U.S. GOVERNMENT PRINTING OFFICE

65–267 CC WASHINGTON : 2001

SOCIAL SECURITY’S READINESS FOR THE IMPENDING WAVE OF BABY BOOMER BENEFICIARIES

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 SIXTH CONGRESS

SECOND SESSION

FEBRUARY 10, 2000

Serial 106–86

Printed for the use of the Committee on Ways and Means

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

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

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

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

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

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

JIM MCCRERY, Louisiana

ROBERT T. MATSUI, California

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

LLOYD DOGGETT, Texas

BENJAMIN L. CARDIN, Maryland

SUBCOMMITTEE ON HUMAN RESOURCES

NANCY L. JOHNSON, Connecticut, Chairman

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

RON LEWIS, Kentucky

MARK FOLEY, Florida

SCOTT MCINNIS, Colorado

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

BENJAMIN L. CARDIN, Maryland

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 February 3, 2000, announcing the hearing ....................................... 2

WITNESSES

Social Security Advisory Board:

Hon. Stanford G. Ross, Chair .......................................................................... 7

Sylvester J. Schieber, Ph.D., Member ............................................................ 17

U.S. General Accounting Office, Cynthia M. Fagnoni, Director, Education,

Workforce and Income Security Issues, Health, Education, and Human

Services Division; accompanied by Joel C. Willemssen, Director, Civil Agencies Information Systems, Accounting and Information Management Division ........................................................................................................................ 30

Coates and Jarratt, Inc., James E. Burke ............................................................. 75

MCTigue, Hon. Maurice P., Q.S.O., George Mason University ............................ 87

National Quality Program, National Institute of Standards and Technology,

Technology Administration, and U.S. Department of Commerce, Harry S.

Hertz ..................................................................................................................... 81

SUBMISSIONS FOR THE RECORD

Matsui, Hon. Robert T., a Representative in Congress from the State of

California .............................................................................................................. 6

National Association of Disability Examiners, Zachary, LA, Terri Spurgeon,

statement .............................................................................................................. 99

Steinberg, Michael A., Michael Steinberg & Associates, Tampa, FL, statement ...................................................................................................................... 102

(1)

SOCIAL SECURITY’S READINESS FOR THE IMPENDING WAVE OF BABY BOOMER BENEFICIARIES

THURSDAY, FEBRUARY 10, 2000

HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEES ON SOCIAL SECURITY AND HUMAN

RESOURCES, Washington, DC.

The Subcommittees met, pursuant to notice, at 11:23 a.m., in

room 1100, Longworth House Office Building, Hon. E. Clay Shaw,

Jr. (Chairman of the Subcommittee on Social Security) presiding.

[The advisory announcing the hearing follows:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

CONTACT: (202) 225–9263

FOR IMMEDIATE RELEASE

February 3, 2000

No. SS–9

Shaw Announces Hearing Series to

Examine Social Security’s Readiness for the

Impending Wave of Baby Boomer Beneficiaries

Congressman E. Clay Shaw, Jr., (R–FL), Chairman, Subcommittee on Social Security of the Committee on Ways and Means, today announced that the Subcommittee

will hold a series of hearings to examine Social Security’s readiness for the impending wave of Baby Boomer beneficiaries. The first hearing in the series is a joint

hearing by the Subcommittees on Social Security and Human Resources, and will

focus on current and future service delivery challenges that the Social Security Administration is facing in the 21st Century. The hearing will take place on Thursday,

February 10, 2000, in the main Committee hearing room, 1100 Longworth House

Office Building, beginning at 11:00 a.m.

Subsequent hearings in the series will be announced at a later date.

In view of the limited time available to hear witnesses, oral testimony at this

hearing will be from invited witnesses only. Witnesses will include members of the

Social Security Advisory Board, representatives from the U.S. General Accounting

Office, and service delivery experts. However, any individual or organization not

scheduled for an oral appearance may submit a written statement for consideration

by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

The services that the Social Security Administration (SSA) provides impact the

lives of nearly all Americans. For example, in 1999 SSA paid benefits to more than

45 million retired and disabled workers and their families and to more than 6.6 million Supplemental Security Income recipients, processed 250 million reports of earnings and more than 6 million initial claims for benefits, handled more than 26 million visitors requesting services at 1,300 field offices, fielded 80 million calls to the

800-number service, issued 16 million new and replacement Social Security numbers, and provided 30 million Social Security Statements to help individuals plan

for their financial future.

As America enters the 21st Century, SSA will face increasing challenges. SSA

workloads are projected to begin increasing rapidly within the next decade as the

huge Baby Boom generation enters its peak disability years prior to reaching early

retirement age starting in the year 2008. Social Security retirement and disability

workloads are projected to rise 16 percent and 47 percent, respectively, between now

and the year 2010. Claims under the Supplemental Security Income (SSI) program,

which is administered by SSA and provides cash benefits to poor disabled and elderly individuals, are expected to grow 12 percent between now and the year 2020. At

the same time, Social Security programs are becoming more complex, with initiatives to prevent fraud and abuse, complete continuing disability reviews, provide increased rehabilitation and employment services for the disabled, and perform reVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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views to determine whether SSI beneficiaries continue to meet the program’s income

and resource requirements. These factors, combined with recent workforce

downsizing and the coming retirement of large numbers of SSA’s aging workforce, will place tremendous pressures on the Agency to meet the public’s need for service

in the 21st century.

In announcing the hearing series, Chairman Shaw stated: ‘‘Ensuring the Social Security Administration delivers quality service in a timely way is more than a

goal—it’s a necessity for American workers and families. Workers pay their hard- earned wages for their Social Security benefits. It’s their program and they deserve not only all the benefits they paid for, but the highest quality of service as well.

Our goal is to ensure that happens without any glitches, despite the Social Security

Administration’s many challenges ahead.’’

FOCUS OF THE HEARING:

This hearing will focus on the Social Security Administration’s service delivery practices, key service delivery challenges in the future, and effective strategies to

address these challenges.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed record of the hearing should submit six (6) single-spaced copies of their statement,

along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format,

with their name, address, and hearing date noted on a label, by the close of busi- ness, Thursday, February 24, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office

Building, Washington, D.C. 20515. If those filing written statements wish to have

their statements distributed to the press and interested public at the hearing, they

may deliver 200 additional copies for this purpose to the Subcommittee on Social

Security office, room B–316 Rayburn House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request

for written comments must conform to the guidelines listed below. Any statement or exhibit not

in compliance with these guidelines will not be printed, but will be maintained in the Committee

files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 format, typed in single space and may not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will

rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material

not meeting these specifications will be maintained in the Committee files for review and use

by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address,

telephone and fax numbers where the witness or the designated representative may be reached.

This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press, and the public during the course of a public hearing may be submitted in

other forms.

Note: All Committee advisories and news releases are available on the World

Wide Web at ‘‘HTTP://WWW.HOUSE.GOV/WAYSlMEANS/’’.

4

The Committee seeks to make its facilities accessible to persons with disabilities.

If you are in need of special accommodations, please call 202–225–1721 or 202–226–

3411 TTD/TTY in advance of the event (four business days notice is requested).

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Comlate starting, but I would like to welcome all of you to the joint

mittee as noted above.

Chairman SHAW. Welcome. I apologize for being a few minutes

f hearing of the Human Resources and Social Security Subcommittees.

Yesterday, Chairman Archer raised an issue that is very disturbing to me and to many of us, and I am sure it is disturbing to the

Subcommittee Members on both sides of the aisle. I’m referring to

the computer hackers disabling major Internet Web sites and accessing consumer credit information. We are concerned because the

Social Security Administration’s computer systems guard the most

sensitive records of the American people, their wage and other personal information.

I know Social Security has world-class security measures in

place, and I am sure this is a top priority for the Commissioner,

but I want to comment publicly that the Social Security Administration has the full support of this Committee to help protect the

privacy of the American people. Such was stated yesterday by

Chairman Archer. We must catch these Internet hijackers and put

an end to this cyberterrorism. There is nothing funny or smart

about it. It is criminal activity and they should be punished.

Today’s hearing is about Social Security’s current and future

service delivery challenges. Social Security touches nearly every

American family. In 1999, the Social Security Administration paid

Social Security and SSI benefits to more than 50 million beneficiaries. Without a doubt, continuing to provide timely, accurate

benefits and world-class service will remain Social Security’s number one mission in the years ahead. This mission will become more

complicated as the huge baby boomer generation enters its peak

disability years and then enters retirement age starting in 2008.

By 2010, Social Security retirement benefits claims are expected

to rise by 16 percent and disability claims by 47 percent. The rapid

rise in disability claims is especially noteworthy since we know disability cases are the most complex, time consuming, and expensive

from an administrative standpoint. For an agency facing a wave of

retirement by its own workers and high expectations from customers, there is a great challenge. This is no idle concern.

Although Social Security is widely regarded as among the best

administered Federal programs, and it is, the need to improve public service was highlighted in a recent report by the bipartisan Social Security Advisory Board. The report concluded, and I quote,

‘‘There is a significant gap between the level of services that the

public needs and that which the agency is providing. Moreover, this

gap could grow to far larger proportions in the long term if it is

not adequately addressed.’’

5

This is our purpose today, to examine what Social Security is

doing now to prepare for the even greater challenges of tomorrow.

In addition to the Advisory Board and General Accounting Office,

we will hear from experts on how high performing public and private organizations have prepared for emerging challenges and

thrived. We have even booked a futurist—new word to me—to help

us to do some deep thinking about changing values, attitudes, customer service preferences, and technologies that will affect Social

Security’s ability to provide services for the impending wave of

baby boomers.

For those who think that it’s just too much action to pack into

one hearing, you are right. That is why the Social Security Commissioner, Ken Apfel, will join us at an upcoming meeting about

Social Security’s plans to respond to such challenges. Today’s hearing will put those plans in context. That way, we will have a better

chance of assessing what the right track is and whether Social Security is on it when it comes to delivering the services to the public

in the 21st century.

I now yield to my co-chairman of this hearing, Nancy Johnson.

Chairman JOHNSON of Connecticut. Thank you, Chairman Shaw.

I just want to welcome those who are testifying.

I share the Chairman’s great alarm at the security challenges

that the Social Security system faces. Of all of our government

agencies, the Social Security computers contain more personal data

routinely and across the board than any other system, and it is extremely important that we meet the challenge of security. And

while I know they are serious and dedicated about this, as we witness new abilities to enter our systems, we really are going to have

to look at new possibilities for security. So it is a tremendous challenge, but it is an extremely important one. We will not be able to

govern if we cannot protect private information.

I also want to mention that, unfortunately, I am not going to be

able to stay through the whole hearing, and I just wanted to extend

a special welcome to the former member of Parliament from New

Zealand who is here as a distinguished visiting scholar and from

whom we will hear on the last panel, Hon. Maurice McTigue.

We do have an excellent series of witnesses, and I would like to

move on with the hearing. So welcome to you all and thank you,

Chairman Shaw.

Chairman SHAW. Mr. Cardin.

Mr. CARDIN. Thank you, Mr. Chairman. First, I would like to put

into the record the opening statement from Mr. Matsui, the Ranking Member on the Social Security Committee, if I might; and, Mr.

Chairman, let me also acknowledge that we have on the floor today

a bill from the Ways and Means Committee, so I am going to have

to leave also and I apologize for that. These conflicts do occur.

Mr. Chairman, we may spend a good portion of this year debating on how much of the overall Federal budget surplus should be

Social Security and Medicare. At the very least, there appears

agreement not to spend any of the Social Security-generated surplus other than use for Social Security. However, saving Social Security money while allowing the disbursement system for those

funds to deteriorate may be a hollow victory for our elderly and disVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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abled Americans who depend on the timely assistance from our insurance system that they paid into.

I am therefore pleased, Mr. Chairman, that you are holding these

hearings to examine the readiness of the Social Security Administration to provide reliable service when the baby boomer generation

retires. In this context, there is one question our Subcommittee

must address head on. How long can a shrinking work force cope

with a growing workload before the quality of service is affected?

Over the last 15 years, the number of full-time employees of SSA

has declined from 80,000 to 63,000 while the amount of work performed by that agency has grown substantially.

Mr. Chairman, I might tell you that many of those 63,000 live

in the Third Congressional District of Maryland. I am very proud

of the work that SSA employees do every day of the week in their

public service on behalf of the citizens of this nation. They work

very hard. They are very dedicated and they have been working

with less and less resources every year.

The increase in SSA’s workload is projected to continue to grow

over the next decade, 16 percent for retirement cases, 47 percent

for disability cases, and 10 percent for SSI claims. Increased efficiencies due to technology advances or system improvements may

moderate the impact of workload increases on SSA, but we all need

to acknowledge that there is a core work force that is needed at

SSA in order to handle the applications, answer questions, and determine eligibility.

Mr. Chairman, I look forward to our witnesses addressing these

work force issues as well as providing their advice on special steps

that SSA should take to improve the service it provides to millions

of Americans. Thank you.

Chairman SHAW. And thank you, and without objection, your full

statement, that of Mr. Matsui, and all the Members of both these

Subcommittees will be placed in the record.

[The opening statement of Mr. Matsui follows:]

Opening Statement of Hon. Robert T. Matsui, a Representative in Congress

from the State of California

Thank you, Mr. Chairman.

I want to commend you for holding this hearing on the challenges facing customer

service delivery at the Social Security Administration. By now, it is common knowledge that long-term demographic trends will pose a challenge for the financing of

the Social Security program in the years ahead. However, the challenges that these

and other trends will create for the administration of the Social Security and SSI

programs are less widely discussed.

Consequently, I look forward to hearing from our witnesses today about the customer service challenges those trends will create and about the initiatives that SSA

has already implemented or is currently developing in order to meet those challenges.

We all know that as the Baby Boom generation retires, SSA will experience rapid

workload growth. At the same time, however, SSA will experience the loss of a significant proportion of its workforce since many of its employees are Baby Boomers

themselves. SSA must begin to plan now to ensure that it is prepared to handle

these events when they occur.

The task at hand is vitally important. With the possible exception of the Internal

Revenue Service, the American people interact with the Social Security Administration more than any other federal agency. As a result, for many Americans the Social

Security Administration is the face of the government. They equate the manner in

which SSA delivers services with the government’s responsiveness in general to the

problems they face and the needs they may have.

7

Recent studies indicate that SSA is performing fairly well with regards to customer service. Last December, SSA scored an 82 out of a possible 100 on the American Customer Satisfaction Index compiled by the University of Michigan Business

School and the American Society for Quality. In contrast, the aggregate score for

the federal government as a whole was 68.6.

We should also keep in mind that SSA was at the forefront of the federal government’s efforts to prevent Y2K-related computer problems, easily the largest and

most pressing service delivery issue the government has addressed in recent years.

Despite these successes, progress still needs to be made on a number of service

delivery problems, such as the length of time necessary to complete a disability appeal. While it is incumbent upon the Congress to highlight these problems and to

ensure that SSA is administering its programs properly, it is also incumbent upon

the Congress to provide SSA with the resources it needs to meet a growing workload.

The FY 2000 appropriation for SSA’s administrative budget that Congress enacted

last year was $6.572 billion, $134 million below the $6.706 billion requested by the

President. SSA projects that, as a result, the agency will be able to process 169,000

fewer disability claims, 91,000 fewer retirement/survivors claims, and answer 3 million fewer telephone calls to its national 800 number.

While we must receive every assurance from SSA that the agency is utilizing its

existing resources in the most efficient manner possible, I strongly hope that we will

not repeat this short-sighted approach to budgeting when we consider the agency’s

FY 2001 appropriation this year.

I want to thank all of the witnesses for being here, and I look forward to hearing

your testimony.

Schieber are members of the Social Security Advisory Board. This

Thank you.

Chairman SHAW. Our first two witnesses, Mr. Ross and Mr.

f Advisory Board was set up back in 1994 as a bipartisan board

which was supported by the Administration as well as by the Congress in order to take a close look and give us a road map on how

we can do better in providing the Social Security functions to the

people that it’s designed to serve.

Welcome to both of you, and, Mr. Ross, if you would start out on

the testimony. Thank you for being with us.

STATEMENT OF HON. STANFORD G. ROSS, CHAIR, SOCIAL SECURITY ADVISORY BOARD; AND FORMER COMMISSIONER,

SOCIAL SECURITY ADMINISTRATION

Mr. ROSS. Mr. Chairman, Chairman Johnson and Members of

the Subcommittees, I want to thank you for your invitation to testify. This is an opportunity for the Social Security Advisory Board

to address the issue of how the Social Security Administration can

better fulfill its obligation to serve the American people.

With your permission, I would like to submit my full statement

for the record and briefly summarize some of the major points.

Chairman SHAW. Without objection, the full text of the testimony

will be placed in the record, as it will for all the witnesses today,

and you may proceed as you feel most comfortable. Thank you.

Mr. ROSS. I’m going to be sharing my time with Sylvester

Schieber who is member of the Board. As the chair of the Board,

I’m going to try to present the basic thrust of what we learned in

over 2 years of study.

First of all, I want to make it clear that when Congress created

our Board in 1994, it was given a mandate to make recommendations for how the Social Security Administration can improve its

8

service to the public. We did not volunteer for this task. This task

was part of the job that you wanted the Board to do.

When we began our work, we had no preconceptions, but by the

time we finished after 2 years and issued our 85-page report last

September, we had the unanimous endorsement of all of the members of the Board, Democrats and Republicans, and most importantly our report was issued in a nonpartisan spirit. It was a professional job.

The bottom line of that report is as follows: The Social Security

Administration has serious problems that need prompt attention.

Most importantly, there are not only current problems that need

attention, but it is absolutely clear that the problems will get worse

in the future if not addressed now. It takes a long time to get to

the situation that the agency is now in, and there are no quick

fixes. It’s not going to be easy to get out of it, but the time to start

is clearly now.

This is a situation that the public will feel directly if the tide is

not reversed. So the time to do something is now before you have

a lot of public discontent. We have come to the Congress to try to

get the Congress to deal with this set of issues.

All is not bleak. The Social Security Administration is fortunate

to have an experienced and dedicated work force and a management that ranks among the top of government agencies. Having

said that, though, those assets do not justify complacency because

they alone have not been adequate so far to deal with the problems

that face the agency. SSA needs to move forward on its problems

urgently. It needs to change, but it also needs resources to help it

make the changes that are needed.

What are the problems? Problems manifest themselves most obviously in overcrowded waiting rooms where waits of 2, 3, or 4

hours are not uncommon, inconveniencing many people who come

to the office to get a Social Security card or file a claim and putting

pressure on overworked employees to process work faster even if it

means cutting corners. There are large backlogs in a number of

areas of the agency’s work, which means that work does not get

done in a timely manner, and there is also broad consensus among

staff in the field that the quality of work and program integrity are

at times seriously threatened.

To deal with workload pressures, the agency is continually shifting work from one component to another, addressing one problem

while creating a new one. A prime example of this robbing Peter

to pay Paul is how the agency deals with the 800 number. To meet

the goal of answering 95 percent of calls in 5 minutes, SSA has

been diverting employees from their own important work to answer

the telephone. This is generating delays in other parts of the agency and producing even more telephone calls. A vicious cycle has

been created that is undermining the quality of service agencywide.

