U.S. GOVERNMENT PRINTING OFFICE

61–025 WASHINGTON : 1999

CHALLENGES FACING THE NEW COMMISSIONER

OF SOCIAL SECURITY

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

AND THE

SUBCOMMITTEE ON HUMAN RESOURCES

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

MARCH 12, 1998

Serial No. 105–95

Printed for the use of the Committee on Ways and Means

(

(II)

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

JIM BUNNING, Kentucky

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

BARBARA B. KENNELLY, Connecticut

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

JON CHRISTENSEN, Nebraska

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

BARBARA B. KENNELLY, Connecticut

RICHARD E. NEAL, Massachusetts

SANDER M. LEVIN, Michigan

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

SUBCOMMITTEE ON HUMAN RESOURCES

E. CLAY SHAW, JR., Florida, Chairman

DAVE CAMP, Michigan

JIM MCCRERY, Louisiana

MAC COLLINS, Georgia

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

J.D. HAYWORTH, Arizona

WES WATKINS, Oklahoma

SANDER M. LEVIN, Michigan

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

WILLIAM J. JEFFERSON, Louisiana

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

(III)

C O N T E N T S

Page

Advisory of March 3, 1998, announcing the hearing ............................................ 2

WITNESSES

Social Security Administration, Hon. Kenneth S. Apfel, Commissioner ............. 7

U.S. General Accounting Office:

Jane L. Ross, Director, Income Security Issues, Health, Education, and

Human Services Division ............................................................................. 54

Joel C. Willemssen, Director, Civil Agencies Information Systems, Accounting and Information Management Division ....................................... 73

Social Security Administration, Office of the Inspector General, Hon. David

C. Williams, Inspector General; accompanied by Pamela J. Gardiner, Assistant Inspector General for Audit .......................................................................... 89

SUBMISSIONS FOR THE RECORD

Social Security Advisory Board, Hon. Stanford G. Ross, statement .................... 135

Daniel, D.C., Jr., Murfreesboro, TN, statement .................................................... 141

Hanson, Michael P., Burbank, CA, statement ...................................................... 147

National Association of Disability Examiners, Baton Rouge, LA, Debi Gardiner, statement and attachment ....................................................................... 151

(1)

JOINT HEARING TO REVIEW THE CHALLENGES FACING THE NEW COMMISSIONER

OF SOCIAL SECURITY

THURSDAY, MARCH 12, 1998

HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND

MEANS, SUBCOMMITTEE ON SOCIAL SECURITY, AND THE

SUBCOMMITTEE ON HUMAN RESOURCES,

Washington, DC.

The subcommittees met, pursuant to notice, at 10:04 a.m., in

room 1100, Longworth House Office Building, Hon. Jim Bunning

(Chairman of the Subcommittee on Social Security) and Hon. E.

Clay Shaw, Jr. (Chairman of the Subcommittee on Human Resources) presiding.

[The advisory announcing the hearing follows:]

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Chairman BUNNING. The Subcommittee will come to order. I’d

like to welcome those who will be testifying. Today we are especially pleased to welcome the Members of the Human Resources

Subcommittee, as together we review the challenges facing the new

Commissioner of Social Security.

Andy Jacobs, Barbara’s predecessor, and I began working on separating the Social Security Administration 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 in HHS, or the subject

of political gamesmanship. By making SSA independent, we made

every effort to ensure that SSA 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 expert advice

of SSA’s field managers, 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. Congress also relies on SSA to effectively implement the law of the land. We all know that Social Security will not be able to honor all of its benefit commitments in the

year 2029. And the Social Security subcommittee, through its hearings series, is fully exploring options for Social Security reform.

However, this subcommittee has taken other actions which ultimately impact the long-term solvency of the Social Security trust

funds. For example, we saved the Social Security trust funds $1.9

billion. That’s money saved to ensure the retirement security for

our seniors when we stopped sending disability checks to addicts,

and instead provided for treatment.

We have also authorized over $4 billion over the 7-year period to

ensure that individuals who are no longer disabled are removed

from the Social Security disability rolls. Every one dollar spent on

continuing disability reviews saved six dollars in Social Security

trust funds.

These workloads must be given the priority attention they deserve by every agency employee. The regulations implementing the

law must execute the clear intent of the law and must be adhered

to.

Clear priorities, effective long-term planning and strong attentive

management at the highest level is critical for SSA, as its challenge and demand for information from the public and Congress increase.

Congress provides SSA a substantial increase in its statutory authority to act independently beginning in March 1995. If SSA fully

uses this authority, it has the ability to set its own direction, as

well as having a majority role in deciding the future of Social Security.

Of course, SSA leadership will be the deciding factor in whether

this occurs as Congress intended. After three years as an independent agency, SSA should be well on its way. We shall soon hear

if that is the case.

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In the interest of time, it is our practice to dispense with opening

statements excepts from ranking Democrat member. All members

are welcome to submit statements for the record, and I yield to

Congressman Kennelly for any statement she wishes to make.

Mrs. KENNELLY. Thank you, Mr. Chairman.

Mr. Chairman, I am pleased to welcome today Social Security

Commissioner Ken Apfel to discuss with us some of the challenges

facing the Social Security Administration.

Since his confirmation last fall, the Commissioner has made excellent progress in meeting many of the challenges facing the agency. Using his experience as a former associate director of the Office

of Management and Budget, he has taken an active role in the Social Security solvency debate, and is well placed to provide a strong

voice, both inside and outside the administration, in the discussions about the future of Social Security which we are all so interested in.

In addition, under his leadership, the Social Security Administration is processing more continuing disability reviews more effectively than ever before. Based on hearings around the country, including my own town of Hartford, Connecticut, he has suspended

the transmission of personal Social Security earning records over

the Internet, and the agency is continuing to seek ways to make

electronic information available to the public, while protecting the

privacy and the security of personal records.

Under Commissioner Apfel’s direction, the agency has provided

the Congress with a strategic plan that is among the most highly

rated in Federal agency plans. In addition, SSA is far ahead of

other agencies in the conversion of its computers in preparation for

the year 2000.

The agency has completed conversion of its central computers

and is working with State Disability Determination agencies to

prepare the State agency computer systems for the year 2000. I

wonder, Commissioner, if we couldn’t save some funds by spreading

this information around to others who are nowhere near making

the progress that you have made.

And all this work is in addition to the work the agency is doing

to review childhood disability cases. Clearly, SSA, under the new

commissioner, has done a good job in meeting its challenges. There

are certainly many more challenges remaining.

However, backlogs of the Office of Hearings and Appeals continue to result in long delays for disabled applicants. Redesign of

the Disability Determination process has been slow. And the suspense file of uncredited wages has not been pared back significantly.

I look forward to discussing these matters with the Commissioner and I welcome him here this morning.

Chairman BUNNING. Chairman Shaw and ranking member Levin

have agreed that they will not make any opening statement in

order that we may expedite the hearing.

First, we will hear from the Commissioner of the Social Security

Administration, Mr. Kenneth Apfel.

Mr. Commissioner, would you begin, please.

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STATEMENT OF HON. KENNETH APFEL, COMMISSIONER OF

SOCIAL SECURITY

Mr. APFEL. Thank you, Mr. Chairman.

I am submitting a formal statement for the record. I have a very

abbreviated statement that may not have been provided to the

table. If it hasn’t, it will be.

Chairman BUNNING. Would you put your mike a little closer so

we can hear you.

Mr. APFEL. I’m going to be providing a formal, lengthy written

statement for the record, and I’ve got a brief statement that I hope

you have copies of. I think it’s being made right now, actually. So

if you don’t have it, you’ll have it shortly.

So thank you, Chairman Bunning, Chairman Shaw, Mrs. Kennelly, Mr. Levin and the members of the subcommittees, for inviting me to testify before you today.

SSA is now approaching the end of its third year as an independent agency, and we’re justifiably proud of our accomplishments, both as stewards of a public trust and of the programs that

affect so many Americans’ lives.

One of the primary benefits of our independent agency status is

that it’s given SSA greater visibility throughout the Government

and within the Executive Branch in particular. And as the Commissioner of an independent SSA, I can and will provide the stable

leadership that was one of the goals of the independent agency legislation.

Let me turn to the five priorities that I established upon being

named Commissioner. The most immediate priority is ensuring the

long-term solvency of the Social Security program.

During his State of the Union address, the President proposed

that the projected budget surpluses be reserved until we address

the program’s long-range financing problem. He said that we must

save Social Security first. Toward this end, he is calling for a yearlong national dialogue on how we can best achieve this goal. At the

end of the year, there will be a White House Conference on Social

Security and early next year, bipartisan negotiations on Social Security reform will begin.

SSA will play a key role in this process. We are focusing our efforts on educating the public about Social Security today so that

they will be better able to help determine the Social Security program of tomorrow. And I, as Commissioner, have been actively involved in discussions on policy matters since the day of my confirmation.

A second priority for SSA is assuring program integrity. Nothing

is more important to me than maintaining the public trust in and

the integrity of Social Security. SSA will forcefully exercise its responsibilities in this regard. Where we identify problem areas, we

will develop plans to correct them.

A particular concern is the SSI program, which has been designated by the GAO as being at high risk. SSA is now at work assessing what corrective actions need to be taken in four areas of

program concern: payment accuracy, continuing disability reviews,

return to work and the entire disability determination process.

Since the SSA became an independent agency, one of the reasons

we have been able to make major gains in assuring program integVerDate 20-MAR-2000 10:09 Apr 17, 2000 Jkt 010199 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 E:\HEARINGS\61025 pfrm02 PsN: 61025
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rity and in fighting fraud and abuse is because the Administration

has moved to strengthen IG capabilities.

If Congress approves the IG budget request for this year, the

staff will have been increased by 80 percent since 1995. Related to

program integrity is our ability to ensure the agency’s systems capabilities with regard to the Year 2000 problem.

We fully expect to make SSA Year 2000 compliant by this December, a full year ahead of deadline. I would like to note that

SSA’s efforts in this area have been rated as one of the best in Government, both by OMB and by Congress.

My third priority for SSA is to guarantee equity for all claimants

and beneficiaries. During my confirmation hearing, I pledged a topto-bottom review of the implementation of recent changes in the

SSI childhood disability provisions. I believe this review was needed because of public concerns about whether the new law and the

regulations were being applied fairly.

The review basically found that SSA and the State agencies were

doing a good job, but there were some problems. Where specific

problems have been identified, I have ordered corrective actions.

SSA is taking steps above and beyond normal administrative actions to ensure that every child receives a fair assessment of his

or her eligibility for benefits.

I would also note that one of our initiatives for improving efforts

to provide efficient and responsive program administration is our

redesign of the disability process. I am concerned that it has taken

SSA so long to accomplish this goal. I expect to be making some

decisions to implement certain aspects of disability redesign nationally later this year. This is a very important priority.

In speaking about the disability program, I want to commend the

spirit and intent of legislation introduced yesterday by Chairman

Bunning and Congresswoman Kennelly. That proposal was designed to help individuals with disability return to productive employment, a goal shared by this administration, and the impetus

for the Ticket to Independence Act that we transmitted to Congress

last year. We will work with lawmakers on both sides of the aisle

to realize this very important goal.

The last two priorities that I identified upon being named Commissioner involved improving internal agency processes. The first

of these is strengthening SSA’s long-range planning capability. SSA

has been in the forefront of Government agencies in developing and

implementing strategic management concepts.

Over the next decade, SSA will face its greatest administrative

challenge yet, handling the dramatic growth in disability and retirement workloads that will occur as the baby boom generation

ages.

For this reason, although the time frame for our current strategic

plan is the next five years, I believe that we need to stretch our

strategic planning horizon to 2010 and beyond.

Finally, SSA is working to improve its policymaking process. Research lies at the heart of this process and we intend to expand research on issues critical to Social Security. We are also undertaking initiatives to ensure the integration of research with policy

development, to expand staffing in both of these areas and to increase interaction with various stakeholder groups.

