United States General Accounting Office

GAO Report to the Committee on Finance,

U.S. Senate, and the Committee on Ways

and Means, House of Representatives

February 1997 SOCIAL SECURITY

ADMINISTRATION

Significant Challenges

Await New

Commissioner

GAO/HEHS-97-53

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-275889 

February 20, 1997

The Honorable William V. Roth, Jr.

Chairman

The Honorable Daniel Patrick Moynihan

Ranking Minority Member

Committee on Finance

United States Senate

The Honorable Bill Archer

Chairman

The Honorable Charles B. Rangel

Ranking Minority Member

Committee on Ways and Means

House of Representatives

The Social Security Administration (SSA) administers the nation’s largest

federal program—Social Security—as well as the nation’s largest cash

welfare program, Supplemental Security Income (SSI). SSA’s expenditures

totaled $363 billion in fiscal year 1995, nearly one-fourth of the nation’s

$1.5 trillion federal budget.

SSA’s programs touch the lives of almost every individual in this country.

Social Security’s Old Age and Survivors Insurance (OASI) and Disability

Insurance (DI) programs provide benefits to retired and disabled workers

and their dependents and survivors; SSI provides assistance to the needy

aged, blind, or disabled. In 1995, 50 million beneficiaries—about one out of

every five individuals in this country—received benefits from SSA each

month. With a staff of 65,000, SSA also records the wages of nearly every

U.S. worker each year and issued almost 17 million Social Security cards

in 1995. Moreover, SSA maintains a large and visible presence in

communities nationwide. In 1995 alone, an estimated 24 million people

visited SSA’s 1,300 field offices, and SSA received 62 million calls on the

agency’s nationwide toll-free 800 number.

SSA recognizes that the American public depends on it to quickly and

accurately provide benefits, properly record workers’ earnings, and

effectively safeguard benefit programs from fraud and abuse. Any failure

to do so seriously undermines the public’s confidence in government and

its ability to efficiently and cost-effectively administer programs and

protect taxpayer dollars. Yet as SSA acknowledges, public confidence in its

programs is low and has been low for some time. Although much of this

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lack of confidence stems from concerns about the future solvency of the

Social Security system, public confidence also has been eroded by reports

of fraud and abuse. Media accounts of problems such as prisoners

erroneously receiving disability checks and allegations that immigrants

and children are feigning mental illness to obtain SSI undermine the

public’s trust in SSA and in the federal government.

To bolster SSA’s ability to address critical policy issues and correct

programmatic weaknesses, the Congress enacted legislation making SSA

independent of the Department of Health and Human Services (HHS) as of

March 31, 1995. In establishing SSA’s independence, the Congress

recognized the importance of strong and stable leadership for the agency.

As we noted in our February 1995 report on SSA’s transition to

independence,1

 such independence heightens the importance of SSA’s

playing a strong leadership role in addressing long-standing problems and

preparing for future challenges.

After SSA’s first year as an independent agency, we reported on its progress

in meeting current and future challenges.2

 These challenges included

managing for results and accountability; funding future retirement

benefits; rethinking disability programs; combating SSI fraud, waste, and

abuse; handling increasing workloads with reduced resources; and

establishing effective leadership. This report updates and expands on the

challenges facing SSA’s new commissioner and the agency.3

To do our work, we drew from completed and ongoing GAO work on Social

Security issues and reviewed recent legislation affecting SSA. We also

reviewed SSA documents and spoke with SSA officials, selected officials of

the Advisory Council on Social Security and the Social Security Advisory

Board, and other experts to determine SSA’s progress in addressing its

challenges and what else is needed to make SSA a premier agency. We did

our work from October 1996 to February 1997 in accordance with

generally accepted government auditing standards.

Results in Brief SSA is ahead of many federal agencies in developing strategic plans;

measuring its service to the public; and producing complete, accurate, and

1

Social Security Administration: Leadership Challenges Accompany Transition to an Independent

Agency (GAO/HEHS-95-59, Feb. 15, 1995).

2

Social Security Administration: Effective Leadership Needed to Meet Daunting Challenges

(GAO/T-OCG-96-7, July 25, 1996, and GAO/HEHS-96-196, Sept. 12, 1996).

3

The current commissioner is scheduled to leave office on Feb. 28, 1997.

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timely financial statements. This gives the agency a sound base from

which to manage significant current and future challenges. These

challenges include the aging of the baby boom generation, coupled with

increasing life expectancy and the declining ratio of contributing workers

to beneficiaries, which will place unprecedented strains on the Social

Security program in the next century. Unless the Congress acts, Social

Security funds will be inadequate to pay all benefits by 2029. SSA, however,

has not performed the research, analysis, and evaluation needed to inform

the public debate on the future financing of Social Security—the most

critical long-term issue facing the agency. SSA has recently taken initial

steps to more actively participate in the financing debate by reorganizing

and strengthening its research, policy analysis, and evaluation activities.

Also challenging SSA have been disability caseloads that have grown by

nearly 70 percent in the past decade. To its credit, SSA has undertaken an

important effort to fundamentally redesign its inefficient disability claims

process. However, while SSA has begun many of its planned initiatives,

none is far enough along for the agency to know whether specific

proposed process changes will achieve the desired results. Moreover, SSA

has not sufficiently promoted return-to-work efforts in the administration

and design of its disability programs. If even an additional 1 percent of the

6.6 million working-age people receiving disability benefits were to leave

SSA’s disability rolls by returning to work, lifetime cash benefits would be

reduced by an estimated $3 billion. In its SSI program, SSA has not done

enough to combat fraud and abuse and address program weaknesses.

SSA faces increasing responsibilities in the future and must manage its

growing workloads with reduced resources. In early 1996, SSA estimated

that it would need about 76,000 work-years to handle its growing

workloads if it conducts business as usual. It expected to do this work

with fewer work-years than it has today. To successfully meet its workload

challenges, SSA knows that it must increasingly rely on technology and

build a workforce with the flexibility and skills to operate in a changing

environment. SSA faces significant challenges, however, in modernizing its

information systems—a complex, multiyear effort that could easily cost

billions of dollars. Compounding this challenge will be the possible loss of

many senior managers and executives—over the next 5 years, about half

of SSA’s senior executives will be eligible to retire. Moreover, SSA faces

difficult decisions on how best to deliver services in the future.