Despite agency efforts, 800 number service remains far from satisfactory. As Chart 1 shows, of the 79 million calls to the 800 number in 1999, 20 million either resulted in a busy signal or were

abandoned before receiving service. Thus only 75 percent of the

public’s calls actually received service. Moreover, this performance

will only go down in 2000 under the budget that has been proposed

9

thus far. That budget shows only 57 million calls being answered

in 2000, so even if there were no more calls, that 75 percent would

be down to about 70, and if calls increase, it could even go from

75 percent to two-thirds.

I do not think that is adequate telephone service. What are the

causes? What are the roots of this problem? The telephone is just

a prime example. Prolonged downsizing has contributed to the

agency’s problem. As Chart 2 shows, since 1982 employment at

SSA has declined by 27 percent, and most importantly the number

of employees in the field has declined by more than 29 percent.

Downsizing has occurred across government, and in Chart 3 we

have compared SSA to two other agencies that have service delivery functions, the IRS and the Department of Veterans Affairs, and

Social Security has declined more where as the IRS has even gotten increases.

Changes in the managerial structure have also been an issue and

created difficulty. There are far fewer managers, and the managers

are less able to monitor, to check, to try to provide the kind of quality control that they have previously provided. The impact of past

staffing cutbacks and managerial changes will be felt even more

acutely over the next decade when a large portion of the agency’s

seasoned work force is expected to retire.

Chart 4 shows that the number of retirees will almost double between now and 2007, and this retirement wave will be occurring

at the same time that the baby boomer generation will increase the

numbers who need to be served, which is shown on Chart 5. A significant portion of this growth, too, will be in the DI and SSI disability programs which are highly complex to administer.

In general, the agency’s work is growing more complex. Disability

applications, for example, increasingly involve mental impairments

which are frequently difficult to evaluate and require careful judgment. The legislation passed last year to help the disabled return

to work will add to the agency’s responsibilities. And yet, as far as

I know and I received a briefing yesterday, there is no money in

the budget specifically designated to address the new responsibilities and needs that will be created by the new legislation.

I could say more, but time is short, but I hope I will have said

enough to convince you that SSA cannot continue with business as

usual if it is to meet its growing challenges. The Board has made

several basic recommendations for how the agency should proceed

to begin to meet these challenges.

First, the agency needs a service delivery plan that sets fourth

for the short- and long-term how it expects to handle its growing

workloads, whether through staffing increases, technological improvements, changing the way the agency does its business, or a

combination of these approaches. It needs the work force plan that

was called for by the 1994 legislation and which has not yet appeared, and that work force plan needs to be tied in with an information technology strategy so that people are trained and hired to

do the right jobs based on the rapidly changing technology that is

available.

Second, the agency needs to make dramatic improvements in its

telephone service and systems capabilities and accelerate significantly the use of new technologies.

10

Third, the agency needs to address longstanding institutional

problems. These include a culture that discourages open discussion

of problems, which means that problems are not being addressed

in a forthright way. Also, there are major weaknesses in communication between SSA’s headquarters and operations in the field,

including the state disability agencies, which undermine the ability

of those in the field to understand agency policies as well as the

ability of headquarters to benefit from the experience and ideas of

employees in all parts of the agency. Further, SSA’s administrative

structure spreads responsibilities over too many components, making communication, coordination, team work, and timely decisionmaking difficult to achieve.

Changes in SSA’s structure and business processes are crucial if

the agency is to the meet its future challenges, but the agency will

need additional resources as well, both in the short term and long

term. The upcoming retirement wave and the aging of the baby

boomers make it critical for the agency to begin quickly to hire and

train a work force for the future. We believe as a Board, and it is

unanimous, an important first step is that the agency’s administrative budget, like its program budget, should be explicitly excluded

from the statutory cap that imposes an arbitrary limit on the

amount of discretionary domestic spending.

The agency’s budget should be work-based, not based on artificial

constraints. The American people, by their contributions, are paying for the program and for the service, and they ought to get the

service which they need and to which they are entitled. It is time

for a work-based budget to be given to the agency.

In conclusion, I want to commend Commissioner Apfel and the

agency for beginning to respond positively to the findings and recommendations in the Board’s report. They have started to take

some steps to address a number of problems that are described in

our report, but they will need the help of the Congress and the administration if they are to be successful.

Let’s make no mistake. There is a long way to go. Staying the

course will require years of consistent work. The agency reached its

present condition over a long period, and there are no quick fixes.

But the important thing—the vital thing—is to get started now,

this year.

Thank you very much, Mr. Chairman.

[The prepared statement follows:]

Statement of Hon. Stanford G. Ross, Chair, Social Security Advisory Board

(former Commissioner of Social Security Administration)

Chairman Shaw, Chairman Johnson, and members of the Subcommittees on Social Security and Human Resources, I want to thank you for your invitation to the

Social Security Advisory Board to testify on the subject of Social Security’s service

to the public. I am accompanied today by Sylvester Schieber, a member of the

Board, who is filing his own testimony. I hope that these hearings, coming as they

do at the beginning of this second session of the 106th Congress, will provide the

impetus for the prompt action that is needed to ensure that the Social Security Administration can fulfill its current and future obligation to serve the American people.

Although most people are aware of the financing deficit that the Social Security

program faces over the long term, few are aware of the Social Security Administration’s serious and growing service delivery problems. On behalf of the Board, I welcome this opportunity to begin a public discourse on what needs to be done to ensure that these problems are appropriately addressed. In the report on service that

11

we issued last September, we set forth our unanimous recommendations for the actions we believe are necessary. When the Congress created the independent, bipartisan Social Security Advisory Board in 1994, you included in its mandate a specific charge that the Board make

recommendations for how the Social Security Administration can improve its service

to the public. Responding to that charge has been one of the Board’s highest prior- ities. Over the course of more than two years, we talked with thousands of SSA and

State disability agency employees in all regions of the country. We examined agency

reports and statistics, and we held hearings to hear the views of the public. As with

all the studies that we have undertaken, we have worked in a spirit of nonpartisanship, with the objective of serving the best interests of the agency and the public.

While we have at times been critical of the agency, we have tried to be constructive. SSA has significant strengths, including an experienced and dedicated workforce and a management that ranks among the top of government agencies. But it is also

presently experiencing serious problems and, more importantly, problems that will

only grow disastrously if left unattended. We are grateful for the opportunity to

share with you the findings and recommendations that emerged from our study.

PROBLEMS OF SERVICE DELIVERY—AN UNTOLD STORY

Social Security’s problems in serving the public have been an untold story so far as the American people are concerned. But they are a story well known to those

who are serving the public on the front lines. The response of Social Security and

State agency employees around the country to the Board’s report on service delivery has been overwhelmingly supportive. Employees in all parts of the system -including field offices, teleservice centers, program service centers, and State disability

agencies -have called and written to express their appreciation that the Board has

recognized their concerns and is giving voice to a situation that urgently needs to

be addressed.

The employees who carry out the agency’s work have a tradition of loyal service to the agency and the public. They share a ‘‘can do’’ attitude that has helped the

agency to cope with the many administrative crises that it has faced over the years.

But as workloads have grown and become more complex and resources have dwindled, these highly motivated employees have become increasingly concerned about

their capacity to provide aged and disabled individuals with what they believe is an

appropriate level of service.

SSA’S SERVICE DELIVERY PROBLEMS ARE NATIONAL IN SCOPE

SSA’s service delivery problems are being experienced in all regions of the coun- try. Although most acute in urban areas, they are prevalent in suburban and rural

areas as well. In our discussions with managers and other employees in the field,

we heard repeated accounts of overcrowded waiting rooms, where waits of 2, 3, or

4 hours are not uncommon. These long lines in waiting rooms are not only causing

serious inconvenience to those who need a Social Security card or want to file a

claim for benefits, they are putting pressure on employees to process their work

faster, even if it means cutting corners. An agency executive told the Board that

‘‘employees no longer have the time to cross the t’s and dot the i’s.’’ The effects can be serious. For beneficiaries and claimants it can mean an inaccurate benefit check or failure to file a properly documented disability claim. For

the agency and the public at large it can mean overpayments, failure to follow up

on potential fraud, or erroneous issuance of a Social Security card. Although the agency’s indicators are generally positive, there are signs of prob- lems. For example, despite the agency’s increasing emphasis on collecting overpay- ments, the amount of outstanding debt owed to the agency due to overpayments has

increased steadily over the last 5 years. At the end of fiscal year 1994, outstanding

debt was $4.l5 billion. By the end of fiscal year 1999, outstanding debt was $6.52

billion, a 57 percent increase.

SSA has a large backlog of postentitlement actions in its field offices, actions that are necessary to maintain the accuracy of the benefit rolls. These actions involve

changes in income or resources, changes in address or living arrangements, or other

changes that can affect eligibility or payment amounts or the accuracy of the benefit

rolls. Data from SSA show that the volume of pending postentitlement actions increased from 1.4 million at the end of fiscal year 1995 to more than 2 million at

the end of 1999.

The results of a recent survey of field office managers underscore the concern

about the quality of service that SSA is able to provide. The survey, conducted by

the National Council of Social Security Management Associations, included 111

managers representing a cross-section of offices from all regions, ranging from large

12

metropolitan offices to small rural offices. While three-quarters of those responding

rated the quality of their office’s Social Security claims work as good or excellent,

only about half rated their Social Security postentitlement work as good or excellent, and half rated their SSI claims work, as only fair or poor. Sixty percent rated

SSI postentitlement work fair or poor.

To deal with workload pressures, the agency often shifts work from one component of the agency to another, so while one problem is addressed, a new one is created. A striking example of this is what is happening with the agency’s 800 number.

For years, SSA has been trying to shift as much of its workload as possible to the

800 number in order to cut down costs. An agency goal has been to answer 95 percent of calls in 5 minutes, and to meet this goal, SSA has been diverting employees

in its program service centers from their own critical work to answer the telephone.

As a result, issues that field offices have sent to program service centers for resolution are taking longer and longer to process. At the end of fiscal year 1999, there

were more than a million items pending in the program service centers, a 15 percent

increase from a year earlier. Benefits are being delayed. This generates even more

calls from frustrated claimants who are trying to find out what is happening to their

claims. A vicious cycle has been created, and overall agency service is suffering.

SSA’s statistics show that the agency has been meeting the goal of answering 95

percent of calls in 5 minutes, but what this means requires clarification. In fiscal

year 1999, 79 million calls were placed to the 800 number. Nearly 7 million, or 9

percent of these callers, got a busy signal. Of the 72 million calls actually received

by the 800 number, 13 million, or 18 percent, were abandoned, either while callers

were waiting for someone to handle the call or before they were able to navigate

SSA’s automated service. In the end, only 59 million callers out of 79 million or

some 75 percent actually talked to an SSA employee or finished using SSA’s automated service.

IMPACT OF PROLONGED DOWNSIZING

Although the agency’s current service delivery problems stem from a combination

of factors, the prolonged period of downsizing SSA has experienced over the last couple of decades has been an important factor. Since 1982, employment in SSA has

declined by 27 percent, from 88,600 in 1982 to 64,600 in 1999. The number of employees in the field has declined even more, by more than 29 percent, from 59,800

to 42,300. We believe the agency cannot sustain any further reductions, and in fact

now faces staffing shortages in key parts of its organization.

Downsizing has occurred across government, by some 14 percent overall. But the

impact has not been evenly spread across agencies. SSA’s cuts have been disproportionately large, particularly when compared with what has happened in two other

agencies that also have significant service delivery responsibilities. Although in recent years the IRS has experienced cutbacks, over the 1982–1999 period employment in the agency grew by 19 percent. Over this same 17-year period, employment

in the Department of Veterans Affairs declined by seven percent, after experiencing

substantial growth until 1993.

THE LOOMING RETIREMENT WAVE

The impact of SSA’s past staffing cutbacks will be felt acutely over the next decade. Years of downsizing and severe restrictions on hiring have given the agency

a rapidly aging workforce. The average age of Social Security’s employees increased

from 41 to 46 over the last decade. A major reason the agency has been able to cope

with its growing workloads as well as it has is that its workforce is currently highly

experienced and there are experienced managers in the field. But a large portion

of this seasoned workforce is expected to retire within the next 10 years. Based on

the agency’s projections, the number of retirees each year is expected to more than

double, from 1,350 in 1999 to almost 3,000 a year in 2007 through 2009.

Compounding the problem is the fact that certain field positions will be particularly hard hit. SSA predicts that between 6 and 7 percent of its managers and supervisors in the field will retire in each year between 2004 and 2008. This will come

on top of a reduction in the number of managers that many in the agency believe

is already undermining the quality of work by reducing the amount of training and

quality review that is being done in the field. SSA has the very large challenge of

hiring and training replacements who will be able to carry out the agency’s work

as efficiently and effectively as has been done in the past.

13

FUTURE WORKLOAD GROWTH

The agency’s large wave of retirements will occur at the same time that the workload is expected to grow rapidly. Over the last decade, the number of people receiving Social Security and Supplemental Security Income benefits has grown at a rate

significantly faster than the population as a whole. This disproportionate growth

will accelerate as the baby boom generation ages, placing increasing pressures on

the Social Security Administration to find ways to keep pace. These pressures will

be exacerbated by the fact that a significant portion of the growth will be in the

DI and SSI disability programs, both of which are extremely time consuming for the

agency to handle. Between 1999 and 2020, the general population is expected to

grow by about 16 percent. But SSA’s actuaries expect the number of Old-Age and

Survivors beneficiaries to grow by 51 percent, while the numbers of DI and SSI disability beneficiaries are expected to grow by 71 percent and 17 percent respectively.

GROWING ADMINISTRATIVE COMPLEXITY

The agency’s work is also growing more complex. For example, disability applications increasingly involve mental impairments, which can be very difficult to evaluate and tend to require carefully informed judgment. The agency’s new emphasis

on program integrity requires employees to spend increasing amounts of time on

continuing disability reviews and SSI redeterminations. The job of issuing Social Security numbers has become more complicated and time consuming for the agency

as the number of non-English speaking individuals applying for numbers has grown.

Higher levels of immigration are a factor. Immigrants often are not readily able to

provide all of the documentation that is needed. The number of immigrants admitted to the United States has climbed from 531,000 in 1980 to an annual average

of more than 770,000. SSA now has employees who speak more than 90 languages.

SSA is also being asked to fill needs not being met elsewhere. Many of those who

call or come into the office are seeking help with Medicare, Medicaid, Food Stamps,

or other matters not directly related to SSA’s program responsibilities. Employees

in the field tell us that more and more Medicare beneficiaries are turning to SSA

for information and advice because of the increasing complexity of the law and because no other resource is available in their community to provide this service. In

fiscal year 1999, SSA processed more than 65 million workload items relating to

Parts A and B of Medicare, requiring about 1,400 agency workyears.

The legislation passed last year to help the disabled return to work will add to

the agency’s responsibilities. Even if much of the work is contracted out to other

public or private entities, the public will expect Social Security’s employees to be

able to answer their questions about the new program, and to explain the rules and

the value of the services that are being offered.

WHAT SSA NEEDS TO DO

SSA cannot continue business as usual if it is to meet these growing challenges.

Although employees at all levels of the agency value quality service and are working

hard to deliver it, their ability to do so is increasingly at risk. The agency needs

to focus much more sharply than it has in the past on the question of what it needs

to do to meet its future challenges. The Board has made several overarching recommendations for how the agency should proceed.

Establish a Service Delivery Plan for the Short Term and the Long Term

Although SSA’s strategic plan includes providing ‘‘world-class’’ service as one of

the agency’s strategic goals, the strategic plan does not purport to be a detailed

service delivery plan and includes only limited discussion of how the agency expects

to achieve this goal. We recommend that SSA establish a service delivery plan that

will set forth how it expects to handle its growing workloads, whether through increases in staffing, technological improvements, changes in the way the agency processes its work, or a combination of these approaches. The plan should address both

the short term and the long term.

Planning should not be a one-time exercise. The agency should establish a permanent planning process that will enable it to adapt its plan as needed to reflect the

changes in law, technology, and beneficiary characteristics that will inevitably occur.

Improve Service Delivery Practices and Strategies

Second, the agency needs to make major improvements in its service delivery

practices and strategies. If SSA is to meet its goal of providing high quality service,

it will have to make dramatic improvements in its telephone service and systems

14

capabilities, and accelerate significantly its ability to use new technologies in conducting its work.

In deciding where and how to focus its efforts, the agency should follow the example of the best private and public entities and become much more oriented toward

understanding the needs and expectations of its clients. To do so will require far

better measurement tools than it is currently using.

At present, there are many basic questions for which the agency has insufficient

answers. For example: What are the service delivery needs and expectations of

SSA’s different client groups? Should the agency be developing different service delivery strategies for different client groups? Are SSA’s current 800 number standards lower or higher than the public wants and expects? Would people prefer to call

the 800 number or their local field office and, if so, why?

Only by getting answers to questions such as these will the agency have a valid

basis for setting its goals and for planning how various components of the agency

will be used in delivering service.

The Board has heard numerous concerns about how the agency sets its quality

goals and the way it measures performance. Many of the agency’s own employees

believe there is an overemphasis on process rather than outcomes and that for various reasons agency data sometimes fail to provide a true picture of the quality of

service that is being delivered. Because goals and performance measures tend to

drive the work of the agency, we believe SSA needs to give high priority to improving these measures and the way they are being used, taking guidance from successful private and public entities.

Address Longstanding Institutional Problems

Third, we urge the agency’s leadership to address longstanding institutional problems. Although these problems relate to all of the agency’s work, they directly affect

SSA’s ability to serve the public. These are problems that have grown over many

years and to some degree are endemic to any large institution. To address them will

require changing the culture of the agency. These problems include an agency culture that discourages open discussion and timely identification and resolution of

problems and weaknesses in communication between SSA’s headquarters and operations in the field. The agency also has an administrative structure that spreads

responsibility across many components, making communication, coordination, teamwork, and timely decision making difficult to achieve. This problem of dispersion of

accountability manifests itself particularly in the areas of disability and SSI, where

some of the most serious service delivery problems occur.

SSA’s leadership needs to send a convincing and consistent message throughout

the agency that open discussion of problems is both needed and expected, and that

ideas for resolving problems will not only be welcomed, but rewarded. The agency

also needs to develop and institutionalize better tools of communication between

management in headquarters and employees who work in the field and in State disability agencies. The problem of dispersion of responsibility across many components

of the agency with parallel responsibilities needs urgently to be addressed in order

to enhance accountability for achieving results. Trying to promote better teamwork

is an obvious approach, but organizational changes may be needed as well in order

to satisfactorily address the problems that we have identified.