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In conclusion, let me say that I am committed to strengthening

and protecting the Social Security programs that are now part of

the fabric of American life. We have an obligation not only to

strengthen the program’s financial outlook in the 21st century, but

to be responsible and careful stewards of our programs here and

now.

We also face several challenges. As the Commissioner of an independent SSA, I accept those challenges. I look forward to working

closely with the members of this committee on these very important endeavors.

Thank you, Mr. Chairman.

[The prepared statement follows:]

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Chairman BUNNING. Thank you, Mr. Commissioner. I will start

off with the questioning, and I am going to take the 5 minutes just

like everybody else so that we can get through the many members

here today.

First of all, I was pleased to hear you discuss the many advantages of SSA being an independent agency. You discussed your personal involvement in meetings at the White House, serving on the

Domestic Policy Council and the National Economic Council, to

name a few.

However, how independent are you in making decisions that affect your agency? What role does OMB play in the development of

SSA legislation, policy and budget?

Mr. APFEL. Well, the independent agency legislation, which was

a very important piece of legislation, created the Social Security

Administration and the Commissioner with greater visibility,

greater accountability and clearly more stable leadership, which I

think are all very important elements.

The Social Security Administration remains an Executive Branch

agency. However, the six-year term established for the Social Security Commissioner provides what I believe is the measured independence and authority within the agency——

Chairman BUNNING. Please just answer, because I only have 5

minutes, please answer the question. How much—what role does

OMB play in the development of SSA legislation, policy and the

budget?

Mr. APFEL. I was answering the question, Mr. Chairman. The

legislation, as I said, did not create a fourth branch of Government.

It created Social Security and its independent Commissioner as a

part of the Executive Branch. Do we still deal with the Office of

Management and Budget for budget formulation and for legislative

proposals? Yes. That will continue, as it always has.

We have an integrated responsibility throughout Government. I

am a managing trustee of the Social Security and Medicare trust

funds. If we look at, say, SES allocations, does the Social Security

Commissioner determine independently how many SES staff it

has? The answer would be no.

Chairman BUNNING. Let me ask you some follow-ups, because

you answered my question.

Did OMB review your testimony before it was finalized today?

What changes did they ask you to make, and did you make any

changes?

Mr. APFEL. Actually, the answer is yes, there were some very

minor changes that were made.

Chairman BUNNING. So OMB did request that you make changes

in your testimony before today?

Mr. APFEL. Absolutely.

Chairman BUNNING. Okay. Why did you choose to continue to

submit virtually everything SSA to OMB for review, and by law,

you are not required to do it.

Mr. APFEL. The Social Security Administration remains an Executive branch agency.

Chairman BUNNING. No, by law. The law that we made in 1994

gave you permission not to consult with OMB. That you would be

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in charge of the Social Security Administration. Now, please answer the question.

By law, you are not required to do it, so why do you do it?

Mr. APFEL. Mr. Chairman, I am responsible for the Social Security Administration. I am the Commissioner. I am also part of the

Federal Government. I have a direct responsibility to report——

Chairman BUNNING. So am I, but I don’t consult with OMB and

the White House.

Mr. APFEL. You’re not an Executive Branch agency. The reality

is I have a direct reporting relationship to the President of the

United States. The Office of Management and Budget has responsibilities to oversee integrative activities throughout Government.

There are many things that——

Chairman BUNNING. Your budget can be what you want it to be.

My request of the Congress——

Mr. APFEL. Mr. Chairman, I would point out that the legislation

did specify that when the President submits his budget, the Commissioner’s budget is submitted at that same time, and that was

completed in this year’s budget request.

Chairman BUNNING. That’s correct, so you could come directly to

the Congress and ask for whatever you choose to ask for, without

submitting your budget to OMB.

Mr. APFEL. And Mr. Chairman, the President submitted my

budget.

Chairman BUNNING. Why would we make you an independent

agency if we thought you were going to submit everything to OMB

for approval?

Mr. APFEL. The President’s budget includes my budget request

and it includes the President’s budget request, consistent with the

Federal law. It’s appropriate, it’s an important activity on both

counts.

Chairman BUNNING. We want you to be independent. We think

it’s important for you to be independent of the White House, of

HHS and everything else, so that we can have a relationship between the Congress and Social Security that is in the best interests

of the recipients and those who are paying into the system.

And if you’re going to continue to submit everything to OMB,

we’re not going to have a good relationship.

Mr. APFEL. Well, Mr. Chairman, I intend to submit testimonies

to OMB. I think it’s my responsibility as the Commissioner of Social Security and as the head of——

Chairman BUNNING. Well, then you’re not an independent agency under the law.

Mr. APFEL. The legislation created Social Security as an independent agency.

Chairman BUNNING. No, the law—I helped write the law, so

please, if you want to get some experts up here to interpret what’s

in the law, we’ll be glad to argue with you about it. But the law

does not require you to submit anything to OMB. Your independent

agency law does not require that.

Mr. APFEL. The legislative history, Mr. Chairman, had a House

version——

Chairman BUNNING. Legislative history, I am familiar with that,

also.

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Mr. APFEL. As I am, too, sir.

Chairman BUNNING. Oh, you were involved in writing the law?

And the legislative history of writing it?

Mr. APFEL. No, but I have read it pretty carefully.

Chairman BUNNING. All right. Mrs. Kennelly.

Mrs. KENNELLY. Thank you, Mr. Chairman.

Commissioner, take a deep breath. You can use two of my minutes to respond to the question so you can get your answer on the

record fully.

Mr. APFEL. I would say that the independent agency legislation,

I believe, created the appropriate balance in creating an independent Social Security Administration outside of the entity of the

Department of Health and Human Services, as a free-standing

agency within the Executive Branch; with a six-year term for the

Commissioner, who serves, unlike many other Cabinet-level appointments, not at the pleasure of the President, once confirmed by

the Senate, but as an Executive Branch agency, clearly subordinate

to the President.

I believe that the balance established was appropriate. The creation of the Social Security Advisory Board, a bipartisan advisory

board, to consult with the Commissioner was appropriate, helpful

and very positive. So I am very pleased with the relationship that’s

been established. I believe it’s appropriate for the American public,

and I believe it’s important for the Government.

Mrs. KENNELLY. Thank you. Commissioner, some people in my

district and people in Washington have contacted me about the administration’s proposal to assess a few on the attorney when SSA

withholds payment for the attorney from the claimant’s award of

past due benefits, which we know has been standard procedure

until now. People have argued that this fee will ultimately fall on

the beneficiary. Can you comment?

And the second question is some attorneys have suggested that

if SSA is going to collect a fee, SSA ought to process the payment

to the attorney within 45 days of the award notice.

Could you comment on these ideas?

Mr. APFEL. We did submit a legislative proposal yesterday to the

Congress to impose a user fee on attorneys who represent clients

through the disability system.

Mrs. KENNELLY. How much was that?

Mr. APFEL. Well, it would be about $165 per case, which is the

cost to the Social Security Administration for processing these activities. We believe this is appropriate compensation for the services we provide.

Two, will these fees fall on beneficiaries? Well, as you know, Mrs.

Kennelly, there is a limit on the amount that attorneys can collect

from the past-due benefits and many of those claims are at the

maximum amount. This $165 could not be shifted over to beneficiaries.

I have discussed this matter with some of the organizations involved. They have concerns about the fee. They also have concerns

about the Social Security Administration’s ability to deliver services on a prompt basis.

I think they’ve got a good point on our ability to provide their

payments promptly. Therefore, I would like to consider that we

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would work together to find ways to first, establish a fee, but second, also to expedite ways that we can ensure that prompt payments are received by attorneys for this activity. So I think their

second point has some real merit.

Mrs. KENNELLY. Commissioner, it’s not the large cases or the

maximum cases that I’m concerned about. What I’m concerned

about is the attorney that has the smaller cases. As you know, lowincome individuals have a hard time affording an attorney. If each

case would cost an additional $165 up front for the attorney, the

affordability issue may get worse.

My concern is that this will keep people from wanting to represent people who need the services desperately because they are

in a desperate situation. So I hope you will continue to discuss this

before we get to a fee of $165.

Mr. APFEL. We will, Mrs. Kennelly. I think that as budget resources become increasingly constrained, finding ways to establish

user fees is one of the important things that we should look at.

I think this is one that, for a relatively modest fee, will not significantly reduce the number of attorneys representing claimants.

But that’s what this debate is about, and we’d be willing to talk

to you about that this year.

Mrs. KENNELLY. Thank you, because I have additional thoughts

on it, and I will make an appointment to talk with you about this

further.

Mr. APFEL. Very good.

Mrs. KENNELLY. Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Shaw.

Chairman SHAW. Thank you, Mr. Chairman. Commissioner, I’m

glad that in your opening statement you make reference to the

probably most heralded statement in the State of the Union address—that we will save Social Security first.

After the President said that, we all leaped to our feet and applauded. It was the most-applauded line of the evening. However,

I cannot detect, in either the President’s speech following or before

that remark, nor in the budget that he submitted, that his budget

is matching his rhetoric.

Can you tell me what the President has done in his budget submitted to Congress to save Social Security first?

Mr. APFEL. I’d be more than happy to, Mr. Chairman. The President, in his budget and in his State of the Union address, indicated

that we should reserve the surpluses pending Social Security reform.

That does not necessarily mean that every dollar of surplus

would be provided to the Social Security programs.

Chairman SHAW. What did it mean?

Mr. APFEL. What it meant was that all dollars, all surplus, every

dollar of surplus would be reserved pending action on the Social

Security reform effort. In the meantime, the Congressional Budget

Office has projected a potential surplus for even this year for the

first time.

The effect of that would be for those dollars to draw down the

debt, to reduce the overall national debt in the short term, which

is——

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Chairman SHAW. Let me interrupt you here. I’m a little bit confused. First of all, I think it’s important to realize what creates a

surplus. It’s the budget. If you don’t have a surplus, then you don’t

follow through on it. If you come up with new programs, new

spending programs or tax cuts, you can eliminate the surplus, and

there’s never a surplus so you never have to deal with save Social

Security first. Am I correct on that?

Mr. APFEL. I didn’t quite follow it. But I know, Mr. Shaw, that

you’ve introduced, or are considering legislation to create some

form of a mechanism to reserve those surpluses in some capacity.

I know that Mr.——

Chairman SHAW. Let me follow up so you can see exactly where

I’m going with this.

The law, as I thought we had enacted it, took Social Security off

of the unified budget. Now, it doesn’t appear that anybody around

here, either in the House or in the White House, is following

through on this.

Now, if you take Social Security out of the unified budget, there’d

be a large deficit. That deficit would be somewhere in the neighborhood of what, $70 billion?

Mr. APFEL. In that vicinity.

Chairman SHAW. So it appears to me that if we’re going to follow

through on what the President said of saving Social Security first,

as we applauded the President, then the logical way to save Social

Security is to take it out of the unified budget, get some honesty

in accounting and say, hey, we still have a $70 billion deficit.

And I want the record to reflect that you just shook your head,

yes.

Mr. APFEL. Well, let me say, Mr. Chairman, that it’s clear that

the Social Security surplus is $80, $90, almost $100 billion this

year, and the non-Social Security deficit is still $70, $80, $90 billion—we understand those.

And the unified budget still requires that Social Security surpluses be included within the unified budget structure, although it

is within other formulations in an off-budget formulation.

Chairman SHAW. That’s arguable.

Mr. APFEL. That is one of the questions that should be debated

this year, with the surpluses reserved; what is the budgetary treatment of Social Security? It’s a legitimate issue that needs to be discussed as part of a Social Security reform endeavor.

Chairman SHAW. I would say that it is dishonest and it is outrageous that either the Congress or the administration would use

the Social Security system to mask a huge deficit that is still with

us.

And I think if somebody is going to get up and say, ‘‘We want

to save Social Security first,’’ that they have an obligation to send

an honest budget to Congress in which the Social Security surplus

is not used in order to hide a huge Federal deficit that is still with

us.

