```

[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]

 
        H.R. 743, THE ``SOCIAL SECURITY PROTECTION ACT OF 2003''
=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 27, 2003

                               __________

                           Serial No. 108-31

                               __________

         Printed for the use of the Committee on Ways and Means

                        U.S. GOVERNMENT PRINTING OFFICE

93-119                            WASHINGTON : 2004
_____________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800
Fax: (202) 512-2250  Mail: Stop SSOP, Washington, DC  20402-0001

                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana               JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                  E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 BENJAMIN L. CARDIN, Maryland
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri           XAVIER BECERRA, California
RON LEWIS, Kentucky                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

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.

                            C O N T E N T S

                              ----------                              

Advisories announcing the hearing................................     2

                               WITNESSES

Social Security Administration, Hon. James G. Huse, Jr., 
  Inspector General..............................................     7
U.S. General Accounting Office, Barbara D. Bovbjerg, Director, 
  Education, Workforce, and Income Security Issues; accompanied 
  by Dan Bertoni, Deputy Director................................    11

                                 ______

American Bar Association, Nancy M. Coleman.......................    31
Consortium for Citizens with Disabilities, Marty Ford............    35
National Association of Disability Representatives, and Insuring 
  Assistance, Inc., Arthur Kaufman...............................    43
National Organization of Social Security Claimants' 
  Representatives, Richard P. Morris.............................    48

                       SUBMISSIONS FOR THE RECORD

Association of Texas Professional Educators, Austin, TX, 
  statement......................................................    65
Cannon, Frank O., North Hollywood, CA, statement.................    65
Herger, Hon. Wally, a Representative in Congress from the State 
  of California, statement.......................................    65
Montague, Sally, Bridge City, TX, statement......................    66
National Association of Disability Examiners, Madison, WI, 
  Theresa B. Klubertanz, letter..................................    66
National Council of Social Security Administration Field 
  Operations Locals, and American Federation of Government 
  Employees, Social Security General Committee, Witold 
  Skwierczynski, statement.......................................    67
National Education Association, statement........................    70
National Senior Citizens Law Center, Los Angeles, CA, Gerald A. 
  McIntyre, statement and attachment.............................    72
Padgett, Barbara, Iowa Park, TX, statement.......................    77
Rutkoski, Joan, San Antonio, TX, joint statement.................    77
Sweeney, Jane, San Antonio, TX, joint statement (see listing 
  under Joan Rutkoski)...........................................    77
Texas Classroom Teachers Association, Austin, TX, statement......    22
Texas Federation of Teachers, Austin, TX, Eric Hartman, statement    22
Texas State Teachers Association, Austin, TX, Jack Kelly, 
  statement......................................................    20
Walters, Lynne, Auburn, ME, statement............................    78
Wise, Ruth, San Antonio, TX, joint statement (see listing under 
  Joan Rutkoski).................................................    77
Zwirn, Stephen, Fort Lauderdale, FL, statement...................    78

        H.R. 743, THE ``SOCIAL SECURITY PROTECTION ACT OF 2003''

                              ----------                              

                      THURSDAY, FEBRUARY 27, 2003

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:07 a.m., in 
room B-318, Rayburn House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee), presiding.
    [The advisory and revised advisory announcing the hearing 
follow:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 20, 2003
SS-1

 Shaw Announces Hearing on H.R. 743, the ``Social Security Protection 
                             Act of 2003''

    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 hearing on H.R. 743, the ``Social 
Security Protection Act of 2003.'' The hearing will take place on 
Thursday, February 27, 2003, in room B-318 Rayburn House Office 
Building, beginning at 10:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 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:

      
    Despite the Social Security Administration's (SSA's) best efforts 
to accurately pay and protect an estimated $500 billion in benefits 
this fiscal year to be paid to over 50 million Social Security and 
Supplemental Security Income (SSI) beneficiaries, certain Social 
Security and SSI program activities continue to be subject to fraud and 
abuse.
      
    Representative payees manage benefits for nearly 8 million Social 
Security and SSI beneficiaries who cannot manage their own affairs. 
While most representative payees are honest and conscientious, some 
abuse the trust placed in them. The SSA Office of Inspector General has 
reported that in a 2-year period, SSA identified over 2,400 
representative payees who misused approximately $12 million in benefits 
entrusted to their management. The Inspector General has also found 121 
cases of SSI beneficiaries who acted as representative payees and 
managed over $1.4 million in benefits, even though their own benefits 
were suspended or terminated because they were fugitive felons or 
parole or probation violators.
      
    Furthermore, Social Security benefits are paid to beneficiaries who 
are also fugitive felons and probation or parole violators. In August 
1996, the Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996 (P.L. 104-193) prohibited payment of SSI benefit payments 
to such persons. The Congressional Budget Office estimates that 
extending this prohibition to Social Security beneficiaries would save 
$698 million in Social Security and Medicare costs over the next 10 
years.
      
    In addition to these program vulnerabilities, SSA has a complex 
disability application process that many claimants find difficult to 
navigate without the help of a claimant representative. Unfortunately, 
some claimants have difficulty obtaining legal representation. To 
encourage attorneys to assist claimants, SSA will pay an attorney's 
fees directly out of past-due Social Security benefits.
      
    However, this service is not available for SSI claimants, 
potentially limiting their access to representation. Also, the 
Subcommittee has heard testimony that SSA's charges for processing 
attorney fee withholding substantially reduce an attorney's net 
revenue, and thereby discourage attorneys from representing claimants.
      
    On February 12, 2003, Chairman Shaw introduced H.R. 743, the 
``Social Security Protection Act of 2003,'' to address these and other 
serious program vulnerabilities. The bill includes provisions to:

            Give the SSA enhanced tools to protect individuals 
        from benefit misuse by representative payees and to hold 
        representative payees responsible for their actions,
            Deny Social Security benefits to fugitive felons 
        and parole violators,
            Expand the SSA's ability to punish and deter 
        perpetrators of fraud through new civil monetary penalties,
            Prevent persons from misrepresenting themselves as 
        they provide Social Security-related services,
            Protect Social Security employees from harm while 
        conducting their duties;
            Help individuals with disabilities gain access to 
        representation; and,
            Clarify and improve the Ticket to Work program and 
        other provisions that enable individuals with disabilities to 
        seek work opportunities.
      
    In announcing the hearing, Chairman Shaw stated: ``The Social 
Security Protection Act gives the SSA the enhanced tools it needs to 
fight activities that drain program resources and undermine the 
financial security of beneficiaries. This hearing will shine a bright 
light on the need for this legislation and the importance of acting 
now, before massive numbers of Baby Boomers start to qualify for 
benefits.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee will hear testimony from witnesses explaining the 
need for quick action and the extent to which the bill will give the 
SSA the tools it needs to prevent misuse of benefits by representative 
payees, prevent program fraud and abuse, help individuals with 
disabilities gain access to representation, and aid individuals with 
disabilities to return to work. The Subcommittee will also hear 
testimony about the impact of the legislation's provisions on 
beneficiaries, workers, and others.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Thursday, March 13, 2003. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Social Security in room 
B-316 Rayburn House Office Building, in an open and searchable package 
48 hours before the hearing. The U.S. Capitol Police will refuse 
sealed-packaged deliveries to all House Office Buildings.
      

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. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST 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. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      

    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 Committee as 
noted above.

                                 

                      ***NOTICE--CHANGE IN TIME***

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 26, 2003
SS 1-REV

     Change in Time for Hearing on H.R. 743, the ``Social Security 
                        Protection Act of 2003''

    Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced the 
Subcommittee hearing on H.R. 743, the ``Social Security Protection Act 
of 2003,'' previously scheduled for Thursday, February 27, 2003, at 
10:00 a.m., in room B-318 Rayburn House Office Building, will now be 
held instead at 9:00 a.m. The hearing will end no later than 11:00 a.m.
      
    All other details for the hearing remain the same. (See 
Subcommittee Advisory No. SS-1, dated February 20, 2003)

                                 

    Chairman SHAW. Good morning. Today, we consider the Social 
Security Protection Act of 2003 (H.R. 743), which is a 
bipartisan bill that was introduced earlier this month by 
myself and Mr. Matsui, along with other Subcommittee Members, 
and other Members of Congress. The Protection Act will give the 
Social Security Administration (SSA) the additional tools 
needed to fight activities that drain resources from Social 
Security and undermine the fiscal security of the 
beneficiaries. In past Subcommittee hearings, we received 
testimony about individuals or organizations called 
``representative payees,'' who are appointed by SSA to help 
nearly 8 million beneficiaries manage their benefits when these 
beneficiaries are not able to do so for themselves. While most 
representative payees are conscientious and honest, there are 
always a few who are not. Despite current precautions, some 
representative payees' misuse the benefits entrusted to their 
care. The Social Security Inspector General reported that 
during a 3-year period ending in the late-1990s, over 2,400 
representative payees were identified for misuse of about $12 
million in benefits. This bill raises the standards for persons 
and organizations serving as representative payees, and imposes 
stricter regulations and monetary penalties for those who 
mismanage the benefits.
    This bill also picks up where the 1996 legislation left off 
in ending benefit payments to those who have committed crimes. 
While parole and probation violators, along with others trying 
to flee the law, are denied Supplemental Security Income (SSI) 
benefits, they are still allowed to receive Social Security 
benefits. The Congressional Budget Office estimates that we 
will pay over $500 million out of the trust fund to those 
lawbreakers over the next 10 years. This is not right, and this 
legislation will deny them benefits. The Protection Act also 
provides tools to further safeguard Social Security programs. 
It will help shield Social Security employees from harm while 
conducting their duties, expand the Inspector General's ability 
to stop perpetrators of fraud through new civil monetary 
penalties, and it will prevent people from misrepresenting 
themselves as they provide the Social Security-related 
services. On top of this, the bill helps claimants legitimately 
seeking benefits by improving the attorney fee withholding 
process. This bill caps the current attorney fee assessment and 
extends fee withholding to SSI claims, enabling more 
individuals with disabilities to receive help navigating the 
complex benefit application process.
    In addition to helping individuals obtain benefits, the 
bill enhances provisions of the Ticket-to-Work program. This 
will enable the SSA to better test ways to help individuals 
with disabilities return to work, and provide more individual 
access to support and services to help them do so. It also 
encourages more employers to hire individuals with disabilities 
by expanding eligibility for the work opportunity tax credit. 
Finally, the bill contains several provisions aimed at 
correcting inequities in the law regarding benefit coverage and 
receipt, as well as making technical corrections to the law. 
One example is the provision adding Kentucky to the list of 
States allowed to have what is called a ``divided retirement 
system.'' This provision would allow certain police officers 
under a newly created local government in Kentucky to 
voluntarily choose Social Security coverage if they desire it, 
without changing the retirement benefits of other current 
employees who would rather pay into the public pension plan 
instead of Social Security.
    Our witnesses will explain why these changes in the law are 
needed, how they would affect beneficiaries, and how they will 
help ensure taxpayers' hard-earned payroll tax dollars and the 
Social Security Trust funds are being spent accurately, wisely, 
and in the best interest of the beneficiaries. There is one 
provision in the bill that particularly embodies the tension 
between protecting the trust funds and providing adequate 
benefits. The provision implementing the U.S. General 
Accounting Office (GAO) recommendation to bolster what is 
called the ``last-day rule'' in applying the government pension 
offset provision. There is no evidence that this last-day rule 
was put into law simply to allow workers to bypass or avoid the 
government pension offset by switching jobs, as has been 
advertised by certain organizations. However, GAO determined 
that such public employees are using it to avoid a reduction of 
Social Security spouse and survivor benefits that all other 
workers in both the public and the private sector experience.
    While the government pension offset was intended to be an 
equalizer, not a penalizer, many public workers believe it to 
be unfair. The overall fairness of this offset must not be 
given short shrift, and will be examined in detail in a 
separate hearing by this Subcommittee in the near future. 
Today, in the interest of time, and to ensure adequate 
discussion of all the bill's provisions, it is important that 
our witnesses limit their comments to the merits of the last-
day rule. Perhaps I should have limited the duration of this 
opening statement; this thing is endless. Protecting Social 
Security programs is a key responsibility of the SSA, and of 
Congress, and this bill is a culmination of bipartisan efforts, 
as well as the cooperation and support of the SSA and the 
Social Security Inspector General. This is why the 107th 
Congress' version of this bill, the Social Security Program 
Protection Act of 2002 (H.R. 4070), passed the House by 
overwhelming bipartisan vote of 425 to 0, and passed the 
Senate, as amended, under unanimous consent. I hope today's 
hearing will be the first step toward quickly enacting these 
changes that are so necessary to protect the most vulnerable 
beneficiaries, and prevent Social Security from wasting 
precious dollars through fraud and benefits misuse. Do we have 
an opening statement on the minority side?
    Mr. BECERRA. Yes, Mr. Chairman.
    Chairman SHAW. I yield to the gentleman from California.
    Mr. BECERRA. Mr. Chairman, thank you very much. On behalf 
of my colleague from California, Mr. Matsui, the Ranking Member 
of the Subcommittee, and the other Members on the minority side 
of the Subcommittee, I want to welcome the witnesses who are 
here. It is good to see some of you again. Mr. Chairman, thank 
you very much for the work that has been done on this 
particular legislation, H.R. 743, the Social Security 
Protection Act of 2003. It is great when we are able to move 
forward in a bipartisan fashion, and try to address some of the 
very real concerns, so that people who qualify for benefits 
under the SSA's programs have a chance to see this happen. We 
are very pleased that we could move forward. We are looking 
forward to what the witnesses say. If the bill is able to move 
forward on a suspension basis to the floor immediately from 
here without having to work through Committee--we are very much 
looking forward to the opportunity to work out any particular 
changes to the bill that we might find productive as a result 
of the testimony we will take today. We are very much looking 
forward to working with the Chairman and all the Members of the 
Subcommittee to move this forward on a rapid basis--to try to 
make those changes, as necessary. With that said, Mr. Chairman, 
thank you very much.
    Chairman SHAW. Thank you. On our first panel this morning, 
we have, from the SSA, the Honorable James G. Huse, who is the 
Inspector General; and Barbara Bovbjerg, who is the Director of 
Education, Workforce, and Income Security, at GAO; and she is 
accompanied by Mr. Dan Bertoni, the Deputy Director. Mr. Huse, 
you may proceed as you see fit--and the testimony of all the 
witnesses this morning will be placed in full in the record.

   STATEMENT OF THE HONORABLE JAMES G. HUSE, JR., INSPECTOR 
GENERAL, SOCIAL SECURITY ADMINISTRATION                         
                                  

    Mr. HUSE. Thank you, Mr. Chairman, and Members of the 
Subcommittee; good morning. I welcome the opportunity to 
testify today about the need for legislation to protect the 
integrity of the SSA's vital programs, and the representative 
payee program in particular. In the interest of time, let me 
ask that my full statement be entered into the record, and I 
will summarize briefly. There are currently about 5.4 million 
representative payees who manage benefits for about 7.6 million 
beneficiaries. As I have previously testified before this 
Subcommittee, not all representative payees properly manage the 
benefits entrusted to them. Some misuse these funds, and the 
effect on those beneficiaries is catastrophic. We have worked 
closely with your staff, and the result was a legislative 
proposal that provides greater oversight of representative 
payees, as well as additional civil and administrative 
penalties to allow my office to combat this problem. This 
bipartisan legislation came close to passage last session. I am 
pleased, Mr. Chairman, that you have reintroduced this 
important legislation in this session.
    Legislation is needed to ensure the integrity of the 
representative payee process at several stages: first, in the 
selection of a representative payee; second, in the monitoring 
and oversight; third, in proper accounting when funds are 
misused; and, fourth, in measures designed to punish and deter 
such misuse. I believe this legislation makes important strides 
in each of these areas. For example, in October 2002, we issued 
a report that identified 121 individuals whose own SSI benefits 
were stopped by SSA because they were fugitive felons, or 
parole or probation violators. These individuals were also 
serving as representative payees for others. As you know, 
current SSA policy permits fugitive felons and parole or 
probation violators to serve as representative payees. We also 
stated in our report that we were working on an additional 
audit concerning the number of representative payees who were 
fugitive felons, regardless of whether they were receiving SSI 
payments. This audit is currently in draft with the SSA.
    Once the selection of an appropriate representative payee 
has been completed, it is then incumbent upon SSA to adequately 
monitor that individual or organization to ensure that the 
benefits are being used, as intended, to aid the beneficiary. 
The bill, H.R. 743, improves the oversight function, and 
further provides much-needed penalties for deliberate misuse. 
We have found the Civil Monetary Penalty (CMP) program to be an 
effective tool against program fraud. In many instances, H.R. 
743 addresses this concern and adds CMPs to particularly 
troubling areas. I also want to add that the extension of 
protection for Social Security employees conducting Social 
Security's business is an important piece of H.R. 743. This 
protection is the same as is afforded those employees in the 
Internal Revenue Service, and it is a critical need. I really 
believe that it is a very key part of this legislation. In sum, 
this legislation will give us some key tools to do a better job 
in many areas. Finally, I believe the extension of the fugitive 
felon provisions to those who receive Title II benefits is a 
key piece in the effort already made in the Welfare Reform Act 
1996 (P.L. 104-193) to deny benefits to those who are fleeing 
from justice. With that, I will answer any questions that you 
might have. Thank you.
    [The prepared statement of Mr. Huse follows:]
   Statement of the Honorable James G. Huse, Jr., Inspector General, 
                     Social Security Administration
                              INTRODUCTION
    Good morning, Chairman Shaw, Ranking Member Matsui, and Members of 
the Subcommittee on Social Security. I welcome the opportunity to 
testify today about the need for legislation to protect the integrity 
of the Social Security Administration's (SSA) vital programs.
                    THE REPRESENTATIVE PAYEE PROGRAM
    SSA provides Social Security and Supplemental Security Income (SSI) 
benefits to the most vulnerable members of our society--the young, the 
elderly, and the disabled. Congress granted SSA the authority to 
appoint representative payees to receive and manage these 
beneficiaries' payments. There are currently about 5.4 million 
representative payees who manage benefits for about 7.6 million 
beneficiaries.
    A representative payee may be an individual or an organization. 
Individual representative payees are typically relatives of the 
beneficiary, who are entrusted to use such funds in the best interest 
of the beneficiary. Although individual representative payees may at 
times provide services to multiple beneficiaries, they are prohibited 
from charging fees for such services.
    Organizational representative payees, on the other hand, are 
typically large institutions that provide care and treatment for 
beneficiaries residing in such institutions (e.g., Department of 
Veterans Affairs hospitals, State psychiatric institutions, and 
extended care facilities). Other types of organizational representative 
payees may include community groups, charitable organizations, and 
other nonprofit agencies. The Social Security Act allows qualified and 
authorized organizational representative payees to collect a fee for 
providing representative payee services.
    As I have previously testified before this Subcommittee, not all 
representative payees properly manage benefits entrusted to them. I 
have previously recounted several instances in which a representative 
payee had misused funds intended for a beneficiary in their charge. The 
effect on the lives of the beneficiaries in those cases was 
catastrophic. At that hearing, both SSA and my office identified 
problems and proposed solutions. We worked closely with your staff, and 
the result was a legislative proposal that provides greater oversight 
of representative payees as well as additional civil and administrative 
penalties to allow my office to combat this problem. This bi-partisan 
legislation came close to passage last session and I am pleased, Mr. 
Chairman, that you have reintroduced this important legislation this 
session.
    As we have pointed out in audit reports and prior testimony, 
legislation is needed to ensure the integrity of the representative 
payee process at several stages: selection of a representative payee, 
monitoring and oversight, proper accounting when funds are misused, and 
measures designed to punish and deter such misuse. I believe this 
legislation makes important strides in each of these areas.
    At the outset, closer attention to the initial selection process 
can resolve many potential problems before they arise, so it is 
critical that SSA more thoroughly screens potential representative 
payees. In October 2002, we issued a report that identified 121 
individuals whose own Supplemental Security Income (SSI) benefits were 
stopped by SSA because they were fugitive felons or parole or probation 
violators. These individuals were also serving as representative payees 
for others. As you know, current SSA policy permits fugitive felons and 
parole or probation violators to serve as representative payees. We 
also stated that we were working on an additional audit concerning the 
number of representative payees who were fugitive felons regardless of 
whether they were receiving Supplemental Security Income payments. This 
audit is currently in draft with the Agency.
    Once an appropriate representative payee is selected, it is then 
incumbent upon SSA to adequately monitor that individual or 
organization to ensure that the benefits are being used as intended to 
aid the beneficiary.