The Agency Needs the Support of the Administration and the Congress

Finally, although all of the changes that I have been describing are within the

purview of the agency itself, there is one area in which it must have the support

of both the Administration and the Congress. The upcoming retirement wave makes

it critical for the agency to begin quickly to hire and train a workforce for the future. The 1994 legislation making SSA an independent agency called for the development of a comprehensive workforce plan that would serve to clarify the agency’s

human resource needs. SSA’s requests for appropriations should reflect the real

needs of the agency to provide high quality service to the public. We urge the Administration and the Congress to provide the funds that will be necessary to meet

those needs.

The Board is unanimous in urging that the agency’s administrative budget, like

its program budget, be explicitly excluded from the statutory cap that imposes an

arbitrary limit on the amount of discretionary government spending. Both workers

and employers contribute to the self-financed Social Security system, and are entitled to receive service that is of high quality. It is entirely appropriate that spending

for administration of Social Security programs be set at a level that fits the needs

of contributors and beneficiaries, rather than an arbitrary level that fits within the

current government cap on discretionary spending.

15

CONCLUSION

In closing, I want to commend Commissioner Apfel and the agency for beginning

to respond positively to the findings and recommendations in the Board’s report.

They have taken some steps to begin to address a number of problems that we described in our report. The Commissioner has established a process for developing

a service delivery vision for the agency, and steps are being taken to assess the

agency’s workforce needs in future years.

But make no mistake there is a long way to go. Staying the course will require

years of consistent effort. The agency reached its present condition over a long period and there are no quick fixes. But it is vital to get started now and I believe

the Commissioner is doing this.

I assure you that the Board intends to follow up on the work it has done on service to the public. We expect to monitor carefully the progress that the agency is

making to make sure that there is progress in fact as well as in words. We are currently studying how we can work with the agency on a joint undertaking to improve

the way the agency measures customer service.

The functions performed by SSA touch nearly every individual in immediate and

direct ways. Employers, workers and their families, and beneficiaries are all affected

by how well the agency does its job, and we all have a stake in its success. Our

assessment is that SSA is fundamentally strong, and with strong leadership and the

support from the Administration and the Congress that it needs, there is no reason

why it cannot meet the very large challenges that it will be facing in the coming

years.

16

[An attachment is being retained in the Committee files.]

Chairman S

We have a vote pending at this time. So it would be a good time

HAW. Thank you, Mr. Ross.

f to break, and I’m going the break until a quarter after twelve. That

would give people here a chance to run downstairs and get a sandwich or something if you would like. It will not give you a lot of

time, but we will go ahead and break for one-half hour and we will

17

then reconvene and then, Mr. Schieber, we will of course start off

with you and then there will be questions. Thank you.

[Recess.]

Chairman SHAW. I apologize for the lack of attendance that we

have here, but there are a number of things going on, including a

Ways and Means bill on the floor of the House. So I know that a

lot of our Members are working there with that.

Mr. Schieber.

STATEMENT OF SYLVESTER J. SCHIEBER, MEMBER, SOCIAL

SECURITY ADVISORY BOARD

Mr. SCHIEBER. Mr. Chairman, Members of the Subcommittee, I

would like to thank you for the invitation to testify here today.

As Mr. Ross indicated in his discussion, all of the members of our

Advisory Board are in full agreement on the findings and recommendations of our report on service delivery. For me, personally,

getting to those findings and recommendations created some considerable ambivalence. I come from a private sector background,

and I think I’m naturally receptive to many of the changes that are

occurring at Social Security. Work force downsizing, leveling of

managerial hierarchy, implementing technology, customer satisfaction are concerns for survival in business today. Though I embrace

these practices generally, I am troubled by their adaptation in Social Security’s case.

My impression, and I believe that other board members agree, is

that the staffing levels of the agency are largely dictated by budget

and personnel goals with little regard for the agency’s dynamic

workloads. To the extent that the workload is considered, many

people in the agency have little faith in the work force measurement systems that are used, and I think we are at a point now

where the agency should seriously consider replacing downsizing

with right-sizing as has become much more prevalent in the private sector.

Staffing issues must be addressed forthrightly by the agency, and

it must engage both the administration and Congress to have the

resources that are needed to fulfill its charter. The managerial staff

ratios that have been religiously adopted by the agency do not reflect the managerial needs of the organization. The agency should

strengthen its management structure at headquarters and ensure

that field managers have the flexibility and tools to manage their

offices effectively.

SSA should improve its measurement of the needs and expectations of the people it serves and its benchmarking against external

organizations. Some of the goals that SSA has made central to its

operation, such as answering 95 percent of 800 calls in 5 minutes,

do not reflect current private sector standards. Last year, we had

an expert come visit the Board who advised that the goal of the answering of 90 percent of calls within 30 to 60 seconds is now the

market standard. Internet access is replacing phone transactions,

in many instance driving down costs while improving customer satisfaction in the private sector.

Measures of good service from just 5 years ago are no longer sufficient. Despite the fact that the 95–5 standard may not be up to

speed, the agency’s singular focus on it is resulting in downgrading

18

of other services. Pulling staff off of program service center activities to answer phones simply delays the processing that’s supposed

to go on in the PSC centers. Once a periodic duty, today PSC personnel spend virtually the whole year servicing the 800 system.

The problem is exacerbated by Social Security’s antiquated phone

system and software.

The agency needs to become much more adept in acquiring and

integrating new technologies. Its IWS/LAN project to place new

computers in all of SSA’s offices went out for bids in September

1994, but the contract was not awarded until 1996, and the national roll-out of these systems is still underway. Few companies in

highly service-oriented business today rely on 1994 systems and

technology. I wonder how many offices here on Capitol Hill are still

using 1994 vintage computers and operating systems.

If the agency is to keep up with its needs, it must find quicker

ways to acquire state-of-the-art systems and to bring them online.

In addition to the hardware problems, we heard repeated concerns

about the development of and implementation of software systems.

Staffing limits are based on system roll-out schedules that are not

met. This phenomenon simply compounds the difficulties imposed

on field office operations by excessive staff reductions.

The Board’s service report did not address the structural problem

of the agency’s disability determination and appeals processes

which are central to many of the agency’s service delivery problems. We did address these matters in an earlier report. My own

personal concern coming out of this is that the current disability

administration model is so badly flawed that it cannot be successfully implemented. I believe this is a subject that needs to be reviewed again by the agency, the Board, and Congress as Congress

did back in the 1970s.

Downsizing a work force by natural attrition, as Social Security

has done in recent years, results in significant work force aging.

The average age of Social Security’s work force has increased by

more than 5 years over the past decade. Within the next decade,

a disproportionate share of Social Security’s workers will retire.

The personnel situation at Social Security provides significant

risks on at least three fronts. The first relates to a lack of infusion

of new blood and new ideas into the organization dating back more

than 15 years. The second relates to the potential of an abnormally

large number of retirements at the time the beneficiary population

is going to explode. So you are going to have new people without

much background and understanding of the system taking charge.

And the third relates to the loss of a whole generation of workers

who should be maturing into senior positions as these current older

workers matriculate out of the system into retirement. The agency

simply cannot put off hiring any longer.

In closing, let me say that because large bureaucracies are difficult to move, making some of the changes that we recommend,

particularly those that involve changing the agency culture, will

take strong leadership. You will hear the agency has many initiatives to address the problems raised in the Board’s report, but it

has to address them far more aggressively than it has in the past

if it is to meet the changes that it will face in the coming decade.

19

1Sylvester J. Schieber, Ph.D., is Vice President of Research and Information at Watson Wyatt

Worldwide. He has been a member of the Social Security Advisory Board since January 1998.

The views presented in this statement are his own and do not necessarily reflect the views of

other members of the Advisory Board or of Watson Wyatt Worldwide or any of its other associates.

I believe that it needs more resources than are being called for in

the President’s proposed budget if it is to meet these challenges. Thank you very much.

[The prepared statement follows:]

Statement of Sylvester J. Schieber 1, Member, Social Security Advisory Board

Chairman Shaw, Chairman Johnson, and members of the Subcommittees on Social Security and Human Resources, I thank you for the invitation to testify. As Mr. Ross has indicated, the Board’s report on service delivery was the work of all the members of the Board. We are in full agreement on the findings and recommendations. For me personally, getting to those findings and recommendations

created considerable ambivalence.

I have spent most of my career in private enterprise. Although I am a working manager, I have been in management positions for more than 20 years. I work in

an industry and business that is highly competitive. In that context, I have personally had to deal with ongoing market pressures to produce more and better work

with steadily diminishing resources. Given this background, I am naturally receptive to many of the trends that are occurring at Social Security. Downsizing a workforce has been a personal experience, one that I should note I did not relish. Elimination of unnecessary levels of managerial hierarchy is a gospel in our business.

The use of technology is what allows these things to occur. For the business in

which I work, customer satisfaction is a condition for survival. Despite my receptivity to all of these considerations, I am troubled by their adaptation in the administration of the programs under the Social Security umbrella. I would like to take the

opportunity today to elaborate on several points that I think are particularly important. • The Board states in its report that the agency cannot sustain any further reduc- tions in its staff and in fact now faces staffing shortages in key parts of the organization. It is my impression, and I believe that of other Board members, that staffing

levels in the agency have been largely dictated by budget and personnel goals that

have not seriously considered the agency’s workload and how it is changing. To the extent workload is considered, many if not most of the people in the agency have

almost no faith in the work measurement system now used to measure the work

they do. The private sector has replaced ‘‘downsizing’’ with ‘‘rightsizing,’’ and this

should be the agency’s objective as well. This problem needs to be addressed forth- rightly by the agency, and the agency needs to engage with the Administration and

the Congress to get the resources that it needs to satisfactorily fulfill its charter. • The managerial-staff ratios that have seemingly been religiously adopted by the agency do not reflect the managerial needs of the organization. The agency needs

to strengthen its management structure in headquarters and ensure that managers

in the field have the flexibility and tools they need to manage their offices effectively. • SSA needs to do a much better job than it is currently doing of measuring the needs and expectations of the people it serves and of benchmarking its service goals

against external organizations. Some of the goals that SSA has made central to its

operations, such as answering 95 percent of calls in 5 minutes, do not reflect present

day private sector standards. We heard repeatedly that SSA had been judged number 1 in its provision of 800 level service by a DALBAR survey done in 1995. To

give you a sense of the dynamics in the private market place, my employer was

rated number 1 in a 1995 DALBAR survey of defined contribution retirement plan

record keepers in the United States. By 1999 we exited that business because the

linkage of record keeping to mutual fund investing had eliminated our utility as a

provider of these services. Standards for telephone service have been rising. Last

year an expert in the private sector advised the Board that a goal of answering 90

percent of calls within 30 to 60 seconds -not 95 percent in 5 minutes -is now the

market standard. Measures of good service from just five years ago are no longer

sufficient.

• Despite the fact that the 95–5 standard may not be up to grade, the agency’s

singular focus on it is resulting in the downgrading of other service levels. Pulling

staff off of Program Service Center (PSC) activities to answer the phones simply

20

delays case processing which generates additional calls. The use of PSC staff on the

800 system was originally intended to cover only a few days a year when call levels

spiked, specifically days around the first of each month, a day or two after holidays,

and so forth. Now PSC staff are pulled into supporting the 800 system virtually year

round. This problem is exacerbated by the antiquated phone system used by the

agency and its underlying software.

• The agency needs to become much more adept at integrating new technologies

into its processes. Systems improvements are being introduced far more slowly than

in the private sector. In the 1940s, 1950s, and 1960s SSA was a pioneer in using

computer technology but today it is lagging behind. Partly this is a procurement

issue that can only be resolved with streamlining of governmental procedures. The

agency’s IWS/LAN project, which involves placing new computer equipment in all

of SSA’s offices throughout the country, went out for bids in September 1994, but

the contract was not awarded until June 1996 and national rollout is still continuing. Rapid systems advances mean that SSA’s equipment is already out of date even

before it has been universally implemented. If the agency is to keep up with its

needs, it has an urgent need to find quicker ways to get state-of-the-art equipment

to its employees.

• In addition to the hardware problems, we heard repeated concerns about the

development and implementation of software systems. Staffing levels often are

based on promised system rollout schedules that are not met. This phenomenon simply compounds the difficulties imposed on field office operations by excessive staff

reductions.

• As we point out problems, we should also point out that the agency is required

to perform some highly complicated tasks. I refer specifically to the administration

of the disability programs. The Board’s report did not address the structural problems of the agency’s disability determination and appeals processes, which are central to many of the agency’s service delivery problems. In the 1970s, the Congress

made a careful study of the Federal-State relationship between SSA and the State

Disability Determination Services. It also examined the appeals process, including

the Office of Hearings and Appeals and the courts. My own personal concern is that

the current disability administration model is so badly flawed that it cannot be successfully implemented. I believe these are subjects that need to be reviewed again

by the agency, the Board, and the Congress.

• Having sat across a desk from more than one employee whom I had to terminate because of staff downsizing, I appreciate that a preferred way to accomplish

such goals is through natural attrition. If such a policy is implemented over a long

time frame, as it has been in the case of the agency, the end result is a significant

aging of a workforce. The average age of Social Security’s workforce has increased

by more than five years over the past decade. Within the next decade a disproportionate share of current workers will retire from Social Security. The personnel situation at Social Security poses significant risks on three fronts. The first relates to

a lack of infusion of new blood and ideas into the organization dating back more

than 15 years. The second relates to the potential of an abnormally large number

of retirements at the time the beneficiary population explodes with baby boomers’

eligibility. The third relates to the loss of a whole generation of workers who should

be maturing into senior positions as older current workers pass into retirement. The

agency cannot put off hiring any longer.

In closing, let me say that because large bureaucracies are difficult to move, making some of the changes we recommend—particularly those that involve changing

the agency culture—will take strong leadership. Having a confirmed Commissioner

has improved the agency’s ability to take the necessary action.

You will hear that the agency has many initiatives to address the problems raised

in the Board’s report. But it will have to address them far more aggressively than

sue the last part of your statement with regard to the work force

it has in the past if it is to meet the challenges it will face in the coming decade.

Chairman SHAW. Thank you. Mr. Schieber, I would like to purf and new hires and the fact that these retirements are going to coincide with the baby boomers coming into the agency. In the 104th

Congress, we authorized an additional $4 billion. That was during

a 7-year period for the agency to reduce the backlog of the continuVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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ing disability reviews. I gather from your testimony, are you referring only to the retirement area or also in the disability area?

Mr. SCHIEBER. I’m talking about the whole agency. As we have

visited a number of regions as we were developing our research, we

repeatedly heard in the field about the large number of people, significant numbers of people in management positions that are going

to be eligible to retire within the next 3 to 5 years. There is significant concern within the organization about the availability of people to move up in the system and really provide the institutional

knowledge, institutional wisdom to keep things going.

Chairman SHAW. What would you do differently?

Mr. SCHIEBER. I think they need to begin to hire people and get

them on board and possibly even attract people in mid-career that

can come in and assume leadership roles over the next few years.

They have begun the necessary actions. They ran a retirement window last year providing early retirement incentives, I think in August and September of last year, offering early out for some workers so they could simply create some vacancies to hire new blood.

But they need to do more of it.

Chairman SHAW. What is the percentage of the people that you

see in management that will be retiring over the next 5 or 10

years? Mr. Ross, you might chime in on this too if you want.

Mr. ROSS. OK.

Mr. SCHIEBER. We heard some fantastic numbers in some of the

senior grades of the majority of people eligible to retire within the

next 5 years, even numbers approaching 70 and 80 percent in some

cases.

Chairman SHAW. Kim has just handed me a GAO study that I

suppose you have reviewed which is, indeed, frightening. The percentages eligible to retire between—well, this was between 1999

and 2009. GS–1 to 11 was 50 percent; GS–12, 64; 13, 74; 14, 83,

86, 84, 54. What has caused that? It seems that an agency ongoing

like this would have a natural turnover with the growth.

Mr. SCHIEBER. What has happened is you have had this very significant downsizing that has been going on for about 15 years, and

these agencies do not like to lay people off. So what they’re doing

is they are using natural attrition to do the downsizing. If you are

using natural attrition and not enough people are walking out the

door, you simply cannot bring very many new people in. That is

what has happened. And the work force ages very rapidly in that

kind of condition. I have seen it in private sector companies also.

Mr. ROSS. Let me just add one thing that underscores an aspect

of this. Because of so much pressure on the work force, particularly

in the field offices, some of these people may retire even earlier

than they have historically. There is a great deal of burnout and

the loss here cannot be described just in numbers. The field force

in particular is still very customer oriented. They really do believe

in service and dealing with the people who come in the door and

who manage to get them on the telephone. But unless there is

some real overlap between the new hires and these people who

have the historic institutional memory and values, you are going

to be getting different kinds of people. You really do need this overlap.

22

You cannot wait until somebody leaves and then think you are

going the get somebody in who is really a replacement, because you

will never replace that institutional memory unless they have had

a period of mentoring and being part of the traditional organization. What’s going on is really dangerous, particularly with the

staff burnout.

Those figures that have been referred to, could easily get worse.

These are just best estimates.

Mr. SCHIEBER. The situation is that today not everybody retires

when they are eligible, but if you start to see a massive infusion

of eligible beneficiaries coming online, increasing the work burden

at the local office level without a commensurate increase in resources, you have people that can walk out the door because they

are eligible for a pension. Under increased work burdens they are

going to be more likely to do it sooner than they have in the past.

That is the probability. That is the risk.

Chairman SHAW. Let me switch gears for just a moment to you,

Mr. Ross. You recommended that Social Security establish a service

delivery plan over both the short term and the long term. I want

to know why this has not been developed until now. As you know,

the SSA came up with a plan to redesign the disability program

7 years ago, and the plan still is in the progress of being implemented. There have been many questions raised all along about

whether the redesign has really changed anything, and what is the

difference between a service delivery plan that you are referring to

versus the re-design of the disability program plan, and what needs

to be done differently?

Mr. ROSS. The agency has historically at various times tried to

get a service delivery plan together, and by that I mean a kind of

comprehensive analysis of what it’s going to take, what sort of

business processes, what kind of human resources, what kind of

technology strategy you are going to follow, where is the work

going to be done, who is going to do it. The problem historically the

agency has had in doing this, and why it’s never been accomplished, is that if you get all the components represented, they

wind up fighting for turf and jobs and whatever, and it’s sort of a

stalemate that is produced.

The only way out of that kind of situation is with very strong

leadership. You need somebody who hears everybody, talks to all

the stakeholders but then says, ‘‘This is the way it’s going to go,’’

and you put in place a plan. It’s not immutable. It would be subject

to change. Things change. Technology changes. The workload

changes, but you have got to have something that people can relate

to so they know what they are going to be doing in the future and

where. The agency is totally lacking in that understanding at

present.

Chairman SHAW. Mr. Collins.

Mr. COLLINS. Thank you, Mr. Chairman. Thank you, gentlemen.

As you read over, Mr. Ross, your report and, Mr. Schieber, I did

not get back in time to hear all of your comments, and listening

to you, Mr. Ross, as you went through the current problems and

also some recommendations, as someone who has been in a small

business for 35-plus years, you quickly can see where the problem

lies here and it’s in people. When you name each one of these, overVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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crowded waiting rooms, long waits, someone is not there to service

these people, or the ones who are there are not servicing these people. The workloads, and it’s going to get worse as you say, the telephone services, managerial services, all of these pertain to people.