Mr. APFEL. Mr. Chairman——

Chairman SHAW. That money is committed, and as a matter of

fact, we’re short that money anyway. So it seems to me that the

White House and the Congress should join hands and say we’re not

going to do that anymore. We need to get rid of the real deficit,

32

which is still very much with us; and we need to no longer use the

Social Security surplus to hide what really is a $70 billion deficit.

Mr. APFEL. Mr. Chairman, in 1993 the non-Social Security deficit

was nearly six percent of GDP. It’s now down around one percent

of GDP. There’s been remarkable progress made, at least in part,

on a bipartisan basis on deficit reduction and also economic growth.

There have been amazing improvements here.

What the President said a year and a half ago in the State of

the Union address was let’s balance the budget first—and that was

a very important endeavor—and then move on to the generational

issues of our day.

What he said in this State of the Union address is we have now

balanced the budget and we are projecting very modest surpluses

in the future; let’s reserve those surpluses, let’s not spend them

away, drain them for any other activities until we’ve addressed

what to do about the long-term future of the Social Security system. And then determine what to do about any other surpluses

that exist.

Chairman SHAW. My time has expired, but I just want to say

that the best spin master in the world cannot refute the fact that

we are still using Social Security surpluses to balance the budget,

and that is wrong.

Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Levin.

Mr. LEVIN. That was, Mr. Shaw, an interesting discussion, and

I think the President said in his State of the Union that without

Social Security there would be a deficit, and that’s why we should

not spend any surplus until the Social Security issue is straightened out.

Mr. APFEL. That’s correct, sir.

Mr. LEVIN. And saving Social Security first is even more important, because without the surplus, we would still have a deficit.

But anyway, I want to go back to Mr. Bunning’s question, because I don’t quite understand the dynamic here. You submitted a

separate SSA budget, is that correct?

Mr. APFEL. The President did on our behalf, yes.

Mr. LEVIN. Right. But you submitted it to the White House. You

transmitted it, I should say. And then the President, in his own

budget, did he have a separate provision for SSA?

Mr. APFEL. Yes, the President submits——

Mr. LEVIN. So essentially, you presented a separate budget from

the President. The law requires that he transmit what you transmitted to him as a separate document, right?

Mr. APFEL. Not as a separate document, as part of his overall

budget. The budget allocations that I proposed to him are included

in the President’s budget as a separate account.

Mr. LEVIN. Now, is what the President presented relative to SSA

identical to what is in the document that was transmitted from you

through the President’s communication to us?

Mr. APFEL. No. The Commissioner’s budget, my budget, was

about $250 million higher in spending than the allocations that the

President provided in his budget for Social Security.

33

Mr. LEVIN. So I don’t see how anyone can argue that you haven’t

followed the purpose of your independence. You said to us, you

have a request higher than the President, right?

Mr. APFEL. Yes.

Mr. LEVIN. In terms of your communications with the executive

department, the President still has the veto power over what we

appropriate for SSA, right?

Mr. APFEL. Yes, sir, as part of the Labor HHS appropriations

bill.

Mr. LEVIN. So if he doesn’t like what we appropriate for SSA, he

could use that as a reason for vetoing the Labor HHS bill.

Mr. APFEL. Yes, sir.

Chairman BUNNING. Mr. Levin, would you yield?

Mr. LEVIN. Sure.

Chairman BUNNING. So we don’t get lost in the formality of this,

the Social Security Administration, under the Independent Agency

Law, is entitled to submit directly to the Congress of the United

States their own budget without going through OMB. That’s what

the law says; that is not what is being practiced.

Mr. LEVIN. I’m not sure the law says there shall be no consultation.

Chairman BUNNING. I didn’t say that. I said if there is a difference, we should see the difference. How can they be an independent agency if we don’t see the difference between what OMB

finally submits through the President on their behalf and as——

Mr. APFEL. Mr. Chairman.

Mr. LEVIN. That’s exactly what happened.

Mr. APFEL. The law specifies that when the President submits

his budget request, included within that would be the budget requested by the Commissioner for the Social Security Administration.

The President’s budget request includes his government-wide appropriations estimates, including blank amount of money for the

Social Security Administration. My budget request is also included.

It is about $250 million higher. They are both included and transmitted to the Congress as part of the President’s budget request.

Mr. LEVIN. Mr. Bunning, that’s exactly what happened.

Chairman BUNNING. We’ll follow up on my own time. Thank you.

Mr. LEVIN. All right. But Mr. Apfel is saying that what he submitted is different than the President suggested to us, so we have

in front of us the President’s position and Mr. Apfel’s position.

Mr. APFEL. That’s correct.

Mr. LEVIN. Thank you.

Chairman BUNNING. Mr. Hayworth. He’s not here. Mr. Collins.

Mr. COLLINS. Thank you, Mr. Chairman. I want to change directions a little bit and inquire about a particular area. I understand

that the IG is increasing its audit work in the Office of Hearings

and Appeals. I just want to ask what you and your office may be

doing in this area.

I understand that attorney fees in particular are very lucrative

in this particular area, and that our Office or Hearings and Appeals or ALJ’s have to collect those fees. The concern is that many

of these attorneys come to court ill-prepared for the hearing. There

34

appear to be no standards for these attorneys to be prepared for

the hearing.

If they’re ill-prepared, then it falls on the ALJ’s to actually do

the research and prepare the cases. And the ALJ’s have no contempt authority. There is no required pre-hearing submission of information. I understand there is a local rule that would allow a

five-day pre-hearing submission, but there’s no authority to enforce

it.

Many of our ALJ’s have no assistant. Several have had to buy

their own computers. And this is an area where there is a tremendous backlog. The disability area accounts for 10 percent of the

cases we have now in Social Security, and that’s projected to increase to 20 percent over the next five years.

What have you done in this area? What have you done to look

at this particular area since you have become the new administrator?

Mr. APFEL. Well, Mr. Chairman, this is one of the larger problem

areas that we have, there’s no doubt about it. Backlogs are serious,

they are real. I’d like to talk about two or three different things.

One is that we do expect to see those backlogs significantly reduced in the course through 1999. We’ve hired about 250 to 300 additional judges, bringing us up to about 1,100 ALJ’s now. So, we

have put investments in this area, which I think are appropriate.

Congress has supported that, and we’re pleased.

This is an area that we needed to build up more of our resources,

but that, in and of itself, is not going to be the long-term story.

What we need are some significant reengineered systems there

with ALJ’s, the Office of Hearings and Appeals, as well as the

State DDSs, in terms of creating a more unified process, as well

as trying to streamline the process.

What I would like to see is that by the time the case lands on

the desk of the ALJ, that there is a much more solid rationale at

lower levels about why the decisions were made the way they were.

Now, when it comes to the actual lawyer coming in the door and

if that lawyer is ill-prepared, which is a point you brought up here,

those hearings are de novo hearings, and I think that’s probably

appropriate. I think the ALJ ought to be able to have all the information provided on that case the day that that case is presented.

If there’s an area that needs more information getting that information, I think, makes good sense.

But what I think the ALJ needs is a more solid justification

about why these State DDSs have determined the case the way

they did, so that there is a more consistent understanding of what

the ground rules are. I think that would have the tendency——

Mr. COLLINS. My time is going to run out. But you understand

this is a problem area.

Mr. APFEL. Absolutely.

Mr. COLLINS. Okay. You’ve been on the job now since the end of

September of 1997, and you understand this is a problem area.

What have you specifically done to assist in this particular area for

lawyers who come to court, come to the hearing rather, ill-prepared

and there’s no contempt authority, there’s no authority for the

ALJ’s to actually reduce those lucrative fees for those ill-prepared

lawyers.

35

Have you done anything? Are you going to do anything? When

are you going to do it? This is an area that is backlogging those

who are applying for those benefits and many who deserve those

benefits, and this is where a decision has to be made.

What are you going to do in the very near future to correct these

bad problems?

Mr. APFEL. Well, as I said, sir, we intend to streamline the process.

Mr. COLLINS. When?

Mr. APFEL. There are a whole series of pilots that are underway

to try to figure out how to move the process, to speed it up, to

unify, so that we have a better consistency of application of rules

between the ALJs and the State DDSs.

On the specific issue that you mentioned, which I had not heard

of, which is whether we should create contempt rules for attorneys

that come in ill-prepared, I will look at this issue, but it’s the first

I’v heard of this one, sir.

[The following was subsequently received:]

Currently, SSA can bring proceedings to suspend or disqualify a person from acting as a representative in dealings with SSA if it appears that the individual has

violated SSA’s rules governing representatives. Additionally, if an Administrative

Law Judge (ALJ) believes that there is relevant and material evidence available

which has not been presented at the hearing, the ALJ can adjourn the hearing or,

at any time prior to the mailing of the decision notice to the claimant, reopen the

hearing for the receipt of such evidence.

SSA has also published a Notice of Proposed Rulemaking (NPRM) which expands

SSA’s rules governing representatives. These regulations will protect the claimant

and the process from those representatives who are incapable of providing or unwilling to provide meaningful assistance in expeditiously resolving pending claims. Representatives will be required to demonstrate by their performance that they have

a working knowledge of the programs for which they wish to provide representational services. SSA will be authorized to bring an action to disqualify or suspend

a person who does not meet our qualifications for a representative or who violates

SSA’s rules and standards governing representatives in their dealing with SSA.

Chairman BUNNING. The gentleman’s time has expired.

Mr. COLLINS. Well, it’s not the first time I have mentioned it, it’s

not the first time I’ve heard of it. I’ve heard it from several people

at ALJs. Thank you.

Chairman BUNNING. Okay. Mr. McCrery will inquire.

Mr. MCCRERY. Thank you, Mr. Chairman. Mr. Apfel, welcome.

I’d like to engage in some of these other topics. They’re very interesting, but I want to concentrate my questions on the SSI program,

particularly the SSI for children program. And I may want to submit some more questions to you in writing, if that’s okay.

Mr. APFEL. That’s great.

Mr. MCCRERY. Just following up quickly, though, on the ALJ

question, do you know, off the top of your head, what percentage

of Disability Determination Services decisions are overturned by

administrative law judges?

Mr. APFEL. It’s on the order—the overturn rate is about 60 percent. I’ll get you that exact number for the record, sir. There are

many reasons for that——

[The following was subsequently received:]

The hearing level allowance rate in fiscal year 1997 was 54.5 percent.

Mr. MCCRERY. Okay. It just seems high, doesn’t it?

36

Mr. APFEL. There are a number of reasons for that. Partly it is

a question as to whether that individual has become more disabled;

that’s issue number one.

Issue number two is: There’s clearly different evidence provided

at that stage than at the earlier stages. There’s more information

provided on the individual’s case record so it’s a fuller picture of

the extent of disability.

Three, because of attorneys and because of other sources of support, there is a significant amount of clarification of the record so

the ALJ is looking at a more accurate picture, overall.

But, at the same time, ultimately, what we’ve got to do as an organization—and I believe this strongly—is find ways to reduce the

allowance rates at the ALJ levels, as well as increase the rates of

approvals at the DDS levels. What I believe we’ve got to be able

to do is have a more unified system so that people do not necessarily feel that they have to appeal time and time again, that the

decisions are correct at the front end.

So, ultimately, one of the ways to improve our system is to see

that there is a more unified approach with higher approvals at the

front end, lower approvals and overturns at the latter end—more

legitimacy for the overall appeals process, which I think we need

to have. We don’t have it right now.

It’s one of the goals of the organization, it’s one of my strong

goals. I believe we’ve got to do more in this area. It’s not going to

be easy; I would love to say that within 3 months the whole thing

will be corrected. It will not be, but it’s something I want to work

on a lot, and we will get better.

Mr. MCCRERY. Well, I’m told by staff that the error rate is closer

to 70 percent than 60 percent, either way it’s very high, and I find

it hard to accept that a 60 to 70 percent overturn rate can be explained away by the simple statement that there’s more evidence

presented at that level.