    In an audit report entitled ``Nonresponder Representative Payee 
Alerts for Supplemental Security Income Recipients'' (September 23, 
1999) my office recommended that SSA develop procedures for employees 
to redirect benefit checks to field offices (and require representative 
payees to provide the accounting forms before releasing the checks) in 
instances where other attempts to obtain the required forms have been 
unsuccessful. SSA agreed with this recommendation however, 
implementation is pending until the legislative changes contained in 
H.R. 743 are approved. Our most recent financial audits of 
representative payees continue to show that the receipt and retrieval 
of annual accounting reports remain a problem. Over the past 2 years, 
we have requested 474 representative payee reports, but SSA has been 
able to retrieve only 228, less than 50 percent.
    Even with improved oversight, there will always be representative 
payees unable to resist the temptation to misuse beneficiary funds. 
When this does occur, two things should happen: the beneficiary's funds 
should be reissued by SSA and the representative payee who misused them 
should be liable to repay them. Unfortunately, under current law, SSA 
has authority to reissue benefits misused by a representative payee 
only if it finds that it has been negligent to investigate or monitor a 
representative payee and this results in the misuse of benefits. Not 
only does this withhold benefits from those who need (and deserve) 
them, but a finding of negligence can have a catastrophic effect on any 
ongoing criminal investigation of the representative payee. For 
example, in the Aurora Foundation case, had SSA made a determination of 
negligence, the United States Attorney indicated that his ability to 
prosecute would have been seriously impaired. This legislation 
eliminates the requirement that benefits can be reissued only upon a 
finding of SSA negligence, by requiring SSA to reissue benefits, even 
absent a finding of negligence. Further, this legislation makes the 
representative payee liable for the amount of benefits misused.
    Once the beneficiary's needs have been addressed, attention then 
turns to punishing and deterring misconduct by representative payees. 
We have found the Civil Monetary Penalty (CMP) program to be an 
effective tool against program fraud, in other areas. Unfortunately, as 
we have reviewed potential cases for enforcement under the CMP program, 
we have found that the current CMP statutes do not adequately address 
some of the most egregious situations involving representative payees. 
To remedy this, we proposed two amendments to the CMP statutes, both of 
which are included in H.R. 743.
    The first is amending Section 1129 of the Social Security Act to 
allow the imposition of CMPs for the willful conversion of a 
beneficiary's funds by a representative payee. For example, the 
benefits of a disabled child whose mother (as a minor herself) could 
not serve as her son's representative payee, were instead paid to the 
father. The father, who did not live with the child and the child's 
mother converted more than $10,000 of his child's benefits to his own 
use. The United States Attorney declined to prosecute the father 
criminally, and the case was referred to my office for consideration 
under the CMP statutes. Unfortunately, the current CMP statutes do not 
provide for penalties to be imposed for conversion of benefits by 
representative payees. H.R. 743 provides this authority.
    These provisions provide much needed legislative relief to improve 
the integrity of SSA's Representative Payee Program.
                       ADDITIONAL CMP AUTHORITIES
    In addition to the CMP authority concerning representative payees, 
H.R. 743 closes a loophole that has long existed. Under current law, 
there is no explicit authority to impose CMPs against individuals who 
fraudulently obtain benefits by withholding information from SSA, 
rather than by making an affirmative false statement. The ability to 
pursue those who, for example, continue to receive and use the benefits 
of a deceased relative, provides us with a new and important tool for 
fighting fraud.
    I know there has been some concern expressed as to the reach 
intended by this amendment. I can assure you that my office is aware 
that many of the individuals with whom we deal have physical and/or 
mental impairments, may be elderly, or are otherwise incapable of 
forming fraudulent intent. We do not pursue such individuals under 
existing authorities, and will not do so should this new authority be 
enacted. We will, however, enthusiastically pursue able-minded and 
able-bodied individuals who purposely conceal information from SSA in 
order to continue wrongfully receiving SSA benefits.
    In addition to the amendments to Section 1129 of the Social 
Security Act (Act), described above, H.R. 743 also amends the other CMP 
provision of the Act, Section 1140. Section 1140 prohibits the misuse 
of SSA's program words, letters, symbols, or emblems, in advertisements 
or other communications, and H.R. 743 amends this statute in two ways:
    First, Section 1140 would be amended to require entities to clearly 
state in their mailing or solicitation that the product or service that 
they propose to provide for a fee is one which is available directly 
from SSA free of charge;
    Second, the list of prohibited terms in Section 1140 would be 
expanded to include many of the terms that seniors and others commonly 
associate with Federal benefits, and SSA programs and benefits in 
particular.
    These amendments will further bolster our successful CMP program 
and enable us to better protect America's seniors and other vulnerable 
individuals.
                FRAUDULENT CONCEALMENT OF WORK ACTIVITY
    We believe that an individual who is receiving Social Security 
disability benefits should not get credit for a trial work period when 
the individual has fraudulently concealed the work from SSA. I will 
briefly touch on the problem caused by the existence of the trial work 
period as described to me in a letter from a United States Attorney. 
She wrote to advise me that if SSA did not change its trial work period 
policy for individuals being investigated and prosecuted for fraud, it 
could have a serious impact on whether her office took our future cases 
where SSA granted a trial work period. The United States Attorney noted 
that her office had several such cases pending at the time of her 
letter.
    In the case that prompted her letter, the suspect received Social 
Security disability benefits. While receiving these benefits, he began 
working in the construction industry under an alias using another 
person's Social Security number (SSN) and failed to inform SSA that he 
was working. SSA allowed the suspect a trial work period in the 
construction industry effectively eliminating the overpayment.
    In another recent case, SSA gave an individual, under 
investigation, credit for a trial work period even though he worked as 
a truck driver under one SSN while receiving benefits under a second 
SSN.
    We have long sought a legislative amendment to eliminate this 
unintended windfall for those who are convicted in Federal court of 
fraudulently concealing work activity from the Commissioner, and H.R. 
743 provides such relief.
    INTERFERENCE WITH SSA FUNCTIONS AND PROTECTION OF SSA EMPLOYEES
    Like its predecessor, H.R. 743 would also amend existing law to 
provide a criminal penalty for corrupt or forcible interference with 
the administration of the Social Security Act. It would impose a fine 
or imprisonment for interfering with SSA employees acting in their 
official capacities. It broadly defines an employee as including any 
SSA officer, employee or contractor, State Disability Determination 
Service employee, or any individual designated by the Commissioner. On 
a daily basis, SSA employees interact with members of the public who 
are undergoing times of great stress, such as after the death or 
disabling injury of a loved one. This exposes our employees to an 
increased risk of danger. Enactment of this provision would provide 
clear authority to our office to investigate any incidents that do 
occur.
                     JUDICIAL RESTITUTION AUTHORITY
    Under Section 208 of the Social Security Act, a court may find an 
individual guilty of stealing Social Security benefits, but cannot, as 
part of that individual's criminal sentence, order the individual to 
repay the stolen benefits. Your proposed legislation would close this 
loophole.
                EXPANSION OF FUGITIVE FELON AUTHORITIES
    We have always believed that criminals fleeing from justice should 
not have the support of Federal benefits. Therefore, we support H.R. 
743's expansion of the Title XVI fugitive felon provisions to the Title 
II programs.
                               CONCLUSION
    Mr. Chairman, we have called for a number of the measures embodied 
in H.R. 743 for several years, and I am very pleased to see such strong 
legislation come out of the starting gate so early in the session.
    I am honored to contribute to the ongoing discussion of how we may 
protect Social Security programs. H.R. 743 is a major step in closing 
several loopholes that currently exist and will provide greater 
oversight for representative payees. This along with the enhanced 
criminal and civil penalties will help to provide greater protection to 
some of our country's most vulnerable. I applaud your efforts and 
pledge my support to work with you in the future. Thank you.

                                 

    Chairman SHAW. Thank you, Mr. Huse. Ms. Bovbjerg?

    STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
      OFFICE; ACCOMPANIED BY DAN BERTONI, DEPUTY DIRECTOR

    Ms. BOVBJERG. Thank you, Mr. Chairman, and Members of the 
Subcommittee. Thank you for inviting me here today. I am here 
to discuss the Social Security system's government pension 
offset exemption, a provision of the program that is addressed 
in H.R. 743, and in the President's 2004 budget. The government 
pension offset was enacted to equalize the treatment of workers 
covered by Social Security, and those with government pensions 
not covered by Social Security. The government pension offset 
prevents workers from receiving a full Social Security spousal 
benefit on top of a pension earned from government employment 
not covered by Social Security. However, the law provides an 
exemption from the government pension offset if the 
individual's last day of work is in a position covered by both 
a public pension system and Social Security. In these cases, 
the government pension offset will not apply, and the Social 
Security spousal benefits will not be reduced. Last year, Mr. 
Chairman, you asked us to assess the extent to which 
individuals retiring from jobs not covered by Social Security 
are using the so-called, last-day exemption. Today, you have 
asked that I summarize our findings from that report.
    First, let me say that no one really knows the extent to 
which the government pension offset exemption is being used. 
There are no central data on the State and local government 
retirement plans that do not participate in the Social Security 
system and could seek to use the exemption. However, we 
identified two States--Texas and Georgia--in which the 
exemption is being used, and believe that this use could 
readily become more widespread. Let me speak to what we found 
in these two States. In Texas, almost 4,800 teachers worked in 
Social Security-covered positions for short periods to qualify 
for the exemption. They worked typically for just a single day 
in non-teaching positions, primarily clerical, maintenance, and 
food service. Most were paid about $6 an hour for these 1-day 
positions, meaning that Social Security payroll taxes for the 
day would be about $3. We saw this 1-day approach being touted 
on websites, in seminars, in newspapers, and believe it is 
becoming a routine part of individuals' retirement planning. 
One university we visited is scheduling these government 
pension offset work days through 2005.
    In Georgia, we found much less activity. About 24 teachers 
not covered by Social Security--so we are talking about a 
relatively low number--went to work for approximately 1 year in 
another teaching position that is covered by Social Security. 
Officials there told us that the teachers' interest in 
obtaining last-day coverage helped the school system address 
teacher shortages in certain school districts that happen to 
offer coverage. In the course of our work, we found other 
States where such arrangements appear to be possible--that is, 
the pension systems do not participate in Social Security but 
include such coverage for some subsets of employees. In our 
view, it is just a matter of time before the approach used in 
Texas becomes relatively widespread. Let me now turn to the 
potential impact on the Social Security trust funds. We came up 
with a very rough estimate, based on an average government 
pension offset amount and average retiree life expectancies--
and just for the individuals we found in Texas and Georgia, so 
just a little over 4,800 people who have already qualified for 
the exemption--the cost would be about $450 million. That is 
$450 million of benefit payments by trust funds whose financial 
position is precarious--a situation about which I know I don't 
need to remind this Subcommittee.
    That number assumes that no more individuals take action to 
invoke the exemption. If the Texas approach grows as expected, 
and if other States and localities begin to help their 
employees to qualify for the exemption, the numbers will be 
much, much larger. We were also asked to provide options for 
addressing this loophole, and our report identifies two. One 
option is a proportional approach, wherein people who spend a 
certain percentage of their career in a position covered by 
Social Security could be exempt from the government pension 
offset. This option has the advantage of being finely 
calibrated, but it could be administratively burdensome, and it 
would be difficult to get the data necessary to make the 
calculation. The simpler approach which is proposed in H.R. 743 
is to change the last-day provision to a longer minimum time 
period. Although this may be less fine-tuned than the other 
approach, it would require only small changes at the 
administrative end. In conclusion, the government pension 
offset loophole I have described raises issues of fairness and 
equity in the Social Security program. The ability to earn 
benefits with contributions as little as $3, when others are 
contributing throughout their working lifetimes, undermines 
confidence in a program that Americans rely on. Although taking 
advantage of this loophole is legal, the institutionalized use 
of it is particularly troublesome, and we urge the Congress to 
take action. That concludes my statement, Mr. Chairman. Mr. 
Bertoni and I are here to answer any questions.
    [The prepared statement of Ms. Bovbjerg follows:]
 Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and 
Income Security Issues, U.S. General Accounting Office; accompanied by 
                      Dan Bertoni, Deputy Director
    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to discuss Social Security's 
Government Pension Offset (GPO) exemption. As you know, the GPO was 
enacted in 1977 to equalize the treatment of workers covered by Social 
Security and those with government pensions not covered by Social 
Security. In short, the GPO prevents workers from receiving a full 
Social Security spousal benefit on top of a pension earned from 
government employment not covered by Social Security.1 
However, the law provides an exemption from the GPO if an individual's 
last day of state/local government employment is in a position that is 
covered by both Social Security and their state/local pension system. 
In these cases, the GPO will not apply, and Social Security spousal 
benefits will not be reduced.
---------------------------------------------------------------------------
    \1\ Currently the reduction in spousal benefits is two-thirds of 
the amount of their public pension.
---------------------------------------------------------------------------
    Last year, you asked us to (1) assess the extent to which 
individuals retiring from jobs not covered by Social Security may be 
transferring briefly to covered jobs in order to avoid the GPO, and (2) 
estimate the impact of such transfers on the Social Security Trust 
Fund. To complete our work, we first reviewed the GPO's legislative 
history and government reports documenting the purpose of the offset 
and the Social Security Administration's (SSA) policies and procedures 
for administering it. We also performed limited work with associations, 
researchers, and retirement system officials in 28 states.2 
Finally, we performed audit work in Texas and Georgia, two of the 
states where we identified use of the last-day exemption. On August 15, 
2002, we reported to you on the results of our work.3 Today 
I will discuss the findings of our review.
---------------------------------------------------------------------------
    \2\ States were selected either because they were authorized to 
operate retirement systems with both covered and noncovered positions 
or because their state and local government plans had a mix of covered 
and noncovered positions, thus offering the greatest potential for use 
of the last-day exemption.
    \3\ See U.S. General Accounting Office, Social Security 
Administration: Revision to the Government Pension Offset Exemption 
Should Be Considered, GAO-02-950 (Washington, D.C.: Aug. 15, 2002).
---------------------------------------------------------------------------
    In summary, because no central data exists on use of the GPO 
exemption by individuals in approximately 2,300 state and local 
government retirement plans nationwide, we could not definitively 
confirm that this practice is occurring in states other than Texas and 
Georgia. In those two states, 4,819 individuals had performed work in 
Social Security-covered positions for short periods to qualify for the 
GPO last-day exemption. In Texas, teachers typically worked a single 
day in nonteaching positions covered by Social Security, such as 
clerical or janitorial positions. In Georgia, teachers generally agreed 
to work for approximately 1 year in another teaching position in a 
school district covered by Social Security. Officials in both states 
indicated that use of the exemption would likely continue to grow as 
awareness increases and it becomes part of individuals' retirement 
planning. For the cases we identified, increased long-term benefit 
payments from the Social Security Trust Fund could be about 
$4504 million over the long term and would likely rise 
further if use of the exemption grows in the states we visited and 
spreads to others. SSA officials acknowledged that use of the exemption 
might be possible in other state and local government retirement plans 
that include both those positions covered by Social Security and those 
not.
---------------------------------------------------------------------------
    \4\ This estimate was calculated by multiplying the number of last-
day cases reported in Texas and Georgia (4,819) by SSA data on average 
annual offset amount ($4,800) and the average life expectancy upon 
receipt of spousal benefits (19.4 years).
---------------------------------------------------------------------------
    The GPO ``loophole'' raises fairness and equity concerns for those 
receiving a Social Security pension and are currently subject to the 
spousal benefit offset. In the states we visited, individuals with a 
relatively minimal investment of work time and Social Security 
contributions can gain access to potentially many years of full Social 
Security spousal benefits. The last-day exemption could also have a 
more significant impact if the practice grows and begins to be adopted 
by other states and localities. Considering the potential for abuse, 
our report presented options for revising the GPO exemption, such as 
changing the last-day provision to a longer minimum time period or 
using a proportional approach based on the number of working years 
spent in covered and noncovered employment for determining the extent 
to which the GPO applies.
Background
    The Social Security Act requires that most workers be covered by 
Social Security benefits. Workers contribute to the program via wage 
deductions. State and local government workers were originally excluded 
from Social Security.
    Starting in the 1950s, state and local governments had the option 
of selecting Social Security coverage for their employees or retaining 
their noncovered status. In 1983, state and local governments in the 
Social Security system were prohibited by law from opting out of it. Of 
the workers in the roughly 2,300 separate state and local retirement 
plans nationwide, about one-third are not covered by Social Security.
    In addition to paying retirement and disability benefits to covered 
workers, Social Security also generally pays benefits to spouses of 
retired, disabled, or deceased workers. If both spouses worked in 
positions covered by Social Security, each may not receive both the 
benefits earned as a worker and the full spousal benefit; rather the 
worker receives the higher amount of the two. In contrast, until 1977, 
workers receiving pensions from government positions not covered by 
Social Security could receive their full pension benefit and their full 
Social Security spousal benefits as if they were nonworking spouses. At 
that time, legislation was enacted creating the GPO,5 which 
prevented workers from receiving a full spousal benefit on top of a 
pension earned from noncovered government employment.6 
However, the law provides an exemption from the GPO if an individual's 
last day of state/local employment is in a position that is covered by 
both Social Security and the state/local government's pension 
system.7 In these cases, the GPO will not be applied to the 
Social Security spousal benefit.
---------------------------------------------------------------------------
    \5\ Public Law 95-216, Section 334 (1977).
    \6\ Currently, the reduction in spousal benefits is two-thirds of 
the amount of their public pension.
    \7\ Exemption due to ``The Last Day of Employment'' Covered Under 
Social Security--State/Local or Military Service Pensions (SSA's 
Program Operations Manual System, GN 02608.102).
---------------------------------------------------------------------------
Nationwide Extend of Transfers to Avoid the GPO Unknown, but Expected 
        to Grow
    While we could not definitively confirm the extent nationwide that 
individuals are transferring positions to avoid the GPO, we found that 
4,819 individuals in Texas and Georgia had performed work in Social 
Security-covered positions for short periods to qualify for the GPO 
last-day exemption.8 Use of the exemption may grow further 
as the practice becomes more rapidly institutionalized and the aging 
baby-boom generation begins to retire in larger numbers. SSA officials 
also acknowledged that use of the exemption might be possible in some 
of the approximately 2,300 state and local government retirement plans 
in other states where such plans contain Social Security-covered and 
noncovered positions.
---------------------------------------------------------------------------
    \8\ Technically, individuals could have used this exemption since 
its passage in 1977. However, nearly all of the transfers we identified 
in Texas and Georgia occurred in the last several years.
---------------------------------------------------------------------------
Use of GPO Exemption in Texas is Growing
    Officials in Texas reported that 4,795 individuals at 31 schools 
have used or plan to use last-day employment to take advantage of the 
GPO exemption. In 2002, one-fourth (or 3,521) of all Texas public 
education retirees took advantage of this exemption.
    In most schools, teachers typically worked a single day in a 
nonteaching position covered by Social Security to use the exemption.
    Nearly all positions were nonteaching jobs, including clerical, 
food service, or maintenance. Most of these employees were paid about 
$6 per hour. At this rate, the Social Security contributions deducted 
from their pay would total about $3 for the day. We estimate that the 
average annual spousal benefit resulting from these last-day transfers 
would be about $5,200.
    School officials also reported that individuals are willing to 
travel to take these jobs--noting one teacher who traveled 800 miles to 
use the last-day provision. Some schools reported that they charge a 
processing fee, ranging from $100-$500, to hire these workers. These 
fees are a significant source of revenue--last year one school district 
collected over $283,000 in fees.
    Our work shows that use of the exemption in Texas has increased 
since 1990, which was the earliest use reported to us.
    In one school district, for example, officials reported that use of 
the exemption grew from one worker in 1996 to 1,050 in 2002. Another 
school district that began offering last-day employment in 2002 had 
received over 1,400 applications by June of that year from individuals 
seeking to use the exemption.
    Use of the exemption is likely to grow further, according to trends 
in Texas teacher retirements and information from school officials.
    There were about 14,000 teacher retirements in 2002, as opposed to 
10,000 in 2000. At one university we visited, officials have scheduled 
workdays for imminent retirees, through 2005, to work in covered 
employment, an indication of the rapid institutionalization of this 
practice. The GPO exemption is also becoming part of teachers' regular 
retirement planning process as its availability and use is publicized 
by teaching associations and financial planners (via Web sites, 
newspapers, seminars, etc.) and by word-of-mouth. One association's Web 
site we identified lists the names and telephone numbers of school 
officials in counties covered by Social Security and how to contact 
those officials for such work. A financial planner's Web site we 
identified indicated that individuals who worked as little as 1 day 
under a Social Security-covered position to quality for the GPO 
exemption could earn $150,000 or more in benefits over their lifetime.
In Georgia, Workers Obtain GPO Exemption by Transferring Positions
    In Georgia, officials in one district reported that 24 individuals 
have used or plan to use covered employment to take advantage of the 
GPO exemption. Officials told us that teachers generally agreed to work 
for approximately 1 year in another teaching position in a school 
district covered by Social Security to use the GPO exemption. These 
officials told us that they expect use of the exemption to increase as 
awareness of it grows.