I am reminded that when we created this independent agency

that there was a request that—I say request. It was part of the legislation that the agency is to submit a work force analysis. The

agency. I do not believe we have received that analysis from the

agency itself.

There is one area that I would like for you to maybe further explain, and, too, it goes back to the people within the agency, and

that is that you refer to the culture in the agency. Would you like

to further explain what you are meaning by culture?

Mr. ROSS. Yes, I would. By culture I mean the sort of habits, patterns of thought, processes that get built into any institution. There

are some good things in the SSA culture, particularly in the field.

They do care about the beneficiaries, the claimants, the people that

come in to get a card. But for the agency as a whole, and I would

say it’s particularly true in Baltimore at the higher levels where

there is less contact with the people that are being served, there

is a tendency to brush aside problems, to ignore them, to say, ‘‘Oh,

we have heard that before, we know what’s going on,’’ and there

is very little premium put on really bringing to the top management, to somebody who could make a difference, the Commissioner

for example, a forthright statement of the issues and some options

for dealing with them.

For too long there has been a tendency to sort of keep the problems away, keep them kicked under the rug, and not really pursue

them. In part, this is because there have been too many Commissioners who have come and gone, Now clearly when the independent agency legislation was passed in 1994, the Congress felt that

one of the things that we would get out of it would be the agency

coming up and honestly describing its problems so that the Congress could address them, give it some help and do things, get on

with what the people being served need.

Senator Moynihan’s floor statement—he was the principal sponsor on the Senate side—said this very explicitly, ‘‘We want to hear

about it, and we want to deal with it. We do not want to wake up

some morning and find out that there are all these unaddressed

problems. We care about this agency.’’ And that legislation went

through on a fully bipartisan basis in both houses. Well, here we

are 6 years later and that is not being done, and we cite in our report numerous examples of where the Congress still had to find the

problem, ask the agency about it, and then get some sort of tepid

acknowledgment of it.

Mr. COLLINS. Well, the light is caution there. You are drawing

a distinct difference between the Baltimore office and the field offices, the waiting rooms, the long lines, the telephone ringing in the

field offices, and that’s where we have a shortage of personnel, but

we have an abundance in personnel in the Baltimore office.

Mr. ROSS. I am not so sure about that. I would hesitate to say.

I think people care and are dedicated in Baltimore. The major

thrust of what I was saying, though, when you have to man those

24

front windows and see the people you are serving, it gives you a

different perspective.

Mr. COLLINS. Well, I have very few complaints from my office in

the Georgia and the field offices. I mean they are trying to do their

best there, but we have had testimony here over the last three or

4 years since I have been on this Subcommittee referencing the

Federal Employees Union and how the union itself has actually

prohibited or prevented or delayed or deterred action within the office. Well, that has to be in the headquarters area of Social Security, not in that field office.

Did you sense any problems with the union itself as it relates to

this culture problem that you are talking about?

Mr. ROSS. I think the field force is heavily unionized too. I do not

think that’s just a phenomenon of headquarters. I think the union

has very definite concerns. One would hope that they would share

the concern for the agency’s need to serve the public and they

would balance that concern with their demands related to various

things.

Mr. Schieber may want the add to this. We did not get deeply

into the role of the unions. Our focus was less on who shot Jack,

because this is clearly a development over many Presidents and

many Commissioners. But the question for the future is where do

you need to go and how do you get people tied to a plan for addressing the agency’s problems. So I cannot really fully answer

your question.

Mr. SCHIEBER. I think that the union, the very presence of

unions in the field offices and in the whole operation has made the

administration of the program more difficult. But I think some of

what has evolved here may actually have created the environment

that led to the unions and the unions’ positions. If you have people

in work environments where they see their workload going up consistently and resources available to handle that workload declining,

and these people do not have the sense that management is really

paying attention to what’s going on and cares about the situation,

after a while what happens is the workers decide that they are

going to get together and they are going to put together a sufficient

force that they can command management’s attention.

The big problem that usually occurs when things get to that situation in a workplace is that all of a sudden you have both parties

worrying about the letter of the real or implied work contract.

Workers refuse to take a call at 7:59 in the morning when the work

day does not start until 8. Management worries about what happens at 4:28 in the afternoon when the work day lasts until 4:30.

Everyone ends up worrying about what people are doing one

minute to the next minute and what the precise work agreement

is and they forget the substance of the primary task.

I think that the unions are a complicating factor, but in some regards you can understand why they are there and have complicated matters. Somehow we need to get this agency back together with every party pulling on their oar all trying to go in the

same direction. That’s part of the challenge here, I believe.

Mr. COLLINS. Well, I believe you are exactly right. That is normally what causes problems within a work force, is when management itself and the higher-ups do not listen to those who are actuVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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ally doing the work. There becomes this resistance that builds up

and it gets worse and worse and worse.

Mr. SCHIEBER. Absolutely.

Mr. COLLINS. Do you think that those who are in the head posi- tions at the Social Security Administration can handle this situation and make the constructions needed? Maybe we should not say

can. Do you think they will?

Mr. SCHIEBER. I think that we have gotten their attention with our report and some of the prior reports. There are many issues

that need to be addressed. For example, we are now seeing the implementation of the new union in the administrative law judge

area where, if you really think about it, at least from where I come

from, is mind boggling. So here’s a lot of work to do.

I do believe that we have gotten some people’s attention. Not everybody is happy with us for what we have said, but at least we

have begun to lay out a road map.

Mr. COLLINS. Well, the frustration among the administrative law judges is the reason they made the decision to organize, and that

frustration runs throughout the labor force at Social Security. Thank you, gentlemen. Thank you, Mr. Chairman, for your leniency. Chairman SHAW. Just one final question. This report has been

presented to the Commissioner, I suppose, in person. What type of

response have you all received?

Mr. ROSS. I think the Commissioner is trying to take steps, and you will hear about some of them when he testifies in the next couple of weeks. I know you are planning to schedule him. I think it

is important to keep the right perspective on this. There are no

quick fixes. It took a long time to get here. It is going to take a

long time of continual work to reverse course. To me, the absolutely most important thing, though, is to get started now. It is like the moment when the tide has been going

out and it starts to come in. We need a clear signal from the Congress and the administration that they are going to turn the tide

on this situation. I think it is wrong to just sit still and wait until

you start to hear about problems and complaints back in your districts which could produce a sort of IRS situation which then requires a drastic remedial process. I think this is a case where the

patient should be taken into the intensive care ward right now and

given the things that are needed and put back going in the right

direction, healthy and out of danger. I think the important thing now is taking the first steps and changing the direction, and I think that you will hear from the

Commissioner that he is going to try to do that. Chairman SHAW. Well, thank you both for doing a very fine job and being with us here now this afternoon. Thank you very much. [The following questions were submitted by Chairman Shaw to Dr. Schieber and Mr. Ross, and the respective answers, follow:]

QUESTIONS FOR THE RECORD

1. What in your view is the most important thing the Social Security Ad- ministration must do to ensure they are ready to effectively deliver service

in the 21st Century? SSA urgently needs to address directly how it expects to meet the serious service delivery challenges that it faces both in the short term and the long term. It should

develop a service delivery plan that presents a straightforward assessment of the

26

agency’s human resource and technological needs. In addition, SSA should engage with the Administration and the Congress to work toward getting the resources that

it needs to provide high quality service to the public. 2. The Social Security Administration has a strong reputation among the American people, which some might contend is an extension of the public’s support for what Social Security does rather than how efficiently they do their work. Anyone waiting literally years for their appeal for disability benefits to be resolved knows what I mean. How does Social Security stack up against companies

that provide similar services, such as a private disability insurer? Do their customers ever experience the long waits that some Social Security disability applicants

do? If not, what are those companies doing to provide better service? At what cost?

Is Social Security studying any of them in hopes of improving the service they provide?

In 1995, Dalbar, Inc., a Boston-based financial services company, completed a comparison of SSA’s 800 number service to the service provided by private sector firms. At that time, it rated SSA’s service as number one in the country. But one- time measurements are not good enough. Experts in the private sector have told the

Board that SSA’s standard for telephone service is now far below the standard used

in the private sector. Customer service expectations are rising, and the public will

inevitably find the agency’s service wanting if it lags far behind, whether this be in telephone service or otherwise.

The Board believes that SSA needs to follow the lead of the best private and public entities and make major improvements in the way it measures and uses customer service information. At this time, the agency has only limited information on

client needs and expectations and on client satisfaction with its service. This is especially the case with respect to particular client segments. For example, SSA does

not measure discrete client segments such as SSI disabled children or SSI disabled

adults. Nor does it measure client satisfaction with particular types of agency actions, such as the hearing process. As the private sector has learned, this type of

information is vitally important if the agency is to understand and address its service delivery problems. In addition, in the past the way the agency has set its quality goals and the way it has measured performance have been largely developed internally. SSA needs to

expand its efforts to learn how these important functions are being carried out by

the most successful organizations in the private and public sectors. The agency will

be taking a step in the right direction this summer when it joins with the Board

in sponsoring a joint effort to bring to the agency outside, private sector expertise

and advice on how to improve its client measurement procedures.

Although the agency is conducting several major disability-related research en- deavors, such as the Disability Evaluation Study and studies of alternative ways of

measuring disability, we are unaware of any special agency studies relating to how

private disability insurers are providing service.

3. You indicate that Social Security’s work is complex and becoming more

so, especially in disability, program integrity, return to work, and healthrelated areas. Can these complexities be addressed through changes in regulations or in law? Is SSA conducting a review of their regulations and the

law with an eye towards reducing complexities?

Much of the difficulty of administering SSA’s programs is the result of their inherently complex nature. SSI is a means tested program, and requires a continuing review of income, resources, living arrangements, and other changing factors. The

statutory definition of disability appears relatively simple on its face, but to implement it requires careful development of medical history and use of personal judgment. Disability decision-makers need extensive and ongoing training to carry out

their job.

SSA recently began taking a closer look at the SSI program in an effort to identify

areas where simplification might be possible. We believe that some improvements

can be made by changing agency regulations. Even relatively small changes could

make a significant difference to workers in the field. We have recommended that

as a first step the agency should consult with employees in the field to identify rules

and procedures that are requiring disproportionately large amounts of staff time to

administer but have little impact on benefit determinations and do not require legislative change.

Over the longer term, the agency should examine areas of greater complexity that

involve more substantive change, such as the rules that apply with respect to living

arrangements and in-kind support and maintenance. There are 186 pages of instructions that field office employees are required to follow on this subject alone. Although changes in policy areas like this may be controversial because of their possible impact on individuals and program costs, we believe the agency should take

27

the leadership in identifying the issues that are involved and proposing changes in

regulations or law where it believes they are warranted.

With respect to disability, the agency proposed a major redesign of the determination process in 1994. It has subsequently stepped back from many of the changes

that it proposed at that time, although some are being further tested in 10 prototype

States with a view to nationwide implementation within the next couple of years.

Based on our studies, we doubt that the changes that are being proposed will result

in simplification of the process, although for some claimants the elimination of the

reconsideration step of appeal and changes that are being made in the hearing process may speed up decisions. One area where the process could be simplified and enhanced from the perspective of employees is in systems improvements. As we pointed out in our September 1999 report on service delivery, we are concerned about

the extraordinarily slow pace of developing a systems strategy that will serve all

parts of the disability determination process. Some of the agency’s most serious

service delivery problems now occur in the disability programs. We have urged the

agency to give high priority to developing a system that would support all parts of

the disability process. We have noted that implementation of a well designed system

holds promise for speeding up the flow of cases through the claims and appeals process, improving the quality of the information that is available to decision makers,

and providing a more uniform basis for decision making. In addition, innovations

such as electronic retrieval of medical information could ease the burden on both

claimants and disability workers and these should be incorporated into the process

to the extent possible.

4. The Advisory Board recommends that Social Security’s efforts to improve computer hardware and software should be strengthened and accelerated. What specific hardware and software problems did you observe?

How does Social Security’s systems improvement performance compare

with technology enhancements being implemented in the private sector?

Systems are primary enablers of SSA’s efforts to improve its processes. However,

many of SSA’s systems enhancements and improvements have not been delivered

on schedule and sometimes they do not perform according to the agency’s expectations. Moreover, SSA has not been able to demonstrate that promised dollar savings

have been realized, even when the process has resulted in better service or work

products.

One of the primary reasons for the implementation delays at SSA is the procurement process. The private sector does not have to comply with federal procurement

guidelines and can introduce new technology more quickly and efficiently. In addition, the private sector has greater flexibility than government agencies in using innovative approaches to attract and retain qualified technical expertise. Nonetheless,

we believe SSA should make better use of the flexibility that now exists in the law

to speed up its delivery of systems innovations to workers in the field.

In our visits to field offices around the country, we heard many concerns about

systems technology from SSA employees. We heard that there is a shortage of computers available to field offices. Customers are served more slowly as a result. We

also heard that much of the software used by field offices is not as user friendly

as it should be, especially for many new employees who think they need more training in its use than they have been getting. In addition, we heard complaints that

many of the systems at use in the field are older systems that break down regularly,

causing delays in workload processing.

SSA has been lagging well behind the private sector in its introduction and use

of technology. This is an area where considerably greater investment is needed.

5. You testified that SSA must become much more adept at integrating

new technologies into its processes. How can SSA accomplish this most efficiently and effectively? Does SSA have the needed expertise in-house? Are

they working with outside experts? Should SSA consider outsourcing some

of these functions?

We do not believe that SSA has all of the technical expertise that it needs in

house at the present time. The private sector has more flexible pay and benefit

structures that enable it to be more innovative than government agencies in attracting and retaining skilled employees. In addition, SSA has perhaps not been as aggressive as it could be in using the hiring authorities that it currently has.

Many who work in the field believe that SSA should have far greater capacity

than it has now to keep up with the agency’s systems needs. They also believe there

is a need for additional staff in the field who are qualified to do systems work. One

of the greatest challenges the agency will face is ensuring that it will have adequate

staff with the technical expertise that will be required to met its future needs in

the area of information technology.

28

SSA is facing a situation where the salaries it is able to offer are so much lower than those being offered in the private sector that it is losing its ability to compete.

Other government agencies share this problem, but SSA’s needs are greater than those in many other agencies because of the complexity and vastness of its operations.

Although the salary issue is important today, there are even greater grounds for concern when the impending retirement wave begins to hit the agency. SSA needs

to begin to hire replacements right away if experienced personnel are to be in place

when they are needed. SSA needs to consider whether it should have greater pay flexibility so that it can be more competitive with the private sector in hiring systems specialists. Even with

greater flexibility it is likely that the agency’s salary scales will remain below those offered in the private sector. Given that fact, the Board has urged the agency to examine whether there are areas in which the private sector may be able to perform

tasks that are becoming increasingly difficult for the agency to do. Additional contracting for some of these tasks may be necessary. 6. In your testimony you indicated that the response of Social Security and State disability employees to the recommendations in your report was

overwhelmingly supportive. Have you heard about any disagreement with

your findings or recommendations? We have been pleased with the positive response that the Board has received to

its report from all parts of the agency. Groups that represent managers and other

employees in the field have been particularly supportive of our findings and recommendations. In addition, the Commissioner has announced a number of initiatives that respond to our recommendations. Although there may be some within the

agency who take issue with one or more of our findings or recommendations, no one

has presented reservations to us. We would be pleased to have a dialogue with anyone who would present other views.

7. One criterion for judging service delivery is the accuracy of payments and the ability to recover overpayments. You say that the amount of outstanding debt in the form of overpayments due to SSA has increased from

$4.1 billion in 1994 to $6.5 billion in 1999, a 57 percent increase. Why has

this happened and is SSA doing anything about it? The Board believes that one of the principal reasons for the increase in outstanding debt at SSA is insufficient staffing in the field. Downsizing in the field, combined with the rapidly growing, more complex workloads that we have documented,

have meant that employees no longer have as much time as they need to work on

collections of overpayments. In addition, staffing shortages have also resulted in

fewer quality reviews. In an environment where employees do not have the time to

work as carefully as they should—and there is insufficient attention to training and to quality measures—more inaccurate payments will occur. The Board has been told

that the agency is making more mistakes because there are now too few managers

and supervisors in the field to ensure an adequate level of quality control.

In addition, there are large delays in processing postentitlement actions resulting

from the agency’s focus on the 800 number. SSA has been diverting program service

center staff from their own critical work to answer the telephone. This has caused

more overpayments to be made because beneficiary records are not being kept current. For example, if a beneficiary reports a change in living arrangements and the

SSA program service center is delayed in processing that change, inaccurate SSI

payments will result until the change is made.

SSA has been taking some important steps to improve program integrity. It is

doing more cross checking of data with other agencies. It is planning to use other

debt collection authorities, including Federal salary offset, charging interest, expanding the Treasury offset program, and credit bureau reporting. It has also supported an increase in the size of its Inspector General staff. We believe the most

important need of the agency, however, is sufficient staff in the field to do the careful work that is needed to prevent overpayments from occurring in the first place.

8. Your testimony indicates that Social Security should follow the examples of the best private and public entities as it improves service delivery

practices and strategies. Can you provide some specific examples to illustrate what you mean by this? Does SSA have a process in place to regularly

compare itself with other public and private high-performing agencies?

SSA has begun applying the Baldrige Criteria for Performance Excellence to its

operations. The Baldrige Criteria include making regular comparisons with other organizations as a way of measuring performance. It is our view that SSA should be

doing much more than it has been doing in the way of benchmarking its performance against the best performers in the public and private sectors and it should be

doing this on a systematic basis. SSA’s performance goals, such as trying to answer

29

95 percent of its 800 number calls within 5 minutes, need to be regularly reviewed

and updated. SSA will have to keep up with private sector standards if it is to satisfy the public’s demands for high quality service. 9. You point to several major service delivery problems that need imme- diate attention, including problems with telephone service, waiting times

in field offices, and large backlogs of actions after people start receiving

benefits (such as adjusting benefits for changes in earnings or living arrangements). What in your view are the most pressing problems and their

effects on customers? Did you provide any specific recommendations to

SSA as to how to address these problems?

In our report we urge SSA to identify in its service delivery plan those problems that need to be addressed immediately. We stated that based on our study, we believe that improving telephone service is foremost among them and we make specific

recommendations for how this should be done. We urge the agency to improve its

measures of the public’s needs and expectations for telephone service so that it will

have a more valid basis for setting its goals for service delivery and for determining

how various components of the agency will be used in delivering service. Among

other changes, we recommend that the agency develop more balanced measures of

the telephone service that it is providing—for example, measures that emphasize

the percent of calls that are served as well as the percent that achieve access. We

urge greater attention to improving the telephone service that is being provided by

local field offices. We also urge the agency to improve its telephone service through

technological improvements and to strengthen its training programs for those who

answer the telephone.