Supposedly, when the determination is made by DDS, they have

all the medical evidence that would support a finding of disability.

And I know from that point until the ALJ, the claimant is asked

to gather more evidence, go back to the doctor, get a clearer statement—all those things which can lead to a different determination,

but 60 to 70 percent seems to me to be very, very high, and not

explained simply by more evidence being presented.

So I would just urge you—I think you’re right to try to reach a

point where there is more uniformity in the decisions at the DDS

level and ALJ level, but I would urge you not to concentrate solely

on the DDS level, but maybe look at the ALJ level. I think the

ALJs are lawyers, too, aren’t they? The ALJs generally are lawyers?

Mr. APFEL. Yes they are.

Mr. MCCRERY. And then there are lawyers appearing before

those lawyers. So, I wish you’d look at both ends of that.

Mr. APFEL. And, sir, we will. The——

Mr. MCCRERY. Let me just get in one more thing because I do

want to get some questions to you in writing, as well.

Let’s talk about SSI for children real quickly. Do you recall when

the legislation was perfected here in the House—not perfected, but

introduced and passed through the Ways and Means Committee,

37

and CBO presented an estimate of how many children would be removed from the rolls. Do you remember that estimate?

Mr. APFEL. On the House-passed version, or——

Mr. MCCRERY. Yes. Well, I’ll take that, the House-passed

version. It’s about 185,000.

Mr. APFEL. Well, actually, the final conference language was

about 185,000.

Mr. MCCRERY. Yes.

Mr. APFEL. Yes, sir.

Mr. MCCRERY. Yes, about——

Mr. APFEL. 185,000 was the number that CBO, on the final legislation, estimated as to how many children would be——

Mr. MCCRERY. 185,000.

Mr. APFEL. They had a range in their estimate. Their midpoint

estimate was 185,000 they had a significant range around that.

Mr. MCCRERY. Well, yes, but 185,000 was the midpoint. Now,

when Social Security Administration released its regulations on the

program, what was the estimate then—of children who would be

removed from rolls?

Mr. APFEL. 135,000.

Mr. MCCRERY. 135,000. So, for some reason, from the time that

the legislation was adopted to the time that SSA regulations came

out, we lost 50,000, an estimate of 50,000 children that would be

removed from the rolls. Now, since that time, you have a done a

top-to-bottom review and you now are estimating how many children will be removed from the rolls?

Mr. APFEL. After all appeals, about 100,000.

Mr. MCCRERY. 100,000. Now, Mr. Apfel, considering that history

of estimates of children to be removed from the rolls, as a result

of legislative action and regulations written by your administration, how do you respond to critics, perhaps in the Senate, who tell

you that your regulations are too harsh and they don’t carry out

the intent of the legislation that was passed by Congress?

Mr. APFEL. Well, Mr. Chairman, the top-to-bottom review was

aimed at ensuring that we were going the extra mile to give every

child the best possible review——

Mr. MCCRERY. And I applaud you for that.

Mr. APFEL. And I know you did, and I thank you for that, sir.

It is true that the estimates have come down some in terms of the

number of children——

Mr. MCCRERY. Some is an understatement.

Mr. APFEL. The 135,000 to 100,000 is significant but it is real.

There are some, as you know, in the Senate who believe that the

regulations are still overly strict and I’ll probably be testifying in

about a week-and-a-half on that.

Mr. MCCRERY. Yes, I’m asking how you respond to those.

Mr. APFEL. Well, I haven’t quite figured out how to respond

when asked for a hearing a week-and-a-half from now, but what I

would say, sir, is that the interim regulations were the best assessment of congressional intent at that time, which the General Accounting Office, when it reviewed the regulations, considered to be

generally consistent with law. Now, we don’t have the final regulations out yet, that’s a long way away, very frankly.

38

Mr. MCCRERY. Well, I would simply urge you to remind the Senators of the legislative history, the CBO estimate history, for this

process, and that might help to quell——

Chairman BUNNING. The gentleman’s time has expired. Mr.

Coyne.

Mr. COYNE. Thank you, Mr. Chairman. Commissioner, how many

States out of the 50 States take advantage of the option of providing supplemental benefits to SSI recipients?

Mr. APFEL. There’s a number of States. I don’t have the actual

number; I will provide that for the record. Many States do provide

a supplement over and above the amount that—my staff tells me

it’s approximately 35.

Mr. COYNE. Thirty-five States provide the benefits?

Mr. APFEL. Yes, State supplemens to the SSI program.

Mr. COYNE. And, at the beginning of this process, they paid SSA

a $1.67 fee for administering the check, and now you’re proposing

that that fee go up to $6 or $7.

Mr. APFEL. Well, it’s not proposing; it’s now the law of the land.

The fees were raised last year to cover the cost of Social Security

for providing the service to the States for the SSI supplementation

program for States.

Mr. COYNE. Well, as you know, Pennsylvania used to absorb that

cost, and now because it’s become so costly do that, they’re no

longer going to absorb the cost, and the beneficiaries are going to

have to absorb the increased cost of $6 or $7. Is there any way that

you can cut back on the high cost of processing those checks?

Mr. APFEL. It is our sense that this is a good estimate as to what

our costs are. Many States cannot shift those costs over to beneficiaries because they are at a maintenance of effort levels. Some

States that provide—as Pennsylvania does—more than the State

maintenance levels that are allowed, have the option to cut benefits

for low income, elderly and disabled people.

That’s a State option. The Administration would rather the

States not do that, needless to say. Many States can’t, if at their

maintenance levels, but States that are higher have that option,

and I must say, we certainly don’t look forward to seeing that happen, for States to take those actions.

But that is a State’s right, if it’s providing more than the maintenance levels, to reduce payments. And it appears, from what you’re

saying, that Pennsylvania is considering that as a State action

rather than coming up with the money within the State to pay for

that service.

Mr. COYNE. Would you anticipate that your automatic data processing efforts in the Administration will reduce the cost from $6 or

$7 to something less for processing that? I mean, after all, the

States that don’t participate in exercising their option, their cases

are reevaluated on a monthly basis, as well. And it seems to me

that those States that are exercising the option and giving the supplement absorb the costs of the States that don’t provide the additional supplement.

Mr. APFEL. Mr. Coyne, I will look into this and determine what

our out-year projections are in terms of what those costs are. We

would then have to come back to Congress for legislative changes,

but I will provide this to you.

39

Mr. COYNE. To reduce the cost per check?

Mr. APFEL. What our out-year costs would be for this activity, to

determine whether those costs are going to decline in the future.

I’ll provide that to you.

Mr. COYNE. Thank you.

Chairman BUNNING. We have less than 5 minutes until we have

two votes, and we are going to recess for those two votes and we’ll

be back as soon as we can get here.

[Recess.]

Chairman BUNNING. The Subcommittee will come back to order.

Since I’m the only one here, I get to ask the questions. [Laughter.]

I want to follow up on some prior statements and interpretations

of the Social Security Independent Agency law. Congress deliberately gave SS statutory authority to submit a budget that cannot

be changed by OMB—directly to the Congress. In other words, you

can submit it without any changes made by OMB, in addition to

the one that is submitted as part of the budget of the President.

Please describe the major differences that you had in your budget that wasn’t in OMB’s and the President’s budget, $250 million

additional.

Mr. APFEL. There were three main differences. One of them actually turned out to be about $150 million that turned out to be unnecessary, given the declines that the actuaries projected in disability workloads. So I had been projecting originally, months before, somewhat higher disability caseloads. When the final estimates came out sometime in the end of December, it was lower, so

about $150 million would be attributed to that.

The other $100 million, about $50 million of that was for automation activities, and about $50 million of that was for overtime.

Chairman BUNNING. All right. Mr. Commissioner, for a long

time, SSA was touted as the leader in addressing the Year 2000

computing issue in the Federal Government, then last fall, GAO

issued a report pointing out several risks with SSA’s Year-2000 effort. What assurances can you provide our subcommittees that you

are adequately addressing these risks, and that the American public will not need to worry about disruption of their benefits when

January 2000 arrives?

Mr. APFEL. I would start by saying that I firmly believe—and I

can tell the American public not to worry about their benefits arriving. The benefits will arrive. The GAO identified three areas. I

think they were very important areas that needed consideration,

and we’re acting on those areas.

One of the areas had to do with the DDSs, the Disability Determination Systems, and the issues about their systems coming into

compliance. 14 of the DDSs are now up to speed——

Chairman BUNNING. You’re at what?

Mr. APFEL. Fourteen of the 50 are now Year-2000 compliant. We

expect all to be done.

We had one jurisdiction that was looking problematic but now

that’s been dramatically turned around. It should be done within

the next 3 to 4 weeks.

Interfacing was the second area, making sure that our interfaces

with the private sector, in terms of our records, wage reporting,

40

etc.—we’ve made believe we’re in very good progress, excellent

progress in that area.

Third was creating a contingency plan where we were in a position to assure that if something did go wrong, we had a backup

plan. And we are developing that plan now. We expect to have that

out within the next month.

And I think those are important steps. Actually from the GAO

testimony today, I believe it also indicates that we are making excellent progress. I consider this to be a major priority of the agency.

It is a hard, major, tough issue. We expect to be Year-2000 compliant by the end of the year. We have a full year for testing and we

think that’s the right plan to go——

Chairman BUNNING. In other words, you’re going to have it inplace, ready to go, and ready to be tested, by the end of 1998?

Mr. APFEL. That is our plan and our expectation, sir, for testing

to take place next year.

Chairman BUNNING. So that the whole of 1999 can be used to

test it.

Mr. APFEL. That’s exactly right. There are other systems that we

need to give a careful look—actually this will take place in the beginning of 1999—that are not our main interface systems. They are

telecommunications systems. We must work with the telephone

companies around the country, so that their activities won’t interface and hurt us. So there are activities that are taking place beyond Social Security proper, beyond the DDSs, beyond the employer records that are coming in, beyond our connections to

Treasury——

Chairman BUNNING. I want to ask you one more question. Why

do you think we gave the commissioner of Social Security a 6-year

term, in our independent agency bill?

Mr. APFEL. One of the reasons that I think you did, which I

think is incredibly important, is to provide long-term direction to

the agency.

Chairman BUNNING. No matter who is in the White House or at

OMB or in the speaker’s chair; that’s the reason. So that we’d have

continuity, so if there is a change in 2000, that the continuity at

the Social Security Administration remains constant. So I want you

to know that you’re an independent agency.

Mr. Neal.

Mr. NEAL. Thank you, Mr. Chairman. Commissioner, one of the

questions that frequently comes to our district offices—in conversations I’ve had with other Members—is the question of the amount

of time that it takes to satisfactorily bring a case to closure, and

I know that’s been one of your priorities.

It does cause some consternation among those who are awaiting

the results. I have a woman in mind, in my district, who is very

good at pursuing me at social events, and trying to find out if there

is going to be some way to speed the hearing up, and I suggested

repeatedly that the best we can do is send along a letter, you know,

requesting that the process be expedited.

And, as one of your priorities, maybe you could talk a bit about

some of the reforms that you’re offering.

41

Mr. APFEL. You have every reason to be concerned because this

has to be fixed. It’s not a question that this is tolerable; we’ve got

to bring down those backlogs.

In the short term, what we have done is increase resources in the

hearings process, as I indicated to Mr. Collins. We’ve increased the

number of ALJs by about 250, up to about 1,100 now. So there’s

more people handling these cases. We’re seeing backlogs come

down; we’re seeing processing times reduced, which is important.

But, in the long run, what we’ve got to do is bring to closure efforts that were started back in 1993 to create a redesigned disability process. One initiative is process unification—in other

words, trying to make sure that the process at the disability level,

the State level, and the appeals level, are more in sync, understanding and following the same ground rules in terms of the case.

The second initiative is an automated system, which is going to

take some significant hurdles to implement, but it’s a very important priority. And third, a re-engineered process so that cases move

through the process with greater efficiency for the public.