    According to Georgia officials, their need to address a teacher 
shortage outweighs the risk to individual schools of teachers leaving 
after 1 year. Officials in fast-growing school systems reported they 
needed to hire teachers even if they only intended to teach for 1 year. 
However, some schools reported that they have had teachers leave 
shortly after being hired. For example, in one district, a teacher 
signed a 1-year contract to teach but left after 61 days, a time 
sufficient to avoid the spousal benefit reduction. In some of the 
applications for school employment we reviewed, individuals explicitly 
indicated their desire to work in a county covered by Social Security 
in order to obtain full Social Security spousal benefits.
Tansfers to Avoid the GPO May be Possible Nationwide
    Use of the GPO exemption might be possible in other plans 
nationwide. SSA officials told us that some of the approximately 2,300 
state and local government retirement plans--where such plans contain 
Social Security-covered and noncovered positions--may offer individuals 
the opportunity to use the GPO exemption. Officials representing state 
and local government retirement plans in other states across the 
country also told us that their plans allow covered and noncovered 
Social Security positions, making it possible for workers to avoid the 
GPO by transferring from one type of position to the other. For 
example:

            An official in a Midwestern state whose plan covers 
        all state government employees, told us that it is possible for 
        law enforcement personnel (noncovered) to take a covered job in 
        the state insurance bureau (covered) just before retiring.
            In a southern state with a statewide retirement 
        plan for school employees, teachers and other school 
        professionals (noncovered) can potentially transfer to a job in 
        the school cafeteria (covered) to avoid the GPO.
            A retirement system official from a north central 
        state reported hearing of a few cases where teachers had taken 
        advantage of the exemption by transferring to jobs in other 
        school districts covered by Social Security.
            Finally, in a western state with a statewide 
        retirement plan, workers could move from one government agency 
        (noncovered) to a position in another agency (covered).
Cost of Transfers to the Social Security Trust Fund is Growing, but 
        Options Exist to Address Potential Abuse
    The transfers to avoid the GPO we identified in Texas and Georgia 
could increase long-term benefit payments from the Social Security 
Trust Fund by about $450 million.9 We calculated this figure 
by multiplying the number of last-day cases reported in Texas and 
Georgia (4,819) by SSA data on the average annual offset amount 
($4,800) and the average retirees life expectancy upon receipt of 
spousal benefits (19.4 years). We believe that these estimated payments 
would likely increase as use of the exemption grows.
---------------------------------------------------------------------------
    \9\ This estimate may over/under estimate costs due to the use of 
averages, the exclusion of inflation/cost-of-living/net present value 
adjustments, lost investment earnings by the Trust Funds, and other 
factors that may affect the receipt of spousal benefits.
---------------------------------------------------------------------------
    Our prior report identified two options for addressing potential 
abuses of the GPO exemption. The first option, as proposed in H.R. 743, 
is to change the last-day provision to a longer minimum time period. 
This option would require only small changes to administer and would be 
less burdensome than other methods for SSA to administer. Also, this 
option has precedent. Legislation in 1987 required federal employees 
transferring between two federal retirement systems, the Civil Service 
Retirement System (CSRS) and Federal Employees Retirement System 
(FERS), to remain in FERS for 5 years before they were exempt from the 
GPO. We found that most of the jobs in Texas last for about 1 day, so 
extending the time period might eliminate many of the exemption users 
in Texas.
    The second option our report identified is to use a proportional 
approach to determine the extent to which the GPO applies. Under this 
option, employees who have spent a certain proportion of their working 
career in a position covered by Social Security could be exempt from 
the GPO. This option may represent a more calibrated approach to 
determining benefits for individuals who have made contributions to the 
Social Security system for an extended period of their working years. 
However, SSA has noted that using a proportional approach would take 
time to design and would be administratively burdensome to implement, 
given the lack of complete and reliable data on noncovered Social 
Security employment.
Conclusions
    The GPO ``loophole'' raises fairness and equity concerns for those 
receiving a Social Security pension and currently subject to an offset 
of their spousal Social Security benefits. The exemption allows a 
select group of individuals with a relatively small investment of work 
time and only minimal Social Security contributions to gain access to 
potentially many years of full Social Security spousal benefits. The 
practice of providing full spousal benefits to individuals who receive 
government pensions but who made only nominal contributions to the 
Social Security system also runs counter to the nation's efforts to 
address the solvency and sustainability of the Social Security program.
    Based on the number of people reported to be using the loophole in 
Texas and Georgia this year, the exemption could cost the Trust Fund 
hundreds of millions of dollars. While this currently represents a 
relatively small percentage of the Social Security Trust Fund, costs 
could increase significantly if the practice grows and begins to be 
adopted by other states and localities.
    Considering the potential for abuse of the last-day exemption and 
the likelihood for its increased use, we believe timely action is 
needed. Accordingly, our August 2002 report includes a Matter for 
Congressional consideration that the last-day GPO exemption be revised 
to provide for a longer minimum time period. This action would provide 
an immediate ``fix'' to address possible abuses of the GPO exemption 
identified in our review.
    Mr. Chairman, this concludes my prepared statement, I will be happy 
to respond to any questions you or other members of the Subcommittee 
may have.
GAO Contributions and Acknowledgments
    For information regarding this testimony, please contact Barbara D. 
Bovbjerg, Director, Education, Workforce, and Income Security Issues, 
on (202) 512-7215. Individuals who made key contributions to this 
testimony include Daniel Bertoni, Patrick DiBattista, Patricia M. 
Bundy, Jamila L. Jones, Daniel A. Schwimer, Anthony J. Wysocki, and 
Jill D. Yost.
Related GAO Products
Social Security Administration: Revision to the Government Pension 
            Offset Exemption Should Be Considered. GAO-02-950 
            Washington, D.C.: August 15, 2002.

Social Security Reform: Experience of the Alternate Plans in Texas. 
            GAO/HEHS-99-31, Washington, D.C.: February 26, 1999.

Social Security: Implications of Extending Mandatory Coverage to State 
            and Local Employees. GAO/HEHS-98-196 Washington, D.C.: 
            August 18, 1998.

Social Security: Better Payment Controls for Benefit Reduction 
            Provisions Could Save Millions. GAO/HEHS-98-76 Washington, 
            D.C.: April 30, 1998.

Federal Workforce: Effects of Public Pension Offset on Social Security 
            Benefits of Federal Retirees. GAO/GGD-88-73 Washington, 
            D.C.: April 27, 1988.

                                 

    Chairman SHAW. Thank you very much. Mr. Hayworth?
    Mr. HAYWORTH. Mr. Chairman, I thank you. I would like to 
thank our witnesses this morning. Mr. Huse, to listen to what 
has transpired about payees misusing beneficiaries' funds is 
nothing short of catastrophic in terms of not only personal 
situations but also public policy. The Protection Act that we 
are discussing includes provisions to stop fugitive felons and 
probation and parole violators from becoming representative 
payees, and requiring SSA to increase its oversight of these 
payees. Could you give us some examples of benefit misuse in 
the past that might have been avoided if we had the provisions 
of this bill in place in law right now?
    Mr. HUSE. Specific anecdotal examples I am not able to 
provide right now, Mr. Hayworth, because I simply do not have 
the memory. I see many cases day after day dealing with 
representative payee issues. There is not one of them that is 
easy to read, because the effect on the beneficiaries is 
devastating. Last year, in fiscal 2002, we opened 565 separate 
investigations of representative payee abuse. Of the 565, 547 
were individual representative payees, and 18 were 
organizational representative payees, but in all of these 
instances, there is always some other horrific crime that is 
involved. Sometimes it is abuse. Sometimes it is malnutrition 
or other aspects of abuse. In any case, in those 565 
investigations, we arrested 98 people and obtained 109 Federal 
indictments. The fraud we cleared as a result of this was over 
$5.5 million. I think those numbers speak volumes about the 
fact that this is a really serious crime.
    Mr. HAYWORTH. In the testimony you provided for us, it says 
that although there are criminal penalties associated with 
misuse of benefits by representative payees, the U.S. attorney 
has the option, and could decline to prosecute. Why would a 
U.S. attorney refuse to prosecute? I am interested in this 
because H.R. 743 creates a CMP to punish those unscrupulous 
individuals who misuse benefits. To what extent does a CMP make 
it easier to punish these wrongdoers?
    Mr. HUSE. That is a great question. I think it is a 
misconception among all of us that our U.S. Department of 
Justice can prosecute every single criminal instance that comes 
to it. Obviously, like every other function in government, 
there is more work than there is capacity, and it is a capacity 
issue for U.S. attorneys. They are just as outraged as any of 
us are by these crimes, but they simply do not have the 
capacity to take all of the crimes we bring to them. So, this 
new tool would give us the opportunity at least to impose CMPs 
against these people who betray the trust of the people they 
care for, as well as the trust of the SSA in delivering this 
key service. So, I think that kind of gives you a sense of why 
CMPs help us.
    Mr. HAYWORTH. I thank you, sir; and again, thanks to the 
panel. Thank you, Mr. Chairman.
    Chairman SHAW. Thank you. Mr. Becerra?
    Mr. BECERRA. Thank you, Mr. Chairman, and thank you to our 
two witnesses for their testimony. Mr. Huse, I have a quick 
question with regard to the issue of fugitive felons and the 
violators of probation and parole. When you testified before us 
last summer, you mentioned that there were any number of 
individuals, in the thousands, who have been fugitive felons or 
parole or probation violators who are receiving SSI. You have 
done some study into this. Can you give us your sense today of 
where we stand, and what effect will this particular 
legislation, H.R. 743, have with regard to the issue of 
fugitive felons and violators of parole and probation when we 
extend what is the existing application to SSI over to Social 
Security benefits as well? Can you explain the work that you 
have done, the work that is under way on your part, and the 
concerns that led you to do the audit?
    Mr. HUSE. We have done several audits about the fugitive 
felon issue. Early on, when the legislation was first passed in 
the Welfare Reform Act 1996, we did work to try to identify the 
universe of how many people would be in the fugitive felon 
category. Of course, that legislation only dealt with those 
receiving Title XVI benefits. When we did that work, we saw 
that there was a far greater number of fugitive felons who were 
actually receiving Title II benefits. In fact, I believe a five 
times greater number would be encompassed by adding the Title 
II coverage to the fugitive felon universe than who we deal 
with now under Title XVI. It is also a matter of equity. Some 
of the fugitive felons receiving Title II benefits are not 
covered by the prohibition right now. It is our experience that 
some of the more serious criminals are in the Title II area. 
This is what drives it now. Over time, as we have worked with 
this existing legislation, I know that there are a number of 
questions that have been raised. What is happening with our 
enforcement of this program? How does it work? Those questions 
are valuable. Some of the questions have been raised by 
advocacy groups and the media. This has prompted us to take a 
look at this issue, and we have an audit underway that will be 
some months in finishing, but will provide some of these 
answers.
    Mr. BECERRA. Have you gotten any answers with regard to the 
issue of the high number of fugitive felons who are out there, 
and when you supply the information of addresses and names to 
the local authorities, even after the fact that that has been 
provided to the local authorities, the vast majority of those 
77,000 felons that you have identified remain on the loose, 
without apprehension. I think the statistic that we have here 
is that 8,000 of those individuals whose names and addresses 
you provide to local authorities, have been arrested by local 
law enforcement, but that is only 8,000 of 77,000. Is there a 
reason why local law enforcement, after you have given names 
and addresses, is not apprehending individuals who are fugitive 
felons?
    Mr. HUSE. I will offer a variation of the answer I gave Mr. 
Hayworth earlier. Like every other function of government, our 
local criminal justice system, as is the case with the Federal 
system, is overloaded. So, they really----
    Mr. BECERRA. Does that have an implication for those 
individuals, maybe not fugitive felons--maybe we are talking 
more in terms of the probation or parole violators. I 
understand that the media has reported instances where 
individuals try to turn themselves in, but local law 
enforcement is no longer interested in pursuing the violator. 
As a result, those individuals who try to turn themselves in 
and do the right thing not only cannot do the right thing 
because local law enforcement does not want to proceed, but at 
the same time, they are losing benefits that they would 
otherwise be entitled to.
    Mr. HUSE. The concept that you should not receive benefits 
if you are fleeing from justice is a valid one, and I think 
that that law and order imperative is very good----
    Mr. BECERRA. I think we all agree with that.
    Mr. HUSE. I believe that is underneath this legislation.
    Mr. BECERRA. I think we all agree with that.
    Mr. HUSE. Now is the first time over the course of our 
experience with this legislation that we have real data to 
review. We are going in to review this data and see exactly how 
this system is really working in terms of how it has been put 
together in the last 6 or 7 years. This will give us an 
opportunity to come back to Congress and say, this is exactly 
how the program is working. I think that in the end, you are 
going to see that the initial imperative that was behind the 
intention of Congress to keep fugitives from justice from 
receiving Social Security benefits is there. I would be remiss 
if I tried to talk about that now, until this work is 
completed, because one of the things I have learned as an 
Inspector General is that I need workpapers, and that, I 
promise you, is underway. We expect this work to be done 
sometime in the autumn. When the work is completed, we will be 
able to come back and answer some of these questions in a 
better fashion.
    Mr. BECERRA. We may have passed this bill before then.
    Mr. HUSE. I don't think the changes in the bill, or 
extending the coverage of the fugitive felon legislation to 
Title II, is wrong. I think we need both in order to make sure 
that we are meeting the intentions of the bill in the first 
place, which is to remove from criminals the opportunity of 
receiving Social Security benefits to enhance their flight from 
justice. I think the fine-tuning will come when we bring back 
the facts as this law is administered, because this is a 
program that cascades through every level of government, and it 
is very complex.
    Mr. BECERRA. We agree with you on that.
    Mr. HUSE. Regarding your other concern about the equities 
to the beneficiaries, I believe Social Security does a really 
good job in taking the equities of each beneficiary into 
account, in the actual management of the program. I do not 
believe anyone has been damaged that way over time.
    Chairman SHAW. Mr. Huse, let me ask you a question 
following up on Mr. Becerra's questioning, and also somewhat on 
Mr. Hayworth's. I can understand the problem of prosecutors 
being overworked, and they have to be selective as to what 
cases they are going to prosecute, and which ones they are 
going to walk away from. I understand that. I would like to 
know a little bit about the enormity of the information that 
you are giving to local law enforcement, and why they do not go 
out and get these guys when you give them their name and 
address. That is a little disturbing to me. I can understand 
what Mr. Becerra is talking about--that some of them are parole 
violators, or something that is rather minor, and perhaps they 
just cannot get their record cleaned up. Obviously, we do not 
want to hurt those folks. I would personally like to know in 
Palm Beach and Broward Counties, Florida, how many of these 
there are. What information can you give me--and I would like 
to go on my own and talk to local law enforcement to get a 
better idea of exactly why they have not pursued this. From 
that standpoint, perhaps other Members on the Committee would 
like to have that information, too, so they could take it home 
and talk to their folks. I think that would give us a good 
idea.
    Mr. HUSE. I would be glad to do that, but I think it would 
be wrong for me to sit here and not say that on behalf of those 
law enforcement officials, both elected and appointed, I 
believe the serious criminals involved here do get apprehended. 
I am sure that----
    Chairman SHAW. There are some that you would like to point 
out to us, and I think all of us would like to go to our local 
law enforcement and say, ``Here is what I have; why don't you 
tell me your side of the story?''
    Mr. HUSE. As you know, Mr. Chairman, you can talk about law 
enforcement simplistically, but as it really works through the 
various levels of government, it is often driven by budget 
restraints and ability to expedite and so on.
    Chairman SHAW. Well, let them tell us that.
    Mr. HUSE. There are many aspects, but I will be glad to 
provide that.
    [The information follows:]

                                     Social Security Administration
                                          Baltimore, Maryland 21235
                                                      March 9, 2004
Chairman E. Clay Shaw, Jr.
Subcommittee on Social Security
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515

    Dear Chairman Shaw,

    Here is the information on completed Certification Reports (OI-5C) 
returned by law enforcement in Broward and Palm Beach Counties since 
the inception of the electronic matching program (March 2000):

      Broward County--461 responses to 576 referrals (80%)
      Palm Beach County--40 responses to 56 referrals (71%)

    Please keep in mind that the national average for responses from 
state reporters is 49%. As you can see, the percentages from Broward 
and Palm Beach Counties are well above that. Our RAC in Ft. Lauderdale, 
Dan Lynch, has related that we enjoy an excellent relationship with law 
enforcement officials in both counties.
            Sincerely,
                                               Patrick P. O'Carroll
                                           Acting Inspector General

                                 

    Chairman SHAW. Yes. Well, I think they can tell us that, 
and that will make us do a better job. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman. First, I would like 
your permission, on behalf of Congressman Sam Johnson and I, to 
submit the written testimony of the Texas State Teachers 
Association, Texas Classroom Teachers Association, and the 
Texas Federation of Teachers into the record.
Chairman SHAW. That will be done as part of the next panel without 
    objection.
    [The information follows:]
  Statement of Jack Kelly, Texas State Teachers Association, Austin, 
                                 Texas
    Representative Shaw, Members, I am Jack Kelly with the Texas State 
Teachers Association and I appreciate the opportunity to talk with you 
about HR 743, the Social Security Protection Act of 2003.
    HR 743 is an important bill and TSTA concurs with many of the 
provisions in the bill. It is imperative that Congress provides 
safeguards for Social Security annuitants and the programs they depend 
on.
    I want to talk with you about one provision in the bill, Section 
418, which amends the eligibility requirements for qualifying for 
spousal benefits. HR 743 is very similar to HR 4070 that the House 
passed unanimously (425-0) last session. The change contained in 
Section 418 was not in the version of the bill that the House 
considered and approved last year. It was not even mentioned by Rep. 
Shaw on February 12, 2003 when he introduced HR 743 and outlined the 
purposes and the key provisions of the bill. Section 418 would change 
the requirement that was adopted by Congress and has been in place for 
about twenty years. The current law allows a person who, on his or her 
last day of employment, paid into both the state retirement system and 
Social Security to be eligible for spousal benefits. The change 
recommended in Section 418 will be detrimental to the Texas education 
profession and Texas educators. TSTA believes that this body has not 
had a chance to adequately discuss it. TSTA does not want to impair or 
even slow down the passage of changes contained in HR 743 that would 
stop abuse and fraud in the Social Security system. However, there are 
thirty other bills that have already been filed in this session of 
Congress that deal with proposed changes in Social Security, including 
some that would adjust benefits and eligibility for benefits. TSTA 
would encourage this Subcommittee to delete Section 418 from this bill 
and include consideration of this proposed change at the same time the 
Subcommittee is considering some of the other bills that address 
changes in Social Security benefits.
    If Section 418 passes it will negatively impact the ability of 
school districts to attract and retain quality teachers. There is 
already a critical teacher shortage in Texas. As some of you may know 
Texas has a rapidly growing, diverse student population. We increase by 
about 70,000 students in average daily attendance every year--that is 
like adding a new school district the size of Austin or Ft. Worth each 
year. In addition to just more students and more diverse students, both 
ethnically and economically, Texas is trying to raise promotion and 
graduation requirements to better serve the students in our state. This 
week our third grade students are taking the new Texas Assessment of 
Knowledge and Skills test that they must pass in order to be promoted 
to the fourth grade. Our high school students will soon have to take 
the recommended or advanced high school curriculum in order to get a 
diploma. That means more math, more science and more foreign language 
credits. That also means we need more teachers in those fields. In 
addition to the changes Texas has imposed upon itself, we, like the 
other states, are trying to meet the new standards Congress has imposed 
in the No Child Left Behind (NCLB) legislation. A couple of those 
provisions require that, immediately for new hires and by 2006 for 
existing staff, all our support personnel must pass a test or have the 
equivalent of 2 years of college and that all our teachers must meet 
the new definition of ``highly qualified.''
    A recent study by our State Board for Educator Certification showed 
that out of the 280,000 Texas teachers in 2001-02, nearly 43,000 were 
certified but teaching more than 50% of the day out of their field of 
certification (not allowed under NCLB) and another nearly 15,000 were 
teaching on emergency permits or some form of certification waiver (not 
allowed under NCLB). In addition to the fact that about 20% of the 
current staff does not meet the new standards, Texas has the additional 
problem that about half of all newly certified teachers quit within 
their first 5 years of teaching. We literally have hundreds of 
thousands of students every day who are being taught, at least part of 
the day, by uncertified or under-certified people. I wanted you to have 
an appreciation for the size of the problem Texas is addressing and why 
the change proposed in Section 418 makes the goal of attracting/
retaining highly qualified educators even more challenging.