Another area needing prompt attention is the administration of the disability pro- grams. We have recommended five priority measures to address the problems: development and implementation of an ongoing joint training program for all adjudicators; development of a single presentation of disability policy that is binding on all

decision makers, including the updating of medical listings and vocational standards; development and implementation of a quality assurance system to unify the

application of policy throughout the disability determination system; improvement

in the quality of medical evidence that is used in determining disability claims; and

development and implementation of a computer system that will provide adequate

support to all elements of the disability claims process. SSA has begun work on all

of these recommendations, but progress has been too slow. We also recommend that the agency pay close attention to service in its field of- fices, where there are serious problems of crowded waiting rooms and long waiting

times. We believe that in the short term the agency should try to alleviate these

service dislocations by shifting either employees or workloads wherever possible.

But we believe that hiring and training additional field office staff will also be necessary.

We will continue to monitor SSA’s progress in addressing these issues and will

work with the agency to resolve them.

10. Social Security has an aging workforce and will soon face a wave of

retirements. Do you think SSA is taking appropriate actions to prepare for

the retirement of its own employees?

SSA has been studying its retirement wave and is planning a program of allowing

employees to opt for early retirement with the expectation that this will enable it

to hire and train younger and more technology-oriented employees to replace them,

thereby smoothing out the transition. Going beyond this, the agency needs to take

a realistic look at its future staffing needs. It is our understanding that as the agency looks toward the future, it is doing so under the constraining assumption that

staffing for the agency is fixed and will not increase.

In contrast, the Board believes that the agency needs to develop a comprehensive

workforce plan as provided for in the 1994 legislation that established SSA as an

independent agency. This plan should provide a bottom-up analysis of the workload

needs of the agency. The agency’s budget should be based on this plan. The agency

also urgently needs a new and more accurate work measurement system in order

to properly assess its workforce needs. SSA’s work measurement system has a pervasive influence on how the agency conducts its business. The field employees who

spoke to the Board about the current system universally described it as inaccurate

fice. We have Cynthia Fagnoni. I have a way of butchering names,

and unfair.

Our next panel will be the United States General Accounting Off

30

so I hope the witnesses will correct me. She is the director of Education, Work force and Income Security Issues at Health, Education, and Human Services Division, and she is accompanied by

Joel Willemssen who is a director in Civil Agencies Information

Systems and the Accounting Information Management Division.

Welcome. We look forward to your testimony, and welcome back

to this Subcommittee.

STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY ISSUES,

HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S.

GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY JOEL C.

WILLEMSSEN, DIRECTOR, CIVIL AGENCIES INFORMATION

SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT

DIVISION, U.S GENERAL ACCOUNTING OFFICE

Ms. FAGNONI. Thank you, Mr. Chairman and Members of the

Subcommittee. I am pleased to be here today to discuss the Social

Security Administration’s service to the public.

SSA faces a number of future challenges that can affect its ability to provide high quality service to the public. Today, I will discuss these challenges and the agency’s strategy to meet them. This

information is based both on our published as well as ongoing

work.

As you have heard, the challenges SSA faces are significant, and

demand for services is expected to grow significantly. Applications

for the DI program alone are projected to increase by 46 percent

by the year 2010. Moreover, the expectations and needs of SSA customers are changing. Some are expecting faster, more convenient

services or more automated services. Others, such as the high proportion of disabled beneficiaries with mental impairments, may require more time and additional staff skills to serve them successfully.

SSA’s ability to cope with these changes will be further challenged because of the number of SSA employees expected to retire.

Agency retirements are likely to peak at the same time the agency

experiences the large increases in workload. To meet these challenges, SSA will need to marshal two of its key resources, its technology and its work force.

We recommended as long ago as 1993 that SSA prepare a service

delivery plan to guide its investment in these two key areas. This

plan would provide a detailed road map of who in the future will

be providing what service, where and how, and SSA is beginning

to take some steps in this direction. Recently, the agency began to

work on what it calls a service vision for the year 2010. As we understand it, though, this vision will provide a high level summary

of future service options rather than the detailed road map needed

to make information technology and work force decisions.

In the meantime, SSA is proceeding with specific information

technology and work force initiatives to deal with its future challenges. To prepare for the expected workload increases, SSA plans

to rely in large part on efficiencies gained through using information technology. However, to date, SSA has had mixed success and

has not yet been able to show specific benefits from some of its

most significant investments. For example, since 1996, SSA has inVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00034 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
31

stalled more than 75,000 new workstations and related equipment

as part of its intelligent workstation local area network. The initiative is to provide the infrastructure to support redesigned, speedier

work processes and make information more available.

However, the benefits of this investment are unclear. SSA has

not yet assessed the initiative’s contribution to improved productivity and service delivery. Further, SSA spent most of the last decade

trying to develop a system to automate its entire disability claims

process. However, after 7 years and more than $71 million, the

agency discontinued the effort and began testing a new, less ambitious strategy. The new strategy currently focuses on automating

the disability intake process using an electronic folder to speed the

movement of disability cases from the field office to a disability determination service.

To its credit, SSA is applying some of the lessons it learned from

the prior unsuccessful effort. It is taking a more incremental development approach and is regularly monitoring the status of the

project at high level meetings. However, the initiative is still in the

early stages and its cost and benefits have not yet been defined.

SSA is also pursuing other technologies that could help enhance

service delivery. It is experimenting with different ways to provide

service over the Internet using imaging and document scanning to

reduce time spent moving and tracking paper documents and is

trying video conferencing of disability hearings to cut processing

time.

Turning now to SSA’s work force initiatives, the agency has

taken steps to prepare for retirements in its own work force and

for changing customer needs and expectations. Many of its initiatives, however, are still in their early stages. Just this week SSA

completed a 5-year work force transition plan. While a step in the

right direction, this plan is long overdue. We recommended such a

plan in 1993, and as you know, the agency’s independence law requires one. The new plan spells out a number of actions the agency

will take to prepare the work force for the future; however, much

work remains. For example, SSA has made progress in identifying

the skills that its leaders and staff need today, but it still needs

to identify the skills its future work force will need. SSA has also

completed a study that helps predict when agency staff are likely

to retire and is beginning to work on ways to make hiring simpler

and faster. Because the agency expects to lose large portions of its

senior executives and other managers, it has also initiated a number of leadership development programs to prepare its future leaders.

In conclusion, even if SSA is able to successfully carry out all of

its planned information technology and work force initiatives, it is

not clear that the agency is adequately prepared for the future. It

will be important for the agency to clarify its gains from information technology and complete a service delivery plan to guide its investments and better position itself to cope with future challenges.

Without a detailed service delivery plan, SSA runs the risk that it

will not have the right people with the right skills and in the right

jobs and locations to face its future challenges.

This concludes my oral statement. We would be happy to answer

any questions you or the members may have.

32

[The prepared statement follows:]

Statement of Cynthia M. Fagnoni, Director, Education, Workforce, and Income Security Issues, Health, Education, and Human Services Division,

U.S. General Accounting Office

Messrs. Chairmen and Members of the Subcommittees:

We are pleased to be here today to discuss the Social Security Administration’s

(SSA) efforts to prepare to meet its future service delivery challenges. As you know,

SSA is one of only a few federal government agencies with which most American

families will have regular contact. In fiscal year 1999, SSA provided benefits of over

$400 billion to more than 48 million individuals through its retirement and disability programs, and the agency maintained records on the earnings of the vast majority of U.S. workers. Because of SSA’s broad reach, the quality of its customer service

can affect the public’s view of government overall, and SSA has committed itself to

providing world-class service to the American public.

While SSA has generally been viewed as one of the better-run federal agencies

and has been recognized for its service to the public, the agency faces a number of

challenges that could adversely affect its ability to provide world-class service in the

future. Today, we are here to discuss (1) the extent and seriousness of these challenges, (2) SSA’s strategy to meet them, and, more specifically, (3) the status of the

agency’s efforts to use information technology to cope with the challenges, (4) the

agency’s efforts to prepare its workforce for the future, and (5) the implications of

SSA’s plans and efforts for its readiness to meet future challenges. The information

we are providing is based on both published and ongoing work (see the list of related GAO products at the end of this statement).

In summary, we found that SSA will be challenged to maintain a high level of

service to the public in the next decade and beyond. Demand for services is expected

to grow significantly, with applications for one of SSA’s already-burdened disability

programs projected to increase by 54 percent by 2010. Moreover, the expectations

and needs of SSA’s customers are changing. Some are expecting faster, more convenient service, while others, such as non-English speakers and the large population

of beneficiaries with mental impairments, may require additional assistance from

staff with more diverse skills. At the same time, SSA’s ability to cope with these

changes will be challenged, since the number of SSA employees retiring is expected

to peak at the same time that large increases will occur in applications for benefits,

according to SSA’s Actuary’s estimates.

While we have recommended since 1993 that SSA prepare a service delivery plan,

SSA is only now beginning to develop a broad vision for customer service for 2010.

This broad vision, as well as a more detailed plan spelling out who in the future

will be providing what service and where, is needed to help the agency focus its efforts to meet its future challenges. In the meantime, to cope with pending workload

increases, the agency is relying in large part on technology to achieve increased efficiencies. However, SSA has had mixed success in implementing information technology initiatives, and the benefits from its technology investments have largely

been unclear. On the other hand, SSA’s efforts to prepare for the increasing number

of retirements from its own workforce and changing customer needs and expectations have shown more promise, although many initiatives are still in their early

stages and much work remains. SSA will need to fully assess the skills its workforce

will need to serve its future customers, particularly its growing population of disabled beneficiaries and the high proportion of those with mental impairments. SSA

will also need to ensure continuity in leadership through ongoing succession planning efforts. Finally, without a vision for future service followed by a more detailed

service delivery plan, SSA cannot be sure that its investments in technology and

human capital—that is, its workforce—are consistent with and fully support its future approach to service delivery. It will be important for the agency to complete

this plan to guide its investments and better position itself to cope with its future

challenges.

BACKGROUND

SSA administers three major federal programs. The Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) programs, together commonly known as

Social Security, provide benefits to retired and disabled workers and their dependents and survivors. In fiscal year 1999, SSA provided OASI retirement benefits totaling more than $332 billion to 38 million individuals and DI benefits of more than

$50 billion to 6.5 million individuals. The third program, Supplemental Security Income (SSI), provides income for aged, blind, or disabled individuals with limited income and resources. In fiscal year 1999, 6.6 million individuals received more than

33

1Some DI benefit recipients have incomes low enough to qualify them for SSI as well and

receive benefits from both programs. 2Other SSA facilities include 10 regional offices, 7 processing centers, and 1 data operations

center. 3These agencies exist in each state, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. 4The state DDS sites employ a total of more than 14,000 staff.

$28 billion in SSI benefits.1 SSA needs to keep up with changes in the circumstances of those currently receiving benefits—from address changes to changes

in health or work status. In addition, SSA maintains records of the yearly earnings

of over 140 million U.S. workers and provides them with annual estimates of their

future benefits.

To meet its customer service responsibilities, SSA operates a vast network of offices distributed throughout the country. These offices include 1,343 field offices,

which, among other things, handle application in-take; 132 Offices of Hearings and

Appeals (OHA); and 36 teleservice centers responsible for SSA’s national 800 number operations.2 The agency’s policy is to provide customers with a choice in how

they conduct business with SSA. Options include visiting or calling a field office,

calling the 800 number, or contacting SSA through the mail. To conduct its work,

SSA employed 63,000 staff in 1999: 13,000 at its headquarters offices and 50,000

in the field offices and at other facilities. In addition, to make initial and ongoing

disability determinations, SSA contracts with 54 state disability determination service (DDS) agencies.3 While federally funded and guided by SSA in their decisionmaking, these agencies hire their own staff and retain a degree of independence in

how they manage their offices and conduct disability determinations.4

SSA relies extensively on computer technology to support its large volumes of programmatic and administrative work. Since the 1980s, SSA has taken numerous

steps to modernize its computer systems in an effort to better serve its increasing

beneficiary population and improve its productivity. A key aspect of the modernization effort has been the agency’s transition from a centralized mainframe-based

computer processing environment to a more highly distributed processing environment. SSA has also taken other steps to improve its service delivery capability, such

as enhancing its electronic payment services and implementing direct access customer service on the Internet.

SSA FACES SIGNIFICANT CUSTOMER SERVICE CHALLENGES OVER THE NEXT 10 YEARS

Over at least the next 10 years, SSA will face a number of changing conditions

that could tax its effort to provide world-class service. Demand for services will grow

as the baby boom population ages. This growth will place additional strain on the

disability claims process, which is already troubled. In addition, the agency will

have to adapt to changing customer service expectations. For example, some customers may expect faster, more convenient service through the use of technology.

As the agency is trying to cope with these changes, increasing numbers of its own

experienced staff will be retiring.

Customer Demand for Services Is Likely to Grow and Change

SSA expects customer demand for its services to grow and change significantly

over the next 10 years. The aging U.S. population means many more people will be

applying for disability and retirement benefits with SSA, and determining initial eligibility—and in the case of DI and SSI, continuing eligibility—are costly and timeconsuming activities. Figure 1 shows the estimated growth in the number of people

applying for benefits. By 2010, applications for OASI, DI, and SSI benefits are predicted to have increased by 20, 54, and more than 10 percent, respectively, over

1999 levels. Moreover, applications are expected to continue to grow even more dramatically for a number of years after 2010 as the baby boom generation reaches retirement age. More applications imply growth in other work areas for SSA as well,

such as updating and maintaining records for those awarded benefits.

34

5The estimated increase in productivity might be conservative, since SSA predicts a slightly

higher proportion of DI applications, which are more complex and resource-intensive than retirement applications.

Note: SSA’s Office of the Chief Actuary does not have estimates of applications for OASI and DI beyond 2010. Also, these estimates reflect some double-counting

of those individuals who apply for both DI and SSI—a group that is expected to grow from about 480,000 in fiscal year 1999 to 640,000 in fiscal year 2010. Source: Data provided by SSA’s Office of the Chief Actuary.

Increased customer demand for services has serious implications for SSA’s workforce. For example, if SSA did not change the number of staff currently handling

initial applications for benefits, worker productivity would need to increase by 27

percent—whether through technology enhancements, process improvements, or other changes—to manage increases in applications predicted by SSA’s Office of the

Chief Actuary.5 Table 1 shows the increased level of productivity that would be needed to manage predicted levels of applications in 2010.

Table 1:—Productivity Needed to Manage Estimated 2010 Workloads

Fiscal year Initial applications

Processed Work-years required

Initial applications

processed per workyear

1999 (actual) ........................................................................... 6,177,723 16,714 370

2010 (predicted) ...................................................................... 7,855,800 16,714 470

Note: SSA’s accountability report used slightly different data in calculating fiscal year 1999 applications than did SSA’s Office of the Chief

Actuary; the difference amounted to about 66,000 cases.

Source: Fiscal year 1999 data are from SSA’s Accountability Report for Fiscal Year 1999. Fiscal year 2010 data were

calculated from Office of the Chief Actuary data.

Increases in disability applications are particularly worrisome for SSA because of

its complex process for determining whether an applicant is disabled. The process

spans a number of offices and can take a long time. First, an applicant contacts a

field office to file a claim for benefits. This information is forwarded to one of the

state DDS offices to determine whether the individual is disabled. To make this determination, DDS staff must often collect a number of documents, including medical

records and other evidence. The decision itself requires difficult judgments. If the

applicant is dissatisfied with the original decision, the process provides for several

35

6Social Security Disability: SSA Has Had Mixed Success in Efforts to Improve Caseload Management (GAO/T–HEHS–00–22, Oct. 21, 1999). 7The Ticket to Work and Work Incentives Improvement Act of 1999 directs SSA’s Commissioner to provide disability beneficiaries with a ticket, or voucher, they may use to obtain vocational rehabilitation services, employment services, and other support services from an employment network of their choice. 8SSA officials predict an average of 18 percent to retire each year.

opportunities for appeal: a reconsideration of the decision at the DDS, a hearing before an administrative law judge at an OHA, and a review by SSA’s Appeals Council. Finally, after exhausting all these remedies, the applicant may file a claim in

federal court.

Even as SSA expects increases in the number of disability applications, the agency is experiencing difficulty managing its current workload effectively. In 1999, over

500,000 people initially denied disability benefits appealed the decision, and it took

an average of 316 days to reach a final decision for these cases. Reducing the

lengthy period that the disability claims process takes at both the initial and hearings levels has become one of SSA’s priorities for improving customer service. SSA

has been attempting for a number of years to streamline, or redesign, the disability

claims process and has counted on these efforts to help absorb some workload

growth. However, as we testified before you in October 1999, SSA’s past progress

has been slow and disappointing.6 The agency is now conducting a test of some proposed changes and has also begun a new initiative to speed decisions at the hearings level. It will be challenging, but necessary, for the agency to achieve significant

improvements in processing times in order to handle the impending workload increases. Otherwise, the predicted growth in applications could further erode customer service in this area.

In addition to the expected increase in customer demand for SSA services, the demands that customers place on SSA are changing, presenting SSA with a dual challenge. Changing customer expectations are pushing the need for faster, more convenient service from SSA, such as by phone or computer. For example, the volume

of calls handled by SSA’s national 800 number’s automated menu grew by over 1.6

million (13 percent) between 1997 and 1999. More dramatically, during a recent 6-

month period, requests for individual estimates of future Social Security benefits via

the Internet increased by 45 percent. At the same time, some aspects of SSA’s customer service workload have become more time-consuming and labor-intensive. For

example, SSA is hiring more staff with bilingual skills and spending more time serving an increasing number of non-English or limited-English speaking customers. In

addition, since 1986, the proportion of disabled beneficiaries with mental impairments has increased—by 18 percent for SSI and by over 30 percent for DI—and

these beneficiaries can be challenging and even more time-consuming to serve successfully. Moreover, SSA’s efforts to help disabled beneficiaries join or rejoin the

workforce could require some additional time and new skills.7

Retirements of SSA Staff Will Affect Agency’s Ability to Meet Challenges

SSA’s ability to meet growing and changing customer demands will be strained

by increasing retirements expected within its own workforce over the next decade.

SSA’s retirement wave is predicted to begin in 2001 and peak in 2009. As shown

in table 2, more than half of SSA’s 63,000 employees will be eligible to retire by

2009.8 The percentage is higher for employees that compose SSA’s supervisor or

manager ranks. In particular, 83 to 86 percent of SSA’s upper-level managers and

executives (GS–14, GS–15, and SES level) will be eligible to retire by 2010.

Table 2:—SSA Employees Eligible to Retire Between 1999 and 2009

Grade level Number of employees

Number of employees eligible to retire

Percentage eligible to retire

GS–1 to 11 .......................................................... 47,983 23,848 50

GS–12 .................................................................. 8,617 5,518 64

GS–13 .................................................................. 4,395 3,245 74

GS–14 .................................................................. 1,568 1,298 83

GS–15 .................................................................. 479 414 86

SES ...................................................................... 117 98 84

Total .................................................................... 63,159 34,421 54

Source: SSA, Office of Human Resources.