All of these things need to take place. They’re all long-term,

tough problems, every one of these three. I think we’re making

some progress on all three, and I hope to be able to move by the

end of the year on more of these re-engineering initiatives, to be

able to help improve them. So, on the front end, it’s added resources, which I think have made an important difference. But, in

the long run, we’ve got to change the culture, we’ve got to change

the dynamic so that we can move these cases faster.

Ultimately, what this comes down to is the legitimacy of our programs which is incredibly important to me as the Commissioner.

The legitimacy of the Social Security programs, including our disability programs, must be broad-based. I think that the backlogs

hurt that, and part of the way to strengthen the credibility and the

importance of the Social Security Administration and the Social Security programs, is by addressing this issue. It’s a very important

priority to me.

Mr. NEAL. Thank you, Commissioner, very much. Thanks, Mr.

Chairman.

Chairman BUNNING. Mr. Camp.

Mr. CAMP. Thank you, Mr. Chairman. Mr. Commissioner, I noted

in your testimony that your first priority was the long-term solvency of the system, and that’s certainly something I think we all

agree with. And that your second priority was to ensure program

integrity. And obviously that’s very much related, first and second.

I noted that to do that, you, in your testimony, mention that you

would like to redesign the disability process, and, obviously, I think

that’s very important, given this Associated Press story about one

southern State where 180 members of one family were collecting

Federal disability benefits until there was an investigation, and 90

of those members were removed from the rolls. Mr. Chairman, I

would ask for permission to put this Associated Press story in the

record of the committee hearing.

Chairman BUNNING. Without objection.

Mr. CAMP. The inspector general, as a result of finding this tremendous problem—which, I think, goes directly at the integrity of

the system and ultimately the solvency of the system, if people who

42

should not be receiving benefits are—recommended that physicians

that are not independent to make a fair judgment not be used, or

continue to be used. And I know that your testimony describes that

SSA is developing, ‘‘a comprehensive plan which will strengthen

the management of the SSI program and substantially reduce overpayments made to SSI recipients.’’

And my question is, just one, when will the results of that plan

be available? Can you give a report on where you are in developing

that plan so that we can ensure the public about the integrity of

the system?

Mr. APFEL. We are working on a comprehensive plan that looks

at a whole series of activities. It is, if I could say, Mr. Camp, some

things are on-stream all ready, other things need to be taken into

account. We intend to get a plan to you later this year.

If we look at ensuring program integrity in this front, Mr.

Bunning has been a leader on CDRs, on Continuing Disability Reviews, to review the cases that are out there. This is one of the significant things that we are doing. Back in 1995, there were 200,000

CDRs performed; in FY 1998, we expect to be at 1.3 million, moving up to 1.6 million a year. So, it’s a very important element in

this endeavor.

Two, we have to do a better job of cross-matching data with employers to validate information about what a person’s income is.

There are a number of things that we already have on this front.

We also get information on prisoners by cross matches with prisons. But this year we’re planning to add nursing homes, to be able

to ensure that if people go into nursing homes, we can capture that

information. We’re also matching with the new child support database that’s being established, trying to find out earlier in the process whether people are getting earnings. And we’re also, as you

know, strongly supportive of the IG’s significant increase in resources to be able to go after fraud.

So there are a number of steps to this and we are developing a

plan. We expect, I don’t have an exact month——

Mr. CAMP. Well, that’s what my question is, particularly the timing of the report given that it would be helpful if it’s in time for

legislative action before Congress adjourns. If you can give a month

that you expect to sent the report up——

Mr. APFEL. Actually, I can’t give you a month. But we do anticipate completion of the strategic plan later this year, and I will see

if we can speed it up as fast as possible because this is important.

As was mentioned, we’ve got to assure the integrity of our programs because it’s part of the legitimacy of what we do as an organization. It’s a very high priority. We’re putting a lot of resources

into it, and we will continue to. And you’ll see the plan.

Mr. CAMP. Well, I think it is a concern because the inspector general report showed that one in three of the recipients faked their

disability during the review. So, clearly, there’s a problem with the

way the system is established now and I think the sooner that we

can develop a plan that will reduce this kind—it’s fraud and it’s illegal and it shouldn’t be happening. These are not people who are

deserving recipients of the program. So, I guess, the sooner, the

better. Thank you.

Chairman BUNNING. The gentleman from Missouri.

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Mr. HULSHOF. Thank you, Mr. Chairman. Just a follow-up point,

and really not to argue with you, Commissioner, but in your exchange with the chairman, you indicated that the President, in defending the budgets, that the deficits were 1 percent of GDP, and

I guess my immediate reaction that I want to put on the record is

that at the same time, the tax take from the American family—

looking that the President’s Fiscal Year 1999 budget—is 20.1 percent of GDP, which is the second highest in the history of our country. So I throw that out for anyone to consider.

Also, in your written testimony, regarding the legislation introduced yesterday by the chairman and Mrs. Kennelly, the ‘‘Ticket to

Independence Act,’’ you mention you commend the spirit and intent

of the legislation. Let me put you on the spot: Do you support it

and are you willing to endorse it today?

Mr. APFEL. We haven’t actually gone through the legislation line

by line. There are a number of features in the ticket part of it,

which affects Social Security, that we are very excited about. I

know there are also tax provisions, there are also Medicare provisions, that I certainly can’t speak to directly at this time.

But in terms of the ticket proposal, we’re very excited about the

ticket proposal. There are some benchmark payments that we’d

like to talk some about in the course of the legislative deliberations. But the overall thrust of the ticket proposal, we think, is a

major improvement for the country and we’re quite thrilled about

it.

Mr. HULSHOF. Well, I walked back from our vote with Mrs. Kennelly, and she wanted me to ask that question. [Laughter.]

SSA is going to spend about $1 billion to replace its current computer terminals with intelligent workstations and local area networks, and I think according to GAO, the 30,000 workstations include computers that have 100 megahertz capacity. And I’m not a

computer wiz, but aren’t 100 megahertz computers seemingly obsolete, and doesn’t that cause you some concern? Can’t you buy these

things at a Radio Shack or at a Best Buy or——

Mr. APFEL. Well, this is a very important issue, which is, how

much capability do we need in our IWS/LAN system. I strongly feel

that the models that we’re buying are exactly the right level for our

organization. It would be a waste of taxpayer money to buy significantly more expensive systems. The 100 megahertz, even though it

isn’t state of the art—that means it’s cheap, for one thing—will

handle our data needs for the next several years.

When we move into computer unification in the disability front,

we may need to upgrade each of those machines to somewhat go

beyond the 100 megahertz. We can do that; we can do that cheaply.

So, I think the most cost-effective method that we have is going

forward, absolutely, with the models that we have. And my own belief is that going to more expensive computers would be a waste of

taxpayer money.

Mr. HULSHOF. And I appreciate your position. I also note in your

written testimony regarding the Year-2000 compliance coming up

this December, you’re ahead of deadline, and you’ve been commended for that, and I commend you as well, but then are we not,

based upon what you just said, purchasing additional upgrades and

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the like, how do you propose to square the two? Do these purchases, will they hinder your effort in the Year 2000?

Mr. APFEL. Not at all. The IWS/LAN is fully Year-2000 compliant. There are a few of the old non-IWS/LAN workstations still

kicking around that may not be, and those are going to be replaced.

But IWS/LAN is all Year-2000 compliant, every one of those machines. And implementation of that is really not a major issue for

Y2K.

In terms of the upgrades, we may need some upgrades after we

move on the disability computer automation efforts, but, certainly,

that would also be Y2K compliant as well. I have no concern about

Y2K compliance and the integration to our IWS/LAN systems.

Mr. HULSHOF. Thank you, Mr. Chairman.

Chairman BUNNING. The gentleman’s time has expired.

Mr. Commissioner, I fully recognize that the number of continuing disability reviews processed by SSA has increased by 133

percent over the past 3 years, and I’m very pleased to see that

progress. However, I remain deeply concerned that you are not utilizing the full amounts authorized in the law to ensure that individuals who are no longer disabled are removed from the rolls.

Since 1997, the agency has spent roughly half of what has been

authorized. You recently reported to this subcommittee that as of

October 1 of last year, there were 3.8 million backlog SSDI cases,

and 1.6 SSI cases. Of these, 80 percent of the SSDI cases, and 97

percent of the SSI cases, have never had a full medical CDR.

Even in this year’s President’s budget, which I assume now that

you signed off on, you requested only $355 million to conduct

CDRs. That’s only one-half of what has been authorized by the law.

I know you were part of the process that brought about the legislation authorizing this spending, and know how difficult it was to

achieve. Why aren’t you spending this money, especially when you

know that SSA’s failure to consistently complete these CDRs has

led to hundreds of millions of dollars in unnecessary costs each

year, and is undermining the integrity of the program?

Mr. APFEL. Mr. Chairman, thank you for recognizing my role in

the creation in this very, very important piece of legislation to establish the cap. I believe this is a very important model that we

can use in other areas for fraud activities and program integrity activities.

We are on what I believe is a sustainable path on CDRs. What

I have to do is figure out how to manage this organization and how

to manage workloads and how to ensure our public responsibility.

As you pointed out, we have gone up from 200,000 CDRs, back

in 1995, up to 1.3 million in 1998; we’re proposing 1.6 million in

1999. We believe this is a sustainable ramp-up in CDRs that we

believe we can eliminate the backlogs in DI by the year 2000 and

in all of SSI by the year 2002 and then continue on a sustainable

path in the future to continue this activity.

I know of your strong commitment and that you believe that we

should be doing more. I think we are doing more. I think we are

doing it at about the right pace. This ramp-up is really unprecedented, to go from 200,000 just a few years ago to 1.6 million.

Chairman BUNNING. Well you got $4 billion more dollars.

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Mr. APFEL. We think that’s the right level of spending, the right

ramp-up is taking place, so the organization can have the capacity

internally to do the work and not create a cliff out there at the end,

if we spike way up in the next two years, with all kinds of staff

resources.

Chairman BUNNING. Can I ask you another follow-up? What percentage or reduction have you made in the CDR’s, the backlog that

we’ve had. In other words, are we at the same level? Are we reducing?

Mr. APFEL. No, it’s coming down from what about—I’ll have to

get you the exact number for the record.

[The following was subsequently received:]

The CDR backlog, as of October 1, 1997, was 3.8 million. Of these, 2.2 million are

for title II (this includes 588,000 concurrent title II/title XVI cases) and 1.6 million

title XVI cases. Some of these cases are currently being worked as part of the FY

1998 workload. Cases remain part of the backlog until a CDR determination is

made.

The current CDR backlog consists of all cases whose medical review diary came

due prior to October 1, 1997. the backlog does not include certain cases whose reviews have been deferred: individuals who would be eligible for a non-disability benefit if disability ceased (windows age 60 and workers age 62) or individuals for

whom the likelihood of a productive CDR is remote (individuals over age 65 or SSI

recipients who were grandfathered-in from State welfare in 1974 at the beginning

of the SSI program).

Chairman BUNNING. Please. I would like that, because you promised me a seven-year program the last time we met, and I don’t

have the copy of it yet.

Mr. APFEL. You don’t. And I expect you will get that very, very

soon.

I have a few decisions I have to yet make on that, but it will be

very soon. I believe——

Chairman BUNNING. I would appreciate when I might get that.

Mr. APFEL. If you don’t have it within a month.

Chairman BUNNING. We’ll call you back and see?

Mr. APFEL. Yes, yes.

Chairman BUNNING. Okay.

Mr. McCrery, do you have any more questions?

Mr. MCCRERY. No, thank you Mr. Chairman. I appreciate that

Chairman Shaw will submit questions in writing.

Chairman BUNNING. Mr. Portman?

Mr. PORTMAN. Just a brief follow up, and this has to do with the

disability program also and the redesign of that. This subcommittee has been at it for some time now under its previous

leadership and under Mr. Bunning’s leadership and, as you know,

SSA made some commitments to make major redesigns. The program, I think, was a six-year plan. GAO did an analysis of it in

December of 1996 and said Social Security is about one-third of the

way through the six-year plan and at that time, GAO, at least, reported that little or no progress had been made in terms of the redesign. Their recommendation was that SSA focus, on those initiatives, most likely to actually reduce processing time and costs, were

some of the key problems.

