (AO) Subset of Full Process Review

Objective
To evaluate the AO work product and provide data to management to assess how the new
process is working

Description

SSA is testing the full process design developed by the Disability Process Redesign consisting of
an SOM, no reconsideration determination, a predecision interview and AO involvement As part
of its assessment of the full process design, the OPIR Division of Disability Hearings Quality
(DDHQ) will evaluate AO activity in a sample of cases. The review will include both allowances
and cases which AOs certify as fully developed and ready for hearing

AO Process Review

Qbiective
To evaluate the AO process and provide management information on how the new process is
working

Description
SSA has created the position of AO to develop the evidentiary record on cases appealed to OHA
prior to a hearing by an ALJ. In addition, SSA has authorized AOs to issue fully favorable

on-the-record (OTR) decisions when warranted by the evidentiary record, Because the Office of


165

Deseristion

For 1 month, all initial QA cases will be tracked through the completion of all intial benefit
payment actions. The cases will be subject to a normal QA review by DB reviewers to
determine the accuracy of the medical factors. Then, when all payment actions have been
completed, these cases will be reviewed to determine the accuracy of he nonmedical factors.
ue to reduced resources, a comprehensive stewardship review of the disability program is not
possible at this time. This initiative will establish a methodology for a measurement system.
which will be used when resources are available for an extensive review.

CROSS-CUTTING

Annual Customer Satisfaction Survey of Recent Transactions

Objective .

To provide data for SSA's customer service standards performance report and to gauge SSA's
success in meeting specific objectives of the Agency Strategic Plan and the Government
Performance and Results Act.

Deser
OPIR has taken over from OIG their annual survey of SSA's customers who have had a recent
transaction with SSA. OPIR will use the same questionnaire and methodology as OIG had
panned for the 13th annual survey. This year OIG was planning fo use a new rating scale which
had “excellent” instead of "very good” as the top rating, In order to determine the impact of this
scale on the overall satisfaction ratings, OPIR will conduct 1,500 interviews using the new scale
and another 1,500 using the prior scale. The survey will begin in December 1996

Customer Satisfaction Survey of Initial Awardees

Objective

To provide data for SSA's customer service standards performance report and to gauge SSA's
success in meeting specific objectives of the Agency Strategic Plan and the Government
Performance and Results Act

Description

PIR is conducting a scaled down version of the FY 1994 survey of initial awardees to provide
the Agency with longitudinal information on key performance indicators. The data will be used for
the September 1996 update of SSA's customer service standards performance report.
Approximately 500 awardees are being interviewed from each of the RSI, Di and SSI programs.

Customer Satisfaction Surveys of Disability Redesign Pilots

Objective
To obtain customer feedback on various aspects of the redesigned disability process.


169

Evaluation of Pilot Match Between the SSR and State (California) Records of Confined
Juvenites

Objective
To pilot and obtain cost and benefit data on a matching operation between the SSR and
California Records of Confined Juveniles.

Descnption

This project involves conducting and evaluating a pilot matching operation. A file of juveniles
confined in California's public institutions will be matched against the SSR to detect recipients
who should be suspended. A sample of about 500 matched records will be developed using
existing adult prisoner population procedures.

Test the Effectiveness of the Matching Operations Between the SSR and the Railroad
Retirement Board (RRB) File

by
To determine the cost-effectiveness of conducting the SSRIRRB matching operation more often.
than once a year

Descnotion

The payment files of the RRB will be matched against the SSR 6 months after the regularly
scheduled annual match. The extent to which new OPs or ineligibles (new accretions or
increased payment levels) are detected will be the basis for our recommendation as to whether
to expand this match to more than once a year.

Test Effectiveness of the Matching Operations Between the SSR and the Department of
Defense (DOD) File

Objective
To determine the cost-effectiveness of conducting the SSR/DOD matching operation more often
than once a year.

Description
This study will use a similar methodology to the RRB match evaluation described above,

Prisoner Match Evaluations

Objective
To produce a more accurate SSN verification rate for the reported prisoner population.

Description

OPIR conducted a phase 1 probe of the prisoner matching operation in 1996, As a result of that
probe, the Principal Deputy Commissioner asked OPIR to review the prisoner records that are
coming to SSA under the Commissioner's March 1 request that all State penal institutions
provide files of their current prisoner population. The primary purpose of phase 2 is to determine


34

support these efforts as important and necessary steps co 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 [: THREATENED: SSA IS NOT YET ACTIVELY
PARTICIPATING IN FIIASI: (NG DEBATE

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 wiil 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 3S-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 Securicy
system per beneficiary; in 1950, 16.5 workers were paying Social
Security taxes per beneficiary.



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194

and employees‘ job knowledge and helpfulness as critical
characteristics of good service. They said they wanted choices
in how they deal with us. Customers also wanted quick access to
the Agency (short in-office waiting times and easy-to-reach
telephone service]; short claim processing times, particularly
for disability claims; the ability to complete business with one
call or visit (or with the same representative if the issue
requires multiple contacts); and “one-stop shopping" for doing
business with agencies having overlapping requirements. We found
that our customers recognize resource limitations and are usually
quite reasonable in their expectations of service.

We continue te solicit input from our customers through
satisfaction surveys that assess our service delivery performance
and explore customer preferences. Further, SSA now routinely
uses focus group testing to inform the public about planning and
policy initiatives such as Personal Earnings and Benefit Estimate
Statements and a reengineered disability claim process.

Currently, we are planning a major new series of activities to
solicit customer input that will give us a good sense of how
customer expectations have changed since 1994. This information
will be a critical resource as we set priorities for the Agency.
We recognize that focusing on customers! needs and expectations
will become increasingly important as Congress and the
Administration work toward a balanced budget. As we hear from
our customers and set our priorities, we will begin working to
make the process changes needed to support improved customer
service. As before, we will obtain and use input not only from
our customers, but also from employees, stakeholders, and Agency
executives who own the processes.

SSA has made excellent progress in meeting its goals for reducing
employment in headquarters and other staff/support functions.
From the beginning of FY 1994 to the end of FY 1996, SSA reduced
full-time permanent (FTP) employment in staff components by about
1,600, or more than 14 percent overall.

The reductions have been accomplished through attrition
(ineluding early-out and buyout program incentives), as well as
from Agency programs to redeploy/reassign employees to direct
service positions in field or hearing offices or in newly-
established direct service units in headquarters

During this same period, FTP employment increased by more than
1,200 in field offices, teleservice centers, and hearing offices.



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58

received hearings in 1995 than in 1993, that processing times for
disability claim applicants decreased by 11 percent between 1993
and 1995, and that continuing disability reviews increased from
116,000 in 1993 to 285,000 in 1995.

Next, our average processing time to assign a Social Security
number was cut in half between those years. Social Security’s new
Office of the Inspector General recovered more than $9.6 million
during its first year, which included its transition and startup
time. And in fiscal year 1995, we issued 10.7 million Personal
Earnings and Benefit Estimate Statements, and we are right on
track in doing the number that we said we would do.

In fiscal year 1995, SSA maintained 240 million earnings
records. We processed more than 5 million benefit claims, and over
6,200 disability beneficiaries were successfully rehabilitated
through our vocational rehabilitation program and returned to
work. This will result in a savings to the trust fund of $257 million.

We are working now with all 50 States, the District of Columbia,
and the Federal prison system to make sure that prisoners are
taken off the rolls. I also want to point out that it is this adminis-
tration, it is we, who found this to be a problem and have corrected
it.

We have met with success in modernizing our automation sys-
tems, and, because we have been successful in dealing with the
computer change for the year 2000, one of our employees serves as
the leader of an interagency group planning on how to change com-
puter systems for the year 2000.

Now, in order to inform the public and build confidence in Social
Security, we created an Office of Communications, led by a Deputy
Commissioner, and we have put into place a nationwide edu-
cational program because we feel strongly that people must under-
stand “what is” before they can understand what “might be.” So,
in addition to sending out the PEBES statement, we’re speaking
across the country and meeting with journalists at every oppor-
tunity. We're writing OpEd pieces and letters to the editor, that
correct the mythology of Social Security and the misinformation.
And we are sending out Social Security Public Service Announce-
ments for radio and television broadcast. In fact, we had about 1.2
million dollars’ worth of broadcast time for these public service an-
nouncements donated to us.

We have also at the schools’ requests, distributed about 17,000
teacher's kits to schools, high schools, and colleges across the Na-
tion, in an attempt to have faculty incorporate this information so
that young people will know what the Social Security Program is
about.

One minute ago, I mentioned that the creation of the OIG and
the Office of General Counsel is part of our transition. They are
both making quite a significant contribution to the agency. We are
absolutely determined, as a very high priority, to deal with the is-
sues of fraud, waste, and abuse. The OIG is strengthening its in-
vestigative resources in particular by increasing the number of
criminal investigators from 124, as of August this year, to 158 by
September 30, more than a 25-percent increase.

With the OIG and Office of General Counsel now working with
other components across the Nation on a daily basis, we’re taking


112

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6

greater union involvement in workplace decisionmaking ag a vehicle for productMiry,
efficicocy, ind berter customer servics, These have traditionally been sten a the exclusive
province of management. That vutduied notion ly precisely what unions ase teying to change
by working fo partnership with SSA and other agencies.

1 The osture of “union activites” bes undergone a radical transformation over the past few
years with the advent of partoerehips betwees labor and mamagement. Unico leaders in
today's federa) workplace are dedicating more and mote of their tiste to improving
governmax performance and delivering higher-quality services to the Ameritan prople.

4 Ata time when downsizing end privatization efforts are threstening to reshepe the federal
worklores, the sbift in focus away from labor-managemest confrontation and loward
cooperation and mutual gosls has become a maner of survival for both labor and

mepagomest.

4 Uf Republicans were truly toterested fn bow well the public is served by SSA, they would
pot ask bow much time aod resources are spent on union work, bur bow much of the work
doge by todzy’s unions Is dedicated toward guipe in productivity, improvements In customer
service, redesigning antiquated work systems, and cutting the overs of doing business.

1 Ut is especially bard to believe the Republicans’ motives are grouloe in Light of the
Republican maferity’s support for the TEAM Act, This bill would change fabor Lrws 0 allow
ménagement 1p creale “company umdous” under the gulse of labor-management cooperation
committoes. The Republican majority apparently has oo trouble embracing the virtues of
workplace cooperation and teamwork -~ al] oa paid company time ~- a bog as there are 20
anions around, But whon employees wax en independent voice to fhe workplace and clect a
anion to spesk for them on these Very game matters, the virtues Of cooperation and workplace
partoc. .!ps suddenly become, in one Republican't words, “a case of misplaced priorities.”

1 The only time Social Scourity workers were not on the fod serving social security
tec{plents was when the Repablican leadersiip decided Lest year that ft would rather shut
Soyn the government than negotiate a clean continuing resolution with the President. Union
mumnbers beld dermonsystons called *workeins* tn froot of Socis! Security offices al! over
the|nation. $0 if you atk us who cazes more about senior citizens, the House Republican
leadership or rank-and~file SSA employees, wo dook think thar's « bard call.

1 The Repudlicas leaders effort to question Labor's cocamitment to the elderty flies tp the
face of the labor moveosent’s staunch opposition to the Republicans’ propased Medicare cuts
‘And no one has been a stronger defendcr of Socisl Scovrity beneSte -~0 which the elderly
rely for a digzified Life —- than the Americas labor movement:


28

panied by Jane Ross, Director, Income Security Issues, Health,
Education and Human Services Division; Cynthia Fagnoni, Assist-
ant Director, Income Security Issues, Health, Education, and
Human Services; and Patricia Taylor, Director, Information Re-
sources Management for Health, Education, and Human Services,
Accounting and Information Management Division.

Welcome to you all. For the benefit of our guests, GAO is the
audit and investigative arm of Congress.

Mr. Bowsher, it is an honor to have you here today, and I want
to thank you for personally presenting the GAO testimony on the
issue of SSA’s performance as an independent agency. Your pres-
ence illustrates the great importance of this hearing.

Having read your testimony, I know that you particularly under-
stand how important a strong, efficient independent Social Security
Administration is to the American public. My personal thanks to
you and your outstanding staff once again for their continued excel-
lent work. I thought that the title of your testimony was right on
the mark and I look forward to hearing your findings.

Mr. Bowsher, would you please begin.

STATEMENT OF HON. CHARLES A. BOWSHER, COMPTROLLER
GENERAL OF THE UNITED STATES; ACCOMPANIED BY JANE
L. ROSS, DIRECTOR, INCOME SECURITY ISSUES, HEALTH,
EDUCATION, AND HUMAN SERVICES DIVISION; CYNTHIA M.
FAGNONI, ASSISTANT DIRECTOR, INCOME SECURITY
ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES
DIVISION; AND PATRICIA T. TAYLOR, DIRECTOR,
INFORMATION RESOURCES MANAGEMENT FOR HEALTH,
EDUCATION, AND HUMAN SERVICES, ACCOUNTING AND
INFORMATION MANAGEMENT DIVISION, U.S. GENERAL
ACCOUNTING OFFICE

Mr. BowsHER. Thank you very much, Mr. Chairman, Mr. Collins.
It’s a pleasure to be here today.

What I thought I would do is summarize my testimony, but I
would appreciate if the full text of my testimony could be put in
the record.

Chairman BUNNING. Without objection.

Mr. BOWSHER. As you know, Mr. Chairman, the Social Security
Administration administers one of the largest Federal programs in
our whole government, and it has a very large staff of 64,000. The
expenditures totaled $363 billion in 1995, nearly one-fourth of the
Nation’s $1.5 trillion Federal budget.

I think it’s also important to realize that SSA serves 50 million
beneficiaries, nearly 1 out of every 5 individuals in this country.

Managing SSA, I think, is one of the great management chal-
lenges. You have a huge work force, you have a complicated pro-
gram, you have old systems and some modern systems, and so
managing this organization is no small task.

In 1995, Congress, in an effort to address some of the critical pol-
icy issues and correct some of the programmatic and operational
weaknesses, passed legislation to make SSA independent of HHS.
Today we are here to provide GAO’s assessment of SSA’s efforts to
address the policy, program, and operational issues and their ef-


94

3. The Sigeommit == has sarcant abeun elimmericg the

Ese ean the new ui office of the
Lexal a the office a bese am [ris siity Reviews

ge shang the
tions, please

A Listing oLLOPTR reports undertaken since

1993 =e

reviews
b. Th ni. rl
e above, and
each
cs. For each of the items in 2, please list the
rion (s) made, ane each (implemented
and date, or not imperentes sd rationale). for each

recommendation implsren"<d, please describe as

aS_pess.ble the results achieved and benefits

derived.


9

thorized to transmit the communications directly to Congress. The
Social Security Administration lacks the statutory exemption en-
joyed by several other independent agencies in this matter. Some
independent agencies without statutory exemption have reported
that they send their communications directly to Congress.

Turning to rulemaking, Executive Order 12866 directs all execu-
tive agencies to send their regulations to OMB for clearance before
being published. Independent regulatory agencies are exempt from
this clearance procedure. Although not a regulatory agency, there
is some question as to whether the Social Security Administration
is legally bound to clear its regulations with OMB.

Looking at data collection, the Paperwork Reduction Act requires
executive agencies to submit proposed new data collection requests
to OMB for clearance. If OMB rejects the request, multiheaded reg-
ulatory agencies may override the decision and collect the data.
The Social Security Administration lacks the overriding authority.

Finally, as to litigation, by statute, litigating authority is cen-
tered in the Department of Justice. While a handful of independent
agencies have complete litigating authority, most agencies, includ-
ing the Social Security Administration, have limited authority. Liti-
gation may be conducted jointly with the Department of Justice,
depending on the complexity of the issues, their impact on specific
agency concerns, and governmentwide concerns.

In conclusion, let me say that, within constitutional and political
limits, Congress determines how independent an agency will be
from the President’s direction and control. Within the general cri-
teria established by the Supreme Court regarding the limits that
might be placed on the President’s power to remove an official from
office, Congress has considerable authority to assure an agency's
independence.

Among the singleheaded agencies, the Social Security Adminis-
tration enjoys considerable independence. The Commissioner serves
a 6-year term and may not be removed except for cause. While the
agency’s budgetary and staffing requests may be subject to revision
by OMB, its own budget, along with the President’s ‘budget, is sent
to the Appropriations Committee.

Finally, as an independent agency, it is uncertain whether its
communications with Congress and regulatory actions are subject
to OMB clearance.

Thank you, Mr. Chairman. I am ready to answer any questions.

(The prepared statement follows:]


77

rorwara neuer

rer 21 196 10:38
jubjezt: Novenbir Elections and AFL_CI

Kathor > Walph-de-ollie CoumelT fae ae i “Wp oF

Date: $/146/96 7:19 AM SSA FO Opembens

From bkelbereige.apc-org Tus May 14 07:19:28 1996
D ‘Tue, 14 May 1996 0 an 0:

From: Harry Kelber <hkelber@ige. apevorg>

Reply-To: publaborérelay.doit.wisc.edu

Toe Multiple recipionte of list. <publeborerelay. dott viac.edus
Subject: LaborTalk: AFL-CIO‘s ‘Wedge’ Issue

LaborTalk: AEL:CJ0's ‘Wedge’ Tesue
By Harry Kelber

For the firet time in age:
worried abort the political cl,

a

Sak ~— ta
et

A
J
we

Republican Party leaders are
2 of organized labor in this



83

Mr. Jacoss. Mr. Chairman, I was only interested in whether the
person who was directed not to engage in that activity had violated
that direction. That’s all I had in mind there.

Ms. Chater, would you comment on the government shutdown?
Did that have any effect on the independent agency’s progress in
this matter?

Ms. CHATER. The shutdown had a tremendous effect on our agen-
cy. We calculated actually that the shutdown cost the agency about
$77 million. That’s not just in salaries, but it has to do with mil-
lions of dollars in rent and maintenance for buildings that were not
fully utilized.

Besides the heavy cost, the shutdown meant that we were unable
to do some of our regular work. We couldn't, for example, verify So-
cial Security numbers, we didn’t issue the Personal Earnings and
Benefit Estimate Statements, we didn’t do a number of things. We
didn’t even answer the 800 number to the extent that we would
have liked to. So all of that simply meant that we had carryover
work to do, catchup work to do.

At the same time, we were working with uncertain budgets, so
we didn’t have overtime and flexibilities in our budget to do all
the——

Mr. Jacoss. You're referring to the continuing resolution?

Ms. CHATER. Yes.

Mr. JAcoss. Mr. Chairman, I have kind of a parting shot I would
like to make here. It’s an idea that I wish to spread on the record.
I think I can state it fairly concisely.

In the problem of the long-range security of Social Security, fi-
nancial security, I have a feeling that a lot of us have seen the
trees more clearly than the forest. By that I mean this:

In 1937, when the first Social Security check was paid—I think
there was only one person, one lady up in New England who re-
ceived it—if productivity in the United States had remained the
same between 1937 and the early fifties, say 1952, I think it’s de-
monstrable that the Social Security system could not have met its
obligations to retirees in as early as 1952.

The productivity did not remain the same. In 1937, 25 percent
of our population was on the land producing food and fiber essen-
tially for the United States. Today, the figure is about one-tenth
that, around 2 percent, producing food and fiber in such excess that
it helps feed and clothe the world. So productivity has improved.

I think the “forest” of this thing, if you get away from the dollars
and the adjusted dollars, what is it today and what will it be 10
years from now, 20, 40, 50, 70 years from now, and get to the fun-
damental “forest” of the matter, the question is what will produc-
tivity be.

Today, three people pay taxes to pay Social Security benefits to
one retiree. By the year 2025, I guess it will be a little over two
people, or 2020, along in there. It will be a little over two people.
So fundamentally, the question to be answered is, can two people
produce as much 25 or 30 years from now as three people can
produce now. That’s about all I have to say.

The ultimate question, of course, is why did productivity increase
in this country? Did it increase because we became better people
and harder workers? Lots of luck. Did it improve because of tech-


5

tory, legend, and it’s been a pleasure to play ball with him in poli-
tics. His service in Congress has been sincere, talented and tireless.

I don’t throw much poetry around, but I think this is an apt de-
scription of your service in the Congress. You have excelled in two
disciplines and that makes you rare, indeed. I am grateful for your
friendship and really the friendship of all my colleagues on this
Committee.

I hope that’s a little better valedictory than I said a few months
ago, when I said valedictorian instead of valedictory. Dr. Chater,
that was my problem. With these Ph.D.s, you have to be more care-
ful. She wasn’t in the room, and I’m glad she wasn’t.

Chairman BUNNING. Thank you, Mr. Jacobs. I appreciate that
very much.

Before I call our first witness, I would want to mention that Con-
gressman George Brown has submitted testimony expressing his
concerns about the proper assignment of wages to workers’ Social
Security earnings records.

I ask unanimous consent that Mr. Brown’s statement be placed
in the record.

[The statement of Mr. Brown follows:]


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81

Chairman BUNNING. During the news segment, Ms. Pierce told
NBC that SSA didn’t condone such activity and promised to look
into it. Although I have asked Ms. Pierce in my letter to let me
know by July 23 what she was doing about this serious abuse of
government time and equipment, I have yet to receive even the
courtesy of an acknowledgment from her. It’s almost like requests
fall into a deep, black pit when we send them over to SSA head-
quarters.