36

9Of SSA’s approximately 1,300 field offices, about 200 have only 1 to 10 employees, and more

than half of all the field offices have 20 or fewer staff, according to the Social Security Advisory

Board. 10Social Security: Sustained Effort Needed to Improve Management and Prepare for the Future

(GAO/HRD–94–22, Oct. 27, 1993). Also, see SSA’s Management Challenges: Strong Leadership

Needed to Turn Plans Into Timely Meaningful Action (GAO/T–HEHS–98–113, Mar. 12, 1998)

and Social Security Administration: Effective Leadership Needed to Meet Daunting Challenges (GAO/HEHS–96–196, Sept. 12, 1996).

Retirement eligibility figures, while useful, do not show the actual challenge an

agency will face in replacing its staff. To get a better idea of the challenges it will

face, SSA has developed estimates of how many staff it will lose each year to retirement and other factors. Figure 2 shows SSA’s predicted workforce losses over the

next 20 years. As the figure shows, peak losses occur in fiscal years 2009 and 2010.

This peak generally coincides with the time period for which SSA’s Office of the

Chief Actuary predicts large increases in applications for benefits. In addition, the

largest number of retirements will most likely occur in job positions that provide

direct service to the public; for example, over 7,500 of the agency’s approximately

16,500 claims representatives—those who accept and process claims for benefits—

are expected to retire by 2010. Retirements can especially affect SSA’s small offices

around the country, where the loss of just a few experienced staff or managers can

seriously undermine customer service and effective operations.9

Source: SSA, Office of Human Resources.

SERVICE DELIVERY PLAN IS NEEDED TO FOCUS EFFORTS TO ADDRESS FUTURE CHALLENGES

To meet the challenges we just outlined, SSA will need to marshal its key resources: its technology and its workforce. To help ensure that these vital resources

are put to the best use, SSA needs to complete a service delivery plan, which we

have recommended as long ago as in 1993.10 Such a plan should spell out for the

future who will be providing what type of services and where these services will be

made available. It should take into account changing customer needs and expectations; the views of interest groups and oversight bodies; and other future challenges,

such as growing workloads. We have also criticized SSA in the past for developing

plans out of sequence, that is, for developing an information technology plan without

having first developed a service delivery plan. Ideally, the agency should base its

37

11SSA uses sampling to assess the level and quality of service provided. Due to budgetary

restrictions, SSA does not collect sufficient data to assess service below the national or regional

level. 12Social Security Administration: Update on Year 2000 and Other Key Information Technology

Initiatives (GAO/T–AIMD–99–259, July 29, 1999).

decisions on and investments in both information technology and its workforce on

a detailed service delivery plan. We view SSA’s workforce, or its human capital, as

an asset whose value can be enhanced through investment, such as training and

staff development. As the value of its people increases, so does the performance capacity of the organization. However, to help ensure their effectiveness, SSA’s human

capital strategies and practices should be aligned with the agency’s vision for the

future, including its plans for serving its customers and its strategic goals and objectives.

SSA has begun taking some long overdue steps to better plan for its future service

delivery; however, much work remains. In 1998, SSA established its Market Measurement Program to improve and consolidate its approach to assessing customer expectations. When this program is fully developed, SSA will monitor and measure the

needs, expectations, priorities, and satisfaction of customer groups, major stakeholders, and its workforce. However, collecting complete data on the needs, expectations,

and satisfaction of these various groups is a multiyear project, and as of January

2000, SSA was about midway through its initial wave of data collection, analysis,

and reporting. SSA has a separate initiative under way to assess future customer

needs and expectations.

In addition, the agency has recently begun to develop a service vision for 2010.

This vision, according to SSA officials, will be based on future customer and stakeholder needs and expectations and will provide a high-level summary of the principles on which SSA plans to base its service provision and the various delivery options available. The agency plans to incorporate this vision into its strategic plan,

which will be updated this year. However, to be useful for making information technology and human capital decisions, this vision should be followed by a more detailed service delivery plan. According to SSA officials, the agency does not have

plans to go beyond this vision statement to issue a more detailed plan at this time.

Without a well-developed plan, SSA cannot be assured that its investments in

human capital and technology, as well as any related decisions regarding the use

of its many field offices and other facilities, will fully support its vision of service

delivery. Nor can the agency be comfortable that it has taken the necessary steps

to meet its future challenges.

SSA’s ability to develop a detailed service delivery plan is hampered by weaknesses in the agency’s complex systems for measuring workloads, productivity, and

quality. These weaknesses make it difficult both to monitor current customer service

performance and to use the data to develop and support planned changes. For example, SSA has the capability to monitor and measure only service provided at the national and regional level, not by its various offices located around the country.11 As

a result, line managers and planners do not know the efficiency or quality of service

provided by individual offices, or even the level of service provided by phone as opposed to face-to-face, and therefore cannot plan for improvements accordingly. SSA

recognizes that its workload and quality data have limitations. The agency is in the

early stages of piloting alternative workload measurement systems and also just recently let a contract to review its quality assurance systems.

In the absence of a service delivery plan, SSA has a number of information technology and workforce initiatives under way to try to prepare for its future challenges. The following sections provide specific information on agency progress on

these initiatives.

SSA IS PURSUING VARIOUS INFORMATION TECHNOLOGY INITIATIVES, BUT IMPACT ON

SERVICE DELIVERY CANNOT YET BE DETERMINED

To cope with its growing workloads, SSA plans to rely extensively on information

technology to help it achieve processing efficiencies and improved customer service.

To this end, the agency has devoted considerable time and effort to identifying strategies to meet its goal of providing world-class service. SSA has pursued a number

of initiatives over the past decade aimed at establishing the technological infrastructure needed to enhance its claims-processing capabilities and the overall administration of its programs. As we testified last summer,12 however, SSA has experienced

mixed success in carrying out its information technology initiatives and it has not

yet been able to demonstrate specific benefits resulting from some of its most significant investments. Because many of SSA’s information technology initiatives are still

38

13Social Security Accountability Report for Fiscal Year 1999. 14 Under the IWS/LAN initiative, SSA planned to replace approximately 40,000 ‘‘dumb’’ terminals and other computer equipment used at SSA and state DDS sites with an infrastructure

consisting of networks of intelligent workstations connected to each other and to SSA’s mainframe computers. 15GAO/T–AIMD–99–259, July 29, 1999.

in various stages of development, evidence of how they will improve the agency’s processing capabilities and service to the public remains to be seen. According to a 1999 independent audit of SSA’s systems environment, the agency must also contend with the challenge of further strengthening controls over the information contained in its computers.13 The vulnerabilities identified could lead to

unauthorized access to, and modification or disclosure of sensitive SSA information.

In turn, this could result in the loss of data and resources, and compromised privacy

of information associated with SSA’s key business processes.

SSA’s Computer Modernization Benefits Are Not Yet Known

One of SSA’s most significant initiatives is its computer modernization effort known as the Intelligent Workstation/Local Area Network (IWS/LAN). SSA considers this initiative to be the linchpin for both its customer service program and its

entire business approach. It is expected to provide the automation infrastructure to

support redesigned work processes and improved availability and timeliness of information throughout SSA and state DDSs.14 SSA began acquiring the IWS/LAN equipment in December 1996. As of January 30, 2000, the agency reported that it

had installed more than 75,600 intelligent workstations and about 1,900 local area

networks in most of the approximately 2,000 SSA and state DDS sites included in

the initiative.

Despite its progress, however, the benefits of SSA’s investment in IWS/LAN remain uncertain because the agency has not yet assessed the initiative’s actual contribution to improving productivity and service delivery. While SSA should be able

to claim some work improvements from various desktop management tools that are

integral to IWS/LAN, such as on-line guides and directories, standardized notices,

and electronic mail, it has not completed the evaluations needed to fully assess the

efficiencies achieved through implementing IWS/LAN and its impact on providing

higher quality and more effective service.

During our testimony before the Social Security Subcommittee last July,15 we expressed concern that SSA lacked target goals and a defined process for measuring

IWS/LAN performance—two ingredients essential for determining whether this investment will yield expected improvements in service to the public. We noted, in

particular, that SSA had not conducted postimplementation evaluations to determine actual project costs, benefits, risks, and returns, as required by the ClingerCohen Act of 1996 and Office of Management and Budget guidelines. During a

meeting held in December 1999 to address our concerns, SSA’s chief information officer acknowledged the need to measure IWS/LAN’s performance, stating that the

agency had begun formulating plans and studies to evaluate the investment in and

actual benefits resulting from the initiative. On February 8, SSA told us that it is

now conducting studies to assess the benefits of IWS/LAN.

SSA Has Initiated a New Technology Strategy to Support Its Disability Claims Process

As part of its efforts to reengineer the disability claims process, SSA intended to

achieve many of its benefits from programmatic software that was to operate on

IWS/LAN. To accomplish this, SSA spent most of the last decade designing and developing the Reengineered Disability System to serve as part of the enabling platform for its modernized disability claims process. Specifically, this system was to

automate SSA’s disability claims process—from the initial claims-taking in the field

office to the gathering and evaluation of medical evidence in the state DDSs, to payment execution in the field office or processing center, and include the handling of

appeals in hearing offices. However, after approximately 7 years and more than $71

million reportedly spent on the initiative, SSA discontinued the effort due to software development and performance problems.

SSA is now pursuing a new technology strategy to address the needs of its disability claims process. This new strategy is expected to incorporate several key components, including: (1) an electronic disability intake process, (2) enhanced state DDS

claims processing systems, and (3) a technology approach to support new business

processes within OHA. The components are to be linked to one another through the

use of an electronic folder that is being designed to transmit data from one processing location to another, and to serve as a data repository, storing documents that

39

16Of the 54 state DDSs, 46 currently use one of three standard systems to process disability

claims. SSA is currently working with 6 DDSs to procure standard systems and the remaining

2 DDSs use their own systems. 17 A public key infrastructure is a system that uses a matching pair of encryption and

decryption keys, along with digital certificates, to achieve secure Internet services. 18 Under phase I, 37 hearing offices were selected to apply the new hearings processes in conjunction with 10 states that will prototype modifications to the disability process.

are keyed in, scanned, or faxed. SSA began testing the electronic disability intake

component and electronic folder in July 1999, with the overall objective of automating the disability interview process in the field office, storing data collected through

the interview in an electronic disability folder, then passing key data elements to

a DDS system.16 SSA believes that automating the field offices’ disability intake process will expedite the movement of the disability case to the DDS, and will provide for earlier adjudication and claimant notification. To date, SSA has tested the electronic folder concept on two versions of the electronic disability software. Based on the test results, it now plans to test the software

and electronic disability folder in a limited production environment in May 2000 at

its Delaware field offices and the Delaware state DDS. However, according to SSA’s preliminary plans for the effort, the agency does not expect to be able to identify

anticipated benefits or return on investment from the electronic disability intake

component until fiscal year 2001, after the project has undergone additional testing

at other sites.

One of the keys to SSA’s success in developing the electronic disability intake

process is avoiding the kinds of development and performance problems that caused

the Reengineered Disability System to be discontinued. As part of its evaluation of

that development effort, SSA identified a number of lessons learned that it is now

applying in its development of the electronic disability intake component. For example, SSA is taking an incremental approach to developing the electronic disability

software application, and is using proofs-of-concept to evaluate design options before

pursuing full development. SSA also is managing the development by (1) requiring

a contract between software developers, customers, and end users to ensure that all

parties agree to the scope of the project; (2) performing risk assessments and developing risk mitigation and project management plans; and (3) regularly monitoring

the status of the project during weekly management meetings chaired by the Deputy Commissioner for Systems.

Beyond the electronic disability intake process, SSA has agreed to have several

state DDSs participate in pilot projects to determine the technology required to support a fully electronic (that is, totally paperless) disability process, and help assess

costs and benefits of the electronic folder. For example, the California DDS has been

selected to explore whether a public key infrastructure 17 can be used to test digital

signatures and encryption for medical consultative examination reports. One challenge associated with this is that, by regulation, some medical evidence used to

make disability determinations must contain an original signature. In New York,

the DDS has been approved to test the management and operational feasibility of

an electronic disability folder as it moves through all stages of SSA’s processes. Further, a pilot being undertaken by the Wisconsin DDS will use the electronic folder

concept to measure the impact of an electronic claim on the DDS’ internal operations. The results of this pilot are expected to provide SSA with information needed

to interface a fully paperless DDS case processing system with an electronic folder,

and allow the agency to study the ergonomic effects of paperless processing upon

DDS case adjudicators.

Various Initiatives Are Being Implemented to Support OHA, but Long-Term Efforts

Have Not Been Defined

SSA also considers information technology crucial for improving the capabilities

of OHA. Therefore, in August 1999, the Commissioner of Social Security launched

a hearings process improvement initiative to create a more customer-focused and efficient hearings process. The initiative, combined with related activities such as the

expanded use of videoconferencing, aims to further reduce processing times and

yield higher quality decisions without additional resource expenditures. OHA implemented the first phase of this initiative in January.18

While the hearings process improvement plan relies mostly on innovative management and reengineered processes to achieve dramatic improvements in the process,

it also emphasizes the use of various technologies and automation to help support

the workload management needs of the hearing offices. For example, SSA is exploring the use of videoconferencing as a means to potentially reduce OHA’s hearings

processing times, travel time and travel-related expenses, and to increase time

40

available for in-office case-related work. Currently, in order to provide customers

with face-to-face hearings and to correct imbalances in workloads among various

hearing offices, administrative law judges can spend a large percentage of time (for

example, about 2 weeks out of every month) traveling to remote sites. However, the

use of videoconferencing equipment to conduct hearings has the potential to reduce

travel and processing times, while increasing productivity.

In February 1996, OHA began piloting the use of videoconferencing equipment at

two sites—West Des Moines, Iowa, and Huntington, West Virginia. SSA estimates

that, to date, a total of about 3,000 hearings have been held via videoconferencing

at the two pilot sites. According to SSA, an evaluation of the initial pilot results

cited a reduction in processing time of 38 days in one of the pilot offices. OHA has

been granted permission to expand the use of videoconferencing to nine additional

sites. Once the equipment has been installed at these sites and the users become

comfortable with the technology, OHA plans to collect data to quantify the benefits

of expanding the use of videoconferencing at additional sites.

SSA is also evaluating whether speech recognition software can be used by OHA’s

administrative law judges and other staff involved in writing decisions to dictate

their casework directly into a computer. SSA initiated this effort in December 1999

and is currently testing the dictation performance of speech recognition software on

computers of various processing speeds. This technology is still being evaluated;

therefore, the agency has not determined the costs and benefits associated with the

initiative, or whether it will actually be implemented.

In collaboration with the Office of the Deputy Commissioner for Systems, OHA

has also identified four automation efforts to support the goals of the hearing process improvement initiative. These projects, as shown in table 3, primarily involve

the use of automated tools to aid in scheduling hearings and to monitor and track

case progress throughout the hearing process.

Table 3:—OHA Automation Initiatives to Support HPI Goals

Initiative Objective Anticipated effect on workload Status

Hearings Process Improvement (HPI) software modifications.

To make software modifications to the Hearing Office Tracking System that

will support HPI.

Allow users to track incoming HPI work, work assigned to processing

groups, and the date a

case is certified and generate two new case tracking reports.

Modifications completed in

January 2000; system

currently being used by

the 37 hearing offices

participating in phase I.

Consolidated Hearing Office

Tracking System.

To replace the existing Hearing Office Tracking System with a new application compatible with IWS/

LAN and to consolidate

the over 140 separate

databases into a single

database.

Enable OHA to provide timely

reporting nationwide and

locally and reduce the

duplicate data entry currently required to track

cases during the various

levels of OHA appeals.

System currently being designed and a prototype

scheduled to be implemented at OHA’s headquarters in Falls Church,

Va., by September 2000.

Hearing Office Scheduling

System.

To provide automation support in the scheduling of

hearings that will record

and share current information on resource availability within the hearing

office and electronically

notify the administrative

law judge that a hearing

has been scheduled.

Reduce the manual aspects

of the hearing scheduling

process.

Pilot testing began at OHA

headquarters in Falls

Church, Va., during January 2000 and will be deployed at hearing offices

in Johnstown, Pa., in February 2000 and Morgantown, W.V., in March

2000.

Document Generation System To provide users with a system that generates decision notices and routine

correspondence.

Provide the means for generating and subsequently

editing decisions and

supporting correspondence, with an automated

interface to the Hearing

Office Tracking System.

System implemented in November 1999.

Source: SSA.

41

It is too early to know whether these four automation projects will successfully support the goals of the hearings process improvement initiative. To date, only two

of the four have been developed and integrated into the phase I process modification

now under way, and the ability of these systems to adequately support the modified hearing processes has not yet been determined. Further, according to the acting director of OHA’s Office of Management, these efforts do not represent all of the in- formation technology that will be required to help OHA increase its productivity and

provide better service to its customers. SSA is currently in the process of preparing

a statement of work for the development of an information technology strategy to

support OHA’s business processes. Until this strategy is defined, SSA will not be in a position to identify all of the technologies that will be required to meet OHA’s needs. SSA expects to finalize OHA’s information technology strategy by late 2000.

SSA Is Exploring Other Technologies to Enhance Service Delivery

As noted, SSA’s beneficiaries of the future are likely to demand services that re- quire new and different technological options to meet their needs. As a result, SSA’s success in providing world-class service will depend on how effectively it can apply

such technologies to enhance its processing capabilities. Moreover, recently enacted

legislation and other initiatives have reenforced the urgency for agencies such as

SSA to pursue new and innovative technologies to carry out their work. For example, the Government Paperwork Elimination Act states that federal agencies should

consider electronic alternatives to paper submissions, and the President’s December

1999 electronic government initiative directs the heads of various federal agencies

to make a broad range of benefits and services available through private and secure

electronic use of the Internet. In addition, the National Partnership for Reinventing

Government is urging federal agencies to offer more online transactions through its

Access America initiatives.

To its credit, SSA has long recognized the potential value in exploring alternative technologies to enhance its service delivery. Since at least 1997, SSA has included

an electronic service delivery strategy in its planning documents to support the

agency’s strategic direction in dealing with self-service communication technology and access delivery alternatives. Moreover, it has explored a number of technology

options, ranging from Internet/electronic commerce applications to document imaging and scanning. SSA is currently in various stages of designing, developing, and

implementing these technologies. In doing so, however, it faces the continual challenge of ensuring that the technologies are implemented in a manner that is costeffective and that does not compromise the security and privacy of beneficiaries’ personal information. In addition, a technological challenge that SSA must address before some of its interactive Internet or electronic commerce initiatives are implemented is upgrading its network infrastructure, including IWS/LAN, to provide the

capabilities to support the new applications.

Internet service is a major project under SSA’s electronic service delivery initiative. SSA is pursuing the use of Internet applications to increase the number of electronic transactions available to the public and to help absorb workload increases expected as aging baby boomers become eligible for benefits. Over the past 3 years,

SSA has explored various options for deploying Internet applications on its web site

without violating privacy issues. As a result, it now uses Internet applications to

assist customers in conducting business with the agency. For example, customers

can download or access the ten most frequently requested SSA forms, such as an

application for a Social Security card, and they can use on-line applications to determine the location of a Social Security office and to request statements of benefits.