At this critical juncture, effective leadership is needed so the agency can

take the following actions to better ensure its success in the 21st century:

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inform the national debate on Social Security financing issues; complete

its redesign of the disability claims process and promote return to work in

its disability programs; enhance efforts to ensure program integrity, while

quickly and effectively implementing many reforms; and make the

technology enhancements and workforce decisions needed to meet

increasing workloads with fewer resources.

Background The three major programs that SSA administers—OASI, DI, and SSI—provide

cash income support to diverse populations. The Social Security Act

established the OASI program to protect workers and their dependents and

survivors from wages lost due to retirement. DI, enacted in 1956, provides

monthly cash benefits to disabled workers and their families. The OASI and

DI programs are funded through payroll taxes and are based on the

contributions of individual workers and their employers. About 90 percent

of all U.S. jobs are covered by these insurance programs. In 1995, the OASI

and DI programs paid over $326 billion in benefits to more than 43 million

eligible beneficiaries.

SSI, enacted in 1972, provides cash assistance to aged, blind, or disabled

individuals with limited income and assets. The federal SSI program

replaced federal grants to state-administered programs, which varied

substantially in benefit levels. The Congress intended SSI as a supplement

to the OASI and DI programs for those with little or no Social Security

coverage. Federal SSI benefits are funded by general revenues and based

on financial need. In 1995, over 6 million recipients received about $25

billion in federal benefits, including 2 million individuals aged 65 and over

and almost 1 million children.

To administer these three programs, SSA must perform the following

essential tasks: issuing Social Security numbers to individuals; maintaining

earnings records for workers by collecting wage reports from employers,

which are used to determine the dollar amount of OASI and DI benefits; and

processing benefit claims for all three programs. SSA must also determine

which applicants for disability benefits under DI and SSI meet the federal

definition of disability;4

 for SSI, the agency must also determine applicants’

levels of income and assets. In addition, SSA performs many actions to

maintain accurate records for program recipients once they are enrolled.

Moreover, SSA must periodically conduct reviews of the health status of

disabled beneficiaries to ensure that those no longer eligible are removed

4

The Social Security Act generally defines disability as the inability to engage in substantial gainful

activity by reason of any medically determinable physical or mental impairment expected to last for a

continuous period of at least 12 months or result in death.

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from the rolls. For SSI recipients, SSA must also review their financial

status. Table 1 gives an overview of the three programs.

Table 1: Overview of SSA’s Programs

OASI DI SSI

Eligibility criteria Age 62 or over with insured

statusa

Disabled persons with insured

statusa

Low-income aged, blind, or

disabled adults with limited

work history; blind or disabled

low-income children

Funding source Payroll taxes Payroll taxes General revenues

Average monthly benefit for

December 1995

$688b $703c $334d

Recipients in December 1995 

(in millions)

37.5 5.9 6.2

Total benefit outlays in 1995 

(in millions)

$290,776 $36,014 $24,652d

aInsured status is defined in quarters of coverage. An individual must earn 40 quarters of

coverage to be insured by OASI and 20 quarters of coverage (within the last 40) to be insured by

DI. In 1996, for example, 1 quarter of coverage was earned for each $640 of income; thus, 4

quarters of coverage were earned if the worker’s total income was at least $2,560.

bNumber reflects retired workers only.

cFor disabled workers only.

dSome states supplement SSI payments; this amount is the federal share only.

SSA Steps Ahead With

Customer Service

Focus and

Results-Oriented

Management

At this time of heightened attention to the costs and effectiveness of all

federal programs, the Congress and the administration have supported

efforts to promote a more efficient federal government that is responsive

and accountable to the public. This is especially critical at SSA because the

agency deals with thousands of individuals daily and nearly 90 percent of

its employees directly serve the public. SSA has surpassed many federal

agencies in these efforts by assessing and improving its service to the

public, gaining experience in managing for results, and emphasizing

financial accountability.

Two federal efforts, the Government Performance and Results Act of 1993

(GPRA) and the National Performance Review (NPR), promote cost-effective

service delivery governmentwide. To ensure that it is meeting the needs of

the public and the requirements of GPRA and NPR, SSA regularly seeks

customer feedback through mail and telephone surveys, comment cards in

its field offices, focus groups, and special studies. It has also taken steps to

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use this information to improve its services. As demand for its 800-number

telephone service increased, for example, SSA found its service lacking.

Customer feedback indicated that this convenient telephone service was

important to the public, yet SSA’s performance data showed that in fiscal

year 1995, the “busy” rate for the 800 number was almost 49 percent; only

about 74 percent of callers were able to get through within 5 minutes of

their first try. SSA set a goal of answering 85 percent of its 800-number calls

within 5 minutes of a caller’s first try in fiscal year 1996 and made

operational changes to increase public access. As a result, the busy rate

decreased to 34 percent, and 83 percent of calls were answered within 5

minutes. For fiscal year 1997, SSA’s goal is to answer 95 percent of its

800-number calls within 5 minutes of a caller’s first try. We are currently

reviewing SSA’s efforts to improve this service.

SSA has also worked under GPRA to strengthen its strategic management

process and to identify and develop performance measures to help its

managers, the Congress, and the public assess how well it is

accomplishing its mission. During SSA’s recently completed participation

as a pilot agency under GPRA, SSA gained experience in developing specific

and quantifiable annual performance goals and measures.5

 On the basis of

this experience, it expects to develop performance measures for fiscal

year 1998 that focus more on outcomes and results than in previous years.

For SSA’s fiscal year 1997 goals and performance measures, see appendix I.

In addition, SSA is a leader among federal agencies in producing complete,

accurate, and timely financial statements that promote accountability to

taxpayers.6

 For fiscal years 1995 and 1996, SSA issued audited financial

statements 3 months before its legal mandate. Moreover, SSA was among

the first federal agencies to produce an accountability report, which is

designed to consolidate current reporting requirements under various laws

and provide a comprehensive picture of an agency’s program performance

and its financial condition. In addition, for fiscal year 1996, as a pilot

project, SSA and its Office of Inspector General collaborated to further

streamline financial reporting by including the Inspector General’s

Semiannual Report to Congress as part of the Accountability Report.