Then last February, you all revised your redesign plan, you focused on eight key initiatives and it is my understanding, at least,

the GAO believes that the success of that scaled-down plan, the

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more focused plan, may also be threatened because of delays, because the testing results were disappointing, and so on.

I just wish you would give the subcommittee a report on that. I

assume this question has not been raised already this morning.

Particularly if you can tell us what progress is being made, how

you have devoted to it in terms of resources, how much has been

spent on this, what kind of results are you getting, and, you know,

what your projections are for the future.

Mr. APFEL. Sure. It’s a real big issue and it is a very important

issue for this organization. It has been for years. The Social Security Administration originally created a number of very broadbased, fairly separate pilots and now has centralized some of those

pilots into a more unified structure. A number of the different elements are now being tested in one place and the results so far are

pretty promising for those.

I believe what we need to do, as soon as possible, is to get out

of the testing stages and move to the decision stages on what to

do. But we have got to make sure, in the process of making those

decisions, that we consider an issue that I know is very important

to this committee which is administrative costs as well as program

costs. What’s going to happen to program costs by these new models for these new activities as well as what is going to happen to

administrative costs.

I am confident that we are going to be able to make some decisions later this year that will assure neutrality on the program side

and also save money on the administrative side on establishing

some of these activities.

One area that is incredibly important that we need to spend

more time on relates to the automation issue for disability, which

we discussed briefly. This is one that has tremendous payoff for the

system as the IWS/LAN did for our organization.

I believe, and it is clear, as the GAO points out, that this is a

project that has slipped and I have to push hard to see what we

can do about this one. Regarding the automation endeavor, I am

going to be getting some outside consultation over the next three

months about the appropriate path of the future to either validate

the direction we are moving in or to determine a couple of alternatives.

From my discussions with the disability determinations systems

in the States, there is a belief that we need a unified platform and

this is a very important thing for efficiencies through the organization.

Mr. PORTMAN. If I could just follow up for a moment because my

time is lapsing here. It sounds like what you are saying, if I can

summarize it and tell if I am inaccurate, is that perhaps you are

beginning to focus on automation, some of the other issues, that

help you do your existing job better but you are moving away from

the fundamental redesign that you embarked on a couple of years

ago.

Mr. APFEL. No, sir. Absolutely not.

Mr. PORTMAN. So, you are still committed to total redesign of this

program and coming up with——

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Mr. APFEL. I am fully—I would love to be able to say today that

we are ready to move out of the testing stages and start three of

the process changes. We are not there yet.

We need to ensure that this is a cost-neutral approach in terms

of entitlement dollars as well as a saver in administrative dollars.

I am putting great pressure on the organization to move as rapidly

as possible. I intend, at the end of the day, to see redesign change

processes in a fairly significant way and that would be further

strengthened by the automation, but you’re right, if all we’re doing

is automating the current process, then you get a one-time, fairly

modest return on your activities; what we need to be able to do is

reengineer the process and then automate so we really get longterm performance increases.

Mr. PORTMAN. I guess I’d make two quick requests and then the

chairman has got to take my time me, which he will in a second,

he turns my mike off. One, if you could give us some sense of what

the cost is then, I think it is fair to say over a five or six-year period. Number two is what were your expectations originally in

terms of work-year savings and have those been matched? I assume they have not. And what your expectations are now in terms

of what the benefits might be to reach them.

Thank you, Mr. Chairman.

Mr. APFEL. I will provide that for the record, sir.

[The following was subsequently received:]

REDESIGN COSTS

We spent approximately $9.24 million on disability process redesign in fiscal years

1995 through 1997. We expect to spend approximately $17.59 million in FY 1998,

for total 4-year costs of $26.83 million. This does not include approximately $1 million in FY 1996 and $8 million in FY 1997 for policy development support for the

redesigned decision methodology, or FY 1998 costs for policy development and lab

testing which are expected to reach between $9–$10 million. Total operating costs

in FY 1999 and FY 2000 are expected to be somewhat higher than the FY 1998 level

as initiatives are implemented. Until we make the decisions later this year concerning which proposals to pursue, it is impossible to predict what the future costs

or savings will be.

REDESIGN SAVINGS

Original redesign estimates projected savings of about $305 million dollars annually following implementation of the complete process. These figures included savings from other budgeted initiatives which were also encompassed by the redesign

(e.g., the Reengineered Disability System and Local Computing Platforms). Major

savings expected from redesign were built on streamlining disability case processing

and the administrative appeals process.

We do not expect to achieve the levels of savings originally anticipated in the redesign plan, although we do expect to improve customer service through reduced

processing times and increased interactions and still save a significant number of

workyears. Again, savings predictions are impossible until we make decisions later

this year concerning which proposals to pursue.

Our original timeframes and expectations have slipped for several reasons. Before

implementation began, SSA responded to stakeholder concerns by agreeing to conduct more extensive and rigorous testing than was originally planned. This approach, coupled with an inclusive developmental process, extended the developmental and testing timeframes.

Plus, the original reengineering assumptions were based on an ideal process. As

implementation activities and plans evolved, issues which emerged were more timeconsuming and complex than expected. Also, some external changes relied upon to

support redesign activities did not occur. Based on a redesign assessment conducted

at the end of 1996, SSA narrowed and focused attention on the four primary redesign tests along with development of key enablers.

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The Full Process Model (FPM) test continues to be our most critical redesign activity because it combines several features into one process, including streamlining

the appeals process. Testing began in April 1997 and results to date have been very

promising. We are seeing an accurate increase in the initial allowance rate and a

synergistic impact of features working together. Earlier testing of both the single

decisionmaker and adjudication officer process helped in the development of these

concepts and are included as part of the FPM process. Our most significant redesign

savings and customer service improvements are expected through this process

model.

Positive results are also coming from process unification activities which increase

development and documentation done at the initial level. Process unification activities are contributing to a higher initial and reconsideration allowance rate which is

offset by a lower allowance rate at the hearing level. This supports one of the primary goals of redesign: to allow cases that should be allowed at the earliest possible

level.

Chairman BUNNING. Mr. Commissioner, I have 13 additional

questions I am going to submit to you in writing and some of the

other members of the panel, on both sides, have asked that they

also be able to submit to you in writing, additional questions. We

thank you for your testimony and we will ask the second panel to

come forward.

Mr. APFEL. A pleasure to be here sir.

[Questions submitted by Congressman Levin, and answers provided by Commissioner Apfel, follow:]

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Chairman BUNNING. The second panel testifying today is Jane

Ross, the Director of Income Security Issues at the GAO; Joel C.

Willemssen, the Director of Civil Agencies Information System at

GAO; David Williams, the Inspector General of the Social Security

Administration; and Mr. Williams is accompanied by Pamela Gardiner, Assistant Inspector General for Audit at the Office of Inspector General.

Ms. Ross.

STATEMENT OF JANE ROSS, DIRECTOR OF INCOME SECURITY

ISSUES, GENERAL ACCOUNTING OFFICE

Ms. ROSS. Chairman Bunning.

Chairman BUNNING. Please pull the mike so we can hear you.

Ms. ROSS. Thank you for asking me to share GAO’s perspective

on the challenges that Social Security faces today. Our work shows

that SSA recognizes the challenges we’ve identified and has taken,

or plans to take, steps to address many of these problems. Nevertheless, the agency is moving too slowly and sometimes too narrowly to resolve most of its challenges.

Commissioner Apfel must assert strong leadership to translate

SSA’s plans into timely action.

Let’s discuss solvency first. The national debate on Social Security solvency has begun. The President has made Social Security

reform a top priority, and the Congress is beginning to discuss options.

Policymakers and the general public need thoughtful and detailed analyses of the likely effect of the different proposals on

workers, beneficiaries, and the economy. They also need to know

the impact of implementation on SSA and other government agencies. Although SSA is uniquely positioned to inform policy makers

and the public about long-term financing issues, it has not undertaken the range of research, evaluation, and policy analysis needed

to fully contribute to the debate. SSA has not seized the opportunity to build its research, evaluation, and policy analysis capacity.

Without an adequate number of skilled staff and a vital and responsive plan of work, the agency cannot fulfill its current and future role as the nation’s expert on Social Security issues.

With regard to SSI, as we have already heard this morning, last

year GAO designated SSI as a high-risk program because of its

susceptibility to fraud and abuse and because we don’t believe it

has been well managed. Because SSI, unlike OASI and DI, is

means tested, SSA must collect and verify a great deal more information on income, resources, and living arrangements in order to

determine initial and continuing eligibility.

SSA is taking steps to address a number of weaknesses in SSI,

and such efforts may help to correct some of the more obvious program weaknesses, but we believe that the problems of SSI are so

fundamental that they require an in-depth program review to address root causes of the problem.

While such a comprehensive strategy is not yet in evidence, SSA

has committed, and the commissioner did again this morning, to

this comprehensive action plan before the end of this fiscal year.

This action plan will be effective only if it includes a set of measVerDate 20-MAR-2000 10:09 Apr 17, 2000 Jkt 010199 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 E:\HEARINGS\61025 pfrm02 PsN: 61025
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ures to evaluate their progress and to hold the agency accountable

for what it actually achieves.

Looking next at SSI children, as you know the 1996 welfare reform law changed the childhood definition of disability, and SSA

issued regulations to implement a stricter standard of severity than

had existed in previous law.

Nevertheless, some children with impairments, less severe than

those in the new threshold, have been awarded benefits because

some of SSA’s medical listings are still below the new severities

level.

Some of these less severe listings are for impairments that are

prevalent among SSI children, including mental retardation, cerebral palsy, and asthma. SSA is aware of the uneven severity levels

in the listings, but hasn’t yet established a schedule for updating

them.

Until it does, children will not be assessed against a uniform

standard of severity.

I’d like to just recap our findings on redesign, return to work,

and CDR’s.

Making disability decisions is one of SSA’s most demanding and

administratively complex tasks. SSA has struggled to process initial applications and hearings more quickly. Yet disabled claimants

still often wait more than a year for a decision.

With regard to redesign, despite several years of work on redesigning the disability process, the overall results are so far disappointing.

Some of the testing is delayed, while tests of individual changes

are showing very little effect on timeliness or efficiency. On the

other hand, SSA is also conducting an integrated test of several initiatives, and the early results there do appear promising.

But if significant improvements in timeliness and efficiency can’t

be demonstrated soon, SSA will have to decide whether to proceed

with its current design or take a different approach.

With regard to return to work, we’ve already issued a series of

reports, as you know, over the past many years recommending that

SSA place a higher priority on helping DI and SSI beneficiaries

maximize their work potential. The program currently encourages

applicants to emphasize their inabilities, not their abilities.

In the previous strategic plan, SSA pledged to pursue this objective through its Ticket to Independence, which would permit SSI

and DI beneficiaries to obtain vocational rehabilitation or employment services from public or private vendors of their choice.

We believe that SSA’s sole focus on employment services, while

a good beginning, will not be as successful as the more comprehensive return to work strategy similar to that reflected in the bill introduced yesterday by Mr. Bunning and Ms. Kennelly.

Finally, on continuing disability reviews. We’ve also reported on

the need to do more CDR’s as required by law to help ensure the

continuing medical eligibility of beneficiaries. As you know by 1996,

more than 4 million beneficiaries were due, or overdue, for CDR’s.

And the Congress acted and authorized $4 billion to bring SSA up

to speed by the year 2002.

Last fall we testified to Mr. Bunning’s committee on SSA’s encouraging progress in conducting CDR’s. For 1997, they considerVerDate 20-MAR-2000 10:09 Apr 17, 2000 Jkt 010199 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 E:\HEARINGS\61025 pfrm02 PsN: 61025
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ably exceeded their goal, and now they have more ambitious goals

for 1998 and 1999.