    In Texas we have implemented, even before the Federal NCLB 
recommendations, a Career to Classroom initiative. Texas sought to 
attract qualified people who wanted to make mid-life career changes and 
bring them into public education. One of the major hurdles to the 
success of that effort has been the impact on the person's Social 
Security benefits. A person, who was working in private industry and 
building up a retirement through that company and a Social Security 
benefit, did not want to take a lower paying job and lose access to 
most of their Social Security benefits. Since 1000 of the 1050 school 
districts in Texas do not participate in Social Security, the person 
wanting to go into education would see their own Social Security 
benefits reduced because of the windfall elimination provisions. At 
present, they can still qualify for at least 50% of their spouse's 
benefits. Similarly, the potential reduction in Social Security 
benefits will make it more difficult for school districts attempting to 
recruit teachers from other states to come to Texas.
    Finally, immediate passage of this provision would work an unfair 
financial hardship on the current school employees who having been 
planning their retirement based on the current law that has been in 
place for about twenty years. School employees are a dedicated group of 
people. They have generally worked with low pay and few benefits out of 
love for the students they served. It is almost unconscionable to think 
Congress would pass a law that tells these educators in ninety days you 
will lose access to about one-fourth (for many teachers) or one-half 
(for many support personnel) of the retirement benefits you had been 
planning on. That is a major change in a prospective retiree's budget. 
Please allow these educators to retire in dignity.
    TSTA would urge Congress not to make this change. However, if you 
are going to enact language like Section 418 in this bill or as part of 
some future discussion of Social Security benefits, school employees 
deserve adequate time to adjust to a financial decision that is going 
to affect the quality of the rest of their lives.
    Much as Congress did when it enacted the current government pension 
offset provision, you ought to pick a date in the future and provide 
that the current law will cover anyone who is eligible to retire at 
that point, whether they actually retire or not. This will protect our 
career educators who do not have time to replace the Social Security 
benefits they had been factoring into their retirement plans. It will 
give our younger educators advance notice that the current Social 
Security benefits will not be available to them and give them time to 
adjust to the change and plan their retirement and savings accordingly.
    Again, I thank you for the opportunity to share TSTA's concerns 
about this bill and I look forward to working with your staff as HR 743 
moves through the legislative process.

                                 

    Statement of Texas Classroom Teachers Association, Austin, Texas
    Thank you for this opportunity to provide comments on H.R. 743. We 
appreciate this committee's efforts to protect the integrity of the 
Social Security system while ensuring maximum benefits for those it was 
designed to help.
    The Texas Classroom Teachers Association (TCTA) was established 75 
years ago and has grown to more than 46,000 members across the state. 
TCTA membership is limited to teachers and related non-administrative 
personnel who are directly involved with student instruction or 
support, and TCTA is not affiliated with a national organization.
    Our members are particularly interested and concerned about Section 
418 of this legislation, which would revise the existing ``last-day'' 
exemption to require that an employee have worked at least 60 months 
for the relevant government entity participating in Social Security. As 
you know, many Texas teachers have utilized this legal exemption in 
order to qualify for Social Security benefits earned by their spouses 
who have participated in Social Security. The extensive use of the 
exemption in our state is an indication of the fundamental problem with 
the structure of the system. These Texas educators are now painfully 
aware of the fact that, had they chosen not to work outside the home at 
all, rather than devoting their lives to public service, there would be 
no question about their eligibility for spousal benefits. Many teachers 
have only recently realized that the government benefits which have 
been a major part of their retirement planning will not be available to 
them after all. Those entering school employment near the end of their 
working years may not have the opportunity to meet the 60-month 
requirement if this provision were changed.
    We appreciate Chairman Shaw's acknowledgement of this concept and 
encourage support for the legislative proposals by Chairman Shaw and 
others to eliminate or reduce the impact of the Government Pension 
Offset (as well as the Windfall Elimination Provision). We are very 
concerned that elimination of the last-day exemption to the offset 
without a corresponding change to or elimination of the offset itself 
will exacerbate the critical teacher shortage and cripple recruitment 
efforts in Texas and other states.
    We encourage members of the committee to carefully reflect on this 
issue, and reject consideration of this section of the bill until such 
time that the underlying issues can receive a comprehensive 
examination.

                                 

 Statement of Eric Hartman, Texas Federation of Teachers, Austin, Texas
    When strict adherence to a legal rule allows an injustice to be 
avoided, that is not a problem--it is the solution to a problem.
    Unfortunately, Section 418 of H.R. 743, the bill before you today, 
would change Social Security law to make the injustice of the 
Government Pension Offset effectively unavoidable for the 43,000 
members of the Texas Federation of Teachers, on whose behalf this 
testimony is submitted.
    We respectfully request that the Subcommittee remove Section 418 
from this bill and reserve judgment on the issue until it can be 
addressed as part of a broader question: namely, the question of 
whether the offset itself should be continued or abolished. We urge the 
subcommittee chair to schedule such a comprehensive hearing on issues 
and legislation relating both to the Government Pension Offset and the 
kindred Windfall Elimination Provision as early as possible. We would 
note that H.R. 594, a bill filed earlier this month to repeal both 
provisions by Rep. Howard McKeon of California, already has drawn the 
cosponsorship of 109 House members.
    The Government Pension Offset affects the vast majority of Texas 
school employees, who are eligible for state Teacher Retirement System 
annuities after retiring from school districts that do not participate 
in Social Security. The effect of the offset is to deprive them of all 
or part of the spouse's or surviving spouse's Social Security benefits 
to which they would otherwise be entitled thanks to their spouse's 
fully earned Social Security coverage.
    Under the ``last-day'' provision of the law that would be changed 
by Section 418, the effect of the offset can be avoided by going to 
work briefly before retirement in another school district that does 
contribute to Social Security and does withhold Social Security taxes 
from the employee's paycheck. By strictly following the letter of this 
law, a teacher or other school employee in Texas thus can avoid the 
offset, and by the reckoning of the General Accounting Office thousands 
have done so.
    The question before you is whether this perfectly legal method of 
avoiding the offset should be foreclosed by a new requirement that the 
employee must work at least 60 months for a school district covered by 
Social Security before the offset can be avoided.
    We believe that this change would compound the injury done to Texas 
school employees by the offset itself, to their great detriment and yet 
without significant beneficial impact on the finances of the Social 
Security program.
    The staff of the Congressional Budget Office, in testimony before 
this subcommittee 2 years ago (Statement of Paul R. Cullinan, Chief, 
Human Resources Cost Estimates Unit, June 27, 2000), described the 
Government Pension Offset as ``a blunt instrument.'' Our members, 
including many low-income retirees who have been and will be hurt by 
the offset, would certainly agree.
    Chairman Shaw, in filing another bill (H.R. 75) that would reduce 
the Government Pension Offset by 50 percent, also has acknowledged 
tacitly that there is something seriously wrong with the Government 
Pension Offset. (In passing it is worth noting that the CBO, in the 
same testimony cited above, estimated ``the long-term impact'' of a 50-
percent reduction in the Government Pension Offset, in terms of costs 
to the Social Security program, ``would be insignificant.'')
    There is indeed something seriously wrong with the Government 
Pension Offset. This offset has its harshest impact on those who can 
least afford the loss: lower income women. It also discriminates 
against individuals who have chosen to serve their communities in 
public employment; had they not worked at all, they would not be 
affected by the offset. By targeting the pensions of teachers and other 
school employees, the offset discourages qualified individuals from 
serving in our public schools precisely at the time when our Nation 
faces a severe shortage of teachers.
    Consider the far from unusual case of a woman who worked in the 
home while her own children were in school but then returned to the 
workforce in middle age as a Texas teacher. A dozen years of employment 
as a teacher in a typical Texas school district could entitle that 
teacher to a Texas Teacher Retirement System annuity of perhaps $900 a 
month. Though her spouse fully qualified for Social Security benefits 
in covered employment, the Government Pension Offset could eliminate 
her entire benefit as a spouse or surviving spouse under Social 
Security. The offset would have the same devastating effect on a 
classroom paraprofessional who devoted 25 years of service to Texas 
schoolchildren while never receiving even $20,000 a year in pay. These 
are individuals whose retiree health-insurance premiums and other out-
of-pocket health-care costs alone can easily eat up more than half of 
their state retirement annuity.
    The marginal savings to the Social Security program that you would 
reap by tightening the screws on the Government Pension Offset cannot 
justify the large and harsh impact this measure would have on thousands 
of Texas school employees. Again, we urge you to delete Section 418 
from H.R. 743 and to consider this issue in the wider context of a full 
review of the merits of the Government Pension Offset itself.
    If that means the discussion should widen also to consider the 
future of the exemption from Social Security for employers such as 
Texas school districts, then so be it. Meanwhile, our school employees 
face a situation not of their own making that can leave them in severe 
financial straits when they retire. They are justified in avoiding the 
injury of the Government Pension Offset by strictly adhering to the 
letter of the law. Before rendering unavoidable the injury to school 
employees caused by this ``blunt instrument,'' Congress should consider 
the outright repeal of the Government Pension Offset.

                                 

    Mr. BRADY. Great. I am sorry they could not be here today; 
they got caught by the rare occurrence of Texas snow, so they 
are back home. I want to thank them for the timely submission 
of their testimony. It was helpful to read it in advance and 
digest it. I have a couple of thoughts. The government pension 
offset and last-day of employment loophole are emotional issues 
for me and my constituents. Those are Texas teachers. They are 
in the Texas retirement system, which is the fifth-largest 
retirement system in the Nation not covered by Social 
Security--but it is a very good system. These teachers work 
very hard and are not paid a lot. Their challenges in the 
classroom are much different than when you and I were growing 
up. There is a great deal of conflicting information 
circulating about the government pension offset and how it 
affects our educators. We have an opportunity to clear up much 
of the confusion surrounding the issues today, and in the end, 
we have a responsibility to ensure that all wage-earners, 
either inside or outside Social Security, are treated fairly.
    So, a couple of thoughts. Ms. Bovbjerg, thank you for being 
here--and thanks for your report. My teachers are being told 
that they are being unfairly singled out by the government 
pension offset--that the government pension offset 
discriminates against them versus other families, and many of 
them are being told that Congress will not change it because 
Members of Congress are not part of Social Security anyway. 
Those are the issues that come up regularly both in townhall 
meetings, at the dry cleaners--I went to the swimming pool this 
summer and was immediately visited about this issue. Help 
clarify, Ms. Bovbjerg, some of the issues. In the testimony, 
for example--here is a good way to get to the heart of the 
matter--in the testimony from Eric Hartman of the Texas 
Federation of Teachers, he testifies that, ``There is indeed 
something seriously wrong with the government pension offset. 
By targeting the pensions at teachers and other school 
employees, the offset discourages qualified individuals from 
serving in our public schools precisely at a time when our 
Nation faces a severe shortage of teachers.''
    Here is the example that he gives, ``Consider the far-from-
unusual case of a woman who has worked in the home while her 
own children were in school and then returned to the workforce 
in middle age as a Texas teacher. A dozen years of employment 
as a teacher in a typical Texas school district could entitle 
that teacher to a retirement annuity of perhaps $900 a month. 
Though her spouse fully qualified for Social Security benefits 
in covered employment, the government pension offset could 
eliminate her entire benefit as a spouse or surviving spouse 
under Social Security.'' He testifies that this is different 
treatment than other families get. Can you address that? In 
this case, I think I know the answer, but I want you to explain 
it. Is this teacher in the retirement system of Texas treated 
differently, better, or worse than other families?
    Ms. BOVBJERG. As you know, it depends on what families you 
are looking at, and I think the confusion with the government 
pension offset is that many people compare the benefits that 
they would get after being offset with the benefits of a 
household with a nonworking spouse. In fact, government pension 
offset was created to equalize the treatment of households with 
two working members, so that in fact this teacher would be 
treated much the same as a spouse working in a position covered 
in Social Security. When you consider this, think about 
government pension offset as equalizing working spouses. There 
have been people who have pointed out that there are inequities 
between the treatment in Social Security of nonworking spouses 
and working spouses, and that is really the heart of the 
concern about government pension offset. I would say that 
whatever you do in the conflict between the working and the 
nonworking spouses, if anything, you would want to treat both 
the covered working spouses and the noncovered working spouses 
the same.
    Mr. BRADY. In this case, isn't the point that for this 
Texas teacher, when her spouse passes away, she would have the 
choice of either the spousal benefits from Social Security or 
her own pension, whichever is higher; is that correct?
    Ms. BOVBJERG. Yes. Actually, I tried to figure this out a 
little bit before I came, and I made myself some notes on 
spousal benefits. Actually, I thought that if you have two 
spouses who are getting roughly the same size benefit, if they 
are both covered by Social Security and one dies, that 
remaining spouse just gets their benefit--that's it. If in the 
same situation the wife is under the Texas teachers system, 
after the husband died, the wife's benefit would go up, because 
only two-thirds of the spousal benefit is offset. So, even with 
the government pension offset, an uncovered spouse would do a 
little better than someone under Social Security.
    Mr. BRADY. That is the point I think I was trying to get 
to--that under the government pension offset, it appears when 
you study most of the cases, that Texas teachers are reduced by 
two-thirds of their pension offset; other teachers or other 
families are reduced dollar-for-dollar. Is that correct?
    Ms. BOVBJERG. Yes, that is right.
    Mr. BRADY. So, they are either treated the same or even a 
little better, depending on the circumstances.
    Ms. BOVBJERG. Yes.
    Mr. BRADY. There has been an explosion--your report 
indicated the use of the loophole or the exemption, because 
their teachers do not feel like it is a loophole. They feel 
like they are recovering benefits that are due to them; that is 
what they are being told, and emotionally, they feel that way. 
You indicated that this has become more widespread in the past 
2 years. A person could put in as little as $3 in contributions 
and receive up to $150,000 in the typical lifespan from the 
report that I read. Usage has grown so much. To what do you 
attribute the explosive growth in the use of this last-day 
exemption?
    Ms. BOVBJERG. Dan, do you want to talk about that? Dan was 
in the field.
    Mr. BERTONI. Sure. There is no question that there has been 
rapid growth. Although we are aware of at least one case dating 
back as far as 1990, nearly all of the 1-day transfers occurred 
in and around 2002. It is not clear who or what is the primary 
information force or the drivers of these transfers, but it is 
clear that the teaching community relies on the various 
associations there that represent them for their information, 
especially in regard to retirement planning. I had the 
opportunity to actually go into the various websites, various 
avenues, and it was clear that these associations are making 
known the availability of this loophole, as well as how you 
would go about taking part in it. Based on the fact that this 
information is out there, it is being advertised, not only in 
the groups and associations that represent teachers, but the 
financial planning community is starting to find out about 
this. There are potentially solicitations out there to help 
people work the 1 day to reap $150,000 in benefits, according 
to one website claim. So, it is probably fair to say that much 
of the growth is coming through this web activity, as well as, 
ultimately, word-of-mouth. The concern is that it could move 
into other States and areas.
    Chairman SHAW. The gentleman's time has expired. I have 
been lenient to both sides with regard to the time clock, but I 
am going to ask Members if you can hold it to 5 minutes so we 
can move it along. As this is your first hearing on this 
Subcommittee, Ms. Tubbs Jones, I am going to be lenient with 
you.
    Ms. TUBBS JONES. You are kind, Mr. Chairman, and I 
appreciate it. Thank you, Mr. Chairman. I am going to use a 
couple of my minutes to refer to a job that I had. I am a 
former Cuyahoga County prosecutor, elected for 8 years, and I 
was a judge for 10 years. When we use the term ``fugitive 
felon'' in these hearings, conceptually it sounds really good, 
like we are upholding justice and so forth. The reality is that 
the National Crime Information Center (NCIC), Animal and Plant 
Health Inspection Service (APHIS), and all those data systems, 
hold criminal justice information--bad information in, bad 
information out. You have a ton of people who go in and end up 
saying, ``I am Stephanie Tubbs Jones,'' and when the record is 
cleared up, they are Stephanie Tubbs Smith--but Stephanie Tubbs 
Jones's record never gets cleared up. I am not saying that with 
regard to generally the more serious offenders. Usually the 
records are not kept clear on the minor offenses, and the 
reality is that the sheriffs and law enforcement people in all 
these communities--and I want you to tell all of them that I 
stood up on their behalf in this hearing--really are overloaded 
with all kinds of work that they do. To be able to clear the 
system will take massive amounts of dollars.
    What I really think we ought to conceptually think about--
and I know a lot of you say that people are not going to come 
forward--is whether we might issue a statement to someone 
receiving disability that it has come to our information that 
you have XYZ record, or that you are a probation violator, and 
you will not be able to continue to get benefits if you do not 
clear this up. A lot of people may take affirmative steps to do 
that because they are minor violations. From the bench when I 
was in the arraignment room, when someone failed to show up in 
Ohio and other communities--let us say, for example, that you 
get arrested--they release you, and then your information goes 
to a grand jury. The grand jury charges you, and then your 
indictment is sent to your last known address. Many of the 
people who are engaged in minor drug felonies, their last known 
address would never be the address they give. They have moved 
on somewhere else, and they never got notice of the fact that 
they had even been charged on an offense--just as an example. I 
am thinking that perhaps that might be a way to issue--and I do 
not know if you do that or not, Mr. Huse, now. Do you do that 
and say to them, the reason you are going to lose your payment 
is because you have this record, or----
    Mr. HUSE. It is a two-part process. My office looks at the 
verification of the actual warrant itself. So, the numbers that 
we give you are warrants that we have verified to exist, and 
exist for a valid reason. So, we take the error out of the 
front end of the process. On the back end of the process----
    Ms. TUBBS JONES. You verify it by--I am sorry, I missed 
that.
    Mr. HUSE. We verify it by working right back to the 
initiating jurisdiction, and that happens before we ever pass 
the information on to the SSA for suspension activity.
    Ms. TUBBS JONES. Okay.
    Mr. HUSE. In Title XVI, that suspension occurs only after 
notice is given to the beneficiary, so they have an opportunity 
to clear up the outstanding warrants. This is what happens with 
a lot of the outstanding warrants. That is why there is a 
difference between the front-end number and the back-end 
action, but that kind of judgment goes in there. I think that 
when our work comes back, you will be able to see this better 
as to what offenses are the felonies that I think the 
legislation intends to focus on, and what are, what I would 
call for lack of a better term, ``coincidental'' felonies, 
something that started out perhaps as a misdemeanor, but 
because of failure to appear or what-have-you----
    Ms. TUBBS JONES. The failure to appear is also the basis of 
a warrant on any minor offense.
    Mr. HUSE. Right.
    Ms. TUBBS JONES. What about on the probation violation 
piece as well--do you go through that same step of trying to 
clear that up?
    Mr. HUSE. We verify every one of these on the front end, 
before we pass them on to the SSA to deal with the suspension. 
It is a very, very involved and complex process. We are talking 
thousands and thousands of warrants.
    Ms. TUBBS JONES. I remember one time we were in a meeting 
in Cuyahoga County--it was the judges, the prosecutors, and 
everyone--and someone said the number of failures to appear or 
probation violators, and everyone said, ``Oh, no, we are going 
to be in total trouble,'' because all these people are out 
there--fugitive felons. The reality is that the numbers far 
exceed the harm that may well come to people in a jurisdiction. 
I have another question which I think I actually lost as I was 
listening to what you were saying. Oh, I know what it was--with 
regard to people who are representing recipients, I think the 
other thing that we need to take a look at after we have 
clarified whether the beneficiary is, ``an appropriate 
beneficiary.'' You are going to come across some families in 
some jurisdictions where the only person who is going to care 
about that person may well be a fugitive--or, not a fugitive, 
but could have a felony record or could be a probation 
violator. Again, I think that, it sounds great in the world 
that we want to make sure the recipients are taken care of, but 
the reality may well be that it could be a mother from some 
neighborhood who has a son, and that is the only child she has 
left, the only person who cares for her, and if we can go 
through and clear that out as well, I think it would be a 
useful process. It could be any race or any religion where that 
occurs.
    Mr. HUSE. I agree with you that there are different 
circumstances, but I think the review needs to take place, 
and----
    Ms. TUBBS JONES. Oh, I wholly support that review.
    Mr. HUSE. Some discretionary judgments made, and that is 
what our point is. We do not disagree that sometimes the care 
giver may not be somebody who passes every test in life.
    Ms. TUBBS JONES. Well, I am just trying to make sure that I 
am weighing in and giving you a piece of what I think you ought 
to consider. I am just one person, but I would ask you to take 
that into consideration. I think I am out of time, but you can 
finish your answer.
    Mr. HUSE. My response would be that the Commissioner is 
very aware of this program, and she has a number of changes 
that she may be making to this program that are in conception 
or in regulation-rewriting stages. We all know that this needs 
to be adjusted.
    Ms. TUBBS JONES. Mr. Chairman, just one more thing. I would 
also suggest, sir, that perhaps what you might want to do is to 
contact, maybe, the National District Attorneys' Association or 
the National Sheriffs' Association, weigh in on this subject, 
and perhaps collectively they may have some ideas of when and 
how you could work together to resolve some of those issues.