5

As a pilot agency, SSA had to prepare GPRA performance plans for fiscal years 1994 to 1996. By the

end of fiscal year 1997, GPRA requires each federal agency to develop a strategic plan that covers at

least 5 years. GPRA also requires each agency to develop annual performance plans beginning with a

plan for fiscal year 1999. The first plan is due to the Office of Management and Budget in the fall of

1997.

6

This financial reporting is required under the Chief Financial Officers Act of 1990 and the Government

Management Reform Act of 1994.

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To be most effective, SSA’s ongoing efforts to cost effectively serve its

customers and be accountable to taxpayers will need to be well

coordinated and continually improved. The agency has taken steps to

better integrate its strategic planning, performance measurement, and

customer service efforts and to improve the ways that it collects and uses

customer feedback. SSA faces challenges, however, as do all federal

agencies, in integrating results-oriented management into its agency

culture and daily activities.7

 Moreover, SSA must determine how to balance

its customers’ needs and expectations with those of taxpayers by

assessing the cost-effectiveness of its customer service improvements.

Long-Term Solvency

Is Threatened; SSA Is

Not Yet Actively

Participating in

Financing Debate

As the baby boom generation ages, growing numbers of people will

receive Social Security retirement and survivors benefits through OASI in

the years to come, as shown in figure 1. By the year 2015—as baby

boomers begin entering their mid-60s—the numbers of individuals

receiving benefits will reach an estimated 50.4 million: more than one-third

greater than the 37.4 million people receiving Social Security retirement

and survivors benefits in 1995. Once on the rolls, retirees can be expected

to receive benefits for longer time periods than past recipients. A 65-yearold male who began receiving Social Security benefits in 1940—the first

year SSA began paying monthly benefits—was expected to live, on average,

about an additional 12 years. By 2015, a 65-year-old male will be expected

to live about an additional 16 years—a 33-percent increase. During that

same time period, the life expectancy for women aged 65 will increase by

almost 50 percent—from an average of over 13 years to an average of

nearly 20 years. Meanwhile, the ratio of contributing workers to

beneficiaries will decline. By 2015, an estimated 2.6 workers will be paying

taxes into the Social Security system per beneficiary; in 1950, 16.5 workers

were paying Social Security taxes per beneficiary.

7

For information on successful GPRA implementation practices, see Executive Guide: Effectively

Implementing the Government Performance and Results Act (GAO/GGD-96-118, June 1996).

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Figure 1: Growth in Social Security

Beneficiaries, 1950-2030 Millions of Beneficiaries

0

10

20

30

40

50

60

70

1950 1960 1970 1980 1990 2000 2010 2020 2030

Calendar Years

Note: Includes recipients of OASI only.

Source: 1996 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors

Insurance and Disability Insurance Trust Funds.

This retirement explosion threatens the long-term solvency of the Social

Security system. Beginning in 2012—15 years from now—program

expenditures are projected to exceed tax income. By 2029, without

corrective legislation, the trust funds are expected to be depleted, leaving

insufficient funds to pay the expected level of OASI and DI benefits. (In an

upcoming report, we will discuss in greater detail the issues affecting the

major sources of retirement income—Social Security, private pensions,

savings, and earnings.)

Concerns about the long-term solvency of the Social Security system are

fueling a public debate about the fundamental structure of this system.

The Advisory Council on Social Security,8

 for example, has put forth three

different approaches to addressing the Social Security system’s long-term

deficit. All three approaches call for some portion of Social Security

8

Before the independence legislation (P.L. 103-296), the Social Security Act provided for the

appointment of a nonpartisan Advisory Council every 4 years to examine issues affecting the OASI, DI,

and Medicare programs. P.L. 103-296 provided that this Council would be the last.

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payroll taxes to be invested in the stock market.9 Two of these approaches

call for allowing individuals to invest some portion of their payroll taxes in

individual retirement accounts. This would be a significant departure from

the current program design, in which benefits are based on past earnings

and trust fund moneys are invested and managed centrally. Given the

magnitude of the financial problems facing the Social Security system and

the nature of the proposals for changing the system, we can expect the

debate over the financing and structure of the Social Security system to

continue and intensify in the coming years.

SSA Is Taking Initial Steps

to Be More Active

In our report on SSA’s transition to independence, we noted that the

agency’s independence would heighten the need for it to work with the

Congress in developing options for ensuring that revenues are adequate to

make future Social Security benefit payments. SSA could, for example,

analyze options and assess their possible effects on individuals and on

SSA’s operations. Nearly 2 years after gaining independence, however, SSA

is not yet ready to fully support policymakers in the current public debate

on financing issues.

SSA has acknowledged that it has not undertaken the policy and research

activities it needs to examine critical issues affecting its programs,

including long-term financing, and to provide support to policymakers.

The agency recognizes the need to be more active in these areas and, in

May 1996, took steps to reorganize and strengthen its policy analysis,

research, and evaluation offices. It believes this reorganization will better

position it to take a leadership role in critical policy and research issues

related to its programs. By November 1996, SSA’s reorganized Office of

Research, Evaluation, and Statistics had formed new links with outside

experts to strengthen its research and evaluation capabilities. In addition,

it had created an office to coordinate all policy planning activities.

Although this is a positive first step, SSA officials also acknowledge that

they are just beginning to focus on Social Security’s long-term solvency.

SSA is in a unique position to inform policymakers and the public about the

nature of long-term financing issues. Focus groups conducted by SSA have

demonstrated that the public’s knowledge of Social Security programs is

generally low and the public’s confidence in the Social Security system is

undermined by its future financing problems. To address these issues, SSA

is conducting a public education campaign that discusses what the current

9

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

Treasury bonds.

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system offers in disability, retirement, and survivors benefits. It also

emphasizes that the Social Security system can pay benefits for many

more years and that the Congress has time to act before the trust funds are

depleted. SSA, however, is not discussing options for maintaining or

changing the current system. Feedback SSA has received from its focus

groups indicates that addressing the public’s lack of knowledge without

also discussing possible options for ensuring the system’s future solvency

does not instill confidence and weakens the agency’s credibility with the

public.