So tell me, Madam Commissioner, how does this Subcommittee,
which has the responsibility for oversight of SSA, get the courtesy
of a prompt response from you or from your staff? Tell us what we
must do to get your attention to these and other various problems.

Let me explain why. When you send a proposal to us, such as
the technical corrections bill that you thought was necessary, we
had no problem receiving that from you. This Subcommittee, in a
bipartisan fashion, passed that bill this morning without anyone
objecting to it. I expect the same courtesy on the other end from
the Social Security Administration and from you personally, be-
cause we have to cooperate if we are going to get this job done.

Do you have some reason for the problems we are having with
communications?

Ms. CuaTer. Yes, Mr. Bunning. We have had some problems.

First I want to state very clearly that, of course, we want to co-
operate with you. One of the bits of information that you asked for
had to do with people. You asked for the amounts of awards for
particular people. We did take a long time to get that back to you—
but for a very good reason.

First, I wanted to be sure that the numbers that we had on a
printout were, indeed, accurate, so we verified that information,
which took a bit of time. Second, I felt, because of the Privacy Act,
it was our responsibility to inform the employees that we were
going to be sending this data that you asked for. So we made every
effort to contact the employees individually to let them know that.
At the end of that process, which I agree took longer than we an-
ticipated, we forwarded it to you.

On the other issue of having Ms. Pierce look into the union and
who can do what and what they have done, I have referred that
to our General Counsel, to examine the laws, the rules, the regula-
tions, so that we can give you the most accurate response.

Chairman BUNNING. Well, we have the American Federation of
Government Employees sending into Social Security offices around
this country a legislative update, with very false information. We
think this is an abuse of the SSA fax machines, and that SSA’s
management should be aware that these things are going on. When
this abuse continues, we need answers as quickly as we can from
the Social Security Administration, so that we can try to under-
stand what you're doing to combat this.

If Ms. Pierce says that SSA is doing something, or you're going
to look into it, we would like to know what results are taking place.

Ms. CHATER. And we will send you that.

We have already, for example, taken away all of the privileges
of e-mail, computers, and so forth, from one employee, and we will
certainly look at all the rest.

Chairman BUNNING. This is dated July 22, so this just occurred.


188

Committee (NFC) that is chaired jointly by the SSA Inspector
General and the Deputy Commissioner for Finance, Assessment and
Management. In the regions, Regional Fraud Committees (also
chaired by OIG) coordinate the investigations and other more
complex approaches to detection and investigation of fraud.

OIG is a key sponsor of the SSA Tactical Plan to Combat Fraud.

The fraud tactical plan demonstrates broad, Agency-wide

ya." cipation, identifying initiatives at the grass roots level
vghout the Agency, with the full support of the NFC.

> :iie projects under OIG leadership include:

d Vulnerability Study

° SN Fraud Detection Guide
5 Strenathening Fraud Infrastructure
© Special Operations (Joint Field Operations)

panding Sharing of Third Party Information with Federal
Agencies

establishing Access to Pooled Fraud Detection Services and
Data Sases

© Implementation of Civil and Monetary Penalty Authorities

© Building a Single $SA/OI1G Database and Control System



107

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92

1. Please provide your views on what role SSA should take in
framinc the debate over national Social Security policy for the
Congrer: and the American public?

Educating the American public is critical to achieving a
resolution of the long-term solvency issue. An accurate
understanding of the facts is needed as the foundation for public
discussion. As part of this effort, SSA developed Teacher's
Kits, which we made available to secondary schools, which used
lesson plans, factsheets, handouts, a video, and a teacher's
guide to present a comprehensive overview of the program. At the
request of secondary schools, we have distributed seventeen
thousand of these kits. We also issue Personal Earnings and
Benefit Estimate Statements so that workers can see exactly how
much they have paid into Social Security and how mich their
benefit will be when they retire. By the year 2000, PEBES wil

be sent to every working American over the age of twenty-five. In
addition, we began a multi-media campaign to educate the public
about the value of Social Security benefits through a series of
public service announcements. Over a million dollars of free air
time has been donated to date.

As the head of an independent Agency, the Commissioner of Social
Security has greater visibility. T have given presentations on
Social Security programs in one hundred forty-seven cities in
thirty-one states. I have addressed groups of al] ages but have
tried to concentrate particularly on reaching those of university
age, who, our focus groups tell us, are least confident in Social
Security's future.


180

is Subcommi as_alw: dia ious interest in
making sure that waste, fraud, and abuse are eliminated in th
programs that SSA administers--close :- 3400 billion annually
In fact, this Subcommittee was ext me'y supportive of the
increas* 1n resources appropriated 1~ -ntly. Do you share this

no providing adequate resourses co protect the trust
tis interesting that the HES T) 2.
budget of about $75 million anda staff
spending of about $320 billion, as compsr<

¢ IG, which

ha: rough. f that, and 4 staft oughly a third
of Hs" Do you agree with the Subcommittee view thar
protecting Social Security trust funds from fraud and at '-~ is at
least as important as protecting Medicare and Medicaid?
In_fiscal 1994, the last full year that as part of HHS, thi
HES Inspector General hada <tsff of 1.°93 Tn 1996, the fisse
2. at SSA 1s indeperryt of + i: HHS IG has 3 -
of 927, In my view, it's reasnable tot tue staff of the 224 1G
should be at least 526, the difference between the current HHS IG
taff, and what it had when it did SSA's IG work, yet it had onl
313 at the start of this fiscal year. (DOD has 1,458 auditors
and investigators in irs 1G office monitoring s:- jing of $277
billion!)

Given the growing wcblen* with credit card -nj 3, <:al computer
fraud, and the ine aug 1Ssaults on SSA's oara bai, what
action are you taking to ensure that the SSA 14 will have the
resources needed to guard against these grow 1. threats?

I agree that protecting the Social Security trust funds from
fraud and abuse is as important as protecting Medicare and
Medicaid. As head of a new independent agency of government, one
of my first decisions was to reallocate 50 full-time equivalent
(FTE) positions and related funding from SSA components to the
Office of the Inspector General (OIG). This reallocation was
reflected in the amended FY 1996 appropriation request submitted
in Spring 1995. Along with some proposed redistribution of staff
within OIG, it represented a first step in building a stronger
investigative capacity. We continue to believe that such
increased OIG investigative capacity is one of our highest
priorities.

For FY 1997, Congress appropriated $10 million more than
requested for OIG. This additional $10 million carried with it
no additional FTEs. As a result, FTEs have again been
reallocated to OIG from SSA components. This should allow OIG to
hire another 75 new employees in FY 1997 and bring its total
strength to around 380, compared to 259 transferred from the
Department of Health and Human Services in 1995. At the same
time, FTEs for other staff components continue their decline,
while FTEs for SSA operational components are projected to remain
about the same.


183

ccon: IN a
agenc S than ther _agenc:
except two--Education, which has 75 for a staff woo, and
EM, with 39 for a staff of 4,000, By compari: HHS, with a
staff similar in size to SSA--58,000, versus 65,000 for SSA--has
40 Skzers to SSA's 104, Shouldn't the number of S&S positions
at S3A oc more in line with the importance Congress places on SSA
programs?

In communications with OPM since the independence of SSA in the
spring of 1995, we have emphasized that a pool of 103 SES slots
is not commensurate with the pressing leadership needs of either
our service delivery mission or the human resource management
challenges associated with a 65,000 person workforce.

9 reported that 47 y=rcent of SSA's senior executives and 30
Persnt pf its senion =» ayers are eligible to retire over the
next 5 years, What js , 11 specific plan ro cope with this loss

of experienced personnel?

How many of SSA's deputy and associate commis:
currently filled by temporary <aniudJates in an "acting" capacity? —
Why are there any such important sitions not permanently
filled?

SSA component heads, under the leadership of the Chairperson of
the Executive Resources Board, are now actively considering
approaches to prepare for anticipated losses in both senior
executive and senior management (GS 13-15) levels in the next 5
years. Following their comprehensive examination of our
situation and projected needs, this group will present
recommendations on directions we should take in our succession
planning efforts

The following key positions are currently filled by individuals
in an "acting" capacity:

The Principal Deputy Commissioner
2 Deputy Commissioners
2 Assistant Deputy Commissioners

No Associate Commissioner positions are currently on an "acting"
basis.

We have deferred filling these positions on a permanent basis so
as to maintain maximum flexibilities for future top leadership of
the Agency.


60

‘STATEMENT OF SHIRLEY S. CHATER
COMMISSIONER
SOCIAL SECURITY ADMINISTRATION

Mr. Chairman and Members of the Subcommittee

Thank you for your invitation to testify today concerning
the Social Security Administration (SSA) as a separate
independent agency within the executive branch. I am happy co
have the opportunity to talk about our first year as an
independent agency, one which is marked with exceptional
achievements.

In our first year, despite two furloughs and thirteen
continuing resolutions, we have fulfilled the requirements of the
legislation establishing SSA as an independent agency. We not
only accomplished a seamless transition to independent status, we
also maintained our longstanding commitment to providing the best
possible service to the American people. SSA's service delivery
remains consistently well rated by our customers

We are justifiably proud of the accomplishments of our
65,000 employees. SSA makes timely and accurate benefit payments
to 47 million beneficiaries every month. In fiscal year (FY) 95,
SSA maintained 240 million earnings records; processed 16.9
million requests for Social Security numbers; processed over 5
million claims for benefits; handled more than 62 million calls
to the 800 telephone service; and sent 10.7 million Personal
Earnings and Benefit Estimate Statements (PEBES). All of this
while holding our administrative budget to less than two percent
of all benefits paid

Independent agency status has given SSA greater visibility
in the executive branch and throughout the Federal government.
Because of our independent status, issues are raised to the level
that they deserve commensurate with the importance of the Social
Security programs to the American people. The Commissioner o:
Social Security now communicates dire =1y with the President and
his Cabinet officers. I serve on the President's Management
Council. Because SSA is a recognized leader in customer service
I head the PMC's Workgroup on Customer Service

In addition to transferring the personnel functions for
65,000 employees from HHS to SSA, we have established an Office
of the Inspector General (OIG) and an Office of the General
Counsel (OGC).

SSA gains significantly from having our own OIG and Occ
Both Offices are able to focus exclusively on issues related to
the Social Security programs. SSA is always the number one
priority, and both components have a greater day-to-day level of
involvement with all SSA components both at SSA headquarters and
in field offices

In addition to the above mentioned changes, we have also
made changes in our structure creating three new offices, each
headed by a Deputy Commissioner. These offices are: Programs and
Policy; Communications; and Legislation and Congressione1
Affairs, all of which report directly to the Commissioner. We
have also provided for a Chief Financial Officer and an Office of
the Actuary that reports directly to the Commissioner.

Strategic Planning Key to SSA Su

SSA places great importance on long-range planning and
management, and we use our strategic planning process as a
framework to coordinate our efforts. Strategic managemen
encorpasses the range of activities needed to "get the job done,"
frow planning and budgeting to implementing, tracking, and
measuring performance outcomes. Strategic management at SSA



56

Mr. COLLINS. Thank you, Mr. Chairman.

I just want to follow up on your comments, Mr. Chairman, and
your inquiry about waiting for the agency to come forward with
some proposals that will address the problems that exist, the sol-
vency problems for the future.

My question, though, is based on the current status of the Com-
missioner—and I may have a misunderstanding of the status—but
the current Commissioner was nominated and confirmed as Com-
missioner of SSA under HHS, but since SSA has become an inde-
pendent agency confirmation as Commissioner of the new inde-
pendent agency has not happened.

With the Commissioner’s current status as the carryover Com-
missioner of the former agency under HHS, and politics as they
are, can we realistically expect proposals based on political vulner-
ability, even at the White House or here in Congress, from the cur-
rent Commissioner?

Mr. BowsHer. I think it puts the current Commissioner in a
more difficult position and certainly not as independent as if she
was confirmed under the new legislation. No question about it.

Mr. COLLINS. As a followup to that, going back to the first wit-
ness, would a good, strong attitude toward the agency, the bene-
ficiaries, the contributors, rather than the politics of it—and I refer
back to the Chairman’s comment about the current Commissioner
stumping politically, political rhetoric for one side versus the other,
that’s a situation that will not render good policy and will not as-
sist those beneficiaries or those who are paying into the system. Do
you concur with that?

Mr. BOWSHER. Well, when I’m talking about policy, I would like
to see it rooted in the research and in the policy analysis, which
would then be articulated up to the Congress and to the President.
That’s what I’m talking about.

Mr. Couuins. Thank you, sir.

Thank you, Mr. Chairman.

Chairman BUNNING. A final question. In your view, what is the
single most important thing that’s needed to be done at SSA? If
you had your choice of all the things over there, what would it be?

Mr. BOWSHER. I think the summary of my statement, those four
major things, I think in the final analysis you need strong leader-
ship and a great management team, including technology experts,
to modernize the systems and the processes.

Chairman BUNNING. And what do you think are the criteria for
that type of strong leadership? Would it be a great manager, a
great “nuts and bolts” person, somebody who has program knowl-
edge?

Mr. BowsHER. You know, that’s always difficult to say because,
to a certain extent, I’m a great believer that you’ve got to build a
great management team. If you’re going to be a great leader, you
have to build a great team under you——

Chairman BUNNING. For 65,000 employees?

_ Mr. Bowser. For 65,000, exactly. That’s why I think the SES
issue is so important.

Chairman BUNNING. OK. We appreciate your testimony. Thank
you very much for being here. Good luck.

Mr. BowsHeEr. Thank you. Thank you very much.


18

TABLE 4 Fiod-Term Ful Tine Fonsons Requiring Senate Confirmation
on Mult(-headed Regulatory and Other Boards and
Collogal Board oF Commiasion Position Years | Statote
Commodity Futures Trading Commiaion Comminsionere (6) {8 | TUSC date)
Consumer Product Safety Commission Commissioners (6) | 7 | 16 USC 20850)
Defense Nuclear Facltee Safety Board Commiasionere (6) | 6 | 42 USC 228660)
Equal Employment Opportunity Commision Commimioners 6) | 8 | 42 USC 2000e-Afa)
General Counsel | 4 _| 42 USC 2000-40
Baportimport Bank Directora (6) 4 [2 UC 6356
Farm Credit Administration ‘Members (3 | i2usc 2202
Federal Communications Cominiasion Commiasionere | 7 | 47 USC 154(@)
Federal Deposit Inmurance Corporation Directors (2 6 [usc 112
Federal Blction Commission Comnnanonera va) | 6 | 2USC AdtIeve)
Federal Energy Regulatory Coramission Commissronecs 15) 4 42 USC 7171(b)
Federal Labor Relations Authority Members 3 [ SUSC Tod
Federal Maritime Commission Coramintonera 6 { 4 | 46 USC 1111 nove
Foderal Mine Safety & Health Commizsion 6 _[ 30 USC #2H0)
Federal Reserve Sraten i¢_[ 2 usc 242
Federal Trade Commnanon Comminsioners 6) | 7 | 15 USC 41
Fereum Clnima Settiement Commission Chairman 3_| 2 USC 16 note
Inter American Development Bank Executive Director 3 (22 USC 2838
International Bank for Executive Direcwor | 2 | 22 USC 28610)
Raconatruction and Development Aternace Exee Dir | 2 | 22 USC 2860)
International Monetary Fond Executive Director | 2 | 22 USC 286a(a)
Aternate Exec Dir | 2 | 22 USC 286010)
Merit Syetome Protection Board Members (3) 7_[ 5 USC 120%
National Credit Union Adminiatraton Members (> @_| 22 USC 176216)
‘National Labor Relations Board Menibero (3) | 29 USC 169.0)
Generat Counsel_| 4 | 29USC 15910)
National Mediation Board Members (3) 3_[ 48 USC 164
‘National Transportation Safely Board Membero 3] 49 USC 19020)
‘Nuclear Regulatory Coniminson Comminsionere 6) | 8 | #2 USC SHiCe)
‘Occupational Safety and Health Rewew Commision | Commissioners) | 6 | 29 USC G6ita)
Postal Rave Commission Commissioners 6) {6 | 29 USC 6010)
Railroad Retirement Board Members (3) S| 45 USC 251)
Securities & Exchange Commission Commissioners (5) 5 15 USC 78d(a)
Surface Transportation Board Members 3) 3_[ 49 USC 7010
“Tennessee Valley Authority Directors 9 [16 USC B38
WS. international Trade Comminsion Comminsionere | 9 | 19 USC 15900)
US. Parole Corouission Conmisionere (@) |_6 | 18 USC-4202

Note: Number in parenthesis under ‘Position’ indicates number of positions,

TABLE 8. Statutes Limiting President's Authority
to Remove Officials Appointed with Advice and Consent of Senate

A. Positions where statutes stipulate that the President may remove an official only for the cause or causes
clted:

1. Only for inefficiency, neglect of duty, malfeasance tn office

Federal Energy Regulatory Commission, Commiasioners, P L. 96.01, title 1V, 91 Stat. 682, 42 U.S.C. 7171(b)

Federal Labor Relutions Authority, Members, P.L. 95-454, title VIL, 92 Stat’ 1196, 5 U.S.C. 7104b)

‘Merit Syatems Protection Board, Members, P.L. 96-464, ttle Il, Sec 202(w), 92 Stat. 1122, § U.S.C. 120%)

Merit Systems Protection Board, Chairman of Special Panel, PL. 95-454, Title Il, Sec, 7702, § U.S.C. 7702(€X6XAKiti)
Office of Special Counsel, Special Counsel, P-L. 95.454, 92 Stat. 1122, 5 US.C. 1211b)

ewes

2. Only for inefficiency, neglect of duty, malfeasance In office, or
Aneligibility

National Medi

ion Board, Members, Act of June 21, 1994, 48 Stat. 1198, 45 USC. 154, First


AT

are poorly monitored and are particularly easy targets for fraud
and abuse. Yet, SSA’s Inspector General’s Office has only 215 audi-
tors and investigators combined.

Consider these agencies in comparison: The Veterans’ Adminis-
tration has a $40 billion budget versus $400 billion at SSA. The VA
has a $40 billion budget monitored by 300 auditors and investiga-
tors. The Department of Energy has a $30 billion budget monitored
by 277 auditors. The Department of Education, $30 billion, mon-
itored by 273. HHS, with a workload not unlike SSA’s, has 579
auditors and investigators, monitoring $319 billion. And DOD has
a whopping 1,338 auditors and investigators monitoring $277 bil-
lion.

Don’t you agree that SSA’s Inspector General’s Office is woefully
understaffed, given the challenges it faces, and given the size and
complexity of SSA’s programs, the growing problems with computer
fraud and the need to maintain public confidence in the integrity
of the program? Wouldn’t you suggest that SSA shift personnel re-
sources to substantially increase its current IG staff—maybe dou-
ble or triple?

Mr. BOWSHER. Well, I’m not sure. What I would like to see, and
maybe the Subcommittee should request this from the IG, is what
is the talent base that he has inherited.

One of the problems with the IGs historically has been that when
the legislation was passed, some of the departments had large
numbers and some had very small numbers, so we’ve been out of
balance, I think, in the whole government you might say, in the IG
community. Gradually, some of them have been better balanced,
let’s say, and in pretty good shape. I think that’s what you want
to achieve here at the SSA.

In other words, I wouldn’t want to jump to say they should be
doubled or tripled or anything like that, but I do believe that it
ought to be adequately staffed, and you need the right skills every
bit as much as the numbers that you need.

I think one of the things that maybe the Subcommittee would
want to do at some point next year is have the IG come forward
with what he thinks is necessary in that.

Mr. LAUGHLIN. My time is about to expire, but you mention in
your testimony the waste, abuse and fraud.

From your review, do you consider the SSA’s Inspector General's
Office adequate to monitor, to correct or to address the waste,
abuse and fraud that you have reviewed?

Mr. BoWSHER. Without having done a study, I can’t give you a
definitive answer. But I would be concerned that it might not—I’m
quite sure it doesn’t have the right mix. What I’m not sure of is
how many more people are needed.

Mr. LAUGHLIN. I yield back.

Thank you, Mr. Chairman. Sam, I think you’re the Chairman.

Mr. JOHNSON [presiding]. The time of the gentleman has expired.

Mr. Jacobs.

Mr. Jacops. Mr. Chairman, I have two housekeeping items.
First, I would like unanimous consent to insert in the record a cou-
ple of newspaper articles and a summary of the accomplishments
of SSA since it’s been made an independent agency.

Mr. JOHNSON. Without objection, so ordered.


51

budget which is sent to Congress. SSA’s unrevised budget is re-
quired to be sent to you at the same time as the President’s budget.

But, as I said earlier, Congress then has the right to change the
appropriation—you know, to send an appropriation back different
than the President’s budget. So you have every right to converse
with the Commissioner as to what that person thinks is needed.

Mr. ENGLISH. How would you characterize the level of independ-
ence that SSA recently has had from OMB? Do you consider it to
be very independent?