Clearly the more quickly SSA can remove those who are no

longer eligible, the more it can save in program costs.

However, SSA still has to grapple with some technical issues before it can determine how expeditiously and at what costs it can

become current on CDR’s.

In summary, SSA’s issues are complex and solutions aren’t easy

to craft. The new commissioner will need to lead the agency with

a sense of urgency to address its long-standing problems.

Thank you very much. I’m ready to answer your questions.

[The prepared statement follows:]

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Chairman BUNNING. Mr. Willemssen.

STATEMENT OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL

AGENCIES INFORMATION SYSTEMS

Mr. WILLEMSSEN. Thank you, Mr. Chairman. Thank you for asking us to testify on information technology challenges facing SSA.

Let me first discuss the Year 2000 issue that you previously

brought up. SSA has made significant progress in assessing and

renovating those mission-critical systems that are essential to the

delivery of benefits.

However, as we reported last fall, three key risk areas remain.

One concerns the need for SSA to improve its oversight of states’

disability systems.

Second was making sure that SSA was adequately addressing

the thousands of data exchanges it has with other organizations.

And, third, SSA lacks contingency plans that would need to be

activated in the event of systems failures.

Our report made several recommendations on these areas. We

are encouraged that SSA has agreed with them and is in the process of implementing those recommendations.

Next, let me turn to SSA’s IWS/LAN acquisition. As mentioned,

this is about a $1 billion acquisition during the first phase that will

include acquiring workstations and local area networks and as of

March 1, SSA had completed installation of about 30,000

workstations and 800 local area networks.

Last year, SSA’s contractor for this, UNISYS, submitted a proposal to upgrade the workstation with a higher speed process or at

additional costs. As mentioned, UNISYS noted in its proposal that

it was having difficulty in finding the 100 megahertz processors

called for in the contract.

It should be pointed out that in today’s market, one can buy a

processor about three times that speed. Nevertheless, as was mentioned by the commissioner earlier, SSA believes that the 100

megahertz processors will meet its needs.

At the same time it is beginning to have some conversations with

UNISYS on this issue.

SSA has also acknowledged, and we have validated, that some of

the initial workstations purchased off of the IWS/LAN acquisition

were not Year 2000 compliant. However, through our own testing,

we have confirmed that the operating system that SSA has now

chosen for IWS/LAN will correct the particular Year 2000 issue

that we identified.

Let me point out just a few other additional challenges related

to the IWS/LAN acquisition. One, some state DDSs have recently

raised concerns about their lack of control over the local area networks being installed and about inadequate response time on IWS/

LAN service calls.

Two, SSA does not currently plan to determine how IWS/LAN

will contribute toward improving mission performance. Therefore,

it is going to be difficult to assess how it will improve service to

the public.

Three, as previously mentioned, the development of RDS is encountering problems. And this has led to an additional planned

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nine-month delay, beyond the 28-month delay that we previously

testified on.

Four, and as discussed in our report being released today, SSA

has recognized weaknesses in its software development capabilities

and has put a program in place to address that.

There are some key elements of that program that are missing.

We have made recommendations on that, and, SSA, we’re encouraged to say, is planning to implement those recommendations.

That concludes the summary of my statement.

[The prepared statement follows:]

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Chairman BUNNING. Thank you very much. David Williams.

STATEMENT OF DAVID C. WILLIAMS, INSPECTOR GENERAL,

SOCIAL SECURITY ADMINISTRATION, ACCOMPANIED BY

PAMELA J. GARDINER, ASSISTANT INSPECTOR GENERAL

FOR AUDIT

Mr. WILLIAMS. Chairman Bunning, Chairman Shaw, and members of the subcommittee, thank you for the opportunity to appear

here today.

I would like to begin by acknowledging Commissioner Apfel’s impressive beginning. I would also like to discuss areas where the Social Security Administration needs to focus its attention so that it

may continue its development as an independent agency.

I have identified eight areas where strengthening and attention

are needed.

The first challenge is the long-term solvency of the trust fund,

communicating the seriousness of this matter to Americans, and

engaging them in a discussion of the trade-offs inherent in any solution is imperative. I believe the initiative to conduct public forums is the right starting point in finding a solution.

Second is the problem of erroneous wage reports held in SSA’s

suspense account. At the end of Fiscal Year 1997, the cumulative

balance of employee wages held in SSA’s suspense account exceeded $240 billion and it continues to grow. Unless corrected, suspended wages can reduce the amount of Title II benefits paid to individuals and their families. SSA must implement its newly established tactical plan to resolve suspended waits and evaluate its effectiveness.

Third is the backlog of continuing disability reviews needed to

confirm the individual’s, that individuals continue to be entitled to

benefits. As of 1997, there were approximately 4.1 million individuals who were overdue a CDR. SSA must focus its attention on reducing the number of cases awaiting a CDR, as well as reducing

other work loads such as requests for appeal hearings, in order to

safeguard the integrity of the disability program.

The fourth area is fraud. GAO has included the SSI program in

its list of high-risk programs because of such factors as self-reporting of income. The CDR backlog allows initial fraudulent claims to

go undetected for long periods. Fraud is also found in other programs, including the disability insurance program. More serious

levels of fraud involving identify theft crimes that are perpetrated

with fraudulently obtained Social Security cards.

The magnitude of SSA’s programs have resulted in sizable volumes of fraud in SSA. I believe SSA is a very good place to fight

government fraud for these reasons and because eligibility for Social Security benefits is a gateway to other benefits such as Medicaid, Medicare, and food stamps.

The fifth area is SSA’s progress in redesigning its processes for

administering its programs. In redesigning these processes, SSAV

will rely heavily on automated systems that manage benefits and

target potential fraud. The redesign effort has progressed very

slowly, including the automation portion. The anticipated benefits

and improved efficiency and accuracy have not yet materialized.

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The redesign’s timely completion and SSA’s evaluation of its impact

on savings are critical challenges.

The sixth concern involves the complexity of SSA’s programs.

Over the years, SSA’s programs have grown increasingly complex.

Program complexity hinders SSA’s ability to issue accurate payments and prevent fraud, and it promotes an excessive amount of

litigation each year. Legislative and regulatory reform could eliminate underlying causes of problems in payment timeliness and accuracy.

The seventh area is the adequacy of SSA’s internal controls over

its data processing systems. OIG and Price Waterhouse audits have

noted numerous problems in safeguarding SSA’s integrity. These

problems included inadequate protection of sensitive information;

insufficient testing to ensure continuity of operations in the event

of an emergency; and inadequate procedures to prevent and detect

embezzlement and misdirection of benefit payments.

Adequate controls over data processing operations are critical to

safeguarding highly-personal information and ensuring continuous

public service. These systems must be protected.

The last area is integrating service delivery operations. SSA currently provides public service through a network of field offices,

program service and teleservice centers, and a data operations center. Technology improvements also present promising opportunities

for efficiency. I believe SSA would be well served by a long-term

service delivery strategy that integrates and streamlines service

delivery organizations and technologies into an efficient service delivery network.

In conclusion, it is evident that there are significant challenges

facing Commissioner Apfel. I believe that, through the work of the

OIG, especially under the Government Performance and Results

Act, we will have an important role in keeping the Congress and

the agency informed of progress in these areas.

Thank you, Mr. Chairman.

[The prepared statement follows:]

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Chairman BUNNING. Mr. Shaw will inquire, please.

Chairman SHAW. Thank you. Mr. Williams, you pointed out on

page 3 of your testimony that the redesign of the process SSA will

rely heavily on the automated systems to manage benefits and target potential fraud. The redesign effort has progressed very slowly,

including the automation portion.

What’s the reason for that? Is it fully funded, as I believe it is,

or is it a lack of desire? What’s the problem?

Mr. WILLIAMS. Ms. Gardiner has been closest to that work,

Chairman Shaw, and I would like for her to respond to it. I’ll be

glad to add anything.

Chairman SHAW. Please, Ms. Gardiner.

Ms. GARDINER. Actually, it has more to do, it is funded and it has

more to do with just a, the desires of the users in being identified

and it also has to do with the IWS/LAN——

Chairman SHAW. Pull your microphone down. I’m having a little

trouble hearing you. Thank you.

Ms. GARDINER. Also, I might add that Joel Willemssen will probably be able to provide even more detailed information because

they have been looking at this specifically. But it is our understanding that it is fully funded. That that’s not the issue. That the

issue has to do more than defining user needs and if there are

some complications, that the pilot test dealing with the single decision maker, and the disability claims manager and those tasks will

tie into the hardware and software needs.

Also, and since those are behind, the computer needs haven’t

been well defined and so, therefore, they are moving at a slower

pace too.

Chairman SHAW. Have you made some positive suggestions as to

what they might be able to do to expedite this process?

Mr. WILLEMSSEN. If I add, Chairman Shaw, one of the other key

areas where SSA is weak in, is developing software for this kind

of client/server nonmainframe environment. And SSA recognizes

their weaknesses, they are starting to put in a program to address

that, but until it is fully implemented, it is not going to be surprising that we continue to hear about delays with things like RDS

because the institutionalized processes to know how to develop software aren’t there yet and until they are there, you will have a larger risk of these kind of delays continuing to occur.

So, we are, we are heartened to know that SSA recognizes its

weaknesses and it is going to be moving out on it, they just need

to do so quickly.

Chairman SHAW. Is there talent available that can move? I’m

still wondering, do you have to hire some people with different

skills, send people back to school?

Mr. WILLEMSSEN. Well, part of it, again, not going too deep technically here, but part of it is SSA’s historically a major mainframe

operation, and they have some very skilled folks who know how to

do that.

With this IWS/LAN acquisition they will be moving into a different type of environment that takes different types of skills and

it is not something that they are going to be able to do overnight.

And it is also not something to go out and just hire a hot-shot

programmer. You have to institutionalize your processes on things

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like defining requirements, tightly managing the configuration,

having a quality assurance program, those kind of key processes

are not at the level they need to be at this point in time.

Mr. WILLIAMS. Mr. Chairman.

Chairman SHAW. I’m not sure I understand the answer or I’m

not sure I’ve gotten an answer.

Mr. WILLIAMS. There is this sort of chicken-and-egg problem of

the computers supporting the effort that is undefined and the undefined effort needing to know how computer services will be able

to support them. Social Security is stuck on this initiative and preceding too slowly.

Chairman SHAW. As far as appropriations, we’re okay, I guess.

Is there something that Congress should do? I guess that is what

I should be asking. The problem is, if it is a question of spending

more money to expedite the process of finding the fraud, then I

would say that would be a good investment. We would probably

save more by ferreting out fraud than we would spend in getting

some real experts in who knew how to do this thing, or just contracting it, or go out and contract it in the private sector. Tell them

to put this type of system in.

Mr. WILLIAMS. I know of no time in which we have come to you

and asked for an investment in which you haven’t given it to us.

The problems are our own. There have been some disappointments

with regard to the accuracy rates of some of the pilots. That has

slowed us down. There has been some resistance on the part of the

ALJs that I’m hearing about with regards to accepting the adjudication officer. Those aren’t problems of investment, those are our

fault.

Chairman SHAW. I would ask for a couple of more minutes. There

is another area I want to get into, and I see there are only two of

us up here to ask questions.

I’m referring now to an article that was in the Washington Times

entitled ‘‘Study Uncovers Such SSA Abuse Investigating the El

Paso Situation.’’

Congratulations, by the way, are in order for your good work in

that area.

Mr. WILLIAMS. Thank you.

Chairman SHAW. Can you describe for the committee some of

your ongoing efforts in this area, and especially, what impact the

changes in the welfare reform law have had on your work? Does

the SSA need other legislative tools from Congress to make sure

that the SSI benefits are going only to those who should be eligible? The article that I am referring to talks about noncitizens collecting SSI who are not entitled to it under the welfare law. They

weren’t here when the law was passed and the article goes on to

say that they are coming across from Mexico, picking up their

check, and going back into Mexico. They don’t even live here.