We are concerned that SSA has not seized the opportunity as an

independent agency to speak out on the importance of addressing the

long-term financing issues sooner rather than later. As we have noted in

our previous work,10 the sooner action is taken to resolve the future

funding shortfall, the smaller the changes to the system need to be and the

more time individuals will have to adjust their financial and retirement

plans.

SSA Is Redesigning Its

Disability Claims

Process but Has

Placed Little Priority

on Return-to-Work

Efforts

In recent years, disability caseloads have faced unprecedented growth. To

manage this caseload growth and the resulting slow processing times, SSA

plans to redesign and dramatically improve its disability claims process.

However, the scope and complexity of its many redesign initiatives risk

the likelihood that SSA will accomplish its redesign goals. Moreover, while

SSA is taking steps to improve the process for moving eligible individuals

onto the disability rolls more quickly, it has not sufficiently emphasized

helping beneficiaries return to work and leave the disability rolls.

Disability Caseloads

Continue to Grow

During the past decade, SSA has faced significant increases in caseloads

and expenditures for its two disability programs—DI and SSI. DI and SSI

caseloads and expenditures increased dramatically between 1986 and

1995, and the pace of this growth accelerated in the early 1990s. In 1986,

4.4 million blind and disabled people under age 65 received DI or SSI

benefits; by 1995, this number had soared to 7.5 million—a 69-percent

increase.11 As the number of DI and SSI beneficiaries increased, so did the

amount paid in cash benefits. The combined DI and SSI cash benefits

10Deficit Reduction: Opportunities to Address Long-Standing Government Performance Issues

(GAO/T-OCG-95-6, Sept. 13, 1995).

11This number includes about 900,000 children receiving SSI disability benefits.

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increased from $25 billion to $57 billion in 10 years.12 Adjusted for

inflation, the increase in the value of these cash benefits was 66 percent.

As these programs have grown, the characteristics of new beneficiaries

have changed in ways that pose additional challenges for SSA. Beneficiaries

are, on average, younger and more likely to have longer lasting

impairments. Increases in beneficiaries with mental illness or mental

retardation, especially, have driven this trend. Between 1982 and 1992, for

example, mental impairment awards to younger workers increased by

about 500 percent. This growing proportion of younger beneficiaries with

longer lasting impairments means that the beneficiary population, on

average, is likely to spend more time on the disability rolls. In 1992, for

example, new DI awardees were, on average, 48 years old. Depending on

the type of impairment that qualified them for benefits, these beneficiaries

could spend nearly one-third of their adult lives on disability before

reaching age 65.

Success of Disability

Redesign Is at Risk

As more and more people have filed for disability benefits, SSA has been

slow to process initial claims, and appealed case backlogs have grown. To

manage the disability caseload growth, increase efficiency, and improve

service to its customers, SSA has started a major effort to change how

disability decisions are made. Making disability decisions is one of the

agency’s most demanding tasks; it accounted for more than half of SSA’s

total administrative budget—about $3 billion—in fiscal year 1995. Even so,

many claimants face long waits for disability decisions. As of June 1996,

the wait for initial decisions averaged 78 days for DI claims and 94 days for

SSI claims, with an additional 373-day wait for appealed decisions. Overall,

the current disability claims process is not meeting the needs of claimants,

the agency, or taxpayers.

To deal with these problems, in 1993 SSA formed a team to fundamentally

rethink and develop a proposal to redesign the disability claims process.

Efforts like SSA’s—business process reengineering—have been used

successfully by leading private-sector organizations to dramatically

improve their operations. In April 1994, we informed the Congress that the

agency’s redesign proposal was its first valid attempt to address the

fundamental changes needed to cope with disability workloads. At that

time, however, we also cautioned that many implementation challenges

12This includes DI payments to disabled workers aged 18 to 64 and federal-only SSI payments to all SSI

blind and disabled beneficiaries regardless of age.

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would have to be addressed.13 These include new staffing and training

demands, developing and installing technology enhancements, and

confronting entrenched cultural barriers to change.

SSA’s redesign plan, released in late 1994, had an extensive scope and

complexity. It included 83 initiatives to be accomplished during a 6-year

period (fiscal years 1995 to 2000), with 38 of these to be completed or into

a research and development or testing phase by September 30, 1996. In a

recent report on the implementation challenges SSA faces as it redesigns its

disability claims process,14 we concluded that SSA’s disability redesign is

proving to be overly ambitious. Undertaking many initiatives at one time is

likely to limit the chances for success and has already led to

implementation delays. Although SSA has begun many of its planned

initiatives, none are complete and many are behind schedule.

Consequently, SSA has not progressed as intended in determining whether

specific initiatives will achieve their desired results. Without concrete and

measurable results, stakeholder support is hard to maintain.

SSA has faced significant challenges in implementing some of the more

complex initiatives. For example, SSA considers technology vital to

redesign; it has, therefore, undertaken a technology initiative to more fully

automate the processing of disability claims. Completion of this initiative,

however, has been delayed by more than 2 years due to software

development problems and the need for additional testing to assess

redesign changes.

Another complex initiative involves consolidating two distinct jobs,

federal claims representative and state disability examiner, into a new

disability claim manager (DCM) position. SSA is considering the

establishment of about 11,000 DCM positions in more than 1,350 federal and

state locations, recruiting these DCMs from its current workforce. Before

fully implementing the DCM position, SSA must first provide several critical

support features, including technology enhancements and a simpler

method for making disability decisions, that SSA does not expect to be

available for several years. Moreover, SSA has struggled to resolve

stakeholder disagreements among representatives of federal and state

employees about this new position. SSA has determined that it will not

13Social Security Administration: Major Changes in SSA’s Business Processes Are Imperative

(GAO/T-AIMD-94-106, Apr. 14, 1994).

14SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to Reducing Costs and Time

(GAO/HEHS-97-20, Dec. 20, 1996).

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decide to implement the DCM until valid and reliable testing demonstrates

that the position is viable.