    Mr. HUSE. We will do that.
    Ms. TUBBS JONES. Okay. Thank you. Thank you, Mr. Chairman.
    Chairman SHAW. Mr. Lewis?
    Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Mr. Huse, 
the bill H.R. 743 will have legislation that will provide 
protection for Social Security employees where there may be 
attempts to influence the Administration on Social Security--to 
help them, to provide penalties to keep people from trying to 
do them harm, or try to change their ability to do their job. 
How pervasive really is that, and can you give us some examples 
of some of the problems there?
    Mr. HUSE. I would be glad to. There is not a week that goes 
by when we do not receive a report from a Social Security field 
office that a Social Security service representative or claims 
representative has been threatened with their lives, or that 
the whole office has been threatened to be bombed by a member 
of the public that Social Security services on a daily basis. 
Understanding Social Security's programs--some of their service 
is directed to those who are mentally ill, and sometimes 
threats come from that sphere. Additionally, as we administer 
some of these programs for some of the fugitive felons, there 
are threats made. Covering SSA's employees with at least the 
benefit of some investigative and prosecutorial result from 
these threats is a good thing. That same coverage is extended, 
for example, to the employees of the Internal Revenue Service. 
Sometimes good government means saying no, and that raises 
someone's ire. These things can happen. I think the criminal 
justice system does a good job of sorting out who is a real 
threat and who is not, but I think the coverage is very 
important--for the morale, if nothing else, of Social 
Security's employees as they undertake these challenges.
    Mr. LEWIS OF KENTUCKY. Thank you. Thank you, Mr. Chairman.
    Chairman SHAW. Mr. Johnson?
    Mr. JOHNSON. Thank you. Ms. Bovbjerg, last August, you all 
made two policy recommendations, and one is in this bill--to 
increase from 1 day to 5 years the amount of time that a 
teacher would have to work under Social Security coverage. The 
other is to address the amount of time the person works in two 
separate systems. Such a proportional approach would take time 
to design, I think. Do you have any suggestions for us on 
trying to make the system more proportional?
    Ms. BOVBJERG. Well, in fact, in that report, we had 
recommended extending the time, which is the approach embodied 
in H.R. 743. We looked at the proportionate approach because 
that is similar to what is done in the windfall elimination 
provision, which is another provision in law that applies to 
non-covered employment--but this approach is difficult to 
administer. Social Security would have to get data from States 
and from individuals as to how much they worked here, and how 
much they worked there. It would definitely be more finely-
tuned than just saying 5 years or whatever period of time, but 
it would be very difficult to administer.
    Mr. JOHNSON. As you know, Texas teachers are not the only 
people around who have opted out of the system early on. Do you 
see problems with other segments of society that we have not 
addressed?
    Ms. BOVBJERG. Most State and local systems cannot back out 
of Social Security now.
    Mr. JOHNSON. I understand.
    Ms. BOVBJERG. There are about 5 million State and local 
employees who are not covered. They are scattered across the 
United States. Seven States are the big ones--of which Texas is 
one. Texas and Georgia are certainly not the only places that 
could invoke the 1-day exemption. It is difficult to predict 
exactly where this could occur, because you need to have a 
system with noncovered employment that has a few positions that 
are covered in it. So, in the case of Texas, teachers can work 
for another school district or can work in another kind of job 
in their own district or can work in a university--and that 
works out. There are some States where the vast, vast, vast 
majority of the State employees are in noncovered employment. 
They would have a hard time finding a position to shift to for 
1 day. There are other States where it seems as if this could 
work, and the word is getting out. So, we do think that it 
would not only grow in Texas, but it would spread to other 
States.
    Mr. JOHNSON. Thank you. Thank you, Mr. Chairman.
    Chairman SHAW. I want to yield my 5 minutes to Mr. Brady.
    Mr. BRADY. Thank you, Mr. Chairman. Just to follow up on 
Mr. Johnson's questioning, our teachers feel like they are 
being singled out through the government pension offset, but 
the government pension offset really applies to a much broader 
group of individuals; isn't that correct?
    Ms. BOVBJERG. Yes. It applies to the 5 million people that 
I just mentioned. I had actually made a note to get back to 
you, because you had asked about Federal employees and Members 
of Congress. In fact, anyone who is covered under the old plan, 
the Civil Service Retirement System, is subject to this offset, 
and there is no exemption for Federal employees. After 5 years 
of employment in Federal Employee Retirement System (FERS), the 
offset would not apply.
    Mr. BRADY. Congress never intended to target teachers, or 
to make education more difficult, in your----
    Ms. BOVBJERG. No, and certainly teachers are not the only 
people to which the offset applies, nor are they the only ones 
who would be able to invoke this exemption.
    Mr. BRADY. The follow-up question to Mr. Johnson's is that 
there are 5 million people, I read in your report, in about 
2,300 different retirement systems, who could take advantage of 
this. If that exemption were used more broadly, what could be 
the financial impact on Social Security in future years?
    Ms. BOVBJERG. We had a really rough estimate in there--$450 
million just for the people in Texas and Georgia. I do not know 
that all 5 million State and local employees who are not 
covered would be able to invoke the exemption, but if they did, 
you would multiply our numbers by 1,000, so you would be 
talking about $450 billion.
    Mr. BRADY. These exemptions spread very quickly in our 
State. If this exemption were kept in place, do you anticipate 
more growth in the use of it?
    Ms. BOVBJERG. Absolutely. In fact, we were a little bit 
concerned in contacting 28 States that we talked to to see if 
they were doing it--trying to figure out where this is 
happening. We were talking to people who were saying, ``You can 
do that?'' Clearly, they were interested, and we were trying 
not to talk about it too much once we found out they were not 
doing it.
    Mr. BRADY. A lot of my teachers are now planning on using 
the exemption and have used it, and as a result of this 
legislation, they ask not only why are you changing it, but why 
to 5 years. My understanding is that there is a precedent for 
the recommendation of a 5-year length of employment. Can you 
explain that?
    Ms. BOVBJERG. When we created FERS for Federal employees 
and Members of Congress--this is a system covered by Social 
Security, and the old system was not. We offered people a 
choice as to whether they wanted to switch from the old system 
to the new. If they switched, the offset still applied, but 
once they had been in FERS for 5 years, it seemed a sufficient 
time to assure that they had contributed to Social Security for 
a meaningful period. We picked 5 years in our report because of 
that linkage.
    Mr. BRADY. In your final recommendation--Mr. Chairman, I 
will be very brief--in the final part of your report, you 
mention that there are some options for addressing government 
pension offset legislation that Chairman Shaw and others have 
introduced. Also, the other solution on this would be 
proportionality, weighing how much time was in noncovered, in 
this case, Texas teachers system--which, by the way, is really 
well-run and pays strong benefits. If anyone is thinking that 
they should become part of Social Security, my argument would 
be that Social Security probably needs to be more like the 
teacher retirement system, frankly. They are just concerned 
again about the cost overall. The proportionality is just tough 
to figure--is that the answer?
    Ms. BOVBJERG. It is difficult to get the information and to 
calculate it. I think it is also a little more difficult for 
participants to understand. People can understand 5 years; 
proportionality, they have to think a little more about how 
that would affect their benefits. It is also easier for Social 
Security to explain to people.
    Mr. BRADY. Thank you. Thank you, Mr. Chairman, for your 
understanding.
    Chairman SHAW. Thank you, and I thank the panel for being 
with us this morning, as usual. We will be moving this 
legislation very quickly. On our next panel, we have Nancy 
Coleman, who is Director of the Commission on Law and Aging at 
the American Bar Association (ABA); Marty Ford, Co-Chair of the 
Social Security Task Force of the Consortium for Citizens with 
Disabilities (CCD); Art Kaufman, President of the National 
Association of Disability Representatives (NADR), from 
Massachusetts; and Richard Morris, President of the National 
Organization of Social Security Claimants' Representatives 
(NOSSCR) in New York. Mr. Jack Kelly was supposed to be on this 
panel, but as Mr. Brady pointed out, due to unusual weather in 
Texas, he was unable to be with us. Without objection, his 
entire testimony will be made a part of this record. Again, 
your entire testimony will be made a part of the record, and 
you may proceed as you see fit. Ms. Coleman?

STATEMENT OF NANCY M. COLEMAN, DIRECTOR, COMMISSION ON LAW AND 
                AGING, AMERICAN BAR ASSOCIATION

    Ms. COLEMAN. Thank you. I am really very pleased to be here 
today. I am Nancy Coleman, and I am here today on behalf of the 
ABA. I appear before you today in my capacity as Director of 
the ABA's Commission on Law and Aging. In addition, several 
years ago, I chaired the SSA's Federal Advisory Committee, 
which looked at the representative payee program. That 
Committee, which was formed in July 1995, presented its 
findings in November 1996. The 25 recommendations that were 
made by that group have a great deal of relevance to what we 
find in H.R. 743, the bill that we are here considering today. 
I am pleased that the ABA was asked to testify and to take a 
look at this particular legislation. For the most part, we are 
commenting only on those provisions for which the ABA has 
policy, and those that relate to Sections 101, 102, et cetera. 
They have to do with what organizational payees are working 
with and how they should be reimbursed. We believe that there 
should be a great deal of oversight, and that there should be 
mandatory bonding. I am going to come to this in just a second, 
but we believe that the provision in H.R. 743 that talks about 
mandatory bonding and licensing, if necessary, through the 
State, is something that really needs to be looked at again.
    The reason is that the provision calls for licensing of 
agencies, and what is unclear to me is how that licensing 
relates to the financial and fiscal responsibility of the 
representative payee. An agency might be licensed to be a 
social service agency, it might be licensed to be a nursing 
home. How does that relate to the bonding question or the 
fiscal security of the payee's money? In addition, we believe 
strongly that public agencies, which are not now included in 
either the bonding or the licensing requirement--that is, a 
State department of social services or a public welfare 
agency--ought to at least be required to assure that the money 
that is made, which they are collecting and spending on behalf 
of beneficiaries, is available only to the beneficiary, and if 
misuse occurs that they are willing and able to make whole the 
beneficiary again. We are very much in favor of the periodic 
onsite review, especially the random onsite review for all 
beneficiaries, not just the large payee beneficiaries. I want 
to spend a couple of minutes looking at what I think is a new 
critical issue.
    Two days ago, the U.S. Supreme Court issued a decision in a 
representative payee case. It is not very often that the U.S. 
Supreme Court looks at representative payee cases, but in the 
representative payee case of Keffler v. Washington State, 
decided in a 9-to-0 decision, the Supreme Court asked that--the 
question that arose was whether or not the State foster care 
agency could act as the representative payee and use the money 
that they collected as the representative payee to pay for the 
foster care services. The State Supreme Court of Washington had 
stated that the agency already had the funds through State 
funds, and with some matching funds, to pay those services; why 
should they be using beneficiaries' money to pay what they 
would otherwise pay? Why not save those funds, either to 
conserve funds for kids who were getting out of foster care, or 
to pay for services that were not otherwise covered? The U.S. 
Supreme Court disagreed with that position. I think there are 
some implications here for this legislation that is now going 
through, that you are looking at, and I would like a couple 
more days to re-look at that and perhaps provide some 
commentary as to what you might do with that in terms of its 
implications. I will stop there and wait for the rest of my 
panelists, but the position that the ABA took, both on the 
Keffler case, as well as on the rest, is in the material that I 
submitted.
    [The prepared statement of Ms. Coleman follows:]
 Statement of Nancy M. Coleman, Director, Commission on Law and Aging, 
                        American Bar Association
    Mr. Chairman and members of the Subcommittee:
    My name is Nancy Coleman and I am here today on behalf of the 
American Bar Association, the world's largest voluntary professional 
organization with more than 400,000 members. I appear before you today 
in my capacity as the Director of the ABA's Commission on Law and 
Aging. In addition, I chaired The Social Security Administration's 
Federal Advisory Committee, which looked at the Representative Payment 
program. The Committee was formed in July 1995 and presented its 
findings to the Social Security Administration in November 1996. The 25 
recommendations have a great deal of relevance to H.R. 743, the 
``Social Security Program Protection Act of 2003'' that is being 
considered here today. However, I do not speak to you today in that 
capacity but speak only as a representative of the ABA. The ABA has 
developed policy in many of the areas that the Social Security Program 
Protection Act covers that I will discuss below.
I. Protection of Beneficiaries
    In February 2002, the ABA adopted policy that is very directly 
related to the performance of Representative Payees. In part the policy 
provides as follows:

           RESOLVED, that the American Bar Association urges the 
        Administration to support and Congress to enact legislation 
        that would strengthen the safeguards and protections of 
        individuals receiving benefits under the Old Age, Survivors and 
        Disability Insurance programs and the Supplemental Security 
        Income program of the Social Security Act (Beneficiaries) 
        which, because of such Beneficiary's disabilities and 
        incapacities, are being received and managed by organizations 
        designated by the Social Security Administration (SSA) as 
        ``representative payees.'' Such protections should include:

                 (A) Replacement by SSA of any benefits misappropriated 
                or misused by an organizational representative payee if 
                not otherwise reimbursed;
                 (B) Mandatory initial and continued bonding of 
                organizational representative payees in all states 
                where they provide services;
                 (C) Forfeiture by representative payees of any fees 
                normally allowed by SSA for any months in which an 
                organizational payee has misused all or part of a 
                Beneficiary's benefits; and
                 (D) Authority for SSA to impose a civil monetary 
                penalty against organizations which misuse, convert, or 
                misappropriate payments for Beneficiaries received 
                while acting in a representative payee capacity.

    Not many years after enactment of the Social Security Program in 
1936, Congress passed legislation granting the Social Security 
Administration (SSA) the power to appoint ``representative payees'' 
(RPs) to receive and disburse benefits for Social Security 
beneficiaries who were too frail, too young or too incapacitated to 
manage their own finances [currently laid out in 42 U.S.C.  405(j) for 
old age, survivor and disability benefits and  1383(a) for SSI benefit 
recipients]. That initiative took place in 1939, then covering retired 
workers, their spouses, their widows and children of deceased workers.
    Today, the Representative Payment System is potentially available 
to all of the more than 50 million individuals receiving some form of 
Social Security benefit (including disabled workers and means-tested 
Supplemental Security Income beneficiaries whose benefit eligibility 
was established by legislative amendment several years after initiation 
of the RP system).
    There are now more than 6.6 million persons whose benefits are 
actually under representative payee management, a group comprised of 
roughly 60% of children and 40% of adults. This equates to an 
approximate (and surprising) caseload of 1 out of 8 Social Security Act 
benefit recipients in the United States. Moreover, that proportion 
promises to rise in the near future as the number of our aged (and 
frail aged) citizens with ``baby boomer'' roots attain Social Security 
retirement benefit ages and the as incidence of SSI disabled child 
beneficiaries continues to expand.
    In overall volume, the hybrid and mammoth ``special guardianship'' 
program represented by the federal RP system now exceeds by a factor of 
more than 10 the combined number of all court guardianships/
conservatorships active in the 50 states (estimated at roughly 
600,000). Fortunately, more than 80% of today's RPs are parents, 
spouses, other relatives, friends of long standing, and court appointed 
guardians of the adult and child beneficiaries who they serve and, 
thus, can be generally counted on for loving and responsible benefit 
management. However, no program this large could avoid instances of 
fiduciary fraud and abuse. Such incidents have indeed occurred and 
these have been particularly troublesome in the area of multi-client 
``organizational payees.''
    Organizational payees are typically non-profit agencies and 
organizations which serve as RPs for individuals without access to 
family members or close acquaintances who might be able to step in to 
meet their needs for responsible benefit management. Such organizations 
have a definite need to fill and most are responsible state 
institutions and community agencies with long histories of competent 
service. However, these entities, by their nature and the vacuum that 
they fill, frequently wind up in charge of the monthly Social Security 
income of 15 or 50 or 100 or 200 or more SSA beneficiaries with large 
accumulations of funds to administer on a regular basis and enormous 
power over the economic well being of the incapacitated individuals 
they have been authorized to serve.
    The American Bar Association supports many of the legislative 
reforms introduced in the ``Social Security Program Protection Act of 
2003.'' These include:

             101. Restitution by SSA of benefits misused by 
        organizational payees (without any negligent causation test on 
        SSA's part) if not otherwise reimbursed. These elements 
        include:

                    A definition of misuse of benefits as 
                defined in the proposed legislation.
                    Applying this provision to payees who 
                provide services to 15 or more beneficiaries.

             102. Oversight of RPs Including:

                    Mandatory bonding of RPs (RPs are not 
                licensed)
                    Periodic Onsite Review of organizational 
                payees and large volume payees as well as Random Onsite 
                Review of all types of payees
                    Organizational payees would be required to 
                provide an annual certification of their bond as well 
                as have and provide to Social Security and an 
                independent audit
                    An annual report to Congress about the 
                results of the on site reviews.

    There is one exclusion that needs to be addressed and that is a 
bonding or assurance from public agencies or governmental entities that 
are payees. While the public agencies are subject to the onsite review, 
as they have been under the current legislative structure for 
institutions, they are not subject to the bonding requirement. In 
recent years there have been numerous times, as pointed out by the 
Inspector General through his investigations, that public agencies may 
have misused benefits.
    The Social Security Administration on its own, either based on the 
recommendations of the Advisory Committee (1996) or because of the 
years of recommendations made by the Inspector General, has implemented 
a much improved method of monitoring payees through onsite reviews and 
greater scrutiny of new organizational payees.  102 simply puts into 
legislation that which the Commissioner has already initiated 
supporting its importance.

             104 Fee forfeitures by RPs otherwise entitled to 
        fees for misuse and misappropriation of benefits.
            Authority for imposition of civil monetary 
        penalties against organizational payees who misuse funds.
             106 Authority to Redirect Delivery of Benefit 
        payments when an Accounting is not filed. This provision is a 
        method of enforcement that uses the annual accounting to 
        encourage payees to file timely reports or be subject to 
        loosing the authority to continue as the payee.
    The ABA believes that there should be a forfeiture of any fees 
normally allowed by the Social Security Administration for any months 
in which an organizational payee has misused all or part of a 
beneficiary's benefits.
 111 Civil Monetary Penalties.
    The ABA's policy states that there should be the authority to 
impose a civil monetary penalty against organizations which misuse, 
convert, or misappropriate payments for beneficiaries received while 
acting in representative payee capacities.
    The foregoing enforcement and monitoring tools are stated as 
desirable legislative objectives without detailed explication so that 
the Congress can achieve the levels of specificity it deems appropriate 
for each initiative and can invest SSA with authority to prescribe 
standards and rules needed for optimal performance.
II. Attorney Fees (Section 301)
    The ABA is pleased that H.R. 743 will raise the fee agreement cap 
in Social Security Old Age, Survivors and Disability Insurance (OASDI) 
cases. The ABA supports repeal of the provisions in P.L. 106-170 that 
impose an assessment on attorneys' fees in Social Security OASDI cases. 
The attorney's fee in these cases is already highly regulated and 
capped. The additional assessment of a ``user fee'' discourages 
attorneys from representing claimants in these matters. Many such 
claimants are in poor health, and have little education and few 
resources. Without representation, they will not be able to navigate 
the appeals process successfully, and will not receive the benefits to 
which they are entitled.
    H.R. 743 would cap the ``user fee'' assessment on withheld 
attorneys' fees at $75.00 or 6.3% (whichever is less). We believe this 
legislation is a step in the right direction. Thus, we would support 
enactment of these provisions contained in H.R. 743.
III. Conclusion
    The American Bar Association is pleased to have been asked to 
testify before the House Ways and Means Subcommittee on Social Security 
on this very important piece of legislation. We support the provisions 
in H.R. 743,  101, 102, 104, 106, 111, and 301. Thank you for the 
consideration of our views. If we can provide any additional 
information please do not hesitate to contact us.

                                 

    Chairman SHAW. Ms. Coleman, without objection, I will leave 
the record open if you care to submit something further with 
regard to that case. For the people who are standing in the 
back, you can fill in these front seats now; the witnesses are 
all at the table. Ms. Ford?

STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY TASK FORCE, 
 AND WORK INCENTIVES IMPLEMENTATION TASK FORCE, CONSORTIUM FOR 
                   CITIZENS WITH DISABILITIES

    Ms. FORD. Thank you, Chairman Shaw, and Members of the 
Subcommittee. Thank you for this opportunity to testify. The 
CCD Task Forces on Social Security and Work Incentives 
Implementation appreciate your leadership and commitment in 
last year's passage of H.R. 4070. We applaud your commitment to 
move H.R. 743 quickly in this Congress. The bill, H.R. 743, is 
very important for people with disabilities. It should be 
enacted as soon as possible. People with disabilities need the 
protections of the representative payee provisions. Those 
attempting to work need the statutory changes in the Ticket-to-
Work program in order to better utilize work incentives. They 
need the provision requiring SSA to implement a centralized 
computer file and to issue written receipts whenever 
beneficiaries report earnings or a change in work status. 