It also brings out the fact that these addresses were missing, and

that many addresses really are post office boxes.

Mr. WILLIAMS. That exactly captures the nature of the problem

and the target of the investigation.

We’ve tried to launch five major operations since my arrival. One

of them is Border Vigil and that is the operation to which you are

referring, Mr. Chairman. That is a very welcome offer to try to help

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us strengthen, and we do have some ideas and we would like to

work with your staff to try to discuss those.

I’d be really negligent if I didn’t say that you have already been

there, Chairman Bunning was the first to identify critical needs inside my office. The committees have given us great ideas for how

to form and shape and target the attacks on the problem of fraud.

You already have been there. We do have some ideas we’d love to

talk to you about. I do want to quickly get to the impact of welfare

reform though after thanking you.

The impact on the area of prisoners has been very important. We

believe that, as a result of that reform, we can save over $3.4 billion during the seven-year period that this will impact.

In the area of fugitives, we are just getting off the ground, we

feel very good about that. It is infuriating that the government

would finance the flight of a fugitive from its own justice system.

We need to end that and we intend to do so.

Chairman SHAW. Did you say we are saving over $3 billion by

not sending the checks into prisons?

Mr. WILLIAMS. That’s correct. It had an enormous impact.

Chairman SHAW. Congratulations.

Mr. WILLIAMS. We, with regard to the fugitives, had an idea to

extend the debarment of fugitive benefit eligibility to the Title II

program from the Title XVI program. We think that this is a great

area to attack and we think that it is infuriating that we would inadvertently finance this kind of enterprise.

You asked about some of the other operations. Inside Border

Vigil, we’re also moving along the Canadian border with investigations similar to the ones conducted on the Mexican border.

Chairman SHAW. How about south Florida? Miami? Fort Lauderdale?

Mr. WILLIAMS. We have. As a part of operation Border Vigil,

we’re going into Caribbean countries. We’re also very interested in

Puerto Rico. Those nations have an impact inside Florida. There is

a big interaction between Florida and several Caribbean nations

that we have targeted.

So, yes we are and that is a good area to look at. It’s a little more

conceptual as a border than Mexico and Canada, but it’s very much

a target of our operations.

Chairman SHAW. Great. Thank you. Jim.

Mr. MCCRERY. Thank you, Mr. Chairman.

Ms. Ross, I don’t know if you were here when I questioned Mr.

Apfel about the CBO estimates that were made at various times

during the legislative process——

Ms. ROSS. Yes, I was.

Mr. MCCRERY [continuing]. On welfare reform. But I think you

are familiar with those numbers. The conference report on welfare

reform with respect to SSI for children said that 185,000 children

would be removed from the roles based on the legislative language

that was adopted in the conference report.

Then there was a later iteration after some tinkering that said

165,000, I think. And then when the SS, Social Security Administration issued their regulations to implement the legislative language, the estimate was dropped to 135,000. Then there was a topto-bottom review and somehow, after that, and some further

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changes, I guess, in the implementation, the most current estimate

gives about 100,000 children to be removed from the roles.

Is that your understanding of the history of these estimates?

Ms. ROSS. That’s my understanding, precisely, yes.

Mr. MCCRERY. Given that, would you say that the Social Security Administration is carrying out the legislative intent of the Congress?

Ms. ROSS. A few months ago we were asked to look at how the

social security regulations related to the welfare reform legislation,

and we did so. We concluded that the interpretation that SSA was

representing in its regulations was consistent with the new definition of childhood disability in the law.

Mr. MCCRERY. That was the initial offering by the Social Security Administration for their regulations; is that correct? This is not

the top-to-bottom review?

Ms. ROSS. It’s the interim final regulations that they have out,

yes.

Mr. MCCRERY. And that’s the estimate of 135,000 children to be

removed from the rolls; is that correct?

Ms. ROSS. Yes.

Mr. MCCRERY. And after looking at that, you said, well, these

regulations you thought fairly implemented the legislative intent?

Ms. ROSS. That’s right, that the regulations had the level of severity that we understand was consistent with what the Congress

was talking about.

Mr. MCCRERY. So what has happened since that time and now,

when we have an estimate of 100,000 children?

Ms. ROSS. I think it’s in the implementation of the regulations,

not in a change in the estimates. First of all, it is hard to

estimate——

Mr. MCCRERY. Sure.

Ms. ROSS [continuing]. These numbers. I haven’t done it, but I

am pretty sure that it would be difficult. I think what’s really important to pay attention to is that this regulation is applied consistently and accurately. One of the things found in the top-to-bottom

review was that there was some inconsistency, and there were

some states that had particularly inaccurate both allowance and

disallowance rates.

So I think SSA is trying to go through a process of being able

to do this consistently and accurately, and the result has been that

fewer people are going to be removed from the rolls. But I think

we want to keep our eye on whether they have a good process.

Mr. MCCRERY. Yes, I appreciated your testimony about the uniformity of standards and how that is lacking right now in the process.

Ms. ROSS. That’s true.

Mr. MCCRERY. Unfortunately, we didn’t have time to ask Commissioner Apfel about that, but it is one of the questions that I will

submit to him in writing. So I appreciate your bringing that to our

attention.

Basically, though, getting back to the numbers and your assessment, given that since you made your assessment of the regulations and the estimate at that time was 135,000 children to be removed from the rolls, and now the newest estimate is 100,000, can

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any reasonable person conclude, in your opinion, that the Social Security Administration is too harshly implementing the intent of the

Congress?

Ms. ROSS. I suppose someone who had a different view could

think that it was being implemented too harshly, but, again, I

think the more important issue——

Mr. MCCRERY. No, no, no, Ms. Ross. I understand there are a lot

of people who think the law is too harsh.

Ms. ROSS. Right.

Mr. MCCRERY. I’m talking about the Social Security Administration’s implementation of the congressional language. In your opinion, are they acting too harshly in implementing the legislative language?

Ms. ROSS. No, we think that what they’re doing in having a severity standard of either two marked impairments or one extreme

impairment is totally consistent with what the Congress asked for.

I think it’s important that we be sure they do that correctly by continuing to monitor the way they’re doing their reviews and by looking at having expanded quality assurance samples, and so on. So

that then you could not only say that SSA used at the right standard, but that the standard was being applied fairly.

Mr. MCCRERY. Thank you.

Chairman BUNNING. I have approximately 17 questions that I’m

not going to ask. I’m going to submit them to you in writing, so

that you can respond in writing.

[Questions asked by Chairman Bunning and the respective answers provided by Mr. Huse, Ms. Fagnoni, and Mr. Willemssen follow:]

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Chairman BUNNING. I have one question for Ms. Ross. In your

view, is Social Security Administration taking the fullest advantage

of the expanded statutory authority Congress gave it in 1994, and

is SSA operating independently to the fullest extent that it could

really operate independently? I want to make sure that we get an

answer of your opinion on independence of the agency because that

was the full legislative intent when we passed the law in 1994.

Ms. ROSS. You’ll have to forgive me, Mr. Chairman. I didn’t go

back and review some of our earlier reports on this, but I’ll do the

best I can and supply anything else for the record.

We did a study at the time that SSA became an independent

agency, and at that time we tried to look at what the law said and

what the law simply permitted. Our understanding of the law—this

is GAO’s lawyers, not just me—was that the way the Social Security Administration is operating now is appropriate, given the way

the law was formulated and precisely what it said. That was our

conclusion at the time three years ago, and we haven’t had any occasion to re-examine this issue or think that we would change our

opinion.

Chairman BUNNING. In other words, if I asked you to go back

and do an examination now that would be an updated version of

whether you think they are or not, you couldn’t give us a re-evaluation of where they’re at now?

Ms. ROSS. We’d be happy to give you a reappraisal. I don’t know

of any events that are different now, but we would be happy to look

at it again—especially I am volunteering the services of the GAO

lawyers in this regard.

Chairman BUNNING. The GAO lawyers. Can we keep them out?

[Laughter.]

Thank you all for your testimony.

All right, Clay, go ahead.

Chairman SHAW. I don’t have a question. I just wanted to just

bring something to the attention of the Subcommittees. That figure

that was given in excess of $3 billion that’s being saved on the prisoner program and not sending checks into the jailhouse, that was

scored by the OMB and CBO as a savings of about $100 million.

So the success here has been really incredible.

I think it was Mr. Herger on my subcommittee who brought this

to the attention of the—committee, and I think Mr. Collins had a

sheriff that testified in this area. I think that the vigilance of the

Congress here has really paid off far beyond the expectations of

bean counters.

Mr. WILLIAMS. Thank you, sir. We’re about to launch the fugitive

effort, and we think that’s going to have a big impact, too. That’s

gratifying to hear. Thank you.

Chairman BUNNING. Jim?

Mr. MCCRERY. Just generally, Mr. Chairman, based on the astounding results of just this one foray into stopping abuse in the

SSI system, Ms. Ross and Mr. Williams, are you of the opinion that

an overall review of the SSI program, particularly for adults, is in

order, particularly looking at fraud and abuse in the program?

Mr. WILLIAMS. My office intends, with Ms. Gardiner and some of

the investigators, we intend to look at each benefit that is offered

by social security and focus on the points at which we are vulnerVerDate 20-MAR-2000 10:09 Apr 17, 2000 Jkt 010199 PO 00000 Frm 00136 Fmt 6633 Sfmt 6602 E:\HEARINGS\61025 pfrm02 PsN: 61025
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able to fraud, and we think that kind of look is appropriate. We

were impressed, too, by how much was accomplished and by, how

much good there is to be done by such a fraud vulnerability study.

We intend to then convert that into an aggressive task force that

looks at how to plug those holes as we identify them in various

benefit programs. Of course, disability is the highest dollar program at risk and that’s probably where we’ll begin.

Mr. MCCRERY. And we haven’t even mentioned the Georgia case

today, but we’re all aware of that shining example of fraud in the

SSI program.

Ms. Ross, I know your agency has identified SSI as a high-risk

program.

Ms. ROSS. We have.

Mr. MCCRERY. So I assume you agree that an overall review is

in order?

Ms. ROSS. Well, we do, and I’d like to take a minute or two to

explain. For several years, we’ve been doing these pieces of investigation related to SSI—prisoners, not reporting that recipients are

in nursing homes, a variety of things of that sort. But at some

point we decided that there was something else going on here, and

that we were not helping to solve the problem by looking at it

piecemeal. We’ve now been engaging in a study of why it is that

this continues to happen in the various parts of the Social Security

Administration. Why does SSI turn out to be so troubled? We’ve

been developing a notion of a couple of root causes, which is what

I think SSA has to go after.

First of all, we see that the agency has been reactive in terms

of SSI and not proactive. They don’t initiate policy. They haven’t

provided legislative proposals. They simply operate the program.

But possibly more importantly, they treat SSI as if it were an entitlement program. They treat it pretty much the same way they

treat the OASI and DI programs. They operate as if SSI were an

entitlement. They aren’t nearly vigilant enough considering it’s a

welfare means-tested program.

We’re expecting, based on the promises that we heard today and

in SSA’s strategic plan that they will have a comprehensive plan

that starts to get at not just these little pieces of a problem here

and a problem there, which I grant adds up to a lot of money, but

that they somehow changed the way they operate the program fundamentally, so they stop having all these little things for us to run

after.

Chairman BUNNING. That just emphasizes the need for oversight,

and the need for your new review of SSA and where they’re at, because that means that they’re not independent and they’re not acting independently because of the oversight that the administration

puts into the SSA and SSI and SSDI. If anybody’s interested in a

new program for SSDI, you ought to look at the bill we introduced

yesterday. It is going to save approximately, for every 1 percent of

the disability people that we get back on return to work, $3 billion

for each 1 percent of return to work. So that’s the estimate, Clay.

Thank you all for your testimony. We appreciate it.

[Whereupon, at 12:29 p.m., the Subcommittees adjourned subject

to the call of their Chairs.]

[Submissions for the record follow:]

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