Weak Return-to-Work

Efforts

Although SSA has focused on improving its processes for moving eligible

claimants onto the disability rolls, it has placed little priority on helping

them move off the rolls by obtaining employment. We have reported that

SSA’s disability programs are out of sync with societal attitudes, as

embodied in the Americans With Disabilities Act, that have shifted toward

goals of economic self-sufficiency and the right of people with disabilities

to fully participate in society.15

At one time, the common business practice was to encourage someone

with a disability to leave the workforce. Today, however, a growing

number of private companies have been focusing on enabling people with

disabilities to return to work. In contrast, SSA’s programs lack a focus on

providing the support and assistance that many people with disabilities

need to return to work. Eligibility requirements, for example, focus on

applicants’ inabilities, not their abilities; once on the rolls, beneficiaries

receive little encouragement to use rehabilitation services. A greater

emphasis on beneficiaries’ returning to work is needed to identify and

encourage the productive capacities of those who might benefit from

rehabilitation and employment assistance. Although the main reason for

emphasizing returning to work is so that people maximize their productive

potential, it is also true that an estimated $3 billion could be saved in

subsequent years if only an additional 1 percent of the 6.6 million

working-age people receiving disability benefits in 1995 were to leave the

rolls by returning to work.

SSA needs to develop a comprehensive return-to-work strategy that

includes providing return-to-work assistance to applicants and

beneficiaries and changing the structure of cash and medical benefits. As

part of an effort to place greater priority on beneficiaries’ returning to

work, we recommended that SSA identify legislative changes required to

implement such a strategy. Although evaluating any SSA response to our

recommendations would be premature, we will continue to assess SSA’s

efforts to help beneficiaries return to work.

SSA has also missed opportunities to promote work among disabled

beneficiaries where it has the legislative authority to do so. In 1972, the

15See SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/HEHS-96-62,

Apr. 24, 1996) and Social Security: Disability Programs Lag in Promoting Return to Work

(GAO/T-HEHS-96-147, June 5, 1996).

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Congress created the plan for achieving self-support (PASS) program as

part of SSI to help low-income individuals with disabilities return to work.16

However, SSA has not translated the Congress’ broad goals for the PASS

work incentive into a coherent program design. We recently reported that

SSA needs to improve PASS program management, and the agency has taken

steps to better manage the program in accordance with our

recommendations.

Inadequate

Management and

Oversight of SSI

Program

Limiting opportunities for fraud, waste, and abuse in government

programs is essential to promoting public confidence in the government’s

ability to wisely use taxpayers’ dollars. Moreover, problems in any one of

the programs that SSA administers can undermine confidence in all of its

programs. Recent media reports on SSI fraud and abuse have focused

attention on SSA’s management of this program. Several of our recent

reviews of the SSI program have shown that SSA’s oversight and

management of SSI have been inadequate and that the agency is not

aggressively pursuing opportunities to increase program efficiencies.

Although quantifying the extent of fraud, waste, and abuse is difficult, we

have repeatedly identified program weaknesses that SSA needs to address.

This suggests more pervasive problems with SSA’s overall management of,

and attention to, the SSI program.

SSA has awarded SSI benefits, for example, to unknown numbers of

non-English-speaking immigrants who are actually ineligible for SSI

benefits.17 These awards are very costly to the government, accounting in

each case for thousands of dollars in improper payments over the years.

And even though individual SSA field offices have developed their own

creative approaches to this problem, SSA’s programwide efforts for

ensuring that only people who are eligible for SSI benefits receive them

have been limited.

SSA has also lacked an effective program to prevent erroneous payments to

prisoners. Even though prisoners are ineligible for SSI if they have been in

jail for 1 calendar month or longer, prisoners in many large county and

16The PASS program provides for work-related expenses, such as training or transportation, to be

excluded when an individual’s eligibility or benefit amount is determined. In some cases, this allows DI

beneficiaries who would not otherwise be eligible for SSI to receive SSI benefits in addition to their DI

benefits. See PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly Managed

(GAO/HEHS-96-51, Feb. 28, 1996).

17Supplemental Security Income: Disability Program Vulnerable to Applicant Fraud When Middlemen

Are Used (GAO/HEHS-95-116, Aug. 31, 1995).

Page 14 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

local jail systems have received millions of dollars in cash benefits.18 This

means that taxpayers have been paying twice to support these

individuals—both for SSI benefits and the cost of imprisonment. SSA has

begun to obtain information on current prisoners; however, it has not tried

to develop information that would allow it to recover benefits paid to

incarcerated or formerly incarcerated individuals who may have received

benefits in prior years, although this information is available.

In addition, SSA’s PASS program internal controls have been inadequate,

compromising the program’s integrity. SSA’s internal program controls

provide only limited guarantees that program moneys are being used

appropriately and taxpayer dollars spent judiciously. For example, the

lack of adequate guidance on acceptable PASS expenditures has resulted in

inconsistent decisions on purchases. In one instance the proposed

purchase of a $13,000 automobile was denied because the applicant did

not provide sufficient evidence to justify the car’s cost; in other instances,

however, purchases of similarly expensive vehicles were approved or less

justification was provided for purchases.

SSA is also missing opportunities to more efficiently administer the SSI

program and to prevent or more quickly detect overpayments to

recipients.19 Millions of dollars could be saved, according to our estimates,

if SSA field offices had and used direct online access to computerized state

income information during initial and subsequent assessments of

eligibility. Although SSA has begun to develop and expand online access in

several field offices, it has not aggressively sought to use this technology

to reduce benefit overpayments.

SSA acknowledges that it needs to do more to prevent and detect fraud,

waste, and abuse. It has several initiatives under way to accomplish this,

and we will be monitoring these efforts. In addition, the new SSA Inspector

General’s Office, created when SSA gained independence from HHS, is

increasing its emphasis on fraud and abuse.

18Supplemental Security Income: SSA Efforts Fall Short in Correcting Erroneous Payments to

Prisoners (GAO/HEHS-96-152, Aug. 30, 1996).

19Supplemental Security Income: Administrative and Program Savings Possible by Directly Accessing

State Data (GAO/HEHS-96-163, Aug. 29, 1996).