Mr. BowsHER. No, I think OMB still basically has oversight over
SSA. In other words, I think SSA came out from under HHS’s re-
view of the budget and everything like that. But you have this in-
formation flow to the Congress on what is needed.

You know, one of the things that’s interesting, if I could just take
1 minute, is that once you have the executive budget of the Presi-
dent coming over here, in most departments, the head of the agen-
cy is asked to specifically support the President’s budget. You
know, sometimes, like at the Pentagon, they slip over here and the
head guy says we support, but somebody else might say we need
a B-2 bomber, Mr. Congressman.

But what you gave the Commissioner is official authority to dis-
cuss, I think, with the Congress their budget that they submitted
to OMB, their needs.

Mr. ENGLISH. That point is well taken.

Let me just ask a final question. When Congress made SSA an
independent agency, we required the Office of Personnel Manage-
ment, by statute, to authorize substantially more Senior Executive
Service positions at SSA.

From your findings, can you tell us how many SES positions SSA
had as part of HHS, and what kind of increase OPM authorized for
SSA as specified in the law?

Mr. Bowser. Yes. I can tell you that OPM did not approve their
request. I think what they had at the time of independence, they
were authorized 104, which was an increase of 14 percent at that
time. Since independence, SSA has identified 113 and requested an
increase of 5, and OPM denied that request.

Mr. ENGLISH. Can you comment on the policy implications of that
denial?

Mr. BowsHER. Well, I think it’s unfortunate, to be very blunt
about it. In other words, I think the request of five more SES to
manage a department of this size was very reasonable. I under-
stand the administration is under some pressure to try to bring
down the number of SESers, but I think it’s shortsighted myself.

Mr. ENGLISH. Thank you, Mr. Bowsher. I appreciate your testi-
mony here today.

Thank you, Mr. Chairman. I yield.

Chairman BUNNING. Mr. Portman.

Mr. PorTMAN. Thank you, Mr. Chairman.

Mr. Bowsher, I appreciate your being here, and I’m glad you sat
through the earlier testimony as well, so you have some sense of
where we are in terms of our questioning. I think part of the prob-
lem that SSA has is that we could make improvements to the law
that it has to administer. Part of the problem you indicated is they
are not necessarily fulfilling the big picture role. I think the annual


80

wuchor: DIARWE TRIPP ag ~S2D445206
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abject Official Tino/dwards/Pleacing of Anericen/ae World Reve 7/8
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wag World Neva
r/0/96

Nightly News 6:30 P.M. Eastern Daylight Tine

John Sage and Ruth Ploree vere interviewed for the PLEECING

of AMERICA segment. It will deal. vith official Tine and
dvard

You probably don't want to miss it... mean you probably
vill want te mige dt; but, you should knov viat is being
said bad about us

on a related note, Dave Glassford saié he spoke with Cong.
Bunning's staffer about these Leaves and said Bunning vas
Baion busting. Xe said that got a very strovg reactiag.
Apparently, the Republicane are very sensitive to
accusations that thay are Union busting.

2 agree with Dave that they are and we should not let up on
chew for Unien-buating av we get closer to the election,


142

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18

Five independent multi-headed banking agencies genorate their own funds and therefore need
‘not be concerned with OMB involvement regarding their budgets! Two other agencies aro shielded
by statute from having their budget requesta revised by OMB.

‘The Social Security Administration submits its budget to the President, who senda it without
revision, along with the annual budget to the Congress.”* As a reault, the Appropriations Committoss
‘are able to compare the original budget request with any changes that may appear in the President's
budget.

Eight other independent agencies submit their budget requests concurrently to Congreas and to
OMB. In thooe instances also, the Appropriations Committees are able to compare the original budgets
with any changes that may appear in the President's budget.”

Agency staffing levels also are affected by the Office of Personnel Management (OPM). Every
‘two years, OPM, in consultation with OMB, reviews each agency's request regarding the number of
Senior Executive Service positions it wants, and sets the specific number of auch postions for each
agency.

‘The process does not affoct the five independent multi-headed banking agencies, because their
senior exscutives do not belong to the Senior Executive Service, but to an equivalent system that is
independent of OPM and OMB control. In effect, the agencies determine their own needs.

Among the other independent executive agencies, SSA appears to be in @ unique position
regarding ita need for SES positions, Tes enabling statute directs OPM to authorize the agency a
‘eubstantially greater number of positions than it had bofore it became independent.”* ‘The statute also
requires OPM to report to the House Ways and Means Committee and to the Senate Finance Committee
the pumber of SES positions it authorized for SSA*” OPM is thorefore on notice that the number of
SES positions it authorizes in response to SSA's request is subject to careful congressional scrutiny.

Apparent concern over possible interference by the President in appointment or removal of
officials to or from SES positions in multi-headed regulatory agencies, led Congress to pass legislation
providing that

Appointment or removal of a person to or from any Senior Executive Service Position in
‘an independent regulatory commission shall not be subject, either directly or indirectly,
to review or approval by any officer or entity within the Executive Office of the
President.

21 Farm Credit Administration, Federal Deposit Insurance Corporation, Federal Housing Finance Board, Federal
‘Reserve Board, and National Credit Union Administration.

2 United States International Trade Commisaion (19 U.S.C. 2232) and the United States Postal Service. The
Postal Rate Commission sends ite budget request to the United States Postal Service, which may revise the request,
but OMB may not revise the budget of the Postal Service (39 U.S.C. 203 and 3604)

% Social Security Administration (42 U.S.C. 904(b)).

% Commoditiea Futures Trading Commission (7 U.S.C. 4a(h)(1)), Consumer Produet Safoty Commission (15
USC. 2076(k)1)), Federal Election Commission (2 US.C. 4374(d)(1)), Federal Energy Regulatory Commission (42
USC. 7171(), Merit Systeme Protection Board (S U S.C. 1205y)), National Transportation Safety Board (49 U.S.C.
11154e)), Railroad Retirement Board (45 U S.C. 23100), and Surface Transportation Board (P.L. 104-88, Title
I, sec. 2, 109 Stat. 934), The Federal Energy Regulatory Commission, which is located inside the Department of
Energy, submite ite budgot requeat to the Secretary of Energy. The Secretary incorporates the Commission's budgot
into the Department's budget, before sending it concurrently to OMB and Congress (42 U.S.C. 71714)

% 5 USC, 91380),

2 42,U.S.C, 904(0XS) provides that "Notwithstanding any requirements of 5 US.C 9193, OPM in to authorize
for SSA “a total number of Senior Executive Service positions substantially greater than the number” the agency
had immediataly before Auguat 16, 1994, while it was still in the Department of Health and Human Services, “to
the extent that the greater number of auch authorized positions is epecified in the comprehensive work force plan
‘08 eatablished ... by the Commissioner under" 42 U.S.C. 904(b\2).

2 PL, 109-296, 42 U.8.C. 904 note, 108 Stat 1472.

5 usc. 390%),


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55

Mr. JOHNSON. Thank you, Mr. Chairman.

In regard to that, what specific role do you think SSA should
play in that long-term solvency debate?

Mr. BOwWSHER. Well, as I have said, I think they ought to have
a good research and policy unit over there that is doing research
and maybe even going out and doing focus groups. You have to find
out what the people are thinking and how they would react to var-
ious policy changes. So I think you need a good research group and
that’s what they have started over there. So I think now hopefully
they will come——

Mr. JOHNSON. I was under the assumption they hadn’t done any
of that, or at least it wasn’t being done as rapidly as——

Mr. BowSHER. It just got started. I think what happened was
that some time back they had a policy group, and that disappeared.
So you've had an organization here for a number of years that
didn’t have that capability, not that maybe some people weren’t
working on some of that at the agency. But I think now what
they’re doing is starting to rebuild that capability and I think,
hopefully, you will get products.

Cindy, would you want to add to that? You’ve kind of been fol-
lowing this area more.

Ms. FAGNONI. Just to comment on or explain specifically, the
SSA had a fairly major reorganization of its policy component and
just in May 1996 they have added a new office that will look at
long-term research. They've added an evaluation component to
their research shop, to help evaluate existing legislation and to
help develop policy options. So they do recognize the need to bolster
their ability in these areas and they do now have a plan to beef
up those areas. But their plan was just set in action in May, so
some of these pieces are not fully staffed up at this point.

Mr. JOHNSON. Are they, in fact, trying to educate the public on
the problem, and the long-term solvency in particular?

Ms. FAGNONI. Their public education campaign at this point has
been focused more on explaining what their programs are and not
talking about the long-term solvency issue.

When SSA does talk about long-term solvency, they tend to talk
about it in terms of there are a lot of years and there is time to
make a decision, rather than perhaps discussing options and em-
phasizing the need to take action sooner rather than later.

Mr. JOHNSON. Thank you.

Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Jacobs.

Mr. JAcoss. Mr. Chairman, I may have something relevant—and
I don’t necessarily say I agree with it. But it’s a quotation from the
Speaker, who says, in an article on January 3, 1995, under the title
“Gingrich says Social Security may need new look, but not now,”
that “it would be unwise to try to deal with Social Security's own
long-range financing problems until early in the next century.” So
there are various points of view on this subject.

Chairman BUNNING. I would just comment that I don’t agree
with the Speaker on a lot of issues, and that’s one of them.

Mr. Jacops. I just thought he had a right to be heard from.
(Laughter.]

Chairman BUNNING. Mr. Collins.


ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225-9263
July 12, 1996
No, SS-6

Bunning Announces Hearing to Review the Performance of
the Social Security Administration
as an Independent Agency

Congressman Jim Bunning (R-KY), Chairman of the Subcommittee on Social Security
of the Committee on Ways and Means, today announced that the Subcommittee will hold an
oversight hearing to examine the performance of the Social Security Administration (SSA) in
its first year as an independent-agency. The hearing will take place on Thursday, July 25,
1996, in room B-318 of the Rayburn House Office Building, beginning at 10:00 a.m.

In view of the limited time available, oral testimony will be heard from invited
witnesses only. However, any individual or organization may submit a written statement for
consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

Public Law 103-296, the Social Security Independence and Program Improvements
Act of 1994, established SSA as an independent agency beginning on March 31, 1995. As an
independent agency in the executive branch of the Federal Government, SSA's primary
responsibility is the administration of the Old Age, Survivors, and Disability Insurance, and
Supplemental Security Income programs, which currently pay benefits to 50 mitlion
recipients. By 2012, the year in which Social Security benefit payments are expected to
exceed Social Security tax revenues, the number of recipients is expected to exceed
60 million. At that time, benefit payments will approach 8 percent of the gross national
product. The change in the status of SSA was intended to improve public service by both
stabilizing top management and alleviating political pressure on the agency.

In announcing the hearing, Chairman Bunning stated: "I am very interested to see
how well SSA has used its expanded authority to function as an independent agency, now that
it has completed its first year of operation under the new law. Specifically I am interested in
how well SSA's management is doing at running a large, complex independent agency, on.
which millions of Americans now depend, and on which many more millions of today's
workers will depend in the future. Our Subcommittee wants to know if SSA is at least taking
the necessary steps to build itself into an independent agency equipped to meet the many
challenges it will soon face as we begin to address the long-term solvency issue and the
problems in the disability program, to name just two. I have asked the General Accounting
Office (GAO) to examine SSA’s progress in a number of management and policy areas, and
to report its findungs at the hearing.”

FOCUS OF THE HEARING:

‘The Subcommittee will focus on the findings of the GAO review about SSA's
progress in establishing its independence as the agency positions itself for future challenges.

(MORE)


174

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198

12. What specific action is SSA taking or planning to take ip
kesponse to GAO's suggestions on improving the Personal Earnings
and Benefit est.mite Statement (PSBES)? Please provide dates of
action or planned action.

SSA is using GAO's suggestions to develop a range of redesign
options for the PEBES. As GAO recommended, these options will be
tested extensively during 1997 to determine the format and
presentation which makes the statements most useful and user-
friendly for the recipients while balancing cost effectiveness in
terms of both production and operational impact. The testing
will be completed in time for final decisions to be included in
procurement of the next printing and distribution contract in mid
1998. The redesigned forms will then go into production in
January 1999.

20. After the- years at SSA's helm ouy view what are the
tines most imcrtant things that ms- hagper at S3a if it is to
meot all the challenges it faces?

Throughout my tenure at SSA, I have consistently focused on three
main goals, and I believe efforts toward reaching these goals
must continue if SSA is to meet the challenges it faces:

- Rebuild public confidence in Social Security. I believe
that we must continue to work to educate the public about
the value of Social Security because of the income security
protection it provides;

-- Provide world-class service. SSA must continue to strive
for face-to-face and telephone service which 1s comparable
to the best in private industry, and to strive to serve the
public with compassion, courtesy, consideration, efficiency,
and accuracy; and

-- Create a supportive environment for SSA employees. We need
to ensure that our workforce has the stability, resources,
training, and tools to do its job in an efficient,
dedicated, and caring way, and that we recognize and reward
employee contributions and provide a variety of
opportunities for career development.


163

Management and Budget (OMB) must concur in the continued viability of this project in order to
permanently establish an AO at the hearing level, data are required for SSA to inform OMB and
others about the continuing feasibility of establishing an AO position

PIR is conducting Early Information System (E'S) FERS to ensure that AOs are making
accurate decisions. The first EIS consisted of about 856 cases, A second EIS of State Agency
‘AOs has begun and consists of about 615 cases. A second EIS for Federal AOs will be initiated
in the next few months and will consist of approximately the same number of cases.

Each case will be reviewed by an ALJ on detail from OHA who will serve as a reviewing judge
and conduct substantial evidence and de novo reviews. Cases also will receive reviews from
physicians/psychologists and DEs who apply the policy and procedural guidance found in the
POMS guidelines. The physicians/psychologists/DEs also evaluate the initial and
reconsideration denial determinations which preceded each senior atlomey (SA) of attomey
advisor (AA) decision or paralegal (PL) determination.

OPIR is responsible for determining the impact .; the AO process on program costs by tracking
both favorable decisions and hearing certification cases to completion. OPIR is tracking all
cases as well as cohorts of cases to provide specific timeframe information. OPIR also will
conduct a review of certification cases conducted by ALJs in the hearing offices participating in
the AO testing process. This review will assess how well AOs are developing and preparing
cases which require hearings before ALJs.

Short-Term Disability Project Initiative #7 (STDP #7)

Objective
To provide the Agency with a program quality assessment of STOP #7 SA, AA and PL fully
favorable OTR decisions and determinations.

Description

OPIR continues to conduct a quaiity review of SA and AA decisions and PL determinations under
the STOP #7 to ensure that these OTR determinations and decisions are comparable to OTR
allowances made by ALJs.

A posteffectuation review of SA, AA and PL allowances is being done by a random sample
selection by OIM from the OHA case control system. The goal is to continue to receive and
review 200 cases per month. It is unknown at this point how long STOP #7 will continue.
However, itis quite likely that it will extend beyond the original December 1996 sunset.

Each case will be reviewed by an ALJ on detail from CHA who will serve as a reviewing judge
and conduct substantial evidence and de novo reviews on each case. Cases also will receive
eviews from physicians/psychologists in SSA's central office and OPIR's DEs who apply the
policy and procedural guidance found in the POMS guidelines. The
physicians/psychologists/DEs also evaluate the initial and reconsideration denial determinations
which preceded each SA or AA decision or PL determination,

In addition to its regular quality review reporting, DDHQ will measure the effectiveness of the
December 1995 and later corrective action initiatives taken by OHA. DDHQ also will begin
providing written feedback to STOP #7 decisionmakers on specific cases.


72

NATIONAL COUNCIL OF 86A FIELD OPERATIONS LOCALS
COUNCIL 220, AMERICAN PEOERATION OF GOVERNMENT EMPLOYEES
P.O. BOX 617576
CHICAGO, IL 60661-7576
(312)886-1047 FAX (312) 353-1958

JULY 10, 1996
FROM: Witold Skvierczynski, Pre caene td if
70: Executive Committee, Local Presidents and Local Reps

SUBJECT: The “PleecingTM of the Public

A few hours from now, on tho Wednesday edition of the NBC Evening
News, that network 16 running a story about APGE and SSA, on its
“Fleecing of America” seri 2 appears that NBC will adopt the
riticisms that Congressman Jie Bunning (R-KY) recently aade of our
use of official time, And this 1s unfortunate

not understand federal-sector labor
1, he would like to send our LMR back to
ikely, he is just fulfilling the
Repudlican election-year agenda to “get” unions: clally ¢
effective federel-enployees union that made a shambles of Newt's
plan to hold the government hostage last winter,

Mr, Bunning really dos
relations. Oz, {f he di
the ston 01

There Le no subdstantive truth to Mr. Bunning’s allegations, and so
we expect this satter to disatpate once the light hits it. But,
given the open, public nature of these latest attacks, neither can

it back and ignore his potential inflvence on the gullible and

we
the nal

Ateached, therefore, are some talking points, to use as a start to

ind to give to your bargaining-unit
broadcast. Renenber to mention how
espectally, have taken up nore and more
in the a And thet these joint
activities are directly related to increasing the effielency of the

agency and faproving service to the public.

But, this Ls complicated, as are the other 5 pages of information
in the six-page talking points. TT recommend, therefore, that if
Jocal media do contact a Local Rep or other bargeining-unit monber,
that person should get the name and phone nuaber of the caller, get
on the line witn your Local President and together call the
reporter Dack. Or you Can have the reporter call me or Executive
Vice President Ralph deJultis (201/357-4175),

In conclusion, there ie more than one way to “fleece” the public,
and it appears that NBC and @ member of Congress are going to try
out @ new one tonight. We cannot stop them, but we will try to

correct their more outrageous errors.

Please send me a copy of any mad{a coverage that you get on


27

White House, or OMB, first, given the legislation and the statutory
authority that Congress gave this independent Social Security Ad-
ministration? What recourse would the President have?

Mr. Garcia. Since the agency has to submit its budget to OMB,
and OMB can revise the budget when it presents it in the Presi-
dent’s budget to Congress, it could possibly cut the budget or pos-
sibly even cut the staff. But I don’t—I mention this in a general
sense, that of the actions that OMB can take against an agency,
I don’t have any knowledge of whether these actions are taken,
have been taken, or will be taken. I don’t know.

Chairman BUNNING. The Social Security independent agency
could do just about what they want to do and Congress could back
them up? SSA could submit their budget, and if the administration
and OMB decides to delete certain things in the budget, the Social
Security independent agency could come to Congress and plead
their case. SSA could say to Congress, This is why we submitted
x amount of dollars for this. Can this independent agency do just
about anything they want to do to make the Social Security Admin-
istration independent from anyone?

Why else would we have given overlapping terms to the Commis-
sioner? Why else would we give the Deputy Commissioner the
same term?

Mr. GarCclA. The reasons that Congress has established these po-
sitions with their fixed times in office I can’t really discuss, sir, be-
cause I’m not knowledgeable about that.

Chairman BUNNING. It’s in the legislation.

Mr. Garcia. Yes. What I can say is that Congress has the ulti-
mate authority regarding any agency regarding the budget of the
particular agency.

Chairman BUNNING. That’s correct.

Mr. Garcia. And regarding the staffing for the particular agency
is Congress’ decision.

Chairman BUNNING. Just like when we did our earnings limit
bill, we put an appropriation in for more money for continuing dis-
ability reviews. The administration didn’t ask for that, nor did the
Social Security Administration. We took it upon ourselves to say
this is a way to clear out the backlog of continuing disability re-
views at SSA.

So the cooperation between the Congress of the United States,
the Commissioner and Deputy Commissioner and other appointed
offices at SSA can make that agency just about as independent as
they want it to be.

Mr. Garcia. Within the statutes provided by Congress and with-
in the President’s constitutional authority, responsibilities and ac-
countability as head of the executive branch.

Chairman BUNNING. Mr. Garcia, I appreciate that very much.

Mr. Collins, do you have anything else?

Mr. Co.uins. No. Thank you, Mr. Garcia.

Chairman BUNNING. Thank you for your testimony. We appre-
ciate it.

Mr. Garcia. Thank you, Mr. Chairman.

Chairman BUNNING. I would like now to ask the witness from
the U.S. General Accounting Office to come forward, Hon. Charles
A. Bowsher, Comptroller General of the United States, accom-


10

a ee
ign bakmnninGnm tap hans wiyieon| — Housey—
Democratic
Today's Message _| Leadership
Communications
Tuesday, June 11, 1996
. Poeronentd
Top Ten Worst Things

About the Final Republican Budget

House Republicans vole tcday on their fina! Budget blueprint for FY 1897. Win inis budget,
tne SOP continves Gown their path of harming American families al ihe expense of the
wealthy and special interests ~ including maintaining uvep cuts in Medicare (0 pay for tax
Lreaks for the wealthy, Here are the top 1€7 worst things about tvs bill:

10. Fewer toxic waste cleanups. The Republican budget will result in tower cleanups,
thande te a funding freeze for Supertund, with no allowance fer inflation,

9. Welfare reform that’
budget would devaetate child
workforce.

w

k on work and tough on kide. The Republican
without moving enaugh adults off welfare and into the

8. Bigger defleits to pay tor frontioaded tax breaks. By cramming tax breaks into
the first three years of ther six-year oudget, Republicans wil actualy increase the deficit for
the nex: three years, This zouid aiso force huge automatic cuts In Medicare and Medicaid

7, Limits direct student loans. The Republican budget caps the populer and
successful direct loan program -- probably at the Serate level, forcing 700 schools and
700,000 students out of the program in “897 alone, and about? million students by FY 2002

6. Tax increases on working fomiliec. The Repubi
on muons of working families earning less than $28,000 a year.

bucget would increase

5. Eliminates guarantees for health care for low-income women and
children, seniors In nursing homes, and the disabled. the Republican budget
makes deep cuts in Medicaid funding and assumes enactment of a bill that would end the
recuirement that states, with federal support, provide nealth eave ta the most yuinerabie in
society

We. NT ewe ta da Danaea


146

To identify which specific dollar accuracy problems are most significant, distinguish those that
appear most correctable and test the most effective methods to correct the problems.