Claimants with disabilities in the SSI program need the option 
of using the attorneys' fees payment system to ensure that 
representation is available to those who need it. These 
important provisions have enjoyed significant bipartisan 
support, and we believe that H.R. 743 should move quickly so 
that these important protections become available to 
beneficiaries as soon as possible. I would like to highlight a 
few areas from my written testimony. First, on earnings 
reports, we have testified in the past about concerns that the 
chronic problem of overpayments to beneficiaries in both 
programs is a major barrier to beneficiaries' ability to take 
advantage of the work incentive programs.
    The Section 202 requirement that SSA provide a receipt 
whenever a beneficiary reports a change in earnings or work 
status is an important provision, and the requirement would 
remain in place until SSA implements a centralized computer 
file recording the date of the report. Together, these 
requirements could go a long way in helping to resolve problems 
with earnings reports. The Section 201 CMPs would not go into 
effect until the centralized computer file is implemented. We 
believe also that the effective date of Section 208 should be 
tied to this provision. In our view, it is impossible for SSA 
or the Office of Inspector General to begin to judge whether 
there is any fraudulent intent on the part of the beneficiary 
if SSA has no accurate method of determining whether a 
beneficiary has properly reported. Regarding fugitive felons, 
we urge the Subcommittee to consider some additional changes in 
Section 203 which address the fugitive felons and people in 
violation of parole or probation. While important for ensuring 
the integrity of the disability programs, we are concerned that 
the current law provisions for the SSI program and the proposed 
provisions for Title II are overly broad and probably more 
inclusive in their reach than originally intended. We have 
included some examples of situations where provisions in SSI 
have operated in a particularly harsh manner, and I would like 
to also submit for the record some further examples that have 
come to my attention in a Los Angeles Times article on similar 
situations, if that is possible.
    [The information follows:]

         Copyright 2002 The Times Mirror Co.; Los Angeles Times

                          All Rights Reserved

                           Los Angeles Times

                 September 6, 2002 Friday Home Edition

    SECTION: California Metro; Part 2; Page 1; Metro Desk
    LENGTH: 1666 words
    HEADLINE: Criticism of U.S. Felon Program Grows; Benefits: 
Thousands of blind, disabled and aging Californians have lost 
Social Security payments after they were tracked down for long-
ago crimes.
    BYLINE: STEVE BERRY, TIMES STAFF WRITER
    BODY: A Federal program designed to catch fugitives and 
deny them welfare benefits has snared thousands of blind, 
disabled and aging Californians. The program is coming under 
growing criticism from California lawyers representing the 
indigent.
    The fugitive-felon program has funded a massive computer 
dragnet that has saved $130 million and led to the arrest of 
thousands of fugitives, law enforcement officials said.
    Most of those caught are the aged, blind and disabled who 
are accused of violating probation and parole or other 
nonviolent crimes, many of which are decades old.
    The program has suspended Supplemental Security Income 
(SSI) benefits to nearly 7,500 blind, disabled and aged 
Californians since 1996, according to figures from the Social 
Security Administration.
    The SSI recipients also have been ordered to reimburse the 
agency for some payments.
    The program compares computer databases of aid recipients 
with fugitives. When Social Security turned the names and 
addresses of those aged and disabled recipients over to 
California law enforcement agencies, authorities apprehended 
2,831 of them, according to Social Security statistics. The 
statistics showed that very few of them were murderers, 
rapists, robbers, kidnappers or other violent offenders.
    About 90% of those arrested in California have been 
violators of probation, parole or some nonviolent crimes.
    Nationwide, 4,721 have been arrested and 45,000 recipients 
have had their benefits suspended.
    Since midsummer, public defenders, court officials, legal 
aid lawyers and law enforcement officers in California have 
been contacted by people threatened with loss of benefits.
    Social Security officials said they will restore assistance 
if recipients provide proof that warrants have been cleared, 
said Mariana Gitomer, spokesman for the Social Security 
Administration in California.
    ``A lot of taxpayers would be indignant to know that public 
funds are being used as fuel to escape law enforcement,'' said 
Dick Lynch, director of Social Security's Strategic Enforcement 
Division at the agency's Office of Inspector General in 
Baltimore.
    ``Who can argue against the benefit of taking murderers, 
kidnappers and armed robbers off the street?'' he said.
    Critics complain that the program has not focused on such 
crimes.
    ``They make this sound like a law enforcement jihad, when 
they actually are getting old, toothless people who are easy to 
find and not fleeing from anyone,'' said Bruce Schweiger, a Los 
Angeles County deputy public defender, who alone has answered 
more than 100 calls in the last three or 4 weeks.
    ``They are using a fire hose to extinguish a birthday 
candle,'' he said.
    San Francisco lawyer Jane Gelfand, whose Positive Resource 
Center represents people with HIV, said, ``These are people who 
are severely disabled with limited assets and income and 
frequently cut off from family, friends or other social 
support.''
    One of her clients, Mark Pruitt, thought that he had 
completed probation for a drunken-driving conviction in 
Florida.
    Pruitt, 41, said he never heard anything further about the 
incident until he got a notice from Social Security officials 
last year saying that his SSI benefits would be suspended. He 
said the SSI check provided one-third of his monthly income and 
helped pay for some of the drugs he needs to combat full-blown 
AIDS. He has diabetes and high blood pressure. Two hip 
replacement surgeries, a degenerative shoulder condition and 
deteriorating joints have left him unable to hold down jobs 
requiring much physical exertion, Pruitt said.
    In San Diego County, Chief Deputy Public Defender Bob Stall 
said most of the cases ``are quite old, 15 years or older, and 
involve nonviolent offenses, drugs, bad-check cases.''
    One great-grandmother in Los Angeles lost her benefits 
because she never completed probation on a 1973 drug possession 
conviction. Dora Price, 65, spent six months in County Jail 
that year and then violated probation early the next year, 
court records show.
    Price said she moved to Shreveport, La., to escape the 
daily, unrelenting pressure from her drug-using friends to 
resume her narcotics use.
    There, she beat her drug habit and got ``a good-paying'' 
job making telephones for AT&T. She returned to Los Angeles in 
the mid-eighties and has a clean record.
    Her notice came June 17, suspending her $175 monthly SSI 
check. She was left with $600 a month for rent, utilities and 
groceries.
    Price got good news this week. A Los Angeles County 
Superior Court judge, at the request of her public defender, 
voided the arrest warrant.
    Although the law is called the fugitive-felon law, former 
SSI recipient Yolanda Randall, 50, never fled after she broke 
probation 27 years ago over a gambling-related charge in Los 
Angeles. Randall, 50, continued living in her home for 2 years 
after the judge entered a bench warrant for her arrest in 1975. 
Court records show that Randall's violation was failure to pay 
a $150 fine.
    Randall is disabled by obesity and arthritis, and has drawn 
SSI since 1995, her sister, Nora Ashford, said. She was drawing 
$750 a month when she got her notice on June 25. It also 
ordered her to repay $18,652 in benefits she had already 
received.
    ``I took her to three stations trying to get her into 
custody so we could clear up the warrant,'' Ashford said. 
Nobody would take her. One officer referred her to the public 
defender's office.
    Lynch said such violators have no one to blame but 
themselves.
    ``You are supposed to pay for your crimes,'' he said. ``If 
you have someone in their eighties with a warrant from their 
forties, couldn't you argue they've had ample opportunity to 
turn themselves in?''
    One who tried that is Susan Irene Reid, who fled Los 
Angeles after pleading guilty to kicking a police officer in 
the leg in January 1988. Reid, who was a 24-year-old 
psychiatric patient, said she agreed to take medication for her 
illness and to remain on probation for a year. But she ran away 
from the probation office on her first visit.
    ``I couldn't admit to my psychiatric problems, and I didn't 
want to take medication,'' she said.
    Over the next 11 years, Reid was taken into custody three 
times-- first in Texas, where she turned herself in and spent 9 
days in jail, and twice in Minnesota--on the outstanding 
warrant. Each time Los Angeles authorities declined to 
extradite her.
    SSI helped pay her $400 monthly medication bill and 
qualified her for assistance for psychiatric care to control 
her manic depression, Reid said. But when the computers ground 
out her name July 31 for that 1988 warrant, the agency 
suspended the SSI.
    Last week a judge dismissed the warrant, in part because 
authorities chose not to seek extradition. Her payments will 
resume when she provides a copy of the court records to Social 
Security. Meanwhile, she said, she still has to battle Social 
Security's claim that she owes back payments, which she 
estimates could be at least $5,000.
    The fugitive-felon program grew out of a provision of the 
Welfare Reform Act of 1996, which also prohibited fugitives 
from obtaining food stamps. Though the U.S. Department of 
Agriculture moved quickly to implement the law, the Social 
Security Administration did not.
    In 2000, Social Security gained access to FBI computer data 
on outstanding warrants. Early last year, the agency signed its 
first contracts with states to compare the names of SSI 
recipients to lists of fugitives provided by police. In return, 
Social Security would provide law enforcement with the 
addresses to which it mailed benefits.
    In California, the program got started earlier than in most 
states, Social Security officials said. The state's Department 
of Social Services started providing Social Security with 
addresses of SSI recipients it had matched with the Department 
of Justice's outstanding warrant files by 1998, Napolski said. 
In Los Angeles, authorities said they seldom bother with 
probation violators or others accused of nonviolent offenses 
that would not carry state prison time.
    If such violators ever appear in court, it usually is 
because the outstanding warrant surfaced in a later police 
encounter, such as a routine traffic stop.
    Only the more serious violators--those accused of murder, 
rape or other crimes that would put them in a state prison--
prompt law enforcement to go to the expense of a search and 
extradition effort, prosecutors and law enforcement officials 
said.
    ``If it's a probation violation, it usually means the 
individual has not been sentenced to state prison,'' said John 
Paul Bernardi, director of the Los Angeles County district 
attorney's Support Operations Bureau.
    ``When it comes to felonies, you still have to analyze how 
serious the offense is, how dangerous they are, its deterrence 
role, and then you have to decide whether it's a wise 
allocation of resources.''
    If a trial will be required, the case may not be provable 
if witnesses are no longer available or evidence is missing, he 
said.
    LAPD Capt. James Miller, area commander of the 77th Street 
Station, said that even serious larceny cases do not always 
warrant extradition.
    He cited a mid-eighties case in which prosecutors decided 
not to extradite a man who had fled to the East Coast to escape 
charges of grand larceny and receiving stolen property.
    When asked about circumstances similar to Randall's 
gambling-related probation violation, Miller said, ``Somebody 
who has gone for 25 years without being picked up, she's 
obviously changed her life, which is the whole purpose of 
probation.''
    Schweiger, the Los Angeles deputy public defender, doesn't 
advocate abandoning the fugitive-felon program. It just needs 
to be amended, he said.
    ``The problem is that you have these two huge bureaucracies 
that . . . don't take the human costs into account,'' he said.
    ``They are doing nothing but matching names and addresses 
with checks without giving thought to the actual 
consequences,'' he said.

                                 

    The Commissioner should have the authority to pay benefits 
where good cause is shown for such payment. Often, the 
triggering offense is decades old and of no further interest to 
the jurisdiction where it was committed. More important, for 
people with mental impairments, the beneficiary may not even be 
aware of the violation, may not have understood the terms of 
parole or probation, or may have other misunderstandings about 
his or her legal status. The examples that have come to my 
attention since the summer on the SSI program make it clear 
that people, even when they do learn from Social Security of 
the violations, have great difficulty managing to clear it up, 
especially if they are far away and actually have no money left 
to travel. The Commissioner should have the authority to pay 
benefits in these situations. In addition, the ``good cause'' 
exception should be extended to those in violation of parole or 
probation requirements, and we believe that the ``good cause'' 
exception should apply to the SSI program as well. Regarding 
attorneys' fees, we support the inclusion of provisions to 
establish a mechanism in SSI for payment of attorneys' fees. 
However, we are concerned that the sunset provision could add 
unnecessary complexity and uncertainty to the program. In 
addition, we understand the interest in extending the 
attorneys' fees payment system to non-attorneys who are 
successful in representing claimants. There are numerous issues 
here, and they deserve full research and discussion before a 
workable solution is devised. The issues should not be allowed 
to impede the progress of the rest of H.R. 743, including the 
extension of the fee payment system to SSI. We support the 
provision providing for a GAO study of the issue with a report 
due to Congress in 1 year. Thank you for this opportunity to 
testify. We look forward to working with the Subcommittee for 
passage of this legislation.
    [The prepared statement of Ms. Ford follows:]
Statement of Marty Ford, Co-Chair, Social Security Task Force, and Work 
  Incentives Implementation Task Force, Consortium for Citizens with 
                              Disabilities
    Chairman Shaw, Representative Matsui, and Members of the 
Subcommittee, thank you for this opportunity to testify regarding the 
Social Security Protection Act, H.R. 743.
    I am Director of Legal Advocacy for The Arc and UCP Public Policy 
Collaboration. I am testifying here today in my role as co-chair of the 
Social Security Task Force and the Work Incentives Implementation Task 
Force of the Consortium for Citizens with Disabilities. CCD is a 
working coalition of national consumer, advocacy, provider, and 
professional organizations working together with and on behalf of the 
54 million children and adults with disabilities and their families 
living in the United States. The CCD Social Security and Work 
Incentives Implementation Task Forces focus on disability policy issues 
in the Title XVI Supplemental Security Income program and the Title II 
disability programs.
    CCD welcomes the opportunity to testify here today and appreciates 
your holding a hearing regarding H.R. 743, the Social Security 
Protection Act of 2003. We appreciate the hard work and the 
perseverance of this Committee in addressing this important legislation 
over the course of two Congresses and again in this 108th Congress.
    Your leadership and commitment last year resulted in the passage of 
the Social Security Program Protection Act of 2002, H.R. 4070, in the 
House by a vote of 425 to 0. Clearly, the issues addressed in the 
Social Security Protection Act are important to people with 
disabilities who must depend on the Title II and Title XVI disability 
programs. Furthermore, the Committee's proposed solutions are 
bipartisan. We support your past efforts and encourage your work again 
this year in pushing for passage of H.R. 743.
    H.R. 743 is a very important bill for people with disabilities. We 
believe that it should be enacted as soon as possible. People with 
disabilities need the protections of the representative payee 
provisions. People with disabilities who are attempting to work need 
the statutory changes to the Ticket to Work program in order to better 
utilize the intended work incentive provisions enacted in 1999. In 
addition, beneficiaries with disabilities need the provision requiring 
the Social Security Administration to issue written receipts whenever 
beneficiaries report earnings or a change in work status. These 
important provisions have not been controversial--in fact, they have 
enjoyed significant bipartisan support--and have simply fallen prey to 
the legislative process over the last two Congresses. We appreciate 
your interest in moving H.R. 743 quickly so that these important 
protections can become available to beneficiaries as soon as possible.
    The remainder of this testimony will discuss many of the important 
provisions included in H.R. 743. In some cases, we will make 
recommendations for additional changes or further refinements to 
enhance the usefulness of H.R. 743 from the perspective of 
beneficiaries with disabilities. We stand ready to work with the 
Committee and your staff on these recommendations in order to ensure 
speedy enactment of the Social Security Protection Act of 2003.
Representative Payee Improvements
    Approximately 6 million Social Security and Supplemental Security 
Income beneficiaries have representative payees, often family members 
or friends, who receive the benefits on behalf of the beneficiaries and 
have a responsibility to manage the benefits on behalf of these 
beneficiaries.
    H.R. 743 includes important provisions strengthening SSA's ability 
to address abuses by representative payees. The provisions would:

            require non-governmental fee-for-services 
        organizational representative payees to be bonded and licensed 
        under state or local law;
            provide that when an organization has been found to 
        have misused an individual's benefits, the organization would 
        not qualify for the fee;
            allow SSA to re-issue benefits to beneficiaries 
        whose funds had been misused;
            allow SSA to treat misused benefits as 
        ``overpayments'' to the representative payee, thereby 
        triggering SSA's authority to recover the money through tax 
        refund offsets, referral to collection agencies, notifying 
        credit bureaus, and offset of any future federal benefits/
        payments; and
            require monitoring of representative payees, 
        including monitoring of organizations over a certain size and 
        government agencies serving as representative payees.

    We support these provisions, including establishing the definition 
of ``misuse'' in the statute, rather than leaving it solely to 
administration policy. We believe that such provisions should be 
enacted. In addition, we believe that SSA should address the 
accountability of state or federal agencies who serve as representative 
payees and also ensure that governmental agencies or institutions are 
not selected as representative payees where family or friends are 
available, willing, and capable to serve as payee. This could be 
achieved through SSA's monitoring efforts to implement the requirements 
specified in Section 102(b) addressing ``periodic onsite review''.
Earnings Reports
    As we have testified in the past, the chronic problem of 
overpayments to beneficiaries in both Title II and Title XVI is a major 
barrier to beneficiaries' ability to take advantage of the work 
incentives programs, including the incentives of the Ticket to Work and 
Work Incentives Improvement Act (TWWIIA). If not addressed, 
beneficiaries will continue to be fearful of working.
    As the system now operates, chronic overpayments to beneficiaries 
result from significant delays in, and sometimes complete failure of, 
SSA personnel recording earnings reports for working beneficiaries. As 
we have noted before, we believe that part of the problem may be that 
SSA workers do not get any credit for this work in their work 
evaluations. In addition, there is not a well-defined process for 
beneficiaries to use in reporting earnings. Beneficiaries often tell us 
that they are very conscientious in reporting their earnings, but the 
overpayments still occur over significant periods of time. When that 
happens, beneficiaries are not equipped to know whether the benefit 
amount they are receiving is correct or whether SSA has made an error 
or failed to record earnings. Over time, overpayments build and it is 
not unusual for beneficiaries to be told to pay back tens of thousands 
of dollars. Beneficiaries are so fearful of overpayments, and the 
inadequate notices from SSA that go with them, that the Ticket program 
and other work incentives could fail.
    We have urged SSA to establish a reliable, efficient, beneficiary-
friendly method of collecting and recording, in a timely manner, 
information regarding a worker's earnings. In addition, SSA must adjust 
benefits in a timely manner. CCD has further recommended that Congress 
require SSA to forgive overpayments if the beneficiary is not notified 
within a reasonable period of time.
    We appreciate the inclusion in the Social Security Protection Act 
of 2003, H.R. 743, of the Section 202 requirement that SSA provide a 
receipt to the beneficiary whenever a change in earnings or work status 
is reported. This requirement would remain in place until SSA develops 
and implements a centralized computer file recording the date on which 
a disabled beneficiary reports a change in earnings or work status. 
These requirements could go a long way in helping to resolve some of 
the problems with earnings reports. The effective date for the Section 
201 civil monetary penalties could not go into effect until the 
centralized computer file described in Section 202 is implemented. We 
also believe that the effective date of Section 208 must be tied to 
this important Section 202 provision regarding the central computer 
file. In our view, it is impossible for SSA or the Office of Inspector 
General to begin to judge whether there is any fraudulent intent on the 
part of a beneficiary if SSA has no accurate method of determining 
whether a beneficiary has properly reported earnings or changes in work 
status.
    In addition, we understand that SSA is embarking on an initiative 
to study the effects of electronic earnings reports for the 
Supplemental Security Income program. We are pleased to see this 
development and look forward to reports on its effectiveness and 
possible applicability to the Title II disability programs. In the 
meantime, the requirement for written receipts and a central computer 
file are important protections for beneficiaries.
Attorneys' Fees in SSI
    We have testified in support of the Subcommittee's efforts to amend 
the statute to allow SSI claimants to voluntarily enter into agreements 
with attorneys allowing SSA to withhold and provide direct payment of 
attorneys' fees from their past due SSI benefits. This provision, 
Section 302 of H.R. 743, is similar to the current provision in Title 
II allowing such payment of attorneys' fees. We continue to support 
such a provision because it will help ensure that claimants have 
adequate representation to appeal their cases. The reasons behind the 
withholding and direct payment of attorneys' fees in Title II cases 
apply with equal force to SSI cases. The SSA disability determination 
process is very complex and beyond the capacity, training, or 
experience of many claimants to negotiate without knowledgeable 
assistance. Furthermore, ensuring that attorneys will be paid a fee for 
successful work on a claimant's behalf helps to ensure that a 
knowledgeable, experienced pool of attorneys are available to represent 
claimants. The limit on fees and the involvement of SSA in establishing 
the fees helps to ensure that the fees are reasonable.