Page 15 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

SSA Faces Difficult

Challenges in

Preparing for Future

Workloads

While SSA is grappling with policy and program challenges, it will also need

to meet customer expectations in the face of growing workloads and

reduced resources. SSA expects to redesign inefficient work processes and

modernize its information systems to increase productivity, knowing that

its customer service will deteriorate to unacceptable levels if it continues

to conduct business as in the past. In addition, it faces the urgent need to

complete year 2000 software conversion to avoid major service disruption

at the turn of the century. SSA will also need to effectively manage its

workforce and consider what service delivery structure will work best in

the future.

SSA Must Manage Growing

Workloads With Reduced

Resources

The need to effectively balance public service needs with costs will

become even more important in the future. As the baby boom generation

ages, more and more people will be applying for and receiving SSA program

benefits. In addition to increasing retirement and disability caseloads, SSA’s

other workloads will grow because of the following increasing

responsibilities:

• SSA’s workloads over the next few years will increase substantially as a

result of recent congressional efforts to overhaul the nation’s welfare

system. The Congress has made changes that eliminate disability benefits

for drug addicts and alcoholics, restrict noncitizens’ SSI benefit eligibility,

and tighten the SSI eligibility criteria for disabled children. SSA will have to

manage the large influx of appeals and reapplications that is expected

following the changes in benefit eligibility. SSA has already received

appeals for more than half of the over 200,000 drug addicts and alcoholics

who were notified in June 1996 that their benefits would be terminated,

according to SSA officials.20 These workloads will also have an impact on

SSA’s capacity to meet other workload challenges.

• SSA must meet a legislative requirement that most workers be mailed

annual statements of their earnings and estimated retirement benefits,21

called Personal Earnings and Benefit Estimate Statements. The creation

and mailing of these annual statements to all workers aged 60 and older,

begun in 1995, must be expanded to those aged 25 and older—about

123 million individuals—by the year 2000. We recently recommended that

these statements be improved to more effectively communicate important

20Legislation was enacted in March 1996 that eliminated drug and alcohol abuse as a basis, or a

material contributing factor, for receiving disability benefits. Individuals who received benefit

termination notices were given the option to reapply but could remain eligible for SSI or DI on the

basis of another disabling condition.

21Under the legislation, SSA must provide individuals aged 50 and over estimates of their potential

monthly retirement benefits, beginning no later than Oct. 1, 1999.

Page 16 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

information to the public; improving these statements could result in

fewer inquiries about them, reducing the impact on SSA workloads.22

• SSA has not fully met legislative requirements to periodically review the

status of disabled beneficiaries to ensure that those who are no longer

disabled are removed from the rolls. About 4.3 million DI and SSI

beneficiaries were due or overdue for continuing disability reviews in

fiscal year 1996.23 SSA now has plans to review the status of more than

8 million beneficiaries in the next 7 years. To accomplish this, SSA would

have to conduct about twice as many reviews as it has conducted over the

past 20 years combined.

SSA knows that it must meet these increasing demands in an era of federal

downsizing and spending reductions. In early 1996, SSA estimated that it

would need the equivalent of about 76,000 work-years to handle its

workloads by the end of the century if it conducted business as usual. It

expected to handle this work with fewer work-years than it has today. SSA

is in the process of revising these estimates.

Technology Critical to

SSA’s Future Success

To handle increasing workloads and improve public service, SSA has begun

to redesign inefficient work processes and develop supporting modernized

information systems. SSA is in the process of a multiyear, multibillion

dollar systems modernization effort expected to support new ways of

doing business and improve productivity. SSA’s Automation Investment

Fund of $1.1 billion supports its 5-year plan, from fiscal years 1994 to 1998,

of moving from reliance on computer terminals linked to mainframe

computers in its Baltimore headquarters to a nationwide network of

personal computers. The new network is expected to improve productivity

and customer service in field offices and teleservice centers and allow for

further technology enhancements.

Although this new computer network environment may yield productivity

improvements, it poses significant challenges for SSA. The usefulness of

new computer systems will depend on the software developed for them.

Software development has been identified by many experts as one of the

most risky and costly aspects of systems development. To mitigate the risk

of failing to deliver high-quality software on time and within budget, SSA

must have a disciplined and consistent process for developing software.

22SSA Benefit Statements: Well Received by the Public but Difficult to Comprehend (GAO/HEHS-97-19,

Dec. 5, 1996).

23Social Security Disability: Alternatives Would Boost Cost-Effectiveness of Continuing Disability

Reviews (GAO/HEHS-97-2, Oct. 16, 1996).

Page 17 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

SSA has already experienced problems, however, in developing its first

major software application for use in its new network. These problems

include (1) using programmers with insufficient experience, (2) using

software development tools that have not performed effectively, and

(3) developing initial schedules that were too optimistic. We have reported

that these problems have collectively contributed to a delay of over 2 years

in implementing this new software. Although SSA has begun to take steps

to better position itself to successfully develop and maintain its software,

it faces many challenges as it works to develop software in its new

computer network environment.

Year 2000: Converting

Software Top Priority to

Avoid Benefits Disruption

SSA faces another systems challenge—one of the highest priority—that

affects not only its new network but computer programs that exist for

both its mainframe and personal computers. Most computer software in

use today is limited to two-digit date fields, such as “97” for 1997.

Consequently, at the turn of the century, computer software will be unable

to distinguish between 1900 and 2000 because both would be designated

“00.” By the end of this century, SSA must review all of its computer

software—about 30 million lines of computer code—and make the

changes needed to ensure that its systems can handle the first change to a

new century since the computer age began.

This year 2000 software conversion must be completed to avoid major

service disruption, such as erroneous payments or failure to process

benefits, at the turn of the century. Errors in SSA programs could also

cause difficulties in determining who is eligible for retirement benefits.

For example, an individual born in 1920 could be seen as being 20 years

old—not 80—and therefore ineligible for benefits. Similarly, someone born

in 1980 could be seen as 80 years old—not 20—and therefore entitled to

receive Social Security benefits.

Beginning work on this problem in 1989, SSA has reviewed and corrected

about 50 percent of the computer code that must be checked, according to

its Deputy Commissioner for Systems. To complete the job, SSA estimates

that it will take about 350 work-years. Agency officials reported that the

amount of resources dedicated to the year 2000 effort could impact staff

availability for lower priority projects and SSA’s ability to tackle new

systems development work.