To mitiate a dialogue in SSA that leads to practical action plans for corrective action,

Descnption

OPIR reviews a random sample of accounts on which actions result in payment changes.
Separate samples are reviewed to determine the timeliness and accuracy of subsequent
correction for those types of payment errors being found. Life cycle dollar projections for errors
and the need for new corrective actions are based largely on this aspect of the payment change
review.

The review of these samples involves an examination of documents in SSA records and
verification of payment accuracy through contacts with beneficiaries, their representatives and
collateral sources. Dollar impact is described in terms of life cycle effect on benefits

RSTPE Debt Resolution Review Requested by the Agency

Qdiectives,
To monitor the accuracy and effectiveness of the various debt collection actions,

To identify which specific accuracyletficiency problems are most significant and distinguish those
that appear most correctable.

To initiate a dialogue in SSA thal leads to practical action plans for corrective action

Description
PIR will review a sample of accounts with existing or recently cleared debts, drawn randomly
from all such records The review involves an examination of documents in SSA records, The
appropriateness of actions taken will be verified through contacts with beneficiaries and their
representatives. Also, collateral sources will be contacted to resolve issues that cannot be
satisfactorily explained by beneficiary contact alone.

RSI PE Payment Delivery Service Review Requested by the Agency

Objectives
To monitor the accuracy and timeliness of actions taken to redirect delivery of benefits, stop
benefits when they are undeliverable or resolve nonreceipt of benefits.

To identify which specific quality problems are most significant, distinguish those that appear
most correctable and test the most effective methods to correct the problems.

To initiate a dialogue in SSA that leads to practical action plans for corrective action.

Gescnplion
‘PIR reviews a random sample of actions involving changes to the address to which benefits

ave delivered, initiation or change in direct deposit, return of benefit checks of correspondence as.
undeliverable or resolving nonreceipt issues.


63

enormous demands confronting SSA in the form of unprecedented DI
workloads resulting from the projected increase in applications
combined with staffing reductions, required us to evaluate
policies and procedures which might be streamlined or altered to
process the workload more efficiently
The redesign of the disability claims process is a long-term
initiative expected to run beyond the turn of the century
Nevertheless, we have made major strides in implementing near
term features and setting the stage for future implementation
efforts. More specifically, in the past 12 months we have
© strengthened the relationship between SSA field offices
and State Disability Determination Services (DDSsi by
asking claims representatives and disability cxaminecs
to work in teams to expedite and improve initial
disability interviews;
© begun testing the Single Decisionmaker Model, which
allows the disability examiner to utilize medical
consultants on an as needed basis

© implemented piloting for the new adjudication officer
position in 9 State sites and in 17 Federal sites;
© published 9 new Social Security rulings clarifying

disability policy for all levels of adjudication
Training on these rulings is scheduled to begin within
the marth for over 14 °° tigsability decisionmakers

Efforts to s.uce Fraud yn3 «i.

One of SSA J ost imports im i.sponsibilities is protecting
the integrity of the trust funds, and ensuring accurate and
timely payment of benefits. As an independent agency, SSA has
given priority attention to our responsibilities for uncovering
waste, fraud, and abuse. Social Security's Inspector General is
directly responsible for promoting economy, efficiency, and
effectiveness in SSA programs and detecting and preventing fraud
waste, and abuse.

During the first year of independence, OIG activities
resulted in the recovery of more than $9.6 million in fines
judgments, and restitutions. Our recoveries and recommended cost
avoidances in the last 6-month period more than exceeded the
OIG's total budget for the reporting period

An example of recent OIG activity was its investigation of a
fraudulert credit card scheme in New York. We are working with
the authorities to ensure that all participants are prosecuted to
the fullest extent of the law. Similarly OIG is initiating a
major nationwide investigation targeting individuals illegally
receiving Supplemental Security Income (SSI) payments while
living in other countries. Allegations from SSA field offices in
border areas suggest that individuals who have left the country
may be obtaining benefits for which they are no longer entitled
OIG will identify and terminate SSI payments to recipients
receiving payments based on false statements regarding residency
or other eligibility factors.

Finally, the O1G continues to work with the States of
Washington and California in cases involving suspected
interpreter fraud. Thirty-three arrests of middlemen have
already been made, 14 have resulted in conviction and the
remaining cases are pending, We continue to implement aggressive
actions to detect and deter fraud by and against non-citizens
through the hiring of bilingual employees and other reviews to
ensure program integrity

These increased activities have required strengthening the
investigative resources of the OIG. As a result, the OIG plans



20

Chairman BUNNING. Thank you, Mr. Garcia.

I will start it off and then, as we normally do, proceed through
the Members as they want to ask questions.

You mentioned in your testimony that SSA, as an independent
agency, no longer reports to the Department of Health and Human
Services. In addition, you stated that SSA has independence from
the direction and control of the President.

Given that the Commissioner has a fixed term of office, 6 years,
in fact, thereby overlapping presidential terms, and that the Presi-
dent may only remove the Commissioner for cause, in your view,
how much independence does this provide the Social Security Ad-
ministration?

Mr. Garcia. It provides it with the independence that, if there
is a disagreement with the President over policy, the President is
not free to remove the Commissioner the way he would be free to
remove an official who does not have the protection against re-
moval.

Chairman BUNNING. Like the Secretary of Defense or the Sec-
retary of State or any of those Cabinet-level offices?

Mr. Garcia. Yes, Mr. Chairman. They could be removed at any
time by the President.

Chairman BUNNING. You have summarized five factors to deter-
mine an agency’s degree of independence. In your analysis of var-
ious independent agencies, would you say the agency’s degree of
independence is more the result of statutory authority or more the
result of the attitude of the agency’s head in interpreting its statu-
tory authority to be independent?

Mr. Garcia. Well, the statutory authority for independence has
to be there for the head of the agency to be able to act on the par-
ticular authority he or she has. How the head of the agency acts
on that authority depends on his or her attitude.

Chairman BUNNING. Could you name another independent agen-
cy, headed by a single person with a fixed term of office, that was
given statutory authority similar to that afforded SSA when it was
established as an independent agency?

Mr. Garcia. There is only one single head of agency that fits that
description, and that is the Office of Special Counsel. The head of
that agency is appointed for 5 years and is also removable only for
cause. So it has a similar protection. But it’s a much smaller office,
not as large as the Social Security Administration.

Chairman BUNNING. In fact, it only has 92 employees and an $8
million budget, according to the research that I have on it.

Mr. GaRcla. Yes, sir.

Chairman BUNNING. Ninety-two employees and an $8 million
budget, compared to SSA’s 65,000-plus employees and a budget of
over $400 billion, $6 billion for operating and administrative ex-
penses alone.

Mr. Jacobs.

Mr. Jacobs. I have no questions, Mr. Chairman.

Chairman BUNNING. Mr. Johnson.

Mr. JOHNSON. Thank you, Mr. Chairman.

Would you agree that it’s one of the Commissioner’s responsibil-
ities to protect the independent SSA from politically motivated ma-
nipulation on the part of the executive branch?


37

noted in our previous work,‘ 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

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

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.’ 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.’ As the number of DI and SST
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.’ 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

me i bre
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,

"Deficit Beduction: Opportunities to Addre:: Long-Standing
wer (GAO/T-OCC 93-6, Sep. 13, 1995)
YSome states supplement federal SSI funds with their own funds.

“his number includes about. 900,000 children receiving SST
disability benefics.

“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.


157

Description

PIR will obtain a duplicate run of ROAR alerts. The sample wil inciude all major types of
beneficiary protests and will nclude both intial 90-day alerts and 60-day followup alerts

Atter sufficient time has elapsed, analysts will query the system/obtain folders to determine the
status of the protest and review the reconciliation process. Beneficiary contact will be made to
resolve remaining problems

Integrated Work Station/Local Area Network (IWS/LAN) Pilots/Paperless Module Review

Obiective
To develop a comprehensive strategy for assessing quality and recommending solutions for
problems in a paperless environment.

Description

The Chicago Insurance Program Quality Branch will continue its pilot study of the IWS/LAN and
paperless processing module in the Great Lakes PSC. The review will consist of the full range of
functions envisioned for the paperless environment, including claims and PE IDA reviews,
stewardship and processing actions. A report of the initial findings with some recommendations,
for improvements was completed early in 1996. The continuing review will monitor the Agency's
progress in moving to a paperless environment.

SSI STUDIES

Study of $S/ Recipient Residency and Unreported Absences From the United States

Ooectves:
Ts aetermine if residency/absence (periods of absence of at least 30 consecutive days)
proowems exist in all or in certain U.S. border areas.

To determine in what geographical areas further study is warranted,

To identify operational policy/procedure that can improve Agency identification of recipients who
are not U.S. residents, who move outside the country after eligibility is established or who fail to
report absence from the United States for more than 30 days.

Description

‘The probe will be based on a targeted random sample of foreign-born SSI recipients~-both
citizens and aliens. The probe will be conducted in all regions except Kansas City. Since past
quality review experience has shown that foreign-bom recipients are more likely to leave the
United States for extended periods of time, the probe will be restricted to this population.

OIG investigators will make unannounced visits to locate sampled individuals and, upon contect,
interview the recipient, request documentation of residency, make some verification contacts,
and inform the recipient that an SSA representative may need to contact him/her for additional
information, The O!G investigator will submit a written report to ORPIR. If the recipient
satisfactorily proved that he/she resided at the reported address and no unreported absences


57

Chairman BUNNING. Usually our hearings do not last past 2
hours, but we have had 45 minutes of voting, so we’re going to pass
a little past 2 hours and continue on.

Our final witness is Hon. Shirley Chater, Commissioner of Social
Security since October 1993. Commissioner Chater, we appreciate
your willingness to appear before the Subcommittee. Please pro-
ceed when you are ready.

Thank you.

STATEMENT OF HON. SHIRLEY S. CHATER, PH.D.,
COMMISSIONER, SOCIAL SECURITY ADMINISTRATION

Ms. CHATER. Thank you, Mr. Bunning.

I do want to say before I begin my testimony that, since this may
be Congressman Jacobs’ last hearing, I would like to thank you for
your longstanding support of the Social Security Administration,
and I do that on ehalt of all of our employees, especially those in
Indiana, and those in Baltimore and Washington. We couldn’t have
asked for a better champion and I thank you.

Mr. Jacoss. Thank you very much.

Ms. CHATER. I am pleased to address this Subcommittee this
morning and talk with you about what we have done during this
transition year of Social Security. I want to say, too, that we are
very well aware of the challenges that we face today. We are very
well aware of the challenges that we face in the future. They are
daunting challenges.

But I am also aware that we have had extra difficulties during
this transition year. We have worked through 2 shutdowns, and we
have had 13 continuing resolutions. Nevertheless, in the first year,
beginning with the transition process itself, we have met with suc-
cess. I am frankly very proud of the success of our employees who
have all worked together to meet some of the challenges that are
before us.

Since we became independent, we have continued to distribute
benefits to the right person, in the right amount, at the right time,
just as we have for the past 55 years. We have continued to fulfill
the requirements of the legislation that gave us independent sta-
tus. We have assumed the personnel responsibilities for all of our
65,000 employees. We have continued to ensure the integrity of
SSA’s programs, as we have worked hard to put together an Office
of the Inspector General and our own Office of the General Coun-
sel. In addition, the Office of the Actuary and a Chief Financial Of-
ficer now report directly to the Commissioner.

Since the Commissioner now participates in Cabinet meetings,
and serves on the President’s Management Council, our independ-
ent status has given SSA and its programs a greater visibility, not
only to other areas of the Federal Government, but also to our cus-
tomers, the millions of Americans that we serve.

Our agency focus is on providing our customers with world class
service, and we work very hard to accomplish that goal.

If you look at the material on our service delivery accomplish-
ments—that’s over there on the board—I want to remind you that
SSA’s 800 number service is recognized as the best in both the pub-
lic and private sectors, according to an outside and independent
surveyor, Dalbar, Inc., that 41 percent more disability applicants



23

I can address the characteristics that help to make an agency
independent, but as to what political pressures there are, I’m really
not qualified to comment on that.

Mr. CoLtins. As long as the cash flow is deposited into the U.S.
Treasury, and the checks for the Social Security benefits are drawn
on the U.S. Treasury, rather than an independent Social Security
Administration, political pressures will remain to keep that cash
flow in a place so that it can offset and hide the deficit. That’s what
I'm referring to.

The cash flow of the Social Security Administration plays an im-
portant role in the pressures that they receive, as the Commis-
sioner and as the agency, from the chief executive officer of this
country to help, as I said, offset or hide the deficit. I think, if you’re
going to make it an independent agency, you ought to make it an
independent bank account. Surpluses could then be used to pur-
chase government securities, but make it an arm’s-length trans-
action, as any other independent, private sector agency would do.

Thank you, Mr. Chairman.

Chairman BUNNING. Mtr. Portman.

Mr. PorTMAN. Mr. Garcia, thank you for your testimony. I en-
joyed it.

I think there is a remarkable independence that most Americans
would be surprised at, thanks to Mr. Bunning and Mr. Jacobs and
other people’s efforts. I think you described it pretty well.

What confuses me still is on the regulatory side. Under the stat-
ute, can the Social Security Administration send regulations di-
rectly to Congress without going through the OMB review process,
and if they can, I would like your appraisal as to whether that has
been done, to your knowledge, and whether there are other agen-
cies perhaps not even as independent that have that authority.

Mr. GarciA. The rulemaking I was referring to deals with agency
rules and regulations issued under the Administrative Procedure
Act. Those regulations are not normally submitted to Congress, al-
though under the recently amended Regulatory Flexibility Act,
major regulations are now subject to congressional disapproval by
joint resolution.

But regarding rulemaking, under Executive Order 12866, which
was issued in September 1993—and that followed an earlier order
first issued in 1981—agencies in the executive branch are required
to send their rulemaking, their regulations, to OMB for review and,
in effect, clearance before the agency can publish in the Federal
Register the draft and the final regulation.

The Executive order mandating the agencies to send their regu-
lations to OMB exempted the multiheaded, independent regulatory
agencies. There is some question whether SSA—which is not a reg-
ulatory agency but which is independent—there is some question
whether SSA has to submit its regulations to OMB for clearance
because of its independent:

Mr. PorTMAN. In your estimation, is SSA more or less independ-
ent than those regulatory agencies that you mentioned, in other re-
spects than regulatory and the rulemaking?

Mr. Garcia. Since OMB may insist on changes to a particular
regulation, this would impact on the independence of the particular
agency that issues the regulation.



144

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90

How will th: workload processing targets be determined for
each State for .. n of the next 7 years?

Each State receives the number of CDRs that is proportionate to
the percentage of disability beneficiaries in that State.

2. Discuss the current level of prepare!
dationwide, tc address expected CDR wail.

overall, in the pps

How many new

hires are expected in the DDSs? What 1s the currenc av
training time for these new CDR sji‘icators? Once th-

ck: reduced, what will ha - to the new staff a
rocess the workload?

The DDSs are currently undergoing a major hiring effort in order
to process the increase in CDRs in the coming years. Despite the
impact of the drug addiction and alcoholism workload, and the
impending childhood workload resulting from the Welfare Reform
Legislation we remain confident that we will meet our CDR
workload targets.

We project the need to hire approximately 2,100 staff in FY 1987
(this includes normal losses from attrition) and another 1,100 in
FY 1998. Further hiring may be necessary depending on overall
workloads and receipts.

Even after we become current on our CDR workload, much of this
staff will need to remain on duty. In order for our CDR workload
to remain current, it wili be necessary to perform large numbers
of CDRs each year. If some staff loses axe warranted, we will
realize those losses through normal attrition

Currently, the average classroom training for a disability
examiner is approximately 11 weeks. However, the trainee spends
additional time with a mentor doing some simple case processing
We estimate that the entire training process takes about 28
weeks. However, it takes approximately one ful year for an
examiner to become fully productive

nave - + tlexibility to contract out their CpR
ares pursuing this option?

State DDSs have the flexibility to centract out various portions
of their operations. However, State DDSs cannot contract out the
disability determination authority. The Social Security act
requires that only the State or the Commissioner determine
whether or not 4 person is disabled or the disability continues

Currently, there are no States that have contracted out any
portion of their CDR workload. Additionally, we are not aware of
any States that are planning to do so



172

Probe of SSA Records That Do Not Match State Birth Records Of Children

Obiective
To determine the incidence of fraud in cases where SSA records do not match State birth
records for children born since 1991

Description

SSA has agreed to provide States with SSNs of children born since January 1, 1991. This
information is in support of State immunization programs. A question was raised about what to
do when there is no matching birth record for the SSA record; i.e., is this an indication of fraud
‘A probe will be conducted to determine how these no-match situations should be handled
Selected States will notify SSA when there is no matching birth record for the SSA records.
PIR staff will obtain a Numident record and a copy of the SS-5/EAB information to determine if
there are any apparent reasons for the no match. Cases with no apparent reason for the no
match of SSA/State records will be forwarded to the servicing FO for development (e g., contact
with parents, nospitals, etc.)

Study of the Accuracy of FO Utilization of the Earnings Modernization (EM) 2.8 Software

Objective
To measure the accuracy of the EM 2.8 software.

Description
EM release 2.8 provides field components with the capability of making corrections to earnings
records via online screens, including reinstating earings from the suspense file To evaluate
this process and determine the types and causes of errors, a sample of EM 2.8 transactions
involving earnings moved from the Suspense file to the Master Earnings File (MEF) will be
reviewed. The findings will be used to develop corrective action recommendations.

Tex Year (TY) 1995 Earnings Posting Study

Objective
To evaluate the accuracy of SSA's posting of reported earnings,

Description
SSA processes more than 250 mitiion eamings items each year_OPIR will select random
samples from the FY 1995 annual wage reports--paper, magnetic media and self-employment
The reported wages and earnings will be compared to the MEF entries, or suspense file, if
applicable

Targeted Studies of the Annual Wage Reporting (AWR) Process

Objective
To identify the types and extent of errors in the AWR process,

Description
A sample of TY96 Transmittal of Wage and Tax Statements, and Forms W-3's and W-2s, Wage
and Tax Statements, will be reviewed to identify areas of the AWR process which are error-prone,



44

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 chat 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.” ‘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 2ist 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 ali Americans. How it
meets its challenges as it moves into the next century can make a

“rhe current Commissioner was appointed by the President and
confirmed by che Senate before the agency gained independence; the
current Deputy Commissioner serves in an acting capacity.


85

The fact of the matter is, just closing our offices and not seeing
all of our customers, even though most employees worked during
the second furlough, did, in fact, have the effect that I just de-
scribed to you.

Mr. Cou.ins. I think we actually talked during that first fur-
lough, as you call it, a shutdown.

Ms. CHATER. Yes.

Mr. Coins. And I voiced my concern then, that these people
who handle this paperwork for those beneficiaries to address those
problems, even to address new applications, were essential people.
Therefore, as you said, they came back to work very shortly after
the furlough. They were not out the full time.

Ms. CHATER. That’s correct.

Mr. COLLINS. What is your response to the previous witnesses
who have put a lot of emphasis on the fact that the attitude of the
Commissioner, of the leader of the Social Security Administration,
is most important to be able to address problems, solve problems,
accomplishments—and I know you have listed a number of accom-
plishments over here, and I don’t blame you. I wouldn't have listed
a bunch of failures, either.

What is your reaction to the previous witnesses as they refer to
you as, you know, evidently being a very weak leader?

Ms. CHATER. Well, I choose not to use that word, and I don’t
know that I actually heard that, if I understand what you’re say-
ing.

But the attitude of an administrator for an agency is, of course,
important. I find myself in a very difficult position. I am a commis-
sioner of an independent agency, with absolutely every responsibil-
ity, total accountability, which I take very seriously. But I have not
been confirmed by the Congress to assume the position that would
have given me a 6-year term to have had the attitude perhaps that
you would request.

Mr. COLLINS. That leads me to the next question, then. You men-
tioned the President’s Council and the President’s Cabinet. Do you
feel uncomfortable, politically, as the head of this agency, having
to sit at a political table, and yet you’re supposed to be head of an
independent agency?