    While we appreciate and support your inclusion of provisions to 
establish a mechanism in SSI for payment of attorneys fees, we are 
concerned about the inclusion of the three-year sunset provision 
(Section 302(b)(2)). To our knowledge, there are no outstanding 
significant policy concerns regarding the attorneys fees provisions in 
the SSI program. Such a provision was included in H.R. 4070, which 
passed the House with overwhelming support. We are concerned that a 
sunset provision could add unnecessary confusion, complexity, and 
uncertainty to the program without adding any benefit.
    We are aware of the interest by some to extend the attorneys' fees 
payment provisions to non-attorneys who are successful in representing 
claimants. We have some concerns about this proposal. We believe that 
Social Security claimants benefit from the legal training and testing 
required of attorneys or members of the bar. Furthermore, state bar 
associations screen potential members and provide on-going monitoring. 
Attorneys found in violation of state bar codes of ethics and conduct 
face a loss of their professional license to practice law. Claimants 
who have been harmed by their attorneys' actions or failures have 
recourse through the state bar complaint procedures.
    While recognizing that many non-attorneys successfully represent 
the interests of claimants in the SSA hearings and appeals processes, 
there is no established system of training, certification, monitoring, 
and enforcement available to protect beneficiaries from unscrupulous 
non-attorneys. There are numerous issues involved here that deserve 
full research and discussion before a workable solution is devised. 
While the issue has merit and should be addressed, it should not be 
allowed to impede the progress of the rest of H.R. 743. Therefore, we 
support the provision in Section 302(c) providing for a GAO study of 
the issue, with a report due to Congress in one year.
    We support the provisions in Section 301 setting a cap on the 
assessment owed to SSA by attorneys who have used the attorneys' fees 
payment system.
Work Incentives and Demonstrations
    As you know, the CCD Task Forces supported the Ticket to Work and 
Work Incentives Improvement Act on behalf of people with disabilities 
who wanted to work but were prevented from doing so by the barriers 
that existed in the Title II and SSI programs and Medicare and 
Medicaid. We believe that the purpose of the bill was to ensure that 
people with severe disabilities would not permanently lose needed 
supports if they attempted to work and to expand their opportunities to 
make those attempts.
    It is clear that there are some technical problems that need 
resolution through statutory change in order to ensure that the Ticket 
program works as originally intended. There are similar changes needed 
in the Commissioner's authority to conduct demonstration programs 
related to work efforts. We support the inclusion of Sections 401 
through 405 in H. R. 743 which will make those important adjustments.
    At the same time, we ask the Subcommittee include a further 
technical correction to TTWWIIA that would permit veterans vocational 
rehabilitation programs authorized under Title 38 of the US Code 
(Veterans Benefits) to serve as employment networks. This change would 
respond to unsuccessful efforts made last year by one such Title 38 
program to qualify as an EN in order to serve disabled veterans on 
SSDI.
Good Cause Exception
    We urge the Subcommittee to consider some additional changes in 
Section 203, which addresses the denial of benefits to fugitive felons, 
persons fleeing prosecution, and persons in violation of parole or 
probation. While these are important considerations for ensuring the 
integrity of the Social Security disability program, we are concerned 
that the current law provisions for the SSI program, and the proposed 
provisions for the Title II program, are overly broad and are likely 
more inclusive in their reach than originally intended. The current law 
SSI provisions and the Section 203 provisions of H.R. 743 need some 
additional refinement in light of recent experience in implementation 
in SSI. Included as Appendix A are three examples of actual cases that 
have come to our attention from recent implementation of the SSI 
provisions. In addition, we are aware of the situations portrayed in 
the September 6, 2002 article in the Los Angeles Times, by reporter 
Steve Berry.
    We strongly believe that it is important for the Commissioner to 
have authority to pay benefits where good cause is shown for such 
payment. The good cause exception in the bill, Section 203(a)(4), 
currently applies only to those considered fleeing felons and not those 
in violation of parole or probation requirements.
    We believe that the good cause exception should also apply to 
parole or probation violations, especially where the original offense 
was a misdemeanor and does not rise to the level of offense delineated 
under the fugitive felon section. Further, we believe that the good 
cause exceptions should apply to the SSI program as well as to the 
Title II disability programs.
    Often, the triggering offense is decades old and of no further 
interest to the jurisdiction where it was committed. More importantly, 
we are concerned that, for people with mental impairments, including 
cognitive limitations, the beneficiary may not be aware of the 
violation, may not have understood the terms of parole or probation, or 
may have other misunderstandings about his/her legal status. Where the 
Commissioner finds that the individual is only in technical violation 
of a judicial order, where the original jurisdiction has no continuing 
interest in the individual, or where the individual's mental impairment 
is a factor in the violation, the Commissioner should have the 
authority to pay benefits. We urge the Subcommittee to support such a 
``good cause'' exception for both the Title II and SSI programs.
                                 ______
                                 
    Thank you for this opportunity to testify on H.R. 743, the Social 
Security Protection Act of 2003. We believe that none of the issues 
that have recently been raised about this legislation--including 
withholding of fees for non-attorney claimant representatives and the 
pension offset for certain public employees--should delay swift passage 
of HR 743. Action on legislation to restore integrity to the 
representative payee system is long overdue. We look forward to working 
with the Subcommittee for passage of this important legislation.

ON BEHALF OF:

American Association on Mental Retardation
American Congress of Community Supports and Employment Services
American Council of the Blind
American Network of Community Options and Resources
Brain Injury Association of America
Inter-National Association of Business, Industry and Rehabilitation
International Association of Psychosocial Rehabilitation Services
National Alliance for the Mentally Ill
National Association of Developmental Disabilities Councils
National Association of Protection and Advocacy Systems
National Organization of Social Security Claimants' Representatives
NISH
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
United Cerebral Palsy
World Institute on Disability
                                 ______
                                 
Appendix A

                                 Case 1
    In 1988, a severely psychotic, mentally ill woman from Rhode Island 
was wandering the streets, walked to Massachusetts, and found a house 
to sleep in. She was arrested and charged with night-time breaking and 
entering (B&E). She was arraigned and given a return date. However, on 
the date of arraignment, she was admitted to a psychiatric facility and 
records document that she was ``delusional and psychotic.'' She was 
hospitalized for several months. She was discharged shortly before the 
court date but had no memory of the incident and arraignment and left 
the community. A warrant was issued. A few days after the court date, 
she was again involuntarily committed due to her ongoing mental 
illness.
    She continues treatment for her mental illness and was unaware of 
the outstanding warrant until she received the SSA notice terminating 
her SSI benefits. When she and her social worker went to the SSA 
district office about the notice, she was told that she could not 
appeal until she cleared up her warrant. Charges have been dismissed 
and benefits reinstated; however, she has an overpayment which remains 
unresolved.
                                 Case 2
    The individual was on probation in Massachusetts. She told her 
probation officer (PO) that she was moving to Rhode Island. The PO 
tried to transfer supervision to Rhode Island, but did not have the 
proper government address. As a result, a default warrant issued. Her 
PO submitted a letter that confirmed the above facts and, in addition, 
stated that he believed that the individual did not intentionally avoid 
probation in Massachusetts.
                                 Case 3
    In July 2000, a Minnesota resident attempted suicide in Ohio by 
jumping off a railroad bridge. The police were called and train traffic 
was stopped while they talked him down. The police took the individual 
to a mental health facility. Several days later, they issued a warrant 
for his arrest for interruption of public services, which is a felony 
in Ohio. However, they never served the warrant, even though they had 
his address. Several weeks later, he moved to Minnesota where he was in 
and out of mental hospitals, had a few more suicide attempts, but 
finally his condition was stabilized. He then started living in a group 
home, takes his medications and receives ongoing mental health 
treatment.
    In February 2002, he received a notice from SSA terminating his SSI 
benefits because of the outstanding warrant from Ohio. Both his 
therapist and attorney contacted the authorities in Ohio but failed to 
get the charges dismissed. The individual maintained that he was unable 
to go to Ohio to resolve the warrant because he had no money and the 
trip would be harmful to his mental health.

                                 

    Chairman SHAW. Thank you, Ms. Ford. Mr. Kaufman?

STATEMENT OF ARTHUR KAUFMAN, OWNER AND CHIEF EXECUTIVE OFFICER, 
  INSURING ASSISTANCE, INC., HILLSBOROUGH, NEW HAMPSHIRE, AND 
PRESIDENT, NATIONAL ASSOCIATION OF DISABILITY REPRESENTATIVES, 
                   FRAMINGHAM, MASSACHUSETTS

    Mr. KAUFMAN. Thank you. Good morning, Chairman Shaw and 
Members of the Subcommittee. My name is Arthur Kaufman, and I 
am President of NADR. I am also a full-time practicing 
representative for claimants seeking disability benefits from 
Social Security, a vocational consultant, and function as an 
employment network for the Ticket-to-Work program. The NADR is 
a not-for-profit organization in its second operational year. 
Our job is to serve the needs of our members in the areas of 
professional education and enhancement of representational 
skills, and our attempt is to provide highly ethical and 
principled representation. We are now in the process of 
developing a set of standards to augment those presently 
codified by the Administration. Many of our members have had 
long and diverse careers which have prepared them to be 
competent representatives. These include but are not limited to 
former SSA employees, nurses, physical therapists, social 
workers, and even attorneys. Clearly, none of us is an amateur 
in this field, and we provide quality representation to 
impaired people trying to obtain disability benefits. Our 
members and executive board would like to congratulate the 
Chairman and Ranking Member for a bill that effectively 
addresses the abuse of vulnerable Social Security beneficiaries 
by strengthening the protections for recipients who are 
dependent upon representative payees to manage their financial 
affairs, the common-sense changes allowing the Inspector 
General to fight systemic fraud and abuse, the Ticket-to-Work 
program moving persons with disabilities to meaningful 
employment, and the protection of dwindling Social Security 
resources.
    The one key area that we believe would enhance this 
legislation is simply to establish parity for both attorneys 
and non-attorneys who represent persons seeking Social Security 
Disability Insurance (SSDI) and SSI benefits in the area of fee 
withholding. This would increase the field of qualified 
representatives, thus providing greater service to persons with 
impairments. Presently, only non-attorneys are eligible to have 
their fees withheld by SSA. Non-attorneys, although explicitly 
recognized in the Tax Code as equals in all other aspects of 
representation, are not allowed to utilize this service. The 
bill, H.R. 743 continues this disparity within SSDI and extends 
it to SSI benefits as well, while entirely ignoring non-
attorney representatives. After reviewing the record from the 
2001 hearing, I have concluded that the overwhelming theme from 
this Committee is that you want more qualified representatives. 
We strongly concur. We propose that parity in fee withholding 
would assist in accomplishing this goal. Confident 
representatives are presently kept out of the marketplace 
because they cannot compete with attorneys who receive an 
unfair business advantage over non-attorneys due to this 
present lack of parity. You have been sensitized via prior 
written testimony that the lack of the equivalent to bar 
oversight for non-attorneys may result in unqualified, poorly 
prepared, or even unscrupulous representation.
    It is asserted for this reason that fee withholding for 
non-attorney representatives should be deferred until a study 
is completed. We believe that this argument is without merit. 
Federal regulations of the SSA clearly outline not only the 
affirmative responsibilities of all representatives but also 
provide for severe penalties to anyone who does not abide by 
those rules. The Administration may and does prohibit anyone 
from practicing in this arena on a Federal level if it deems 
such is appropriate. This applies equally to attorneys and non-
attorneys. Clearly, this is one area where our colleagues who 
also practice law feel parity is acceptable. Representatives 
must have their fees approved by the Administration. Current 
law requires the SSA oversight of all fees, and it allows all 
claimants to attest any fees approved. The issue of parity is 
not new. During the last 15 years, I, and many fellow NOSSCR 
members, have frequently expressed concerns about the disparate 
treatment in fee withholding under the statute. I have 
previously expressed my dissatisfaction with the utilization of 
the word ``attorney'' in regard to fee withholding, and I have 
asked NOSSCR to assist in crafting legislation that would 
simply change the term to ``appointed representative.'' With 
your permission, I would like to submit my letter detailing my 
concern to NOSSCR for the record.
    [The information follows:]

                                          Insuring Assistance, Inc.
                                  Hillsborough, New Hampshire 03244
                                                  November 26, 2001
Nancy Shor
Executive Director NOSSCR
6 Prospect Street
Midland Park, NJ 07432-1691

    Dear Nancy:

    I have been a NOSSCR member for nearly 15 years.
    I want express my extreme disappointment in my status within NOSSCR 
as a non-attorney representative and NOSSCR's apparent stand regarding 
such relative to HR 3332. This bill is obviously supported and probably 
even developed by NOSSCR yet it essentially discriminates against non-
attorney representatives.
    I agree with the intent of this legislation but am displeased that 
the fee withholding provisions are only applicable to representatives 
who are attorneys. Many competent representatives throughout the 
nation, like myself, have been providing this service for years yet are 
unable to partake of this provision which is limited strictly to 
attorney representatives while novice attorneys fresh out of law school 
can engage the Administration to act as their collection agency. This 
exclusion essentially demotes highly qualified non-attorney 
representatives to a second class status.
    As an example of the impact this has had specifically upon me, I 
would briefly like to provide you with the following. I have provided 
Social Security Representation services to a Long Term Disability 
Insurance Carrier for about 11 years. They were recently purchased by a 
much larger conglomerate. They have now given a directive to their 
Social Security specialists that they cannot refer cases to 
representatives unless a fee can be withheld and paid directly to that 
person. A law student fresh out of law school, who has no knowledge nor 
history of this extremely complex administrative process beyond ``book 
learning'' can get their fees withheld and paid by the Social Security 
Administration while I cannot. While fairness should not be an issue, 
it becomes one when I cannot achieve parity due to legislative 
doctrine.
    I do not know whether the writers of this bill understood that non-
attorneys could even be representatives but certainly NOSSCR 
understands such.
    I ask that you, as executive director of NOSSCR, please advocate my 
position. If NOSSCR is truly ``committed to providing the highest 
quality representation and advocacy on behalf of persons who are 
seeking Social Security and Supplemental Security Income'' as the 
statement of purpose professes, then I ask you to commit your position 
on the board to that purpose.
    It is NOSSCR with an R for Representatives not NOSSCA with an A for 
Attorneys.
    I have written to David Green who is my representative to the board 
and will be forwarding a similar letter containing much of the above to 
all board members. Please have NOSSCR press for a change in HR 3332 
from the word ``attorney'' to the term ``appointed representative'' and 
as the leader of the organization that I have supported with my dues 
for 15 years I ask that you individually do the same to your 
representative.
    If you have any questions please feel free to contact me.
            Sincerely,
                                              Arthur Kaufman, M.Ed.

                                 

    Mr. Chairman, if the goal of this Committee is to provide 
increased numbers of qualified representatives in an 
expeditious manner, then we submit that providing a level 
playingfield for all professional representatives. Parity will 
help achieve this goal. I strongly encourage you to amend H.R. 
743 to initiate fee withholding parity for professional non-
attorney representatives under SSDI as well as any changes that 
may be made to SSI. On behalf of the NADR, I thank you for 
inviting me to comment on this important legislation. We look 
forward to working with you toward enacting this legislation in 
a manner that will increase access to quality representation 
for our citizens with significant impairments. Thank you.
    [The prepared statement of Mr. Kaufman follows:]
    Statement of Arthur Kaufman, Owner and Chief Executive Officer, 
Insuring Assistance, Inc., Hillsborough, New Hampshire, and President, 
    National Association of Disability Representatives, Framingham, 
                             Massachusetts
    Good morning, Chairman Shaw, Congressman Matsui and members of the 
Subcommittee. My name is Arthur Kaufman. I am honored to appear before 
you today to talk about H.R. 743, the Social Security Protection Act of 
2003, and in particular the issue of representative fee withholding.
    The National Association of Disability Representatives, Inc. (NADR) 
is a relatively new not-for-profit organization in its second 
operational year. Our job is to serve our existing membership's needs 
in the area of professional education, political action, and in 
maintaining and enhancing the skills of the membership. In our attempts 
to provide highly ethical and principled representation, we are now in 
the process of developing a Code of Standards for NADR members as well 
as what is tentatively called the NADR Satisfaction Guarantee for our 
members to give to their clients. I would like to submit for the record 
a draft of NADR's ``Methodology to Achieve Stated Goals and 
Objectives,'' which makes reference to these efforts.
    NADR has recently applied for membership within CCD and such is 
pending. We have been notified by the membership committee chair that 
we have been recommended for membership will be serving as a member on 
their Social Security task force.
    Many of NADR's members who now perform professional disability 
representation were previously employed or contracted in various 
positions within the Social Security Administration. These positions 
have included claims representatives, examiners, supervisors, executive 
assistants, field office managers, paralegals, and agency analysts. We 
also have masters level nurses, social workers, physical therapists, 
lawyers, and vocational rehabilitation professionals, and others coming 
from a multitude of professional or educational backgrounds bringing 
various skills to claimant representation. None of us is an amateur in 
this field and we provide quality representation to impaired people 
trying to obtain Social Security Disability Benefits as well as 
Supplemental Security Income benefits. We are delighted that you have 
sought our views on this important legislation.
    Our members and executive board would like to congratulate the 
Chairman and ranking member for a bill that effectively addresses the 
abuse of vulnerable Social Security beneficiaries by strengthening 
protections for recipients who are dependent upon representative payees 
to manage their financial affairs, the common sense changes allowing 
the Inspector General to fight systemic fraud and abuse, the Ticket-to-
Work program moving persons with disabilities to meaningful employment, 
and the protection of dwindling Social Security resources. It is 
evident that striving toward individual actualization for our 
beneficiaries with disabilities while safeguarding our diminishing 
fiscal resources are clearly key considerations of this Subcommittee, 
as well as our organization, and I commend you for these efforts.
    I am not only appearing before you as the president of NADR, but 
also as a person who has been successfully representing persons with 
impairments before the SSA since 1986. My background is Vocational 
Rehabilitation, and in the past year I became an employment network 
under the Ticket-to-Work Program. I have also served as a vocational 
expert for the SSA for about 2 years.
    The one key area that NADR believes would enhance this legislation; 
is to simply establish parity for both attorneys and non-attorneys who 
represent persons seeking SSDI and SSI benefits.
    Presently only attorneys are eligible to have their fees withheld 
by SSA. Non-attorneys, although explicitly recognized as equals in all 
other aspects of representation, are not allowed to utilize this 
service. H.R. 743 continues this disparity within SSDI and further 
proposes to extends it to SSI benefits, while entirely ignoring non-
attorney representatives.
    Non-attorney representatives have historically represented 
claimants applying for SSI benefits even though our fees were not 
withheld nor guaranteed by the Administration. Many of our members 
client base is with such individuals.
    After reviewing the written testimony and subsequent submissions 
from the May 17, 2001 hearing, I concluded that the overwhelming theme 
from this Subcommittee is that you want more qualified representatives 
to assist claimants in the cumbersome application and appeals process 
of SSDI and SSI. We strongly concur. We propose that parity in fee 
withholding would assist in accomplishing this goal. Competent 
representatives are presently kept out of the marketplace because they 
cannot compete with attorneys who receive an unfair business advantage 
over non-attorneys due to this present lack of parity.
    The disparity of fee withholding is elucidated by these small 
examples:
    For more than 10 years I had been referred clients by an LTD 
insurance carrier to help their clients get SSDI. That carrier was 
purchased about a year ago by another LTD insurer. Upon completion of 
the purchase, I was notified that my services were no longer going to 
be utilized as the new carrier is only referring cases to persons or 
companies who can have their fee withheld and paid by SSA. After 10 
years, I no longer get referrals from this company.
    Another disparity arises when an attorney fresh out of law school 
having never seen a Social Security application nor spoken to an 
Administrative Law Judge, represents his or her first client and wins. 
The SSA will guarantee that he or she is paid. I, on the other hand, 
with more than 17 years experience, cannot utilize this service, even 
though my skills and experience far outweigh this attorney's. From my 
time as a vocational expert at SSA, I was oftentimes appalled by the 
lack of knowledge many attorneys exhibited when appearing before the 
ALJ in my Local Office of Hearings and Appeals (at that time there were 
no non-attorney representatives actively practicing in that office).
    Mr. Chairman, I would respectfully submit that simply the existence 
of a law degree does not ensure competence in a complex area such as 
this. Many representatives from our organization can enumerate examples 
of cases which we have taken after an attorney was unsuccessful in his 
or her representation. With your permission, I would like to submit for 
the record letters that were written to our members by claimants 
describing how pleased they were with their non-attorney 
representatives.
    You have been sensitized via the written testimony as well as the 
oral presentations made by the colleagues of mine on this panel that 
the lack of an equivalent of Bar oversight for non-attorneys may result 
in unqualified, poorly prepared, or even unscrupulous representation. 