SSA has now developed an Internet services tactical plan, which includes a framework for identifying and approving future electronic service delivery efforts. However, it has not finalized a strategy that identifies and prioritizes the applications

that will be deployed. Further, because it has not developed a service delivery plan,

SSA does not yet know what efforts will be required to meet its future service delivery needs. Moreover, according to the framework, before SSA launches its future efforts, it needs to determine (1) what electronic services make sense to its customers,

(2) how the new line of service delivery will affect the agency’s workload, (3) whether the agency has the available resources (staff and technology) to implement these

actions, and (4) whether the technology needed to authenticate the electronic customer is available. Furthermore, sound, disciplined processes such as business case

analyses; cost/benefit analyses; and requirements, technology, and risk assessments

must drive these decisions. Some of these processes are already being applied to

various projects under the direction of SSA’s Software Process Improvement Program, which is responsible for serving as a focal point to the agency’s Office of the

Deputy Commissioner for Systems. The objective of the Software Process Improvement Program is to create an environment that encourages continuous improvement

42

19Social Security Administration: Software Development Process Improvements Started But Work Remains (GAO/AIMD–98–39, Jan. 28, 1998). 20This figure does not include additional costs that may be incurred to replace hardware acquired for the initial pilot sites. 21 Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/GGD–99–179, Sept.

1999). 22 Human Capital: Key Principles From Nine Private Sector Organizations (GAO/GGD–00–28.

Jan. 31, 2000). 23SSA’s draft workforce transition plan includes over 20 action items, with milestones for each

to (1) improve the workforce projection and planning process, (2) recruit new employees with

the necessary competencies, (3) fully develop and utilize employees, and (4) provide a work environment and culture that support employees.

in software development activities that will result in the ability to develop highquality software products and to deliver those products to the customer as promised.19

In addition to its electronic service delivery initiatives, SSA intends to support its future workload demands with projects that rely on technologies such as imaging

and scanning. One such initiative, which has been ongoing since September 1993,

is SSA’s Paperless Processing Center project to begin to turn SSA into a paperless agency and position its resources and processes to meet emerging workloads. Based

on its initial analysis of the paperless processing concept, SSA estimated that 95

percent of a clerk’s workday and 10 percent of a manager’s workday are occupied with paper-related activities, such as locating a folder and the associated case material. Accordingly, the project’s objective is to implement document imaging and paperless technologies to improve SSA’s intensive paper folder processing in pro- gram service centers and the Office of Central Operations. Paperless processing will

be used to eliminate SSA’s reliance on paper records by building and storing com- prehensive electronic client records. The new technology is expected to increase productivity and quality, which in turn should reduce backlogs and improve public

service.

SSA has thus far spent about $35 million to implement and maintain the necessary hardware and software to pilot paperless processing at three program service

center sites. According to the project manager, about $69 million 20 in total will be

required to complete the paperless processing effort at all six program service centers and the Office of Central Operations by 2001. SSA projects savings attributable

to the paperless processing initiative of about $161 million, or about 5,600 work

years, once fully implemented. However, the agency considered this to be a conservative estimate, given that additional savings may be realized from being able to redirect program service center staff to other activities such as assisting the telephone

service staff in responding to 800-number telephone calls.

SSA’S EFFORTS TO PREPARE ITS WORKFORCE FOR FUTURE CHALLENGES ARE IN

EARLY STAGES, AND MUCH WORK REMAINS

SSA has a number of initiatives under way to help prepare its workforce for the remaining two key challenges: the impending retirement of many of its experienced

staff and the projected changes in customer needs and expectations, such as the increased reliance on technology as a means of service delivery. Many of these steps

are consistent with principles of human capital management laid out in our selfassessment checklist 21 and common to organizations recognized as leaders in

human capital management.22 (App. I outlines the selected principles of human capital management that are most relevant to SSA’s future challenges.) Many of SSA’s

human capital initiatives, while steps in the right direction, are in the early stages.

Moreover, without a more detailed future service delivery plan linked to the agency’s goals and objectives, SSA runs the risk that it will not have the right people,

with the right skills, in the right jobs and locations to face its future challenges.

SSA Is Making Progress in Workforce Planning Initiatives, but Some Lack Future

Focus

Principles of human capital management suggest that workforce planning be explicitly linked to an agency’s strategic and program plans and that it meaningfully

involve the agency’s human resource professionals. To address SSA’s impending

staff retirements and to help meet its strategic objective ‘‘to create a workforce to

serve SSA’s diverse customers in the 21st century,’’ SSA is developing a 5-year

workforce transition plan. The draft plan strives to project what SSA expects to happen in the future, what the effects will be on SSA’s workforce needs, and what actions SSA should take to respond to those needs.23 The plan was developed with

direct involvement of key human resource professionals throughout the agency.

While a step in the right direction, such a plan is long overdue. The Social Security

43

24Social Security Administration: Stable Leadership and Better Management Needed to Improve Effectiveness (GAO/HRD–87–39, Mar. 18, 1987) and Social Security: Status and Evaluation of Agency Management Improvement Initiatives (GAO/HRD–89–42, July 24, 1989). 25GAO/HRD–94–22, Oct. 27, 1993. 26 Core competencies identified by SSA are attributes needed by all its employees, including

qualities such as organizational awareness, basic program knowledge, ability to apply computer

skills on the job, and customer service orientation. 27See GAO/HRD–94–22, Oct. 27, 1993; GAO/HEHS–96–196, Sept. 12, 1996; GAO/T–HEHS–

98–113, Mar. 12, 1998; and Social Security Administration: Significant Challenges Await New

Commissioner (GAO/HEHS–97–53, Feb. 20, 1997).

Independence and Program Improvements Act of 1994, which made SSA an independent agency, required that the agency’s appropriations requests for staffing and

personnel be based on a comprehensive workforce plan. Even earlier, we reported

that the absence of a human resource plan contributed to low morale and problems

in such areas as management development and training, agencywide succession

planning, and employee/management communication.24 Then in our 1993 report, we

recommended that SSA develop a long-term human resources plan to prepare for

future workforce changes.25

To link workforce planning to an agency’s strategic vision, human capital principles call for identifying current and future human capital needs. Recognizing that

it will shortly be facing the prospect of increasing retirements, SSA conducted a

study that predicts staff retirement and attrition by year, from 1999 to 2020, as well

as by major job position and agency component. In making these predictions, SSA

went beyond identifying the dates that its employees first become eligible to retire

by also factoring in 10 years of historical retirement data to make more realistic

projections. SSA also conducted focus groups with recent retirees and current employees eligible for retirement to identify factors that might affect their decisions to

retire once eligible. SSA expects the focus group and retirement study will help its

managers in their workforce planning, and the agency intends to update the retirement data on an ongoing basis. However, aspects of the retirement study might not

provide sufficient detail to be useful for some line managers. For example, the study

lumps all supervisors from the GS–7 to SES levels into one supervisory category,

whereas planners and managers might have a better idea of how to prepare for the

imminent retirement of upper-level managers if the supervisory data were broken

out into further detail. SSA officials told us they plan to break out these data in

their next update. Even with this additional information, the agency will still need

to develop a concrete plan to clarify what staff, where, and with what skills will be

needed to replace the retirees.

To ensure that staff are well-prepared to do their jobs, agencies need to compare

the competencies—that is, the knowledge, skills, and abilities—employees need,

both now and in the future, with the knowledge, skills, and abilities they possess.

As part of its draft workforce transition plan, SSA has already identified core competencies that its leaders and employees need to possess today, and the agency is

taking steps to evaluate and update the competency levels of its existing staff.26 The

agency has developed automated self-assessment tools that supervisors and nonsupervisors can use to evaluate whether they need improvement in any of the core

competencies identified by SSA. When the individual completes the assessment, the

tool identifies areas where the individual needs additional training and provides a

list of courses related to that competency area. The self-assessment tool is currently

being piloted at a number of SSA offices. Through these steps, SSA is making some

progress in identifying and developing core competencies, but its efforts to date reflect today’s workforce needs rather than tomorrow’s. SSA recognizes the need to

identify competencies that reflect its future workforce needs so that it can more effectively recruit and train staff to handle more complex customer needs and new

technology tools. Once these future competencies are identified, SSA will need to develop new training programs, including ones to help current and new staff adapt

to new technologies.

To ensure continuity of leadership, human capital principles call for identifying

leadership traits that support an agency’s mission and goals, and building and sustaining a pool of leaders through recruitment, hiring, development, retention, and

succession planning. We have long stressed the importance of succession planning

and formal programs to develop and train managers at all levels at SSA. As early

as 1993, we recommended that SSA make succession planning a permanent aspect

of its human resource planning and evaluate the adequacy of its investments in

management training and development.27 SSA has recently created three 2-year national development programs to help prepare selected staff to assume mid-and topVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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28Specifically, SSA established the Career Development Program in July 1998 to prepare staff

for senior executive positions and the Advanced Leadership Program in April 1999 to prepare

staff for upper-level management positions. SSA expects to begin the Leadership Development

Program, to prepare staff for mid-level management positions, in March 2000. 29 As a basis for its training, SSA is using 30 leadership competencies, or characteristic and

measurable patterns of behavior, skills, and knowledge, that engender superior performance in

a specific job.

level leadership positions at the agency.28 Each of these programs accommodates be- tween 35 and 40 staff. Because of the large number of expected management retirements, SSA hopes to regularly repeat these national programs over the next 10

years. It will be important for the agency to do so. In addition to these formal development programs, SSA is also taking steps to provide leadership training for all its

current supervisors, managers, and executives.29 Also, SSA regional and head- quarters offices are providing additional leadership development opportunities to

their staff.

SSA Recognizes Need to Improve Hiring and Investments in Human Capital

Human capital principles call for recruitment and hiring strategies that target short-and long-term needs and gaps identified through workforce planning. SSA’s draft workforce transition plan emphasizes that, in the future, the agency will need

to recruit and hire more effectively in order to compete with other employers in an

increasingly tight labor market. To improve the recruitment process, SSA is seeking

ways to simplify its hiring process and use special recruiting tools and approaches

for hard-to-fill jobs. For example, SSA is seeking to establish procedures for providing a salary advance for job candidates who possess skills that are in high demand

and is developing criteria for incentive awards for current employees who refer candidates who are hired for such jobs. However, according to SSA officials, the agency’s freedom to take some actions may be limited by governmentwide hiring and recruitment policies and procedures, such as the Office of Personnel Management test

requirements for certain SSA positions and governmentwide salary limitations on

candidates who have needed critical skills. SSA recognizes it will need to work with

the Office of Personnel Management to simplify these aspects of its hiring process.

Regardless, competition in the labor market for staff with certain critical skills, such

as those with the ability to help design and implement new technology and information systems, is already stiff, and SSA will have difficulty recruiting the talent that

is critical to meeting future challenges.

Maintaining positive working conditions is another key to human capital management. The draft workforce transition plan contains a number of action items to provide a work environment that supports employees. These items include opening or

expanding child care facilities and fitness centers and making improvements to SSA

facilities from a environmental health or security standpoint where necessary. For

certain action items, such as expanding telecommuting, it will be difficult for SSA

to be receptive to employee preferences for telecommuting because employees’ responsibilities for customer service often require an on-site presence.

Another essential human capital principle involves investing in training and development to build and sustain critical staff competencies, such as customer service

skills. This would include appropriate investments in education, training, and other

developmental opportunities to help employees build the competencies needed to

achieve the agency’s strategic mission and goals. To meet the challenge of SSA’s significant training needs, particularly with respect to the large number of anticipated

new staff, SSA has been making a major investment in Interactive Video Teletraining (IVT). SSA currently provides IVT at 78 percent of its sites around the country

and is considering expanding IVT to all sites. In the past, staff generally received

classroom training, often away from their home units—an approach SSA recognizes

will be costly to sustain given the large numbers of new staff it expects to hire. In

contrast, SSA’s new IVT training modules are transmitted live to staff in their home

units, thus avoiding travel and per diem costs. However, to be effective for new

hires, IVT sessions are to be supplemented with on-the-job training by a mentor at

the work site. Providing for mentors will be challenging for SSA given the large

number of experienced staff expected to retire and the growing customer service demands being placed on remaining staff. SSA officials told us that having the ability

to bring new staff on board before the experienced staff retire would facilitate the

mentoring process. SSA plans to evaluate the relative effectiveness of IVT, which

is important, because IVT is new to SSA.

Even though individual elements of SSA’s workforce transition plan are consistent

with principles of human capital management, to date the agency is undertaking

these initiatives in isolation from a comprehensive vision and plan for future service

45

30The OASI and DI Trust Funds are funded by Social Security taxes paid by workers and

their employers. SSI administrative costs are paid through general funds.

delivery. It is vital that SSA’s workforce efforts be well integrated with any future service delivery plans. If they are not, actions taken now could prove counterproductive. For example, SSA is now considering the expansion of its IVT equipment

and facilities to all SSA offices. SSA officials told us that while IVT equipment is

not very expensive, renting or otherwise securing appropriate facilities to support

IVT training can be. However, such investments may ultimately prove unnecessary

if SSA’s service delivery plan calls for adjustments in the number of field offices, other facilities, or the types of services offered at these facilities. Similarly, SSA’s current policy to replace each staff person who retires might result in the deployment of staff in locations or positions inconsistent with the agency’s future vision.

State Disability Offices Face Similar Workforce Challenges

While SSA has taken many steps toward preparing its own workforce for future retirements and other challenges, its workforce planning efforts do not extend to the

large number of state workers who are responsible for making disability determinations. Because state workers are not SSA employees, SSA’s draft workforce transition plan has not taken into account DDS retirement and other workforce trends.

However, the state agencies will likely be undergoing many of the same stresses

being experienced by SSA, including the retirement of large numbers of skilled staff

and stiff competition in the labor market for qualified staff. As noted earlier, these

DDS employees are responsible for making initial and ongoing disability determinations, which requires considerable expertise and knowledge of complex regulations

and policies. It will be important for the DDS offices to adequately prepare for these

workforce changes and for SSA to share its plans and other useful approaches with

DDS managers. According to SSA officials, DDS staff have participated in SSA’s training programs, and SSA plans to invite them to use the self-assessment tool for

evaluating their core competencies.

IMPLICATIONS OF SSA’S CURRENT PLANS AND EFFORTS FOR ITS FUTURE READINESS

If SSA is to meet its future customer service obligations, it is important for the agency to allocate funds for the human capital and information technology initiatives that are vital to helping it face its impending challenges. For example, SSA

will need to continue and possibly expand its leadership development programs to

fill the gaps left by retiring managers and executives. Also, SSA will need to continue exploring and investing in various technologies to manage its increasing workload and to improve service delivery. As with any initiative, continued funding

should depend on progress or demonstrated success under a program of vigilant

oversight. Even if SSA is able to carry out all of its planned initiatives, however, it is not clear that the agency is adequately prepared for the future. SSA is relying heavily

on its information technology to meet the demands of its growing workload. However, until the agency has identified the benefits from its various information technology investments, it will not know whether it will need to take other steps, such

as adding staff or contracting out some of its services, in order to cope with its future challenges. Given the serious challenges facing the agency, you asked us to address the pos- sible implications of removing SSA’s administrative expenses from the caps that are

used to limit discretionary spending in the federal budget overall. If this were done,

SSA would no longer have to compete directly with other federal agencies for funding of its administrative expenses, which could potentially result in increased administrative funding. However, most of SSA’s administrative budget is financed from the OASI and DI Trust Funds.30 An increase in SSA’s administrative budget, unless paid for through a separate appropriation of general funds, would not provide

any new source of funding but would instead draw additional resources from the Social Security Trust Funds. This would reduce the Trust Fund surpluses and somewhat exacerbate the Social Security program’s long-term financing problems. In ad- dition to the effect on the Trust Funds, there are technical implications of removing

SSA’s administrative expenses from the discretionary spending caps. (We provide

additional information on this issue in app. II.)

Because of the uncertainty over whether SSA’s current plans are adequate, it will

be important for SSA and the Congress to closely monitor the agency’s performance.

Also, before future financing needs can be determined, SSA will need to complete

a number of important planning activities. To help ensure that SSA makes optimal

use of its resources and places itself in the best position to cope with its future service delivery challenges, the agency will need to complete its 2010 service vision and

46

31 An effective performance culture to enable and motivate performance is another key human

capital principle; however, SSA’s efforts in this area were beyond the scope of our review.

use it to develop an overarching service delivery plan. This plan would then provide

the framework to guide SSA’s future information technology and workforce decisions and investments. In addition, the agency will need to • complete assessing the benefits (that is, work-year savings, productivity in- creases, and improved service delivery) expected from its information technology initiatives and then closely monitor whether these benefits are being realized; • monitor service delivery measures for degradation in quality, satisfaction, and timeliness and to look for early warnings of work backlogs; and; • more aggressively pursue all possible options to better position itself for the fu- ture, such as developing cost-saving electronic service delivery options or altering

the agency’s network of facilities to more closely align it with projected customer needs and demographics. This concludes my formal statement. I will be happy to answer any questions that you or other Members of the Subcommittees may have.

GAO CONTACTS AND ACKNOWLEDGMENTS

For future contacts regarding this testimony, please call Cynthia M. Fagnoni at

(202) 512–7215 or Joel Willemssen (202) 512–6253. Kay Brown, Valerie Melvin,

Christine Bonham, Michele Grgich, Yvette Banks, Robert Tomcho, and Gregory

Micco also made key contributions to this testimony.

APPENDIX I

SELECTED HUMAN CAPITAL PRINCIPLES KEY TO MEETING FUTURE CHALLENGES

FACED BY SSA

In reviewing SSA’s efforts to prepare its workforce for the future, we applied the

following human capital principles.31

Treat human capital management as fundamental to strategic business management. Integrate human capital considerations when identifying the mission, strategic goals, and core values of the organization as well as when designing and implementing operational policies and practices. Establish measures that provide meaningful data on the full range of human capital policies and practices and how these

practices promote mission accomplishment.

Implement an explicit workforce planning strategy. Link workforce planning to the

agency’s strategic and program planning efforts to identify its current and future

human capital needs, including the size of the workforce; its deployment across the

organization; and the knowledge, skills, and abilities needed for the agency to pursue its strategic mission and goals. Include information on attrition rates, retirement rates, and projected eligibility by pay level and ratios of managers to employees. Identify roles and core competencies needed to support the agency’s strategic

mission and goals, and develop an inventory of current and future skills needs and

gaps.

Integrate employee input into the design and implementation of human capital

policies and practices. Incorporate the first-hand knowledge and insights of employees and employee groups to develop responsive human capital policies and practices.

Empower employees by making them stakeholders in the development of solutions

and new methods of promoting and achieving high performance of organizational

missions and goals.