Ms. CuHaTER. No, I don’t feel uncomfortable at all. In fact, I think
it’s a distinct advantage to Social Security because, prior to becom-
ing an independent agency, Mr. Collins, we received information
about the management of government from the Secretary of HHS.

To give Social Security a seat at the table, to hear about the
management of government, reinventing government and so on, as
part of other governmental agency heads, has been very, very im-
portant. It takes away a level of bureaucracy for us, and we're at
the table where we can participate in discussions as well.

I consider it a distinct advantage.

Mr. COLLINS. Could I have one followup to that?

Chairman BUNNING. Go right ahead, Mr. Collins.

This is the longest we've ever had on a hearing. I just want you
to know that.

Mr. CoL.ins. Everybody is acting very patient. Thank you.

Well, that brings me around to another point—and I appreciate
you making that point. There are actually three branches of gov-


176

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62

work, This is a net estimated lifetime savings of $256.7
million. We have recently published regulations to increase the
pool of providers to include private vocational rehabilitation
service providers when a state does not serve a beneficiary

SSA has asked the Congress to extend thy ~urrent
demonstration authority and te further exj sr} chat authority
include new applicants. This authority wil. <nable SSA to
explere new ways to help beneficiaries return to work

A_Leader in Technology

Our accomplishments in our first year of independence go far
beyond simply fulfilling the requirements of the legislation
SSA has become an acknowledged leader in the Federal government
in technological advancement. Back in 1988, long before the issue
surfaced publicly, SSA began changing computer systems to accept
dates in the 21st century. Today SSA leads an interagency group
on this subject that is working to change software used by all
federal agencies

We have successfully modernized our automated systems. As
part of an agency initiative to create a state-of-the-art
computer processing environment for all agency employees, a
contract of over $279 million was awarded to provide hardware
installation, software, and support of 56,500 computer
workstations (including over 1,700 local area networks) over the
30-month period beginning November 1996. This will serve as the
architecture for the Redesigned Disability System

SSA has been a leader in offering on-line Internet services
In May 1995, we were named one of the 101 best wel) c.r=s by PC
Computing Magazine. More recently, this year the kat ngton posi
business secricn called us, "the ultimate Federal we. site." In
June alone, ov1 “Home Page" was accessed 56,000 times. Access
requests hat: ben increasing at the rate of 20 percent each
month.

In April of this year, SSA began a test of an on-line
request for Personal Earnings and Benefit Estimate Statements
(PEBES) on the Internet's World Wide Web. Anyone with "secure
browser" and access to the internet is able to complete an online
form and request a statement that will be mailed to them in less
than 4 weeks. Since the test began, it has been enthusiastically
accepted by the public. Through mid-July, more than 13,000
people have made an on-line request for a PEBES. More than 2,500
comments have been received. These comments have been
overwhelmingly positive and supportive of SSA's efforts at
providing a real on-line service for the public.

One of my priorities as Commissioner has been to create a
management environment which emphasizes communication and
teamwork among agency components with other agencies and groups
This environment was essential to facilitate all of the
technological improvements discussed above. I am proud that we
have achieved cooperation and interaction of groups at an early
level of policy planning and development, when it is the mos}
effective

Disability Redesign

One of the most daunting challenges we faced these last few
years was initiating solutions to the projected increasing growth
in che disability insurance iDI) program. As I have testified in
prior hearings before this Subcommittee, program growth is a
product of the complex interaction of a number of economic
demographic, social, programmatic, and other factors--internal
and external to the program. long-standing and short-cerm--that
influence application, award, and termination rates. The



86

ernment. There’s the judicial, the executive, and the legislative.
The legislative branch has the responsibility to raise funds, appro-
priate funds, and set policy. The executive branch is to carry out
that policy, to use those funds to appropriately run the day-to-day
operation of the government.

Do you see that as the role of the executive branch?

Ms. CHATER. Yes, I see that as the role of the executive. But I
also think the executive branch is influential in determining policy
as well.

Mr. COLLINS. It’s very influential, because the executive branch
administers the daily operations, sets the regulations and the rules
by which those agencies operate. Oftentimes those rules and regu-
lations lead to the excessive cost of the operation of government.
That’s the point I’m making.

Chairman BUNNING. The gentleman’s time has expired.

Mr. COLLINS. Politics becomes a very major player in that day-
to-day operation.

Thank you, Mr. Chairman.

Chairman BUNNING. Mr. English.

Mr. ENGLISH. Thank you, Mr. Chairman, and welcome, Dr.
Chater. We appreciate your coming in today.

You heard the exchange I had with Mr. Bowsher earlier, and I
wanted to follow up on that.

When Congress made SSA an independent agency, we wrote a
requirement, as you know, into the law that the Office of Personnel
Management authorize “substantially,” I think is the operative
word, more Senior Executive Service positions at SSA.

Following up on my exchange with Dr. Bowsher, can you tell us
what kind of a case you made to OPM for additional SES positions
based on this provision in the law, and how many SES positions
OPM actually authorized, and your level of satisfaction with that
response.

Ms. CHaTER. Yes, I certainly can respond to that.

When we became an independent agency, you heard the numbers
and so you know we received about 103 SES positions. I went per-
sonally to talk with the Office of Personnel Management, and in
that discussion we made the point that we needed to formulate
some units within Social Security that we didn’t have before, some
of which I have already mentioned in my testimony. Therefore, we
had a great need for more.

We asked for five, which I agree is modest, and I would also say
to you that the door is still open. Jim King has not said no. He has
simply said that, because he is under a directive to decrease the
number of SES positions governmentwide by between 5 and 10 per-
cent, he wanted to wait to see how many he could gather together
across government and create perhaps a pool-

Mr. ENGLISH. I appreciate that, Dr. Chater, but reclaiming my
time, you had asked for five more, you didn’t get them, and that
sounds like “no” to me. Maybe that is a temporary situation, but
in the near term, I think that has a significance.

Did you alert this Subcommittee that OPM had apparently ig-
nored the intent of Congress, that had been spelled out in the law,
to provide SSA with those additional positions?



121

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KEY INFORMATION:

uty lexclises sexso1al employes

10/93 9/96
Staff... ee 2. 11,222 9,593

Increase for OIG, OGC, CDR
quality reviews 2... wk --
Staff Component Total . . 11,222 9,593

Workload Operations:

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Field/TSCs ........ . 31,146 31,655

Hearings and Appeals . . . . _6,002 6.726
Workload Total ...... 51,530 51,502

(Estimated workload supervisors

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31

Two, we think this reengineering effort in the disability area is
very key to the future of SSA. We think you’ve got to get on top
of the fraud, waste and abuse in the SSI Program, and we think
you've got to make this technology program a success and make it
pay off both in customer service and in cost.

That would conclude my summary, Mr. Chairman. We would be
happy to answer any questions.

(The prepared statement follows:]


156

Evaluation of the Automatic Job Stream (AS) Exception - “Month of Election (MOEL)
Option (X)"

Obdjectives
To eliminate unproductive and/or unnecessary workloads.

To improve service by paying benefits making adjustment actions taster.

To determine why the AJS generates an “Exception” and is unable to automatically determine the
most advantageous MOEL without manual processing

OF w ail select a sample of AJS MOEL exceptions and verify the reasons for the excepted
conaition and identify any systems problems and/or limitations that prevent automated action.

Evaluation of Month of Entitlement (MOET) and Medicare Date of Entitlement (DOE) for
Disabled Widow(er}s--Prior SSI

Otiectwes.
Ts dentify and initiate corrective action on disabled widow(er)'s claims with incorrect MOETS
andor Medicare DOES,

To produce precise budget estimates of the program benefit and administrative costs/savings.

Description

OPIR will identify cases involving disabled widow(er)s where there is SSI involvement and the
Medicare enroliment is after January 1991 and conduct a case file and systems reviews to:
Identity claims with an incorrect MOET andfor Medicare DOE and take the necessary corrective
action, and develop procedures and processing routines to prevent future errors,

AET Study
oectve

To wentify problems with the earnings test information obtained dunng the
and now that will affect the AET process under the REGO 1! proposal.

ial claims process

Description

PIR will review the AET information gathenng during the interview process to determine why
certain aspects do nat work well and how that will affect the new REGO Il process for AET. This
will be done in the context of FAV visits to FOs.

Recovery of Overpayments, Accounting and Reporting (ROAR) Diary Alerts
Odiective

To analyze ROAR TC23 alerts to see if the debtor inquiries are being resolved timely and to
determine if there is a more efficient way to process the workload



179

4. 22 pri tailed action plan anda progress
action SA has taien since July to consolidate andj transfer
duplicatiy. 3 i from other S58

mponents, in particular, the Off E. cam Lacearcy
Reviews, to the new office of the SSA_Inspector General, which
hec_snrexcement—powe x ant a tp-addirion. please
poste the Sue 2 wi diz 41 status rey
progress th. far fanetione 1a

1997, by which tame che Subeommi hops

functions will be com a.

Since the newly independent Social Security Administration was
established, the Commissioner and other Executive staff have met
with the Inspector General on many occasions to identify and
discuss issues of concern to our new Inspector General. Most of
these issues have been resolved. Discussions are continuing over
program assessment issues. Per your request, we will update you
on our progress.


As | understand, the Social Security Administration has pul together an internal
task force which is currently examining this problem, This is commendable, and | hope
demonstrates a commitment on the part of the Social Security Administration to fully
address this problem, However, | fear that the somewhat overwhelming number of
earnings records that have already been placed in the open suspense file may tempt the
SSA to “sweep under the rug” the current entries, rather than coming up with ways to
match them to workers’ records. This problem needs to be addressed for both current
retirees and current workers.

‘There has been little incentive for the Social Security Administration to solve this
decades-old problem. The FICA taxes have been paid whether the worker gets credit or
not. The trust funds are aided by income on which benefits may never be paid.
Computer operations that could easily detect many mismatches are expensive and have
had no priority in budget-setting. } am told that lack of knowledge of the extent of the
problem has prevented claims staffs in focal offices from being eltectve in finding and
crediting lost wage earings,

The adverse impact of this ticking time bomb on working Americans is
staggering. These mismatches, whether they be the fault of shoddy employer practices
or the infleaibility of the Social Security Administration's strict matching policy, have
the practical effect of denying millions of Americans up to hundreds ot dollars on their
monthly retirement or disability income. The overall numbers are mind-boyyling and,
quite frankly, | am astounded that this problem has not received the attention of the
public, the media, Congress, or the Administration that a problem of such scope demands.

Mr. Chairman, | am sure you would agree that we should strive for nothing less
than 100% accuracy for the American wage earner. I have here a letter which requests
the General Accounting Office to investigate this problem and report on possible
solutions, I would appreciate your consideration, and the consideration of your
subcommittee, in joining with me to request and ensure that this problem be looked at
with a fine microscope by GAO as a top priority.

J should note that GAO has released previous reports, the latest dating from 1995,
which address some of the problems associated with the open suspense file and suggest
as a partial solution, the possible sharing of data with the Internal Revenue Servive
Tiowever, these reports have been focused on IRS and the Social Security Administration
sharing data, as was their directive, and do not address the problem from the overall
policy perspective that is required to contain and remedy the problem. On an expedited
basis, we need an updated and thorough evaluation of the magnitude of the suspense file
and the Social Security Administration's policies and processes for placing wages in the
suspense file as well as a determination of whether any other methods could be used to
post wages ftom this file to the appropriate accounts,

Thank you again, Chairman Bunning, for giving me the opportunity to bring the
problems associated with the open suspense file to the attention of your subcommittee

‘As you know, the most serious problems with administering federal programs first
‘manifest themselves at the local level often times. | know for a fact that the suspense file
problem that is compounding in local Social Security Administration offices in my
district is symptomatic of a very serious problem that exists nationwide, 1 know this is an
issue of concern to you as well, and | look forward to working with you and members of
your subcommittee in the future to make sure that hard-working Americans receive every
dime in retirement benefits they deserve.



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147

‘The review involves an examination of documents in SSA records, The appropriateness of
actions taken is verified through contacts with beneficiaries, their representatives and collateral
sources (Such as financial institutions)

Corrective Action Tests to Establish Means for Implementing Recommendations

Objectives
To promote efficient implementation of corrective actions affecting large numbers of
beneficiaries.

To produce precise budget estimates of the program benefit and administrative costs/savings
associated with corrective actions involving high amounts of benefit payments (or collections)
and large numbers of beneficiaries

Description

‘Some of OPIR’s study findings identify incorrect payments to large numbers of beneficiaries and
result in corrective actions proposals that would affect many beneficiaries and have important
budget implications. For example, a problem identified with unprocessed rate increases in the
annual earnings test (AET) reviews concerns more than 400,000 beneficiaries and over $1 billion
in program benefits. In this particular example, OPIR will actually process a substantial part of
the workioad using DynaComm tools developed in the corrective action tests,

Making changes that efficiently implement corrective actions will be dependent on precise
cost/benefit projections and detailed profiling of the accounts affected. By identifying a large
sample of the accounts affected using OPIR and/or Systems data bases, and correcting those
sampled accounts, OPIR can produce precise budget and cost-benefit estimates and a profile of
the accounts affected. This will enable systems, policy and operations components to maximize
automation and prepare processing procedures that fully outline what actions are necessary in
the nonautomated situations for the operating components,

Workyear Savings Analysis to Detect Unproductive Program Service Centers (PSC) Alerts
and Actions

Objectives
To determine whether workloads with very little or no dollar or service delivery impact can be
reduced or discontinued. To reduce folder dependency and increase workload automation.

Desenption

‘The ongoing dollar accuracy studies provide SSA with a comprehensive picture of the dollar
impact of both correct and incorrect actions. In doing so, they also identify some actions that
have minimal or no effect on payments or beneficiary service. These ongoing samples, however,
do not include most of the actions that have no effect on payments or beneficiary service.
Previous systematic reviews of "no impact” workloads identified large volume activities that had
become a routine part of SSA processes (e.g., operational reviews of systems alerts) that did not
result in any change. Millions of such actions were subsequently discontinued. A number of
years have passed since research along these lines has been conducted on a large scale This
kind of research, using samples of low or no impact work, can be expected to produce
information that redirects resources more productively towards backlog reductions, higher
accuracy and service improvements.


153

Hearings and Appeals (OHA) case control system; ie., after the effectuation of the ALJ decision
The sample is stratified by the type of disposition, region and African-American and alt other
claimants. Currently, the review entails approximately 200 cases per month

Each case will be reviewed by an ALJ on detail from OHA who will serve as a reviewing judge
and conduct substantial evidence and de novo reviews on each case. Cases also will receive
reviews from physicians/psychologists in SSA's central office and from OPIR’s Disability
Examiners (DE) who apply the policy and procedural guidance found in the Program Operations
Manual System (POMS) guidelines. The physicians/psychologists/DEs also evaluate the initial
and reconsideration denial determinations which preceded each hearing decision,

Case Bank Reviews

Obiective
To identify disability policies, procedures and guidelines which are inadequate or are being
misinterpreted and to recommend corrective action,

Description

OPIR identifies problematic policy and procedural issues based on data evaluation and program
experience. Possible case examples are selected from completed consistency review cases.
Selected cases are altered to enhance their value as policy testing and teaching devices. A
“textbook” answer is prepared after conferring with physicians/psychologists in the Office of
Disability (OD). The selected cases are then sent to the DQBs and regional
physiciansipsychologists for team reviews afler which consensus responses are prepared and
returned to central office for evaluation and a final response.

CROSS-CUTTING

Service Evaluation of 800 Number

Obiective
To monitor the quality of service provided by the teleservice centers (TSC) and SPIKEs and to
comply with a congressional request for information on 800 number service levels.

Description

PIR conducts an ongoing evaluation of SSA's 800 number service. Calis from the public are
‘monitored by all 10 ORPIRs throughout each month, Sample size is being reduced in FY 1997
from 12,800 calls to approximately 4,000 calls. Data are reported on a §-month basis.

800 Number Caller Recontact Surveys
Objective

To evaluate caller's perceptions of service and to provide Congress with information regarding
800 number service levels on a continuing basis


46

Chairman BUNNING. Mr. Bowsher, since this is probably going to
be your last appearance before our Subcommittee, and you're retir-
ing this fall, on behalf of the Subcommittee I want to commend you
on your 15 years of distinguished service to the Congress. Thank
you and your staff once again for all of your outstanding work. We
wish you the very best in retirement. You have done a great job
and we appreciate it very much.

Mr. BoWSHER. Thank you.

Chairman BUNNING. You're not off the hook, because I want to
go vote, return, and ask you some questions.

Mr. JACOBS. Would the gentleman yield?

Chairman BUNNING. I'll be glad to yield.

Mr. Jacoss. Ditto. [Laughter.]

Chairman BUNNING. Mr. Laughlin, would you start the question-
ing while I go to vote.

r. BOWSHER. We will.

Mr. LAUGHLIN. Mr. Bowsher, don’t you think that the public’s
personal stake in the Social Security Program makes it particularly
important for the Social Security Administration to preserve the in-
tegrity of the programs in the eyes of the public through a strong
Office of Inspector General, particularly since the IG has enforce-
ment power granted in statute?

Mr. BOWSHER. Yes, I do.

Mr. LAUGHLIN. From the GAO’s perspective and experience, what
are some of the particular challenges that the SSA Inspector Gen-
eral’s Office will face in auditing and investigating SSA programs
and operations? What are some of the greatest SSA vulnerabilities?

You mentioned fraud and abuse. What about computer fraud,
and program abuse and fraud, and employee fraud?

Mr. BowsHER. Those are the main concerns. In other words, in
SSI you've got a program that is vulnerable to fraud, waste and
abuse. We’ve seen it and we've reported on it. What the IG needs
is the expertise to go out and review that area.

Also, I think there are two areas that worry me a little bit about
the SSA IG, and that is that you’ve got to have experienced sys-
tems talent to review all this investment that you’re making in
technology, and also the systems that are in place now, to see if
the proper controls are there to prevent that kind of abuse.

Also in the CFO Act. In other words, you need CPAs, you need
experienced accountants and everything like that. So I think the IG
Office, which is just getting started under its first IG—and I might
for full disclosure here point out that the new IG did serve some
time at GAO; in other words, he was with our organization for a
period of time—I think he’s got to build a strong staff over there
and build the right mix of talent to do his job.

Mr. LAUGHLIN. Mr. Bowsher, as head of the congressional audit-
ing and investigative arm, I’m sure you understand the need for an
adequate number of auditors and investigators if you are to do the
work properly.

How the SSA is setting up and staffing its new Inspector Gen-
eral’s Office is of serious concern to this Subcommittee. This year
the SSA’s total budget will include Social Security and SSI benefit
payments of close to $400 billion, going to roughly 50 million peo-
ple, both here and abroad. As you know, the disability programs


CONGRESSMAN GEORGE E. BROWN, JR.

Testimony Before the Committee on Ways and Means
Subcommittee on Social Security

July 25, 1996

Thank you, Chairman Bunning, for the opportunity to testify before your
subcommittee on an issue that is of great importance and relevance to this hearing on the
Social Security Administration's performance as an independent agency

When Congress voted to make the Social Security Administration an independent
agency wo years ago, it did so for a number of reasons. Primary among these was to
take partisan politics out of the decision-making process of the Social Security system, as
much as possible, In doing so, we hoped to renew the faith of the American people in
Social Security and instill a greater sense of income security for the American people.

| would like to draw attention to a problem, which I perceive to be one of major
consequence for my constituents, as well as all Americans. I have visited Social Security
Offices in my district and have met with General Accounting Office officials and strong.
evidence suggests that American workers are being short-changed by the very insurance
system designed to safeguard their economic future. The Social Security
‘Administration's procedure for posting wage and self-employment returns has pitfalls
previously unknown to workers and even Social Security staff themselves.

‘The result is perhaps millions of American workers and families have been
receiving smaller benefit checks than they are due. The accumulation of unposted
curnings has built to over 200 million items spanning over tive decades, which has been.
placed in what is called the “open suspense file.” While this represents a small fraction
of all wage reports, the ease with which many can be matched (o the proper worker
represents an urgent challenge to the newly independent SSA.

Put another way, millions of working Americans during the past 0 years have
been cheated out of hard-earned Social Security benefits because of poor record-keeping,
‘managerial screw-ups, and bureaucratic bungling. Now the problem has grown so large
that nobody wants to admit that it exists, let alone tackle it head on.

Employer reports are often in error yet the Social Security Administration accepts
all but those with more than a 90% error rate. Form letters may go out to other offending
employers without follow-up to assure corrections. Typical errors include unreadable
data, garbled information, first name reported as surname, middle initial as surname, and
internal jargon used in place of employee names. The lack of sanctions for bad reporting
leaves the worker and his or her family to suffer possible lost benefits, never knowing the
error occurred.

Even when the employer reports correctly, the Social Security Administeation’s
policy results in wages going into the suspense file. Women who do not
change their names on the Social Security Administration’s data banks lose credit for
earnings until they do, Even then, there are no controls to search for lost reports in prior
years, Others who change their names or use variations of their names are al risk because
the Social Security Administration's computers demand an exact match to grant credit.