Page 18 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

Developing a Trained and

Flexible Workforce Is

Essential

SSA recognizes that to maximize the effectiveness of its reengineered work

processes and investments in technology, it must invest in ongoing

employee training and career development. Ultimately, SSA envisions a less

specialized workforce with a broader range of technical skills that can be

flexibly used in areas of greatest need. In addition, SSA has taken steps to

reduce its number of supervisors, as part of the administration’s efforts to

eliminate unnecessary bureaucracy by working with fewer supervisory

layers. To manage these changes, SSA is training some of its headquarters

employees in the concepts and techniques of teamwork. To manage with

fewer supervisors in its field operations, SSA also plans to work with its

unions to test a number of team concepts.

Complicating SSA’s efforts is its aging workforce: 51 percent of SSA’s senior

executives and 35 percent of its mid-level managers are eligible to retire

over the next 5 years. In the last 2 fiscal years, SSA has lost two of its seven

Deputy Commissioners to retirement.24 SSA has acknowledged the

importance of having skilled managers to prepare for the demands of

heavier workloads, new technology, and expected changes in its employee

and client base. However, it has been nearly 5 years since SSA has

conducted an executive-level management development program. SSA also

has not selected candidates for its mid-level management development

program since 1993. The agency recognizes the need for management

development programs but has not yet scheduled future programs.

Difficult Restructuring

Decisions Lie Ahead

Although SSA has begun to discuss its use of improved technology and a

more flexible workforce to conduct its business in new ways in the future,

it has maintained its traditional service delivery structure, including 1,300

field offices. Given the significant changes facing SSA, it has not adequately

considered whether its current service delivery structure is really what is

needed for the future.

According to SSA officials, the agency has not developed specific plans for

restructuring its organization and redeploying staff in response to

demographic and workforce changes and shifting customer expectations.

As noted earlier, the demand for SSA’s 800-number telephone service

continues to grow, and SSA’s surveys show that callers prefer to use the

telephone for more and more of their business. Customer feedback also

indicates that customers would like to complete their business in a single

contact. Over time, SSA will likely need to restructure how it does business

24SSA currently has seven Deputy Commissioners who oversee the following functions: operations;

systems; finance, assessment, and management; programs and policy; communications; human

resources; and legislation and congressional affairs.

Page 19 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

to cost-effectively meet changing customer preferences; this may

ultimately involve office closures. Issues of where, how, and by whom

work will be done entail sensitive human resources issues and may have

negative impacts on local communities; to resolve these, SSA will need to

work closely with its unions, employee groups, and the Congress.

To improve its 800-number service, for example, SSA has many initiatives

under way, which we are reviewing. SSA currently has 37 teleservice

centers. Studies indicate that this is far too many teleservice centers to

operate SSA’s 800-number system in the most cost-effective way. A 1990

report from HHS’ Inspector General, for example, indicates that SSA could

operate more efficiently and cost-effectively with one-third the number of

centers it currently has. SSA has studied this issue but has not developed

specific plans for reducing the number of teleservice centers.

Observations on

Leadership Needed to

Manage Challenges

As the 21st century approaches, SSA faces dramatic challenges: funding

future retirement benefits, rethinking disability processes and programs,

combating fraud and abuse, and restructuring how work is performed and

services are delivered. How SSA performs in these areas can have a

powerful effect on its success in fulfilling its mission and on the public’s

confidence in this agency and the federal government.

To help SSA meet these challenges, the Congress took steps through the

independence legislation to build public confidence in and strengthen the

agency. The independence legislation provides that SSA’s Commissioner be

appointed by the President with the advice and consent of the Senate for a

fixed 6-year term, with removal from office by the President only for a

finding of neglect of duty or malfeasance in office. As the Congress was

considering the legislation, we testified that a fixed term of several years

for the Commissioner would help stabilize and strengthen SSA’s leadership.

We continue to support the need for a fixed term. The legislation also calls

for a fixed 6-year term for a Deputy Commissioner, also to be appointed by

the President with the Senate’s advice and consent.

The Commissioner and Deputy Commissioner head the leadership team

needed to address the agency’s existing problems and manage its future

challenges. SSA’s efforts to maintain an effective cadre of leaders are

complicated by the impending retirement of many of its executives and

managers and by the absence of a Commissioner and Deputy

Commissioner with the stability of fixed terms. This leadership must be in

place for SSA to progress on the four fronts we have highlighted.

Page 20 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

First, SSA must step up to its role as the nation’s expert on Social Security

issues; it is uniquely positioned to inform the public policy debate on the

future financing and structure of Social Security.

Second, SSA must redesign the disability claims process and place greater

emphasis on return to work in its disability programs. To increase the

redesign project’s likelihood of success, SSA needs to focus on those

initiatives most crucial to producing significant measurable reductions in

claims-processing time and administrative cost. SSA also needs to place

greater emphasis on return to work by changing both the design and

administration of the disability programs.

Third, SSA must better protect taxpayer dollars. As the administrator of the

nation’s largest cash welfare program, SSA must ensure program integrity

in SSI. Reports of fraud and abuse trigger public perceptions that SSA is not

making cost-effective and efficient use of taxpayer dollars.

Finally, SSA must manage technology investments and its workforce and

make difficult decisions about handling increasing workloads with

reduced resources. It must also continue to focus on and closely manage

its year 2000 conversion to help ensure that SSA will move into the 21st

century with systems that function correctly. Moreover, as SSA prepares to

meet greater demands and changes in its employee and client base, it may

have to make difficult workforce decisions to better respond to customer

needs. For example, SSA may need to close offices and move its workers to

different locations to better meet growing demand. In an environment of

shrinking budgets and increased expectations for government agency

performance, ensuring that agency decisions are based on comprehensive

planning and sound analyses will be even more essential.

SSA’s success in meeting these challenges is critical. The agency is all

important, touching the lives of almost all Americans. How it meets its

challenges as it moves into the next century can make a significant

difference in the well-being of America’s vulnerable populations—the

aged, disabled, and poor—and in how the public feels about its

government.