Hire, develop, and sustain leaders according to leadership characteristics identified

as essential to achieving specific missions and goals. Define the kind of leaders the

agency wants (that is, their roles, responsibilities, attributes, and competencies) and

the broad performance expectations it has for them in light of the agency’s shared

vision. Ensure continuity through succession planning; investments in development

programs; selection criteria linked to the agency’s shared vision, competencies, and

broad expectations; and information on attrition rates, retirement eligibility, and retirement rates of executives.

Hire, develop, and retain employees according to competencies. Develop a recruiting and hiring strategy that is targeted to fill short-and long-term human capital

needs and, specifically, gaps identified through the agency’s workforce planning efforts. Make appropriate investments in education, training, and other developmental opportunities to help employees build the competencies needed to achieve

the agency’s shared vision, and encourage continuous learning and improvement.

Deploy the agency’s workforce in a way that is appropriate to mission accomplishment. Ensure that workforce deployment—both geographically and organizationVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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32GAO/GGD–00–28, Jan. 31, 2000. 33GAO/GGD–99–179, Sept. 1999. 34The Deficit Control Act is the Balanced Budget and Emergency Deficit Control Act of 1985,

as amended by the Budget Enforcement Act of 1990, the Omnibus Budget Reconciliation Act

of 1993, and the Budget Enforcement Act of 1997. The Deficit Control Act, as amended, established statutory limits on federal government spending for fiscal years 1991 through 2002 by

creating, among other controls, annual dollar limits (spending caps) on discretionary spending

funded through the regular appropriations process. 35For fiscal years 2001 and 2002, SSA’s administrative funding does not compete with highway and mass transit spending, each of which has its own cap. 36The scorekeepers are the House and Senate Budget Committees, the Congressional Budget

Office, and OMB.

ally—supports organizational goals and strategies and is keyed to efficient, effective, and economic operations.

Measure the effectiveness of human capital policies and practices. Evaluate and

make fact-based decisions on whether human capital policies and practices support

high performance of mission and goals. Implement an information technology plan. Ensure that employees are making the best use of information technology to perform their work and to gather and share

knowledge. Emphasize the alignment of the agency’s information technology pro- grams with its mission, goals, and strategies. Obtain employee feedback to ensure

they have the opportunity, incentives, support, and training to make the appropriate

use of technology to do their work and to acquire and share knowledge. Take the necessary steps to help employees effectively, economically, and efficiently pursue their work. Establish appropriately tailored organizational structures, job processes, workplace facilities, tools, work arrangements, and other resources and

opportunities.

These human capital principles represent a subset of principles from two recent

GAO reports that are relevant to our review of SSA’s efforts to address its future

challenges. The first report 32 is a checklist of human capital issues we developed

for agencies to use to self-assess and improve their human capital management. The

values found in the checklist were derived from various sources, including 32 leading organizations in the private sector and governments at the state and local levels

and abroad; the Malcolm Baldridge National Quality Award Program and the President’s Quality Award Program; relevant parts of title 5 U.S.C., ‘‘Government Orga- nization and Employees,’’ and 5 C.F.R., ‘‘Administrative Personnel"; and the

Government Performance and Results Act, along with agency guidance contained in

OMB Circular No. A–11. The second report 33 identifies common principles underly- ing the human capital strategies and practices of nine private sector organizations

recognized as innovative or effective in strategically managing their human capital:

Federal Express Corp.; IBM Corp.; Marriott International, Inc.; Merck & Co., Inc.;

Motorola, Inc.; Sears, Roebuck and Company; Southwest Airlines Co.; Weyerhouse

Co.; and Xerox Corp., Document Solutions Group.

APPENDIX II

TECHNICAL IMPLICATIONS OF REMOVING SSA’S ADMINISTRATIVE EXPENSES FROM THE

DISCRETIONARY SPENDING CAPS

Currently, SSA’s administrative expenses are controlled by an obligation limita- tion contained in the agency’s appropriation act and are considered to be subject to the discretionary caps set forth in the Deficit Control Act (DCA).34 This means

SSA’s administrative expenses must compete for funding with most of the other dis- cretionary programs in the budget.35

We contacted OMB regarding the implications of removing SSA’s administrative

expenses from the discretionary spending caps. According to OMB, under the DCA,

if this funding was moved out from under the discretionary caps by redefining it

as ‘‘mandatory’’—that is, not subject to appropriation act control—this would be a ‘‘change in concepts and definitions.’’ The DCA requires adjustments to the caps for such changes in concepts, but the timing of the adjustment would depend on how

the change was made. Further, OMB indicated that if the change was the result

of technical discussions and agreement among the scorekeepers 36 and was not related to making room for additional spending by other agencies under the existing discretionary caps, OMB would lower those caps by the baseline amount of SSA’s administrative funding. If the change was made by direction in legislation, the administrative funding would not be scored as discretionary and more room would be

available under the caps for 1 year. However, OMB would most likely reflect the

change by lowering the caps in subsequent years, thus putting more pressure on the

following year. As a result, in OMB’s view, shifting SSA’s administrative expenses

48

to mandatory spending would create, at the most, additional room under the caps

for 1 year for funding other programs.

Administrative expenses are typically viewed as controllable and thus fit into the

discretionary category of spending. Questions might be raised about considering

them mandatory. If SSA’s administrative expenses are not controlled by obligation

limitations in an appropriation act, the locus of control would shift to SSA’s authorizing committees, and some mechanism would be required to limit the amount of

Social Security trust funds that could be spent on administrative expenses.

It is important to note that the shift in the locus of control would not provide any

new source of financing, because administrative funds come out of the trust funds

that pay Social Security benefits. Therefore, any increase in the administrative

budget would reduce the trust funds unless a general fund appropriation was made.

However, such an appropriation would be discretionary and would have to compete

with other programs for the limited funding under the discretionary caps.

RELATED GAO PRODUCTS

Human Capital: Key Principles From Nine Private Sector Organizations (GAO/

GGD–00–28. Jan. 31, 2000).

Social Security Disability: SSA Has Had Mixed Success in Efforts to Improve

Caseload Management (GAO/T–HEHS–00–22, Oct. 21, 1999).

Human Capital: A Self-Assessment Checklist for Agency Leaders, Discussion Draft

(GAO/GGD–99–179, Sept. 1999).

Social Security Administration: Update on Year 2000 and Other Key Information

Technology Initiatives (GAO/T–AIMD–99–259, July 29, 1999).

SSA Disability Redesign: Actions Needed to Enhance Future Progress (GAO/

HEHS–99–25, Mar. 12, 1999).

Social Security Administration: Technical Performance Challenges Threaten

Progress of Modernization (GAO/AIMD–98–39, June 19, 1998).

SSA’S Management Challenges: Strong Leadership Needed to Turn Plans Into

Timely, Meaningful Action (GAO/T–HEHS–98–113, Mar. 12, 1998).

Social Security Administration: Software Development Process Improvements

Started, but Work Remains (GAO/AIMD–98–39, Jan. 28, 1998).

Social Security Administration: Significant Challenges Await New Commissioner

(GAO/HEHS–97–53, Feb. 20, 1997).

Social Security Administration: Effective Leadership Needed to Meet Daunting

Challenges (GAO/HEHS–96–196, Sept. 12, 1996).

Social Security Administration: Risks Associated With Information Technology Investment Continue (GAO/AIMD–94–143, Sept. 19, 1994).

Social Security: Sustained Effort Needed to Improve Management and Prepare for

the Future (GAO/HRD–94–22, Oct. 21, 1993).

Social Security: Status and Evaluation of Agency Management Improvement Initiatives GAO/HRD–89–42, July 24, 1989).

Social Security Administration: Stable Leadership and Better Management Needed

to Improve Effectiveness (GAO/HRD

f–87–39, Mar. 18, 1987).

Chairman SHAW. Thank you. In the report that you have submitted to the Congress, and we talked about it several times with the

previous panel with regard to the aging work force, this is one of

the more frightening things about what is going on. Could you further elaborate on what you found there and what you might suggest as where to go?

Ms. FAGNONI. Well, as we pointed out, SSA did do a study——

Chairman SHAW. I am talking about the aging work force within

the agency, not country as a whole. Excuse me.

Ms. FAGNONI. SSA did do an assessment to try to get a handle

on what that retirement wave might look like and at what pace

people might leave the agency due to retirement. In part they used

historical information that, of course, shows not everybody who is

eligible for retirement, retires. But they do have some estimates of

how many people will retire, are expected to retire, and, as we

show, it will peak about the same time that its workloads are exVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
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pected to be increasing. That poses significant challenges, and as

the members of the Board said, it is important for SSA not only

to be positioned now to replenish the staff who are leaving, but to

make sure they know what skills and abilities they need for these

new staff coming in to meet the challenges with the new kinds of

clients that they are going to be serving.

If you think about the fact that many of the people who will be

retiring over the next 10 years were hired 30 years ago, the skill

mix that is needed for this century is likely to be very different

from what was needed 30 years ago when these people came into

the agency. Just to cite one example, there is a significantly higher

percentage of individuals on the disability rolls who have mental

impairments, and that poses particular challenges both in terms of

how to serve these individuals but also the judgments and training

that are needed to assess whether or not people are, in fact, mentally impaired and how severe the impairment is.

So while SSA officials have taken some important steps to get a

handle on how many people might be leaving over the next decade,

they have not gone as far at this point to determine what the skill

mix might be that they need in the future and how that might differ from what they have on board.

Chairman SHAW. How does all of this relate to the increased productivity due to technology? I see that also in your testimony you

refer to the computers and the aging of these particular computers.

The replacement that we make today we assume will probably be

somewhat obsolete at the time the baby boomers hit the system. Is

there any plan in place for an orderly replacement of the technology as it’s upgraded? We are starting from way behind at that

particular point according to how I understand your testimony.

Ms. FAGNONI. I will turn to Mr. Willemssen who is our expert on

technology.

Mr. WILLEMSSEN. The agency has just undergone a major modernization with its field offices on the workstations and local area

networks, and they are planning a major replacement project for

that effort to start I believe in Fiscal Year 2003, and one of the

areas that we are most anxious to see is SSA is now committed to

demonstrating what kind of benefits have accrued from that initial

investment so they can use that information to better target their

technology modernization upgrade that will be starting down the

line.

Chairman SHAW. Mr. English.

Mr. ENGLISH. Thank you, Mr. Chairman, and thank you, Ms.

Fagnoni, and welcome back.

Ms. FAGNONI. Thank you.

Mr. ENGLISH. A couple of points you raised that I am particularly

interested in: First of all, you have expressed concern over weaknesses in the agency’s complex systems for measuring workload,

productivity, and quality. How much does SSA know about who receives services and the quality of those services rendered in the

field offices? What is the agency doing to address any weaknesses

in this regard, and are they taking the right steps in your view?

Ms. FAGNONI. Actually, that is a weakness that has been, I

think, frustrating to those of us who are trying to get a good handle

on SSA’s service delivery structure and how well positioned the

50

agency is, and the reason I say that is because while SSA has

methods for on a national level knowing how satisfied people are

with service, what SSA is not able to do is go field office by field

office and understand how satisfied people are with the service at

that particular office. Particularly they do not have good measures

of the numbers of people who walk into those offices each day and

how that may ebb and flow at different points in time.

They do not have a good handle on the numbers of people who

call the field office and why they are calling. They do not know why

people are walking in on a routine basis. Routinely, they do not

know this and how many might walk out or hang up without being

served. They have better information on people who come in to file

for claims because that information gets recorded on their systems,

so they have a very incomplete picture of how their field offices are

performing, and I think that makes it difficult for them when they

try to do their service delivery plan to really know which are the

offices that are especially overcrowded, and are there offices that

may be undercrowded. Maybe the clientele base that once was

there is not there or is choosing alternative ways to be served, and

I think that is the piece of this that SSA has less information on.

In fact, one of the reasons you will hear so much about their 800

number performance is because they have a lot of data on their 800

number performance and that level of data are not available for the

field offices—for specific field offices.

Mr. ENGLISH. In your testimony you indicated that Social Security, while it is making progress in its work force planning initiatives, is lacking a future focus. Can you be a little more specific

about what SSA has done in this area and what do you see are the

strengths and weaknesses of their approach?

Ms. FAGNONI. Well, as I mentioned a little earlier, they do have

a handle on who might retire, and of course that is a piece of knowing what the work force ought to be. They also, as we recommended, reinstituted leadership programs at the executive and

managerial level that they had suspended for some time in the

mid-nineties. So they do have a better—they are better positioned

for succession planning at the executive and managerial level.

They have a sense of who is going to retire. They are in the process of documenting what skills they have on board. They are collecting that information at a sort of general competency level and

are in the process of determining on a more job-specific basis what

skills they have on hand. What they have not yet done, although

my understanding is they know they need to do this, is to get a

handle on what skill mix they will need for the future and how

that compares with what they have now and what they will need

for their hiring, for their recruiting and retention plans.

Mr. ENGLISH. You indicate that the SSA has established something called a market measurement program to improve and consolidate its approach to assessing customer expectations. Can you

describe this program, and why do you feel more needs to be done

in this area?

Ms. FAGNONI. The market measurement program is something

that was put in place a couple of years ago in part because while

SSA had a lot of different initiatives underway in different parts

of the agency to obtain feedback both from customers and in some

51

cases from employees, it was not well coordinated. One of the goals

of this particular effort was to get a better handle on what data

were being collected in terms of feedback, how that could be better

coordinated and organized, what else they needed to obtain. So SSA has done that. They actually did that with the help of an outside consultant. They have also instituted some additional

surveys such as re-contact surveys where they are now asking people who call or go to the fields offices how they felt about that service provided. That is something they were not doing in the same

way in the past, and at this point they are partway through gathering and analyzing the data that they have obtained. So they will

get some better information on—and more coordinated information

on—customer as well as employee feedback. And another very important thing that they are doing for the first time is segmenting people’s responses by the type of customer, and the reason that is important is because I believe they may very

well find that somebody who is applying for retirement benefits

may very well have different views and different preferences for

service than someone who is filing for disability benefits or somebody with mental impairments who is seeking assistance once they

have obtained disability benefits. I think that information can be

important for SSA in understanding and determining how to serve

people in the future.

Mr. ENGLISH. Thank you, and thank you, Mr. Chairman.

Chairman SHAW. Thank you, Mr. English. And thank you, Ms.

Fagnoni, for joining us. We always look forward to your appearances before this Subcommittee.

Ms. FAGNONI. Thank you.

[The following questions submitted by Chairman Shaw, and Hon.

David M. Walker’s responses are as follows:] February 28, 2000

The Honorable David M. Walker

Comptroller General of the United States

U.S. General Accounting Office

441 G Street, N.W.

Washington, DC 20548

Dear Mr. Walker:

As a follow up to the joint subcommittee hearing held on February 10 regarding

the current and future service delivery challenges that Social Security is facing, I

would appreciate your answering the following questions for the record:

1. In your testimony (page 1) you state ‘‘While we have recommended since 1993

that SSA prepare a service delivery plan, SSA is only now beginning to develop a

broad vision for customer service for 2010.’’ Why the 7-year delay?

You indicate that according to SSA officials, the agency does not have plans to

go beyond this vision and issue a more detailed plan. How is a ‘‘vision’’ different

from a ‘‘plan’’? What does the absence of a detailed plan mean for customer service?

2. Would you elaborate on the consequences of developing plans out of sequence,

specifically SSA’s continued pursuit of workforce and information technology planning without a service delivery plan in place? Is SSA expending scarce resources

today to develop service delivery systems that may prove to have limited usefulness

by the time they are in place? Or hiring employees with the wrong skills to work

in locations where they may not be needed in the future?

3. A recent Washington Post article discussed how productivity gains especially in

manufacturing are helping the economy produce more and better goods and services

while lifting wages and still keeping inflation at bay. Presumably this is occurring

because businesses are figuring out how to capitalize on the digital revolution.

• In contrast, your testimony points out that, despite SSA’s efforts to modernize

computer capacity since the 1980s (page 3) and their ‘‘relying in large part on technology to achieve increased efficiencies’’ (page 1), ‘‘the benefits from (SSA’s) techVerDate 20-JUL-2000 16:32 Jan 13, 2001 Jkt 061710 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 K:\HEARINGS\65267.TXT WAYS3 PsN: WAYS3
52

nology investments have largely been unclear.’’ Further, SSA ‘‘has not yet been able

to demonstrate specific benefits resulting from some of its most significant investments’’ (page 10).

• How is it possible that after more than 10 years we do not know whether these

investments in SSA have increased worker productivity there? While I note that

SSA recently told you they are ‘‘now conducting studies,’’ when do you think we will

have that information? What is it likely to show? After how much money has been

spent on computerization (which SSA calls IWS/LAN)?

• Not having this information seems especially exasperating in light of the gains

we see elsewhere in the economy, and given your point (page 4) that SSA needs to

increase worker productivity by 27 percent between now and 2010 to keep up with

expected increases in demand.

4. You have made the point that Social Security’s customers and their needs will

change over time. Please tell us more about the special challenges that Social Security will face because of this.

5. About half of all households have online access now. Today, on the internet,

you can buy a car. You can find a job. You can access stocks and savings, and pay

all your bills. You can apply for a home loan worth hundreds of thousands of dollars

in just seconds—without ever sitting down and seeing anyone face to face. You can

pay your taxes, and in fact the government is encouraging people to do so. You can

even buy and print out stamps without leaving your desk. Yet you can’t apply for

Social Security benefits online. Why? Does Social Security see online applications for

benefits as one way they will provide services in the future? If so, starting when?

Since it’s pretty obvious that online applications for benefits are both inevitable

and may conserve scarce worker resources, are you comfortable with how Social Security is going about developing this process from the standpoint of openness, timeliness, and ensuring maximum privacy and data protection?

6. Please talk to us about how online applications for benefits might allow Social

Security to provide better, more convenient services, and perhaps at lower cost to

taxpayers. Rather than only 1,300 field offices, wouldn’t people have literally millions of new ways to access benefits, including from the convenience of their home?

Might SSA staff have more flexible work conditions, including working from home

handling electronic applications? And couldn’t field offices concentrate on tough

cases that require face-to-face service, such as disability cases and SSI cases, and

maybe do more outreach into the community? Does SSA foresee such benefits?

7. You describe a new technology strategy that the agency is using to address the

needs of its disability claims process. Can you provide a brief overview of the components of this strategy and your assessment of the appropriateness of this strategy

and the effectiveness of the tests of this strategy so far?

8.Your testimony includes a discussion of the various technology initiatives being

implemented to support the Office of Hearings and Appeals, yet you indicate that

long-term efforts have not yet been defined. Does this mean SSA hasn’t identified

all of the technologies needed to meet the needs of its hearing offices?

I appreciate your taking the time to answer these questions for the record. If you

have any questions concerning this request, please feel free to contact Kim Hildred,

Staff Director, Subcommittee on Social Security at (202) 225–9263.

SINCERELY,

E. Clay Shaw, Jr.

Chairman

cc: The Honorable Nancy Johnson

Chairman, Subcommittee on Human Resources

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