This begs the question’ Has the Social Security Administration, as an
independent agency, taken steps to address this problem? The most reliable data | have
seen indicates that the open suspense file now contains some 200 million records and is
growing. These numbers are not merely statistics. To a large extent, they cepresent
‘Americans who have paid into the Social Security system in good faith, believing they
‘would receive in theit retirement years what they have eamed during their years of hard
work



40

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

bE vk s

Limiting opportunities for fraud, waste and etuse 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
hot 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 SST
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.
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." 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 SST 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 SST 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.

Eligiba-1:) cuescioa: (GAO/HEHS-95-66, Mar. 10, 1995).

“Supplemental Security Income: Disability Program Vulnerable
i D 'GAO/HEHS-95-116, Aug. 31,

1995).


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8. Only for neglect of duty or malfeasance In office

'¢ Consumer Product Safety Commission, Commissioners, P-L 92-575, 86 Stat. 1210, 16 US.C. 206%(a)
National Labor Relations Board, Members, P-L. 86.257, title VII, 73 Stat. 642, 29 U.S.C. 163¢a)
‘© Social Security Administration, Commissioner, P-L. 103-296, 108 Stat. 1466, 42 U.S.C. 902%a)

4. Only for general cause

‘© Postal Rate Commission, Commissioners, P-L. 94-421, 90 Stat 1304, 39 U.S.C. 2601

B, Posttions where statutes omit the term only before the cause or causes cited for removal:
1. Inefficiency, neglect of duty, or malfeasance in office

‘¢ Federal Maritime Commission, Commissioners, 46 U.S.C. 1111, Reorganization Plan # 7 of 1961
'* Federal Mine Safety and Health Review Commission, Commissioners, PL, 91-173, ttle 1, 91 Stat, 1913, 30 US.C.
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© Federal Trade Commission, Commissioners, Act of Sept. 28, 1914, 38 Stat. 717, 718; 15 USC. 41

‘¢ National Transportation Safety Board, Members, P L, 93-698, 68 Stat, 2167, 49 US.C. 1(0

© Nuclear Regulatory Commission, Commissioners, P-L. 09-438, 88 Stat. 1242, 42 USC. 6841l6)

‘© Occupational Safety and Health Review Commission, Commissioners, P.L. 91-596, 84 Stat. 1608, 29 U.S.C, 661(b)

‘© Surface Transportation Board, Members, P-L. 104-88, 109 Stat, 992-999, 49 USC, 702(b)

2. For cause

‘© Feders! Resorve System, Board of Governors, Act of June 3, 1922, 42 Stat. 620; 12 U.S.C. 242
C. Positions where President need only communicate reasons for removal to the Senate or to both Houses of
Congress:

Archivist of the United States, P.L. 98-497, 98 Stat 2280, 44 U.S.C. 2103
Chiof Bonefite Officer, Department of Vetorans Affairs, 38 USC 306(0)

Chief Medical Officer, Department of Veterans Affaira, 38 US C. 305(e)

Comptroller of the Currency, Act of June 3, 1864, 13 Stat. $9, RS. Sec. 326; Aug, 23, 1985, 49 Stat. 707, 12 U.S.C. 2
Director of the Mint, Act of Feb. 12, 1873, 17 Stat. 424; P-L. 97-258, 96 Stat. 879, 31 U.S.C. 304(b)(1)

Director of Operational Testing and Evaluation, Department of Defense, PL. 98.94, title XIT, 79 Stat. 684, 10 US.C. 138
Inapector General Act; P-L, 95-452, 92 Stat, 1101, 5 U.S.C Ap 3, 3tb)

Office of Inspector General and Deputy Inspector General, Department of Energy, P.L. 95-91, title Il, 81 Stat. 676, 42
USC. 7188

1D. Positions where removal probably requires cause or causes even though statuteg are allent on matter

© Commodity Futures Trade Commission, Commissioners
Defanse Nuclear Facilities Safety Board, Members

Equal Employment Opportunity Commission

Farm Credit Administration, Commiasioners

Federal Communications Commission, Commissioners

Federal Dopo Ineurance Corporation, Board of Dirctors
Federal Election Commission, Commissioners

National Credit Union Administration, Board of Directors

Railroad Retirement Board

‘Securities and Exchange Commission, Commissioners

United States International Trade Commission, Commiasionera

United States Parole Commission, Commissioners

‘The aboence of a removal provision regarding « fixed-term position does not mean that the President can remove
‘an incumbent whenever he wishes, In 1958 the Supreme Court ruled that unless specifically authorized by statute, the
President may not remove members of a body created to exerciae purely adjudicatory functions that are not subject to review
by any other executive branch official? Sines then the Court has expanded and extended the grounds under which
Congreos can impose limita on the President's power to remove incumbents before their term of office expire.

© Wiener v. United States, 957 U S. 349 (1958). Soe also Securities Exchange Commission v. Blinder, Robinson,
‘and Co,, 65 F 24 677 (10th Cir. 1988). (SEC commissioners may only be removed for cause despite statutory silence
‘on removal.)

© See Morrison v. Olson, 487 US. 685-86 (1988), and Mistretia v. United States, 488 US. 361 (1989) n. 13,
(quoting Nizon v. Administrator of General Services, 438 US. 443 (1979),


4

SSA is not covered by the above provision because it is not a "regulatory commission.“ Inclusion under
the provision may provide it with an extra degree of immunity from Presidential interference in its
personnel policies.

Communications with Congress

Another factor to consider when examining an agency's independence is whether ia legislative
recommendations, testimony and comments arv cleared by OMB before being submitted to Congress
(OMB has cvcted all erocutve branch agencies Lo snd thelr communications ot for clearance before

being sent to Congress, except for the agencies that are exempted from such clearance procedure by
law:

Nine of the independent agencies are exempted from the clearance procedure by provisions in
their enabling statutes that prohibit another executive agency or official from reviewing or approving
legislative communications before they are sent to Congress.®' Three other independent agencies have
statutory authority to send their communications concurrently to Congress and OMB. Five others, whose
statutes are silent on the matter, reportedly rely on their status as independent regulatory agencies to
send their communications directly to Congress? As a matter of courtesy the communications are also
sent to OMB,

SSA's enabling statute is silent regarding ita communications to Congraas.* As an independent
‘agoncy, it may not nood OMB clearance before sending ite communications directly to Congress. However,
the congressional liaison officer in the agency reported that communications regarding policy matters are
cloared with OMB before being sent to Congress.

Rulemaking

‘Another factor in determining an agency's independence is whether its rulemaking is subject to
review by OMB. Since 1981, executive agencies have been required by executive order to sent their

2 44 U.S.C, 3502(10) of the Paperwork Reduction Act defines the term independent regulatory agency aa
{including the Board of Governors ofthe Federal Reserve System, the Commodity Futures Trading Commiasion, the
Consumer Product Safety Commission, the Federal Communications Commission, the Federal Deposit Insurance
Corporation, the Federal Energy Regulatory Commission, the Federal Housing Finance Board, the Federal Maritime
Commission, the Federal Trade Comuminsion, the Interstate Commerce Commiasion [since abolished and replaced
by the Surface Transportation Board], the Mine Enforcement Safety and Health Review Commission (cenanted
Federal Mine Safety and Health Review Commision) the National Labor Relations Board, the Nuclear Regulatory
Conamission, the Occupational Safety and Health Review Commission, the Postal Rate Commission, the Securitia
‘and Exchange Commission, and any other similar agenty designated by statute au « Federal independent regula

or coraismion. A peablem sealing vany other mules ogency decignsted by atavuve aa a Pederc
independent regulatory agency or commiseon,” ia that while there are other such commieions, they are not
identified as auch in their enabling statutes In fac, only a few of the shove lited agoncies are identified as an
“independent regulatory commission" in their enabling statutes.

© OMB Circular A-19, Revised, September 20. 1979.

*) Commodity Futures Trading Commission (7 U S.C 4a(hX2)), Consumer Product Safety Commission (15 U.S.C.
2076(k)(2), Federal Deposit Insurance Corporation (12 U.S.C 2501), Federal Election Commission (2 US.C,
4874(d)(20, Federal Reserve System's Board of Governors (12 U.S.C. 260), National Credit Union Adminiatration
(42 U.S.C. 250), National Transportation Safety Board (49 U.S.C 1115(e)), Railroad Retiremont Board (45 U $.C,
2310) and Securities and Exchange Commission (12 USC. 250)

52 Agencies with statutory authority to send their communications concurrently include the Farm Credit
Administration (12 U.S.C. 2252{a)), Federal Energy Regulatory Commission (42 U.S.C. 7171); and Merit Systems
Protection Board (5 U S.C. 12069(k)). Thowe relying on their independent atatus include the Federal Maritime
Commimion, Federal Trade Commission, Nuclear Regulatory Conimission, Surface Transportation Board, and
United States International Trade Commission (Information regarding agencies relyingon their independent status
ia based on telephone conversations with officials in each agency).

88 There isa provision in the statute, however, that one of the functions of the Social Security Advisory Board
includes "making recommendations to the President and to the Congrasa with reapect to policies that will ensure
the solvency of the old-age, survivors, and disability inaurance program, both in the ahort-tarm and the long.tarm,~
PL 103-296, 108 Stat. 1467-1468.

‘Telephone conversation with Legislative Reference Officer in Social Security Administration on July 19, 1996.
‘Sending policy related communications to OMB for clearance before transmitting them to Congress raises questions
regarding how an agency head perceives and see the independence that he or she has been given,



WAYS AND MEANS SUBCOMMITTEE ON SOCIAL SECURITY
PAGE TWO

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed
record of the hearing should submit at least six (6) copies of their statement, with their
address and date of hearing noted, by close of business, Thursday, August 8, 1996, to Phillip
D. Moseley, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives,
1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written
statements wish to have their statements distributed to the press and interested public at the
hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on
Social Security office, room B-316 Raybum House Office Building, at least two hours before
the hearing begins.

Fe [REME!

‘eM aot ah the wl aot be peat, bat wi be rr ‘a fer ream and aus bythe

‘AY stataments and any accompanying ex fr petting most be typed in eagle epace on legate paper and may ast
caved a tal page ang Mahe

2 Copies of whole documents submited as ehible mara wl not be aceepid fr pratng. lasted, exhibit maura shonld be
‘ference and qootd or peraprased. Al exhibit mataral at meeting thee specications wil be malmaned in the Commite Mls or
review and se bythe Common,

‘3 —_Avwiness appeariog 1 pobc hearing, or bmn « statement forthe record of  poble hearing, or mbaaing wrtzan
comments Ln retpous i x pablshed request for comments by tho Commie, mast nce on his statement or aobmlsion a tof all,
‘Vent, peru, o organizations on whose behalf the witaast appear.

4 —__Avapplomencal sheet must accompany each stalmment sting the same, full dren, tlophous number whore te witness
or the dacguated roprsentave aay be reached and tplealontne or summary ofthe cemmenty und rcemmendations ts the fll
‘ugecent This eopplamantl shoot wl wot be taclded in the praia record

Tee aber aa apply ony to saul Daag for pratag. and ents
mail vag sly for abun tof Meaber th pres as te ube ag fh Conran e's ple hearing my be ube lt
‘aber forms

Note: All Committee advisories and news releases are now available on the World Wide
Web at HTTP://WWW.HOUSE.GOV/WAYS_MEANS/" or over the Internet at
*GOPHER.HOUSE.GOV' under "HOUSE COMMITTEE INFORMATION’.

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69

House E-Mail Fax Cover Sheet

wy

Congress of the Hnited Sintes

House of Repreeentatibes
Washington, B.C.
Company:
To: Mary Hanson
From: Democratic Leader Richard Gephardt

Subject: Message for 6/11/96 (5)
Sent at: 23:59 on 10 Jun 1996

Number of pages (including this cover sheet) + 3.


24

Mr. PoRTMAN. I guess what I’m suggesting is, do you think there
is a logic to having SSA treated differently than those other inde-
pendent agencies as it relates to rulemaking, given the fact that
SSA’s independence by statute is so broad?

Mr. GarclA. That’s again a question that will have to be handled
by Congress, depending on the responsibilities of the particular
agencies. There are established independent regulatory boards and
commissions with certain independence for certain reasons—politi-
cal, policy, and so forth—and the same would be true for the Social
Security Administration.

Mr. PorTMAN. What is your interpretation of the statute? Be-
cause of the Executive order and not specifically exempting SSA,
is SSA mandated to submit its proposed rules to OMB for review
prior to being published in the Federal Register?

Mr. GarclA. The question is whether an Executive order can re-
quire an agency with certain independent status to follow certain
procedures. I’m not qualified to evaluate these procedures——

Mr. PoRTMAN. So you would say it’s a gray area at this point?

Mr. GARCIA. It’s a gray area as to whether the agency must sub-
mit its regulations——

Mr. PORTMAN. Under current practice—I don’t know the answer
to this—you indicated the budget is submitted separately so that
Congress sees the budget and the appropriators know what the
budget is. Does SSA do that with rules as well?

Mr. GarciA. No. The rules and regulations are not sent to Con-
gress, except for the—

Mr. PoRTMAN. So prior to the OMB screening, there would be no
way for Congress to know what the rules were being proposed?

Mr. Garcia. That’s correct.

Mr. PoRTMAN. Thank you.

Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Christensen.

Mr. CHRISTENSEN. Thank you, Mr. Chairman.

Mr. Garcia, which key SSA vacancies are needed to be filled by
presidential appointment, assuming—I don’t know if there’s hun-

reds or tens——

Mr. Garcia. No, there are at least three with Senate confirma-
tion. It’s the Commissioner, the Deputy Commissioner, who is also
appointed for a 6-year term, but there’s no provision regarding the
removal of the Deputy Commissioner, and the Inspector General.
Those are the three primary positions, presidential appointees re-
quiring Senate confirmation.

Mr. CHRISTENSEN. And you say the Deputy and the Inspector
General are there with—as far as cause? How are they —

Mr. Garcia. No, the Deputy can be removed at any time. The In-
spector General can be removed as long as the President submits
his reasons for removal to Congress. The statute just stipulates
that he just has to submit reasons for removal.

Mr. CHRISTENSEN. During your time here in Washington, have
you ever seen a situation where the President has refused to make
3, Key appointment in terms of trying to find leverage over the SSA

irector?


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10

STATEMENT BY ROGELIO GARCIA
CONGRESSIONAL RESEARCH SERVICE
HOUSE SUBCOMMITTEE ON SOCIAL SECURITY
JULY 25, 1996
CHARACTERISTICS OF INDEPENDENT EXECUTIVE AGENCIES.

Mr. Chairman, thank you for inviting me to testify regarding the characteriatics of an
independent executive agency and how the Social Security Administration fita into that category. In its
‘broadest senso the term “independent executive agency" refers to agencies in the executive branch that
are located outside of and are independent of executive departmenta.' ‘This type of independence is fairly
‘common in U.S. practice

‘Ther are two types of indepondent executive agencies-those that are under the direction and
control of the Prosident and those that are not under such direction and control. ‘The crucial difference
bbetwoon the two types of agencies is whether the President may summarily remove the official or the
officials heading the agency.’ He may do so if the agency is under his direction and control, but he may
not do 6o if the agency is not under his direction and control. ‘The President may remove the head of an
agency that ia not under hia direction and control only for cause. It is this type of independent executive
agency that I am addressing today >

Nearly all of the agencies independent of the President are multi-headed regulatory agencies,
Only two agencies, the Social Security Administration and the Office of Special Counsel, are headed by
fa single official. ‘The degree of functional agency independence varies, depending on the amount of
independence they exert when 1) preparing their budget requests for Congress; 2) communicating with
Congress; 3) developing and issuing regulations; 4) collecting survey and other data from the public; and
5) litigating before the federal courta. For multi-headed agencies, the following factors are also
important: how the chairperson is selected, and whether political balance among its members ia required

Fixed-Term Positions and Protection Against Arbitrary Removal by the President

Moat executive branch agencies carrying out executive responsibilities fall under the authority
and direction of the President. Officials heading those agencias are appointed by the President with the
‘advice and consent of the Senate. The appointees generally serve indeterminate terms of office and may
be removed whenever the President wishes. The power to remove an appointeo, which is inherent to the
power to appoint, ia the President's most effective instrument in assuring his direction and control over
the action of his appointees.

‘Some agencies, however, have duties and responsibilities that the Congress has determined should
bbe shielded from partisan politics. In those instances, Congress has established a fixed-term of office for
the heads of thase agencies and prohibited the President from summarily removing an incumbent before
his or hor term expires, except for cause. In limiting the President's power to remove an official,
Congress must be careful not to violate hie core constitutional responsibilities. In a series of decisions,
the Supreme Court has established the following criteria to determine if the restrictions are
constitutional: (1) was the agency created to exercise its judgment without hinderance of any other
‘executive official? (2) dove restricting the President’s removal power impede his ability to carry out his
constitutional duties? and 3) if the President's core constitutional powers are impeded, is the action
Justified by an overriding need to promote objectives within the constitutional authority of Congress?

Let _me turn now to tho organizational characteristics that make the Social Security
‘Administration and other agencies "independent" of the President's direction and control.

Fixed-Term of Office

A fixed-term of office provides protection against the arbitrary removal of an incumbent, but not
complete protection. ‘The courts have held that absent certain conditions, a fixed-term only sets the outer

' Bxceptions to the rule are the Federal Energy Regulatory Commission, located in the Department of Energy,
and the Surface Transportation Board, located in the Department of Transportation Although bath are located
within executive departments, they are independent executive agencies

2 The agency may be single-headed (e.g., Office of Personnel Management, Social Security Administration), oF
‘multi-headed (e.., Consumer Product Safety Commission, Tennessee Valley Authority)

 Tabloo in the Appendix list fixed-term positions requiring Senate confirmation, and statutes limiting the
President's power to remove officials. For a discussion on executive-legislative control over executive agencies that
includes much of what iain this paper, see Louis Fisher, The Politics of Shared Power: Congress and the Executive.
434 Edition. Washington, D.C., Congressional Quarterly Preat, 1993, especially pp. 119-144

* See Myers v, United States, 272 US 52 (1925), Humphrey's Executor v. United States, 295 US, 602 (1935);
Wiener v. United States, 357 US. 349 (1958), Morrison v, Olson, 487 US. 685-86 (1988), and Misiretta v. United
States, 488 US. 361 (1989) n, 13 (quoting Nixon v. Administrator of General Services, 433 US, 443 (1979),


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184

10. In order te ijvise Congie.- of + true level of
administrative fusting it needs, Cousess deliberately gave SSH

OMB directly to the Congress, in addition to the one that is

submitted as part of the pudoer of the President. Plez

ribe the major differen-rs in SSA's two budget sukm.ss ons.

Arenit you interested in letting Congress know what SSA's true
1+. curce and staffing needs are, so that, to the extent possible

‘1. Subcommittee can go to bat with the appropriators in getting
wl 2 3 sf

pats)

A brief description of SSA's original FY 1997 request to OMB
(submitted in September 1995) was included in the FY 1997
President's Budget Appendix released in March 1996 (copy
attached) .

Our FY 1997 administrative budget request of $6.3 billion was
within the range of the President's $6.1 billion request which
represented an increase of nearly $250 million over the FY 1996
levels being considered by Congress at the time. The President's
request also included an additional $510 million for
implementation of the Administration's welfare reform proposals.

Both Congress and the Administration have recognized SSA's need
to handle the work at hand as well as to invest in the future.
However, this may not always be the case. There may come a day
when we will come directly to Congress and ask for more funds
than the Administration is willing to provide for SSA.

Attachment


29

forts to prepare for managing the challenges they face in the 21st
century.

First, the good news. SSA has surpassed, I think, many of the
Federal agencies in financial accountability. In both their ability to
perform under the CFO Act and as a pilot agency under the GPRA
Act of 1993, we certainly give them high marks.

Second, I think SSA has, as most everyone knows, a big financial
problem facing them, namely, that their trust funds are in a sur-
plus position now but will not be some time in the next century.
So one thing I would like to do is just read one paragraph that I
do have here on page 3 of my statement.

As the baby boom generation ages, growing numbers of people will receive Social
Security retirement and survivors benefits in the years to come. By the year 2015,
as baby boomers begin entering their midsixties, the numbers of individuals receiv-
ing benefits will reach an estimated 50 million, more than one-third greater than
the 37 million receiving Social Security retirement and survivors benefits in this
past year, 1995.

Once on the rolls, retirees can be expected to receive benefits for longer time peri-
ods 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 the year 2015, a 65-year-old
male will have a life expectancy of 16 years, or a 35-percent increase. During that
same time period, the life expectancy for women aged 65 will actually increase by
50 percent. Meanwhile, the ratio of contributing workers to beneficiaries will de-
cline. By 2015, an estimated 2.6 workers will be paying taxes into the Social Secu-
rity system per beneficiary, and in 1950, it was 16.5 workers paying Social Security
taxes per beneficiary.

Now, when the Congress passed legislation for an independent
SSA, they were expecting more leadership on how to deal with
these big financial problems that are looming in the future. A very
big political issue is how to deal with Social Security funding in the
future. I think each, the President and the Congress, are facing
this; Democrats and Republicans are facing this; and everybody is
somewhat hoping that the other one will go first. So I think one
of the things that SSA has to do is to be able to do the research,
develop the appropriate policy options and be more of a leader in
helping the Congress and the President in the public debate that
is going to be a very crucial issue here in the future.