Agency Comments In commenting on a draft of this report, SSA discussed the

accomplishments of Commissioner Chater during her tenure and stated

that many challenges remain. The agency also made technical comments

Page 21 GAO/HEHS-97-53 Challenges Await New Commissioner
B-275889 

on our report, which we incorporated where appropriate. See appendix II

for a copy of the agency’s comment letter.

We are sending copies of this report to the Commissioner of the Social

Security Administration and other interested parties. Copies also will be

available to others on request. If you or your staff have any questions

concerning this report, please call me on (202) 512-7215 or Cynthia M.

Fagnoni, Assistant Director, at (202) 512-7202. Other major contributors to

this report include Gale C. Harris and Valerie A. Rogers.

Jane L. Ross

Director, Income Security Issues

Page 22 GAO/HEHS-97-53 Challenges Await New Commissioner
Page 23 GAO/HEHS-97-53 Challenges Await New Commissioner
Contents

Letter 1

Appendix I 

SSA’s Goals and

Performance

Measures, Fiscal Year

1997

26

Appendix II 

Comments From the

Social Security

Administration

28

Appendix III 

Related GAO Products

32

Table Table 1: Overview of SSA’s Programs 5

Figure Figure 1: Growth in Social Security Beneficiaries, 1950-2030 8

Abbreviations

CDR continuing disability review

DCM disability claim manager

DI Disability Insurance

GPRA Government Performance and Results Act of 1993

HHS Department of Health and Human Services

NPR National Performance Review

OASI Old Age and Survivors Insurance

PASS Plan for Achieving Self-Support

SSA Social Security Administration

SSI Supplemental Security Income

Page 24 GAO/HEHS-97-53 Challenges Await New Commissioner
Page 25 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix I 

SSA’s Goals and Performance Measures,

Fiscal Year 1997

Goal Performance measure

Fiscal year 1997

target

Rebuild public confidence

Percent of public “very well informed” or “fairly well informed” about Social

Security

Number of personal earnings and benefit estimate statements issued upon

request and automatically

62 percent

14,000,000

Provide world-class service

Overall Percent of people who rate SSA service as “courteous” or “very courteous”

Percent of people who rate SSA service as “good” or “very good”

90 percent

82 percent

Enumeration Percent of Social Security numbers issued within 5 calendar days after

receipt of needed information

97 percent

Earnings Percent of earnings items posted correctly 98.8 percent

OASI/SSI aged claims Percent of OASI claims paid when due or within 15 days from effective filing

date

An OASI initial payment accuracy rate

An SSI initial payment accuracy rate

83 percent

95.2 percent

94 percent

OASI/SSI/DI claims Percent of DI claims decided within 6 months after onset or within 60 days

after the effective filing date, whichever is later

Percent of SSI disability claims decided within 60 days of filing

Number of DI and SSI initial disability claims processed

Percent of Disability Determination Service decisional accuracy

Percent of hearings decisions made and notices sent within 120 days of filing

Number of hearings processed

55 percent 

30 percent 

2,415,000

97 percent

15 percent 

650,000

Postentitlement Percent of budgeted continuing disability reviews (CDR) processed to

completion

Number of CDRs processed

100 percent

864,000

Face-to-face service Percent of people with an appointment who have waiting times of 10 minutes

or less in a field office

Percent of people without an appointment who have waiting times of 30

minutes or less in a field office

84 percent

72.7 percent

800-number telephone

service

Percent of callers who reach 800 number within 5 minutes 

Percent of calls handled accurately

95 percent

97.2 percent

(continued)

Page 26 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix I 

SSA’s Goals and Performance Measures,

Fiscal Year 1997

Goal Performance measure

Fiscal year 1997

target

Mail Percent of people who find SSA mail “easy” or “very easy” to understand 75 percent

Provide supportive environment for employees

Percent of direct service employees with intelligent workstations connected

to a local area network

Number of underrepresented equal opportunity groups that came closer to

parity with civilian labor force

Yet to be

determined

Six of six

Source: Social Security Administration Business Plan: Fiscal Years 1997-2001, SSA, Pub. No.

01-008 (Apr. 1996).

Page 27 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix II 

Comments From the Social Security

Administration

Page 28 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix II 

Comments From the Social Security

Administration

Page 29 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix II 

Comments From the Social Security

Administration

Page 30 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix II 

Comments From the Social Security

Administration

Page 31 GAO/HEHS-97-53 Challenges Await New Commissioner
Appendix III 

Related GAO Products

SSA Disability Redesign: Focus Needed on Initiatives Most Crucial to

Reducing Costs and Time (GAO/HEHS-97-20, Dec. 20, 1996).

SSA Benefit Statements: Well Received by the Public but Difficult to

Comprehend (GAO/HEHS-97-19, Dec. 5, 1996).

Social Security Disability: Alternatives Would Boost Cost-Effectiveness of

Continuing Disability Reviews (GAO/HEHS-97-2, Oct. 16, 1996).

Supplemental Security Income: SSA Efforts Fall Short in Correcting

Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug. 30, 1996).

Supplemental Security Income: Administrative and Program Savings

Possible by Directly Accessing State Data (GAO/HEHS-96-163, Aug. 29, 1996).

Social Security Administration: Effective Leadership Needed to Meet

Daunting Challenges (GAO/T-OCG-96-7, July 25, 1996 and GAO/HEHS-96-196, Sept.

12, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return to Work

(GAO/HEHS-96-62, Apr. 24, 1996).

PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly

Managed (GAO/HEHS-96-51, Feb. 28, 1996).

Deficit Reduction: Opportunities to Address Long-Standing Government

Performance Issues (GAO/T-OCG-95-6, Sept. 13, 1995).

Supplemental Security Income: Disability Program Vulnerable to Applicant

Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31, 1995).

Social Security Administration: Leadership Challenges Accompany

Transition to an Independent Agency (GAO/HEHS-95-59, Feb. 15, 1995).

Social Security Administration: Major Changes in SSA’s Business Processes

Are Imperative (GAO/T-AIMD-94-106, Apr. 14, 1994).

(105938) Page 32 GAO/HEHS-97-53 Challenges Await New Commissioner
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