SSA is only now strengthening its research, policy analysis and
evaluating capabilities to be better prepared to assist the
decisionmakers in this debate. The sooner the research is done, the
sooner some of the options can be debated and, hopefully, decided,
because sooner means less draconian changes later. This is also
true for individual Americans who possibly will have to adjust their
retirement plans.

Next I would just like to say a few words about the disability
program. In recent years, disability caseloads have really shown
unprecedented growth. In other words, in 1986 you had 4.4 million
people in the programs, and in 1995 you had 7.5 million, a 69-
percent increase. The dollars were up practically as much, 66 per-
cent, from $25 to $57 billion. And the characteristics of the new
beneficiaries changed. From 1982 to 1992, the mental impairment
awards to younger workers increased by about 500 percent. In
1992, the new DI awardees were on average 48 years old. There-
fore, they might spend as much as a third of their adult life on dis-
ability before reaching age 65.


166

Deseription

OPIR will conduct event-specific customer surveys after a particular redesign pilot 1s fully
implemented and adequate time has elapsed for employees to attain a level of competency and
comfort with the new process to allow for a representative assessment by customers. In FY
1937 we anticipate carryover of the customer surveys of the AO pilot we are initiating in

FY 1996. These include separate surveys of unrepresented claimants, claimants who had
Tepresentation and claimant representatives themselves. We also expect to conduct surveys,
related to oiher pilots (dependent on the implementation timetable for the pilot) where redesigned
aspecis of the process may be visible to claimants, such as the sequential interviewing or DCM
pilots.

Customer Satisfaction Survey of Current Beneficiaries

Qbjective
To obtain feedback from beneficianes in current pay status on overall perceptions of SSA service
and preferred methods for doing business with SSA.

Description

Unlike other satistaction surveys which are transaction-based, this survey samples beneficiaries in
current pay status receiving RSI, title Il Dl and SSI benefits regardless of whether they have had
recen! contact with SSA. The survey, with interviews of about 3,000 individuals, will obtain overall
perceptions of service and information about beneficiaries’ preferred methods for doing business
with SSA. Interviews will begin in September 1996 and continue into early FY 1997.

Electronic Service Delivery - Videoconferencing

Objective
To measure the quality of and public reaction to the use of videoconferencing technology in taking
‘tie Il and tile XVI disabntity claims,

Description

This customer survey will use a three-phase approach: 1) A customer satisfaction survey to
evaluate public reaction to the use of videoconferencing equipment in the ciaims process; 2) a QA
review to evaluate DDS decisional accuracy; and 3) a review to evaluate integrity of evidence
provided during the videoconferencing

Ottice of Finance, Assessment and Management (OFAM) Employee Survey

Objective
To obtain ideas fram OF AM employees for improving customer service.

Description
This survey will obtain ideas from OFAM employees for improving customer service. In support
of Executive Order 12862, all SSA employees were surveyed in 1994; a followup survey will be
conducted of all OFAM employees to obtain additional ideas


186

ii. What role does OMB play in devel i
policy, and budget, now that has .s om
agency?

Why do you choose to submit virtually everyt
fox review, when by law you are not required to?

° The legislation which made SSA an agency independent of the
Department of Health and Human Services did not exempt it
from Executive Branch oversight. Therefore, SSA is still
subject to Administration direction

© Under the law, the Commissioner of Social Security is
directed to prepare an annual budget for S$A which is
submitted by the President to Congress without revision,
together with the President's annual budget for SSA. At the
same time, we understand the current budget restrictions
facing the Congress and the Administration today, and take
seriously our responsibility to prepare a budget which
recognizes these restrictions


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91

4. What efficiencies is SSA or State 00Ss developing ro improve
case processing in terms of lowering processing times ai
costs

The development and implementation of the CDR mailer/profile
process has greatly increased the cost-effectiveness, and
timeliness of the CDR process and expanded SSA's capacity to
process large numbers of cases. The mailer/profile process
identifies those cases that have such a low likelihood of
cessation that conducting full medical reviews of these cases in
the disability determination services is not cost effective.
These cases require only a less expensive mailer questionnaire
that examines the individual's current medical status and work
history. Studies and analyses to incorporate further
improvements and efficiencies in the process are ongoing.

SIs SSA ¢:ns) dering any recommendations + 1 ‘-gisiative changes

to the Congie _If so, what is being con and when might
these be sub. ---3?

SSA is not contemplating any specific recommendations for
legislative changes. However, information obtained from
experience with the COR mailer/profiling process is reviewed and
analyzed on an ongoing basis for new ideas that will enhance the
effectiveness of the disability program. All new ideas
including those which might require legislative action, will be
carefully considered. We will seek legislation, if needed, for
those that improve the CDR process


193

15 How have customer expectations shifted over say the last 10
Ss. and tp i positioning 1+ "f to address thus

changing expectations? What speci®c 2teps are jw tans to

downsize headquarters, and beef wy -"sffing of ona field off

From its beginning, SSA has placed a high priority on delivering
quality customer service. $SA public contact staff have
consistently received high ratings in independent surveys of the
Agency's customers. Providing world-class service to the public
has been one of my top three goals for the Agency during my
tenure.

The difference in SSA's approach to customer service over the
last few years is that, instead of assuming we already know, we
have begun asking our customers how they define world-class
service. This approach is consistent with recommendations from
the National Performance Review and Executive Order 12862,
"Setting Customer Service Standards." In fact, SSA is proud to
be considered a leader among U.S. agencies in “putting customers
first."

To respond to the Executive Order, in 1994 we conducted our first
major round of activities to solicit information about the
expectations of our customers, employees, and other stakeholders
We obtained input in five ways:

© Focus group discussions with beneficiary and non-beneficiary
customer groups across the country;

©  Service-delivery surveys of our recent 800-number callers
and recent applicants for benefits by our Office of Program
and Integrity Reviews;

© A World-Class Service Survey that asked SSA employees as
well as external stakeholders how they define "world-class
service;"

© Postcard surveys asking customers for specific, numeric
measures of good service; and

© An annual customer satisfaction survey by the Office of the
Inspector General.

Customer expectations and preferences clustered around several
general themes. Our respondents identified courteous treatment


n

limita of an incumbent's tenure and that he or she may be summarily removed by the President at any
time during that tenure, Such removals, while rare, have occurred.

The degree of independence ix affected by the length of the term, whether the torm has a
holdover provision, and, in the case of a multi-headed agency, whether the term is staggered. The longer
the term, the greater the degree of independence. An official serving a short term may be more
ausceptible to Presidential direction, eepecially if he or she wanta to be reappointed. Moreover, an official
whove torm of office is longer than that of the President who appointed him or her ia lew likely to foo!
‘8 sense of allegiance or commitment to a new President. Both the Commissioner and Deputy
‘Commissioner of Social Security enjoy a six-year term of office

‘A second factor that may enhance independence is if the position has a holdover provision that
enables an incumbent whose term expires to remain in office either for a specified period of time or until
he or she ia replaced. ‘The provision is designed to assure that an agency is not left leaderless or without
‘quorum. On the other hand, a holdover provision in some instances may encourage a President to take
zo action to replace an incumbent whose term has expired, if the incumbent appears responsive to the
Administration. The Commissioner of Social Security is covered by « holdover provision.

Moreover, holdover provision also may limit the President's power to make a recess
appointment. Such an appointment may be made only if a position ia vacant. Depending on the wording
of the holdover provision, courts have ruled that some holdover provisions do not create a vacancy and
that the incumbent may be replaced only by someone who is confirmed by the Senate.

‘An additional feature enhancing the independence of multi-headed agencies is the staggered date
‘arrangement by which fixed-terms expire. The terms are kept staggered by appointing members to fill
only the remaining term of incumbents who resign or who die before their terms expire, This assures
that 9 President cannot replace all members at one time.

Restricting the President's Power to Remove an Appointee

In most instances, unlose a fixed-term position carries with it a restriction on the President's
removal power, the incumbent may be removed by the President whenever he wishes. Consequently, @
provision limiting the President's removal authority is the most important way to preserve agency
independence. The Commissioner of Social Security has such independence, because the Commissioner
‘may not be removed during his or her term of office except for cause,

Some statutes limit the President's authority to remove an incumbent only for the causes cited
in the statute. These causes may be only for neglect of duty, or malfeasance in office;® only for
inefficiency, neglect of duty, or malfeasance in office;' only for inefficiency, neglect of duty, malfeasance
in office, or ineligibility;® or only for cause® Other statutas omit the only qualifier. ‘These causes
include for inefficiency, neglect of duty, or malfeasance in office,"
guilty of appointing or promoting an official on the bosis of a politcal tet or qualification;
for cause."?

Whother the President may remove an official for shortcomings other than thooe specified if the
qualifier only is lacking, is uncertain, In 1940 the Supreme Court let stand a circuit court decision

8 See Mackie v. Clinton, 827 F Supp 56 (D.D.C. 1993), vacated, 10 F.3d 13 (D.C. Cie 1993); Wilkinson v. Legal
‘Services Corp. 865 F Supp. 891 (D.D.C. 1994, reversed on other grounds by the D.C. Cireuit on April 9, 1996,

6 Consumer Product Safety Commiasion (16 U $.C, 2089(a)), National Labor Relations Board (29 U.S.C. 16(8)),
‘and Social Security Administration (42 U.S.C, 902).

7 Federal Energy Regulatory Commission (42 U.S.C 7171(by), Federal Labor Relations Authority (6 U.S.C.
‘TiOAD)), Merit Systems Protection Board (6 U.S.C. 1202(d)), and Office of Special Counsel (5 U.S.C. 121106).

* National Modiation Board (45 U S.C. 154. First)

» Postal Rate Commission (39 U.S.C. 3601),

4 Federal Maritime Commission (46 U S.C. 111), Federal Mine Safety and Health Review Commiaeion (90 U.S.C.
£824(0\(1), Federal Trade Commission (16 U.S.C. 41), National Transportation Safety Board (49 U.S.C. 1111(¢),
‘Nuclear Regulatory Commission (42 U.S.C. 6841(e)), Occupational Safety and Health Review Commission (29 U.S.C.
{861(0)), and Surface Transportation Board (49 U.9.C. 702(b.

1 Tennesaee Valley Authority (16 U.S.C, 831e)

12 Federal Rosorve System (12 US C. 242).


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187

12. In his test.mony, ne Corprroller General discussed the fact
that smplemenrazion of the icw redesign software has been delayed
by ob are expressed concern about the lack of a
comprehensive, aetaiiea plan regarding system efforts. How do
you respond to these findings?

What_is SSA doing to protect itself against sophisticated fraud
within its immense and complex computer system?

Sheuldo't the $2 1G be involved in the effort to protect the
jntegiity of SSA's computer systems?

The disability modernization plan, developed in 1992, took a
three tier approach:

. Maintaining existing State disability case processing
systems;
. Providing new and/or updated case processing systems to some

States lacking automation or requiring upgraded software
programs; and

. Developing a new, national, client server-based disability
processing system.

The original target date for releasing the new software for pilot
testing the national disability processing system was October
1995. The actual release date to the Virginia DDS and the
Federal DDS was November 29, 1996--a 13-month delay from the
initial target date. The delay was caused by a number of
factors, including additional time needed to complete the initial
software requirements, recruit and train personnel, and complete
procurement activities.

OIG needs to be involved in protecting SSA's Computer Systems to
the extent that OIG is responsible for investigating,
documenting, and prosecuting fraud and misuse of SSA's systems by
both employees and the genera) public.

OIG is the part of the Agency that is responsible for conducting
audits of the integrity of SSA computer systems, as well as
participating in SSA intercomponent workgroups discussing broad
issues in these areas.

OIG participates in fraud committees. There is a National Fraud


102

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192

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sca | 6,402 | 3,693 sv | s20,a95,a73.61 | 95,468 |
2,092 | 7,428 | 4.469 0x} §20,087,991.71 | $6,285
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1.267 | 9,762 | 5,028 sox | s4,740,569.48 | $8,369
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a0,287 | 10,599 5,653 sax | 963,462,164.00 | $21,226 |
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65

of the members are appointed by the President and two each are
appointed by the Speaker of the House and the President Pro
Tempore of the Senate. This Board is to advise the Commissioner
the President and the Congress. The Board is fully operating and
has had several meetings

© Solvency Issues

As you are aware, under the 1996 Trustees Report's
intermediate assumptions, the assets of the combined OASI and DI
Trust funds are expected to grow until 2019, and then to decline
unti they would become exhausted in 202%, a year earlier than
was estimated in last year's Report. Clearly, considering the
crucial role that Social Security plays in our society, its
future solvency is of critical importance to the nation

We all recognize that changes to the program will be
required to sustain Social Security in the long term. The
Advisory Council on Social Security is close to completing its
assesstent of long-range solvency options. Although the Advisory
Council is not expected to reach a consensus, its work
demonstrates that there are a number of options available for
consideration.

Ay past successful efforts to reform Social Security have
shown, changes to the program can occur only after bipartisan
debate and public discussion

I have emphasized that the Social Security program is not in
immediate financial danger and there is no immediate crisis.
Under the intermediate assumptions, the program will be able to
fully meet its benefit obligations for the next 33 years. In
addition, even if no changes in the program were made by then
payrull taxes in 2029 would be sufficient to pay 77 percent of
benefits.

I want to emphasize, however it is important to address the
Social Security financing issue earlier rather than later. The
earlier a bipartisan solution can be achieved, the less dramatic
he changes will need to be

Educating the American public is critical to achieving a
resolution. An accurate understanding of the program is needed
as the foundation for public discussion. I have been traveling
around the country, talking to senior citizens and young people
alike, to discuss the Social Security program and the need for
long term changes. In addition, during my travels across this
country over the past 2 years, I have used every opportunity in
the cities across America that I have visited to meet with
journalists, both print and broadcast, to educate them on the
current state of Social Security. By taking the time to meet
with numerous editorial boards, participate in many radio and
television programs, and sit down in countless one-on-one
interviews with newspaper and magazine reporters, I have been
able to put journalists in a much better position to accurately
inform the millions of Americans who get their information each
day from the news media about the current financial status of
Social Security.

In addition to public addresses by agency officials, we have
developed a Teacher's Kit which has been distributed to more than
17,000 secondary schools around the country. The kits use lesson
plans, factsheets, handouts, a video, and a teacher's guide to
present a comprehensive overview of the program

We also issue PEBES, so that workers can see exactly how
much they have paid inte Social Security, and what benefits they
can expect when they retire. By 2000 everyone age 25 and over
will receive an annual statement. As I travel around the



104

771

Page 9 cf 3

n 1998 23:

wena 111990. House Democ'are Posy Commins
Nenuion Gone €.

4. Hundreds of rural hospitals could close because of deep Medloare cuts,
The average ruta! hos pital relies on Uadicare for nearly hall of its revanve, Aceeroing wo he
Amancan hospital Atucciation, the GOP s deep Medicare cuts could fores many to clogs,

a, Allows doctors to overcharge seniors for thelr medical care, the
Republican progasai would allew dociors who leave the traditional Medleare program to
overdit! their patients, which could increase seniors’ out-of-packe! medical cosi» by 40 percert

2, Public relations gimmicks to hide reason for Medicare cuts, Republicans
have separated their tudget into three @, in & descerate atemptto preempt arguments
that they cut Medicare to poy for tax breaks for the wealthy. Don't be focled - it's allone
budget, even if pieces of It gat voled on separately. Medicare cuts ctill pay fur tax breaks.

1, SECRET PLAN to cut Medicare to pay for “crown jewel” tax breaks for

14 GOP budget cuts Medicare just as deeply by 2002 as their budget trom

does the money go? Into a sush lund to pay for as yet unnamed tax breaks

ikely the "crown jewel” of the Contact with America, which GOP leaders repeatedly put first
* * legisiatve prory list: capital gains tax breaks, which bonefit the very wealthy,





16

‘Toe authority ta jntiate and conduct lawoulta and offensive Ligation vaio considerably among
the agencies. Six have complete or near complete authority to initiate and conduct lawouita i

of the Justice Depertment” Five ethere have partial ot uncartan authority to do ao Only four
hhave no independent authority to sue in their own name without the approval of the Attorney General.‘

Finally, under 28 U.S.C, 2360(a), three agencion may petition the Supreme Court for a writ of
certiorari,“ and three others appear to have almost complete authority to appeal and argue directly
before the Court.#

Litigation with which SSA ia involved is conducted jointly with the Department of Justice. The
degree of SSA control appears to depend on the type of case, its complexity, workload of the offices
involved, and the importance of the litigation to specific agency concerns or broader government-wide
concerns,

Other Independent Criteria Applicable to Multi-headed Agencies

For multi-hoaded agencies there are two more factors to consider regarding their
independence-how the chairman of the agency is selected, and whether the members of the agency must
‘be politically balanced,

In most instances, the chairman has broad administrative powers, including control over the
‘agenda, budget and staff of the agency. The chairman of the multi-headed agencies are selectod either
by the members Iv08 oF by the Pre Soloction by the asoures groator ind
Tf the President selects the chairman, whether he has sole authority to elect or needs Senate
‘confirmation is important,

Seven multicheaded agencies have chairmen whose designations are subject to Senate
‘confirmation,«’ while two designate their own chairmen. ‘The chairmen of most multi-hoaded
agencies aro designated by the Provident alone.

Political balance is required for most multi-headed agencies to assure that a wide varioty of
ideological as well as other positions are represented among the members. Nearly all of the members are
‘affliated cither with the Democratic Party or the Republican Party. In some instances, however,
‘members may belong to another political party or to no political party.

Most multi-headed agencies by statute require that no more than a simple majority of the
mombors may belong to the same political party (ie., two out of three, or three out of five). One agency
that lacks a etatutory provision requiring political balance-the Federal Reserve System—by tradition has
a ‘membership.

“2 Federal Deposit Insurance Corporation (12 U.S.C. 1819), Federal Energy Regulatory Commission (42 U.8.C.
‘7101, t 90g and 7171(), and 16 U.S.C. 717 et gag and 7174), Federal Labor Relations Authority (6 U.S.C. 7106¢h)
and 7125(b), 7125(c) and 71254), Federal Trade Comamisaion (16 U.8.C. 66), National Labor Ralations Board (29
USC. 164(a), 16046), 160G) and 160(D, and 161(2), and Securities Exchange Commission (15 U.S.C. 77(o), 71),
‘Tou(e), 78u(@) and TBu(e), 11 USC. 11004e), 1126(a), and 1128¢)), See P-L. Morgan, pp. 7-10 and 18-14; ACUS
Preliminary Survey, pp. 7-8, 11, 13, and 18; and Study on Federal Regulation, Vol. V (Regulatory Organization) p.
Ca

*5 Commodity Futures Trading Commission (7 U.S.C. 4a(c) and 15(a)(1)), Consumer Product Safety Commission
16 USC. 2061, 2064(g), 2071, and 2076b), Farm Credit Administration (12 US.C, 224(c)), Federal Maritime
‘Commission (46 U.S.C. 1705(k)), and Federal Reserve Board (12 U.S.C. 182%c)(7XD). See P-L. Morgan, pp. 3-4, 9,
‘and 11; ACUS Preliminary Survey, pp. 2-3, 9, and 12; Study on Federal Regulation, Vol. V (Regulatory Organization)
p62

“4 Federal Communications Commission, National Transportation Safety Board, Nuclear Regulatory
Commission, and Occupational Safety and Health Administration

“5 Federal Communications Commission, Federal Maritime Commission, and Nuclear Regulstory Commission.

“* Federal Deposit Insurance Corporation (12 U.S.C. 1819), National Labor Relations Board (29 U.S.C. 164(a),
160(e), 1604)), and 161(2), and Federal Trade Commission (15 U.S.C. 66).

*" Commodity Futures Trading Commission (7 U.$.C. 4a(2)), Consumer Product Safety Commission (15 U.S.C.
2068(a)), Federal Deposit Insurance Corporation (12 U.S.C. 1812), Federal Reserve Board (12 U'9.C. 242), Merit
‘Systama Protection Board (6 U'S.C. 120%a)), National Transportation and Safety Board (49 U.S.C. 1111(@), and
Railroad Retirement Board (49 U.S.C. 1902(b\3).

“* Federal Election Commission (2 U.S.C. 497c), and National Mediation Board (45 U.S.C. 154)


160

Child Support Payment Study

Objectives
To determine the number of child recipients who could be receiving chiid suppos from an absent
parent or a direct payment of child support from a State or county agency (pass through)

To assess the effectiveness of SSA procedures in identifying receipt of child support or pass
through payments and taking adjustment actions if such payments are received

To determine if SSA policy and procedures adequately address the issue of filing for child
support payments.

Description

This is a national study that involves five regions with Chicago as the lead region. The sample
size will be 225 cases. Each case will receive a casefile and a field review. In addition, the
custodial natural parent(s) will be contacted concerning marital status, household arrangements
and chilg suppor. If possible, the absent parent(s) will be contacted for additional information on
child support payments. employment status, etc.

Data will be compiled on the frequency of absent parents, whether child support has been
pursued, and the impact of child support payment arrangements on SSI benefits

Modernized Supplemental Security Income Claims System (MSSICS) 4.4 Accuracy

Objective
To determine the effect of the 4.4 version of the MSSICS screens on claims quality and casefile
review dollar accuracy,

“oscnption
“10 past Studies of MSSICS releases provided valuable insight on various aspects of FO
processing accuracy. Informal discussion between OPIR and Office of Systems staffs indicated
the latter would prefer any future study to encompass the results of the 4.4 release.

The study will review redeterminations oniy and will be a piggyback to the FY 1998 IDA review.
The review will be conducted for either the last 6 months of FY 1998 IDA or the entire year. A
supplemental sample of targeted 4.4 program areas will be selected as required.

Early Information Systems to Monitor Welfare Reform Implementation

Objective
To determine if the Welfare Reform law is being implemented properly throughout its various
stages within the Agency.

Description

All incoming claims will be subject to review with a 1000 case sample spread over six months in
each of the RSI and SSI programs. Selection will be determined by citizenship field and/or any
other indicators established by Systems, Reviews will be case file to determine adequacy of
documentation in determining eligibility


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21

Mr. GarciA. That has been Congress’ intent, so I would agree
that that’s the reason Congress made the agency independent.

Mr. JOHNSON. So it’s clear then in the legislation, in your view?

Mr. GarciA. During hearings, those were the intentions that
were announced by many Members.

Mr. JOHNSON. You mention also that the statute specifies that
they submit their budget directly to the Congress without revision
as well as to the Congress as part of the overall budget of the
President.

Can you tell me what leverage the President has to ensure that
the SSA, now that it’s independent, submits a budget that is ac-
ceptable to the President?

Mr. Garcia. Well, the agencies will normally negotiate with
OMB regarding their budgets. By statute, SSA’s original budget is
eventually submitted to Congress. But along with that budget,
Congress receives the budget that’s prepared by OMB for all of the
agencies. The latter budget, the presidential budget, may be a re-
vised version of the budget that has been prepared by the agency.

However, the Appropriations Committees are aware of the origi-
nal budget that the agency submitted to the OMB, and whatever
changes OMB has made in the President’s budget regarding the
agency.

Mr. JOHNSON. But Social Security doesn’t have to submit their
budget to OMB, is that true?

Mr. Garcia. Yes, they do, sir.

Mr. JOHNSON. They do?

Mr. Garcia. Yes. There are some agencies that do not submit
budgets because they generate their own funding. These are pri-
marily multiheaded, regulatory banking agencies—the Federal Re-
serve Board, the Federal Deposit Insurance Corp. However, the So-
cial Security Administration, by law, must submit, as other agen-
cies, must submit its budget to OMB.

Now, there are two agencies that have statutes which prohibit
OMB from revising their budgets. They are the U.S. International
Trade Commission and the U.S. Postal Service. There are other
agencies that submit their budgets to OMB and at the same time
submit budgets to Congress, but in those instances where there’s
no stipulation preventing OMB from revising the budget, those
budgets may be revised. So the SSA budget——

Mr. JOHNSON [continuing]. Falls into that category.

Mr. Garcia [continuing]. Falls into that category.

Mr. JOHNSON. Thank you, sir.

No more questions, Mr. Chairman. Thank you.

Chairman BUNNING. Mr. Neal.

Mr. NEAL. Thanks, Mr. Chairman.

Mr. Garcia, you seemed to indicate that SSA could, on its own
volition, decide to issue regulations or send communications to Con-
gress without having been reviewed by OMB. The independent
agency legislation was thoroughly studied and reviewed by Con-
gress and legislation was introduced repeatedly over a decade, and
there were many, many hearings.

Don’t you think that Congress would have made the Social Secu-
rity Administration independent of OMB if it had intended to?


50

you could get a better explanation of how the trust fund actually
works, and the fact that the money is there now and things like
that, then what you need is a new financing plan that is credible
to the average American, including the young people. That’s what
is needed.

Mr. CoLuins. In my closing seconds here, on Sunday’s “Meet the
Press” with Tim Russert, Sam Nunn gave a very good explanation
that no one group in this town has the answer. But when you get
to Social Security and Medicare, it is politically incorrect because
one side or the other is going to attack, attack, attack the other
side, to use it as a political tool.

How can we get rid of that political tool that is used by both
sides?

Mr. BowsuHERr. I think you need some kind of a bipartisan ap-
proach to it, whether you go to a commission or some kind of thing
to give you cover. But you will never solve this problem except on
a bipartisan basis.

There is one thing I would like to add to a previous answer I
gave you. I think that this annual statement going out to the citi-
zens will be a very key communications tool. I think that is very
important to the building of future confidence.

Mr. CoLins. Thank you, and thank you, Mr. Chairman.

Chairman BUNNING [presiding]. Sam, do you have any questions?

Mr. JOHNSON. No questions.

Chairman BUNNING. Mr. English.

Mr. ENGLISH. Thank you, Mr. Chairman.

I would like to follow up, Mr. Bowsher, on your last comment.
What is your assessment of SSA’s progress in implementing issu-
ance of the Personal Earnings and Benefit Estimate Statement, the
PEBES that you just referenced?

Mr. BowsHER. We're doing a study on that right now, and we
don’t have it completed. But I think one of your problems there is
that, when you send those statements out, the information on it
has got to be accurate or, needless to say, you will have more of
a lack of confidence.

But I think it’s important to send the statements out and make
sure that the systems are working, and you've got to have accu-
racy. Once you achieve that, I think people are going to feel good
about the program. If you think of most of the large employers in
this country, and when I was in the private sector, I always got an
annual statement as to what my Keogh said, where my pension
stood and everything like that. The employers do that because they
want the employees to feel good about what’s being taken out of
their paycheck.

I think once SSA can produce accurate annual statements to the
public here, I think it can be a big boon to the confidence level.

Mr. ENGLISH. Thank you very much.

Shifting topics a little bit, I would like to get your observations
on the legislative policy and budget role the Office of Management
and Budget has played in SSA’s affairs since it became an inde-
pendent agency.

Mr. BowsHer. I believe what happened is that SSA submitted
their budget to OMB, as they normally did. OMB may, with the
legislation that you passed, modify that as part of the President’s


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33

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 clains 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. Tf 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, lifetine 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
@eliver 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

EINANCIAL ACCOUNTABILITY

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 (CF
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



168

Description
HCFA is conducting a pilot in Marytand and Delaware to obtain information on whether to
establish a national 800 number {0 respond to the public's Medicare questions Pending
agreement from HCFA, RPIR monitors from 3 regions wil listen to the contractor's calls from a
remote site. The monitors will collect information on the types of calls received, actions taken,
ete Of specific interest is whether the contractors are accurately requesting and interpreting
SSA systems queries, identifying SSA-related issues and correctly responding to these issues or
referring callers back to SSA's 600 number. The probe will involve the scheduling of 600 calls to
the Medicare contractors,

Match of Disabled Beneficiaries Working Under Another SSN

Objective
To determine the feasibilty and cost-effectiveness of establishing an ongoing matching operation
between SSA's payment files and earnings suspense files to detect unreported work activity

DéScription

Through an address standardization program, the addresses of titles Il and XVI disabiily
beneficiaryrecipients were matched against the addresses shown on unpostable 1993 earnings
Aierted cases (1,000) are being developed by ORPIRS to determine if disabled beneficiaries have
given employers incorrect SSNs to avoid detection of work activity and medical improvement

Evaluation of Death Alerts

Objective
To measure the costs and benefits of FOs' working alerts resulting from discrepancies in
reported dates of death

Description
Alerts are generated when SSA receives a report of a beneficiaryirecipient death that has a
different date of death than what is on the Numident file. The Death Alert Control and Update
System will be screened to select a sample of death alerts. The study will determine if tolerances
can be established to reduce the estimated 100,000 alerts currently released to FOs each year

Evaluation of a Pilot Computer Matching Program Between the Supplemental Security
Records (SSR) and Treasury's Currency and Banking Retrieval System (CBRS)

Objective
To obtain cost benefit data on an ongoing matching operation between the SSR and the CBRS.

Description
The CBRS file is a summary of reports from financial institutions of cash transactions of $10,000
‘or more, foreign bank account balances, customs reports of individuals entering or leaving the
country and reports by gambling casinos of currency transactions. Treasury's file will be
matched against the SSR, and a sample of SSI recipients/deemors who have these kinds of
transactions will be identified. The sample cases will be developed by FOs for previously
unreported income or resources to obtain costs and benefit data and to determine if an ongoing
matching operation should be established.


133

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7

Conclusion

Lot me conclude by saying that, within constitutional limita, it is Congress that determines how

independent an agency will be from the President's direction and control. The political environment
helps to determine the duties and responsibilities assigned to an agency, ite location in the executive
branch, and the degree of indeper it enjoys. Within the general criteria est by the Supr
Court regarding the limits that may be placed on the President's power to remove an official from office,
Congress hae considerable authority to assure an agency's independence.

Congrn bas mde the Seal Sacusity Adminstration one of the most indepandent ecutive

is unique the single-headed ‘The Cor ‘servos a six-year term and
‘ay not be removed except for cause. While its budgetary and staffing requests may be subject to
revision by OMB, ite own budget is sent to the Appropriations Committees. Finally, as an independent
‘agency, its communications with Congress and regulatory actions may not be subject to OMB clearance,
‘Such independence is shared only by a handful of agencies,

‘TABLE 1, Fixed-Term Full-Time Positions Requiring Senate Confirmation
In Executive Departments and Independent Agencics*

Departments & Independent Agencien Position ‘Term | Stavute
Drparmant of Agee
ral Electrification Adminiatration Administrator 10_| 7 usc 901
Department of Health & Human Serviow
“fice of Surgeon General Surgeon General 4_ | suse 205
Department of Justice
Gommsunity Relations Service Director 4 | a2 usc 20006
Federel Bureau of Invetigaion Director to | 28 usc 632 note
Office of Immigration Related Unfair
Employment Services ‘Special Courtal 4 | suse iszaoxn
Executive Office for US. Atorneys US. Attorney (04) 4 | 28usc si
United Staten Marahala Service US. Marshal (04) 4_| 2ause s61a
Department of Labor
Bureau of Labor Statition Cominsioner 4_| 20uses
Department of Transportation
Seint Lawrence Seaway
 Adminietration ‘Adminintrator 1_| sa use o82
Department of the Treasury
Office of Compirolar of the Currency Comptroller 5 | wzusc2
Offs of Thrift Supervisor Director 8 | 12 Vac 1462a1012)
United Staten Mint Director 5_| suse sos
Department of Veterane Affaire
‘Veteran Banafita Admsiniatration Under Secretary 4} s8.use soe)
Veterans Health Adminiatration Under Secretary 4_| 38 Use 30510)
‘National Endowment forthe Arte Chairman 4 | 20use es4axer
‘National Endowment forthe Humanition Chairman 4 | 20use ssemxay
National Sconce Foundation Director 6 | azusc 12640)
(Office of Personnel Management Director 4 _| bse 110%0)
(Oi of Government Ethice Director 5 | susc aps aoe
Ofte of Special Counsel Special Counsel 8 | suse zn
‘Social Security Administration Commissioner 6 | 42.usc o0%—)
Deputy Commissioner | _6 | 42 USC 9020)

* Independent in the sense that they are located outside of executive departments,


61

allows us to recognize the forces changing our world--rising
workloads, changing custom.r expectations, reductions in
resources--as well as the cechnological innovations that allow
us to deal with those charles. It has enabled us to respond to
these pressures while keepang a steady eye on our mission and our
vision for the future

Our current strategic plan, A Framework for the Future,

includes:
© Identification of societal trends and their
applicability to SSA and the programs we administer;
© Statement of SSA's mission;

© General goals, which are t
Rebuild public confidence in Social Security;
Provide world-class service
-+ Create a supportive environment for SSA employees
and

©  Quantifiable service delivery performance measures

The Social Security Administration was one of several
agencies to volunteer to participate as a Government Performance
Review Act pilot agency. Thus we have outlined performance goals
to serve as standards for delivery of customer service. In
addition, we have developed a technology strategy consistent with
the Strategic Plan and our Business Plan. Our annual
Accountability Report released to Congress in December 1995 is
also a first for government agencies

Service Delivery

Service delivery improvements continue under independent
agency status. As I noted in my testimony before you last month
we cut busy signal rates on our national 800 number in recent
months to less than half of last year's rate. We have been rated
the best provider of telephone customer service, not only for the
public sector but the private sector as well, in a 1995 survey by
Dalbar Inc., a financial services company.

In addition, we also improved processing time for issuing
Social Security numbers by issuing 97 percent of Social Security
cards within 5 days of the request in fiscal year 1995. In the
disability area, we processed 41 percent more hearings in 1995
than in 1993, and decreased our claims processing time by
11 percent fcr the same period.

To preserve the integrity of the disability programs, it is
essential that we conduct periodic CDRs to ensure that only
beneficiaries who continue to be disabled remain on the
disability rolls. A more efficient CDR process, which relies in
part on a questionnaire mailed to disabled beneficiaries, has
allowed us to significantly increase the number of CDRs performed
annually. During FY 1995, we processed 285,000 CDRs--an almost 84
percent increase over the previous fiscal year--and made initial
determinations in 41,800 cases that benefits should be ceased due
to medical improvement and the ability to work. This year, the
President requested an increase of $260 million for CDRs over
last year, The house passed Appropriations bill included $160
million of that request. The Administration supports funding o}
CDRs at a level to ensure full inplementation of CDR reviews for
all recipients-on a timely basis Congress is to be commended
for supporting and funding this initiative

Working with our State partners, other public agencies and
private organizations, SSA has made major progress in returning
our beneficiaries to work. In tiscal year 1995, over 6,200
beneficiaries were successfully -ehabilitated and returned to



130

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4

Chairman BUNNING. The Subcommittee will come to order.

Today the Subcommittee will examine the Social Security Admin-
istration’s performance since becoming an independent agency.

For the record, I would like to say that Andy Jacobs and I began
working on separating SSA from the Department of Health and
Human Services soon after I was appointed to this Subcommittee.
Our efforts resulted in the enactment of Public Law 103-296 on
August 14, 1994, finally making SSA an independent agency.

Congress recognized that Social Security is too important to the
American people to be kept in the basement of HHS, or the subject
of political gamesmanship. By making SSA independent, we made
every effort to ensure that Social Security is removed from politics.
We also intended that its management be based on good policy and
sound financial principles, not on who sits in the White House or
in the Speaker’s chair.

Congress depends on the advice and counsel of SSA’s field man-
agers, actuaries and policymakers to give us an accurate picture of
what is happening with the program. In a bipartisan fashion, we
must make decisions that affect the lives of millions of Americans.
Long-term planning and strong, attentive management at the high-
est level is critical for SSA, as its challenges and demand for infor-
mation from the public and Congress increase.

Congress provided SSA a substantial increase in its statutory au-
thority to act independently beginning March 1995. If SSA fully
uses this authority, it has the ability to set up its own direction,
as well as having a major role in deciding the future of Social Secu-
rity.

Of course, SSA leadership will be the deciding factor in whether
this occurs as Congress intended. After 15 months as an independ-
ent agency, SSA should be well on its way. We shall soon hear if
that is the case.

Today we will hear from Rogelio Garcia, an expert in government.
from the Congressional Research Service, who will tell us what
SSA could do using its expanded authority as an independent agen-
cy. Then we will hear from the Comptroller General, who will tell
us what SSA should do in using its authority as an independent
agency. Finally, we will hear from the Commissioner of Social Se-
curity, who will tell us what SSA did do in its first year with the
expanded authority Congress gave it as an independent agency.

In the interest of time, it is our practice to dispense with opening
statements, except from the Ranking Democratic Member, Mr.
Jacobs. All Members are welcome to submit statements for the
record.

I yield to Congressman Jacobs for any statement that he might
want to make.

Mr. Jacoss. Thank you, Mr. Chairman.

Mr. Chairman, you cited a date, and let me cite a date, also. Au-
gust 4, 1996, 2 p.m. eastern, via ESPN, we will have the oppor-
tunity to see our fine Chairman inducted into the Baseball Hall of
Fame. As I told Congressman Portman a few moments ago, both
Tand my VCR will be watching.

The only other thing I want to say is that it’s rare on this Earth
when anybody succeeds so well at the top of the game in two dis-
ciplines. Mr. Bunning’s baseball career is a part of American his-


93

Asaf March 1, lye

the one-year anniversary of SSA becoming

yo scyendent, GAC +s,.rred to us that SSA had not even begun
re. janize and s,s) then its policy analvsis 1«search and
evaluation component capable of anticipats an ding to
expected Sensis ral requests for jaca analysis
particularly on Jr; :-rerm solvency i. © provide an

action pla sn
ho streng! 1 .ts capacity in thy. areas. In addition, pl=
provide tne subcommitres an addit cual progress report by
March 31, 1997.

=riou thar s3A has since ston

The Office of Programs and Policy was created to enhance policy
development by formulating long-range policy options, engaging in
rapid decisionmaking, and intensifying its efforts to work with
its customers. The former Office of Research and Statistics was
given formal responsibility for policy evaluation and renamed the
Office of Research, Evaluation and Statistics. A new component
the Office of Policy and Planning, was established to develop
long-range policy options, and improve SSA's ability to engage in
rapid decisionmaking. Through this new office, SSA is
intensifying its focus on policy planning and development by
generating well-conceived policies in a timely, effective manner

Current)

o Efforts are underway to identify and recruit staff into
these new areas

© An expedited contracting mechanism has been put in place (a
task order contract) which enables the Agency to quickly
issue policy evaluation tasks to private firms which are
under contract with the Agency. SSA's fiscal year 1997
extramural research budget contains $2 million for policy
evaluation studies to be done under this mechanism.

The first evaluation project will center around the effects
of recently-enacted welfare reform legislation.

© Aneffort is underway to address issues related to growth in
the disability programs. A contract for phase 1 of a multi-
year, national disability survey is expected to be awarded
by July 1997.

© SSA is also considering options feasible to ensuring the
long-term solvency of the Old Age and Survivors and
Disability Insurance Trust funds.


38

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." Efforts like $SA‘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

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
che 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 develoyment
activities, it has not developed a comprehensive detailed plan that

‘The same disability claims process is used for the SSI program

“Social Security Administration: Major <
Processes Are Imperative (GAO/T-AIMD-94- ~


158

were uncovered, then no ORPIR review will be required. If the investigator could not establish
residency or noted extended periods of absence, the ORPIR reviewer will undertake additional
development, e.g., revisiting the recipient and/or making additional verification contacts

Unable to locate or unwilling to cooperate cases will be referred to the servicing FO for
appropriate action--redetermination and/or suspension of payments

Redetermination by Mail Demonstration Project

Objective

To devise and test a process for completing SSI redetermination completed by FOs by first
screening out the considerable portion of such that result in no change. Up to 1,000 FO
workyears are expended each year completing the approximately two-thirds of that workload
which result in no change.

Description .

A workgroup with representation from OPIR, Operations, Programs and Systems has drafted a
letter to be Sent to recipients scheduled for FO redeterminations. The letter would provide the
‘Agency's most current information on the facts of eligibility for that recipient. The recipient would
be asked to confirm or show the change for each eligibility factor and return the document in the
envelope provided to the servicing FO.

The FOs would screen all “no change” out and input "completed RZ." Any indications of change
would be resolved by the easiest path available: Phone call clarification verifying no change,
limited issue development; or callin for regular redetermination. All demonstration project cases
input as ‘no change" will be subject to a complete IDA type OPIR review to confirm the accuracy
‘of that disposition,

Before beginning the demonstration project in all regions. a test of the eligibility factor letter to
recipients will be conducted on unredetermined claim redeterminations in selected FOs of the
Atlanta and Kansas City Regions. This test will allow refinements to the letter design before
Using it in the nationwide project.

Benefit Restructuring

Objective
Jo determine the effect the simplified benefit proposal will have on SSI recipients and to estimate
any administrative and program savings,

Description
‘The SSI Modemization Project determined that the elimination of in-kind support and
maintenance should be one of SSA's top priorities. To accomplish this, the Agency has
proposed that the current living arrangement (LA) development policy be replaced with a
25:percent reduction in benefits for any person residing in a household with another adult

To determine the effect this simplified benefit proposal will have on SSI recipients and to
estimate any administrative and program savings, the Atlanta ORPIR will coordinate a national
piggyback review of 1,600 stewardship cases to compare current and proposed LA and benefit
policies.


125

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41

uN FOR su AI

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

2 Pesours:

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," 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. '”

SSA knows that it must meet these increasing demands in an era
of federal downsizing and spending reductions. SSA has estimaced
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.

Technology Critical to SSA's Future Success

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.

“under the legislation, SSA must provide indivicuals aged 50 and
over estimates of their potential monthly retirement benefits,
beginning no later than Oct. 1, 1999

special funding has been authorized for 7 years for SSA to
complete these reviews.