It is for this reason they claim that fee withholding for non-attorney 
representatives should be deferred until the study at Sec. 302 (c) of 
H.R. 743 is completed, and that such withholding not commence under 
Title II. We believe that this argument is without merit. The 
regulations of the Social Security Administration clearly outline not 
only the affirmative responsibilities of all representatives but also 
provide for severe penalties for representatives who do not abide by 
the rules for representatives outlined by the Social Security 
Administration (20 C.F.R. Pt. 404, Subpt. R for Title II, 20 C.F.R. Pt. 
416, Subpt. O for SSI, and 62 F.R. 41,404-41,418, August 4, 1998, Final 
regulations that establish Standards of Conduct for Claimant 
Representatives.)
    It is imperative to note that the attorney Bar does not act pro-
actively to determine nor monitor whether attorneys are practicing good 
law. Rather it relies upon complaints being made by a dissatisfied 
party or member of the court. It is then, and only then, that an 
inquiry would commence. The Social Security Administration system 
presently has the rules and regulations in place to perform the same 
duties as each State's individual bar. If a dissatisfied claimant or a 
member of the Administration feels that the representative, whether 
they are an attorney or not, has not performed to standards which are 
expected, they have the right to complain directly to the Social 
Security Administration and that complaint will be evaluated. These 
rules however are uniform and apply equally throughout the nation. 
Unfortunately the same case cannot be made regarding each individual 
State's Bar. Furthermore, since an attorney does not need to be 
admitted to a State Bar to practice before the Social Security 
Administration, many attorneys provide representation in more than one 
State. The uniformity of rules on a federal level provides a far 
superior system for maintaining quality representatives than 
individually nuanced State rules.
    The Administration may, and does prohibit anyone from practicing in 
this arena on a federal level if it deems such is appropriate. This 
applies equally to attorneys and non-attorneys alike. Clearly, this is 
one area where our colleagues who also practice law feel parity is 
acceptable.
    The idea that attorneys have more at stake so they will be better 
practitioners is invalid. Clearly even disbarred attorneys still have 
skills that can be transferred to gainful employment in another field 
of endeavor. The same is true for non-attorney representatives. 
However, most of us are single practitioners or ``mom and pop shops'' 
where husbands and wives provide a service of Social Security 
representation. We do not provide representation for Worker's 
Compensation, Personal Injury, ERISA, or do wills, divorces, or any 
other area of law. We are highly trained specialists who focus our 
knowledge and understanding to the single area of Social Security 
representation typically on a full-time basis. Because this is our 
primary focus, we are astutely familiar with the rules, regulations and 
laws surrounding SSDI and SSI. This is not necessarily the case with 
most attorneys.
    Since we ``have all our eggs in one basket'' our incentive to excel 
in our career and avoid any negative publicity not to mention 
condemnation from the Social Security Administration is paramount. 
Should we be unqualified, or provide poor or unscrupulous 
representation then the marketplace would soon drive us out of a job 
and, in all likelihood, our career. Such cannot be said about the 
attorney.
    Currently, any representative, whether they are an attorney or not, 
must have their fee agreement or petition approved by the 
Administration. The oversight and protection by the Social Security 
Administration does not stop there however. Even after a fee has been 
approved, claimants are given the additional security to dispute the 
amount of and entitlement to a fee by a representative. This 
notification is provided directly to the claimant in the Notice of 
Award by the Administration on any claim where there has been 
professional representation involved.
    The withholding of fees has never been the central focus of NADR's 
legislative agenda, but it is rather to obtain parity in the 
representation of persons with impairments before SSA. Our membership 
has divergent opinions about the utilization of fee withholding, but 
has significant interest in achieving an equal status with 
representatives who also practice law.
    We sympathize with the members of the Committee who have been told 
that this issue had not surfaced until late in the 107th Congress, but 
this is simply is not the case. Having been a member of the National 
Organization of Social Security Claimants' Representatives (NOSSCR) for 
more than 15 years, many of the non-attorney colleagues had frequently 
expressed concerns about the disparate treatment we have received from 
that organization. My concerns crescendoed when H.R. 3332 was 
introduced early in the 107th Congress. I personally contacted the 
Executive Director as well as all Circuit Representatives of NOSSCR and 
clearly expressed my dissatisfaction with the utilization of the word 
``attorney'' in regards to fee withholding. I explicitly asked them to 
assist in crafting legislation that would change the term to 
``appointed representative.'' I was told that such could not be 
addressed at that time, but could be in future legislation. I would 
like to submit the letters detailing my concerns to NOSSCR to the 
Committee with my testimony.
    The disregard of non-attorney representatives' concerns within 
NOSSCR led me to run for the presidency of NADR, and bring these 
concerns before Members of Congress, and in particular, this Committee. 
Being aware of these facts, it is my belief that the members of the 
Committee would not knowingly want to do damage to my profession.
    On behalf of NADR, I strongly encourage you to amend H.R. 743 to 
allow professional non-attorney representatives to receive equitable 
treatment from SSA in all areas by initiating fee with-holding parity 
under SSDI, as well as in any changes which may be made to SSI. We 
believe that all qualified representatives should receive the identical 
benefits that attorneys derive from the Social Security Administration 
in all areas because all professional representatives, whether or not 
they are attorneys, are subject to the same regulations and codes of 
conduct when representing claimants before the Administration.
    I am confident that the members of this Subcommittee are fair-
minded, and will therefore want to take the necessary steps to provide 
parity in the way all representatives are treated by the SSA. If the 
goal of this Committee is to provide increased numbers of quality 
representatives in an expeditious manner, then we submit that providing 
a level playing field for all professional representatives--parity--
will help achieve this goal.
    On behalf of the National Association of Disability 
Representatives, Inc. I thank you for inviting me to comment on this 
important legislation. We look forward to working with you toward 
enacting this legislation in a manner that will increase access to 
quality representation for our citizens with significant impairments. 
Thank you.

                                 

    Chairman SHAW. Thank you. Mr. Morris?

      STATEMENT OF RICHARD P. MORRIS, PRESIDENT, NATIONAL 
  ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES, 
                    MIDLAND PARK, NEW JERSEY

    Mr. MORRIS. Thank you, Mr. Chairman. Mr. Chairman, Members 
of the Social Security Subcommittee, I thank you for inviting 
me this morning to testify at this hearing on the Social 
Security Protection Act of 2003. I am Richard Morris. I am the 
President of the NOSSCR. The NOSSCR was founded over 20 years 
ago as a professional association of over 3,400 attorneys and 
other advocates who represent individuals seeking Social 
Security disability or SSI benefits. As you know, the SSA's 
disability determination system is a complex, multi-level, and 
often time-consuming process. Appealing the denial of an 
application for disability benefits is a daunting task for 
anyone without the necessary legal experience, but for 
individuals who are in poor health or disabled, the procedural 
hurdles that must be cleared in order to obtain disability 
benefits can often seem insurmountable. We are appreciative of 
your commitment to this legislation, which is of great 
importance to these claimants. Although we discuss several of 
the provisions we support in our written submission, including 
the added protections for beneficiaries who have representative 
payees and the reduction of the user fee, in my testimony this 
morning, I would like to focus on the sunset provision for 
Title XVI withholding as well as the GAO study.
    Although we support the extension of the fee payment 
process to Title XVI, we are very dismayed by the addition of a 
sunset provision for this program. Enactment of an attorneys' 
fee payment system with an ``end date'' will undercut its very 
purpose, which is to enable SSI claimants seeking an attorney 
to hire one. I know that many of my attorney colleagues will 
conclude that the future for this provision is too uncertain. 
In the meantime, SSI claimants will continue to face 
difficulties in hiring an attorney and thus securing 
representation. The sunset provision shortchanges these 
claimants, and we strongly urge its deletion from the bill. We 
do support the provision that requires the Comptroller General 
to undertake a study regarding fee withholding for non-attorney 
representatives. The NOSSCR wants to ensure that claimants have 
equal protection regardless of their representatives, and we 
echo the advocacy community's concern with expanding the system 
to non-attorney representatives. Because of the importance of 
the outcome of Social Security disability appeals, we believe 
the issues of qualifications, competency, accountability, 
ethics, and training should be studied by GAO in the report 
mandated by this legislation. Our accountability concerns do 
not pertain to paralegals employed by legal service 
organizations or law firms. The claimants they represent are 
afforded the same protections, which I will discuss, as 
claimants represented by attorneys in those organizations or 
firms.
    To be licensed to practice law, individuals in every State 
must pass the minimum of a 2-day bar exam and must prove they 
meet the character requirements necessary for the practice of 
law. In contrast, in order to represent individuals before the 
SSA, the only requirement is completion of the 1-page 
``Appointment of Representative'' form, which requires only the 
representative's name, address, and telephone number. The SSA 
only relies on the representative's self-certification as to 
their good character and reputation. Others would suggest that 
the ethical requirements that govern the practice of law are 
similar to 2 pages of Social Security regulations entitled 
``Rules of Conduct and Standards of Responsibility for 
Representatives.'' The truth is that the actions of attorneys 
are much more heavily regulated and face greater scrutiny than 
the actions of non-attorney representatives. In every Social 
Security disability case, a comprehensive cannon of ethics 
regulates the conduct of attorneys and operates in addition to 
any Social Security rules of conduct. Unlike many voluntary 
association's conduct guidelines, State bar ethical cannons are 
not hollow documents. These cannons are comprehensive, and they 
are enforced. Failure to abide by them will result in fines, 
censure, or even disbarment.
    Finally, if an unaffiliated, non-attorney representative 
behaves unethically, the client is limited to complaining to 
SSA. The client cannot bring a charge against a non-attorney 
representative before an ethics Committee because such a 
committee does not exist. The SSA has no obligation to 
investigate the misconduct of a non-attorney representative, 
unlike a State bar commission, and SSA is the only entity that 
can take action against those unaffiliated non-attorney 
representatives who would bilk or otherwise harm Social 
Security disability claimants. The Social Security disability 
process is designed to benefit claimants. Expanding the system 
to include withholding for non-attorneys will harm these 
claimants, and such an expansion is fraught with many problems 
including the lack of minimum levels of competence for non-
attorney representatives, the lack of controls necessary to 
protect claimants, and the lack of standards regulating such 
individuals. When Congress enacted in 1965 the law allowing 
only attorneys to receive direct payment of their attorneys' 
fees, it did not do so to give attorneys a competitive 
advantage in this field. It did it to protect those most 
vulnerable members of society. In conclusion, the members of 
NOSSCR and those claimants we represent thank the Chair and all 
Members of this Subcommittee for your interest. I would be 
pleased to respond to any questions you might have. Thank you.
    [The prepared statement of Mr. Morris follows:]
  Statement of Richard P. Morris, President, National Organization of 
  Social Security Claimants' Representatives, Midland Park, New Jersey
    Mr. Chairman, Congressman Matsui, and the Members of the Social 
Security Subcommittee, thank you for inviting me to testify at today's 
hearing on the Social Security Protection Act of 2003. I am Richard P. 
Morris, the president of the National Organization of Social Security 
Claimants' Representatives (``NOSSCR'').
    The issues that you are discussing today are of great importance to 
claimants, to beneficiaries, and to those legal advocates whom they 
choose to represent them. We support this legislation, including those 
provisions that provide protections for claimants who require 
representative payees, attorney fee payment system improvements, and 
amendments to the Ticket to Work Act. We do have some concerns 
regarding provisions relating to fugitive felons, which are addressed 
later in our testimony.
    Founded in 1979, NOSSCR is a professional association of attorneys 
and other advocates who represent individuals seeking Social Security 
disability or Supplemental Security Income (``SSI'') benefits. NOSSCR 
members represent these disabled individuals in legal proceedings 
before the Social Security Administration and in federal court. NOSSCR 
is a national organization with a current membership of 3,400 members 
from the private and public sectors and is committed to the highest 
quality legal representation for claimants.
    An applicant for any type of Social Security benefit may choose to 
be represented at all stages of the process. However, I, and the other 
members of NOSSCR, typically represent individuals who are seeking 
disability benefits. As an attorney in a two-person law firm in New 
York, I have represented claimants for the past twenty-six years. While 
I represent claimants from the initial application through the Federal 
court appellate process, the majority of my cases are hearings before 
Social Security Administrative Law Judges and appeals to the Social 
Security Administration's Appeals Council.
     Representation is a Valuable Asset for Claimants and for the 
                          Adjudication Process
    As you know, the Social Security Administration's disability 
determination system is a complex, multi-level, and often time-
consuming process. Appealing the denial of an application for 
disability benefits is a daunting task for anyone without the necessary 
legal experience, but for individuals who are in poor health or 
disabled, the procedural hurdles that must be cleared in order to 
obtain disability benefits can seem insurmountable. As a result, many 
of the hard working men and women applying for Social Security 
disability insurance benefits or SSI benefits choose to retain an 
attorney to help them with their appeal.
    It is not surprising that these individuals want to have legal 
representation, in light of the complexity of the disability 
determination process, the individual challenges each case contains, 
and the undeniable importance of the outcome. Exactly why a claim has 
been denied is frequently a mystery to the claimant who receives an 
initial denial notice. The men and women that come to my office often 
have been out of work for many months and are seeking the disability 
benefits for which they and their employers have paid FICA taxes. Many 
have no income other than the financial support they receive from their 
friends, family, or church or synagogue. Most have no health insurance 
and cannot pay for the medical treatments necessitated by their sudden 
disability. These men and women understand that their family's welfare 
may be dependent on receiving disability benefits and the accompanying 
Medicare or Medicaid health insurance coverage.
    The ability to have an experienced professional provide legal 
assistance is certainly valuable for claimants. The Social Security 
Administration has found that almost 75 percent of Social Security 
disability claimants were represented by an attorney in 2000. 
Approximately 64 percent of disability claimants who were represented 
at the hearing level were awarded disability benefits, while only 40 
percent of claimants without representation were determined to be 
eligible for such benefits.
    We believe this discrepancy between approval rates is due, in large 
part, to the assistance of a knowledgeable representative who knows the 
sequential evaluation system set forth in the regulations and Social 
Security Rulings. The representative can marshal evidence from doctors 
and hospitals, school systems, vocational testing centers, previous 
employers, and others who can shed light on the claimant's entitlement 
to disability benefits.
    Such trained legal professionals can also thoroughly interview 
vocational and medical witnesses during the hearing before the 
Administrative Law Judge. These are daunting tasks for pro se 
claimants, especially when we consider that they are in poor health and 
often have only limited education. Indeed, the Social Security Act 
requires the Social Security Administration to provide information on 
options for seeking legal representation, whenever the agency denies a 
claimant's application for benefits.
    It is my experience that attorneys are also a valuable resource for 
the Social Security Administration by helping to streamline the 
disability determination process. Attorneys and other representatives 
routinely explain the disability determination process and procedures 
to their clients with more specificity than the Social Security 
Administration's information specialists. Additionally, they ensure a 
more efficient system by developing an accurate and complete medical 
and vocational record and presenting the supporting documentation and 
statements that the adjudicators require for a full and fair evaluation 
of the claim. Oftentimes, the evidence we obtain and the legal briefs 
we prepare on behalf of our clients contain the requisite evidence to 
support a finding of disability by an Administrative Law Judge without 
the necessity of a hearing, thereby saving time and expense for both 
the Social Security Administration and the claimant.
    Clearly, legal representation is needed and desired by Social 
Security disability claimants and is beneficial to the disability 
determination system in general. We believe that the Social Security 
Protection Act of 2003 makes needed reforms to the user fee tax and 
increases the availability of representation for SSI claimants seeking 
disability benefits.
                 Rationalize the Amount of the User Fee
    In an effort to ensure the availability of representation for 
claimants who desired it, Congress, in 1965, enacted a system for 
direct withholding of attorneys fees from a Social Security disability 
claimant's award. The legislation you are considering today corrects a 
serious and, we believe, unintended consequence of an amendment added 
by the Ticket to Work Act during the 106th Congress. Although this 
clearly was a landmark piece of legislation, the Act also established, 
for the first time, a user fee tax to be charged to attorneys whenever 
the Social Security Administration pays an attorney's fee. The statute 
set the user fee as 6.3% of the amount of the attorney fee. This 
assessment is unfair because the amount of the charge bears no 
relationship to the cost of providing the service.
    When an attorney is successful in proving that a claimant is 
eligible for benefits, the Social Security Administration computes the 
amount it owes to that claimant. Under the attorney fee agreement 
provision of the Social Security Act, an attorney may receive 25 
percent of the claimant's past-due benefits or $5,300, whichever amount 
is less. The Social Security Administration calculates the claimant's 
past-due benefits, determines 25 percent of the amount, and then 
determines whether that amount exceeds $5,300. This is a routine 
calculation, which does not require a substantial amount of time or 
effort. Furthermore, although the agency has indicated it cannot 
calculate the actual cost of writing a check for an attorney's fee, we 
note that the Social Security Administration website, in encouraging 
beneficiaries to use direct deposit for their checks, states, ``It 
costs 42 cents to process and mail each check, compared to 2 cents for 
direct deposit.'' (Source: www.ssa.gov/deposit/DDFAQ898.htm).
    This 6.3 percent user fee, which may total as much as $334 for the 
simple administrative task of writing a check, is assessed regardless 
of how long it takes for the Social Security Administration to issue 
the fee check. As this Subcommittee has noted in past hearings, the 
pace of fee payments has slowed substantially in recent years. NOSSCR 
members report that the processing and payment of attorneys' fees from 
the Social Security Administration often takes as long as one year.
    At least once a week, a member has advised me that he or she is 
taking a bank loan or using a line of credit for the first time in 
order to meet payroll, because the agency is not paying the fees in a 
timely manner. This has led many attorneys to reduce their staffs. 
Others have decided to leave this area of practice altogether, and many 
more are considering substantially reducing this line of casework in 
their offices. As a result, the most vulnerable claimants--those with 
serious physical or mental impairments, those with financial 
challenges, and those who do not or cannot understand the disability 
claims process--are often left to find their own way through the Social 
Security Administration's labyrinthine bureaucracy. This bill seeks to 
reverse this trend and to encourage attorneys to continue providing 
this much-needed public service by enacting rational and equitable 
modifications to the user fee tax. For this reason, we support the 
reduction of the user fee tax, as provided for in this legislation.
Improve Access to Legal Representation for Supplemental Security Income 
                               Claimants
    As you know, SSI is designed to assist the most financially 
vulnerable members of our society. Those who apply for disability 
benefits from the SSI program must meet very low income and resource 
limits, in addition to meeting the standard for establishing 
disability. SSI claimants are often in dire financial and health 
straits; an award of benefits will provide a monthly subsistence check 
and access to health care through the Medicaid system in most states.
    Many SSI claimants want and need representation for the same 
reasons that Social Security disability claimants do. Legal services 
programs across the country provide excellent representation for many 
SSI claimants. Unfortunately, many of these legal services programs are 
under-funded and unable to accept all of the SSI claimants who seek 
their assistance. SSI claimants often cannot retain a lawyer from the 
private sector, not because their cases lack merit, but only because 
the attorneys cannot take the risk of not being paid even if the claims 
are awarded. Some of the attorneys who used to take these cases on a 
pro bono basis or with a recognition of the uncertainty of payment can 
no longer afford to do so, in light of the impact of the user fee tax, 
discussed earlier.
    We believe that this lack of availability of representation 
explains the statistics that show only 46 percent of SSI claimants were 
represented at the hearing level in 2000, compared to almost 75 percent 
of Social Security disability claimants. As noted above, represented 
claimants fare better than do unrepresented claimants in the disability 
determination process.
    We also believe that extending the attorney fee direct payment 
system to SSI will bring the availability of counsel for SSI claimants 
to the same level as for Social Security disability claimants.
    It is our position that establishing a fee payment process for SSI 
claims, as provided by this legislation, would address directly the 
underlying reason that many attorneys will no longer accept SSI cases: 
lack of assurance of receiving their fee if the outcome is successful. 
If assured of the payment of their fee in successful cases, many 
attorneys are ready, willing, and able to undertake representation for 
many SSI claimants. If this legislation is enacted, SSI claimants who 
want to have representation would find it generally available. Only if 
the claimants were awarded benefits would their attorneys receive 
attorneys' fees. In addition, the amount of those fees would be 
regulated by the existing processes established under the Social 
Security Act.
Sunset Provision
    We are dismayed, however, by the addition of a sunset provision for 
this program. Enactment of an attorneys' fee payment system with an 
``end date'' will undercut its very purpose: to enable more SSI 
claimants seeking a lawyer to hire one. Adding a sunset provision will 
be interpreted by many attorneys as a lack of commitment to the 
attorneys' fee payment process in SSI cases. Many attorneys will 
conclude that the future for this provision is too uncertain. They may 
well make a decision not to participate in representing SSI claimants 
because of concerns about investing additional resources and personnel 
in a practice which may disappear in just three years. In the meantime, 
many SSI claimants will continue to face difficulties in hiring a 
lawyer and thus securing representation. The sunset provision 
shortchanges them. We are not aware of any policy justification for 
this provision, and we urge its deletion from the bill.
       Study On Fee-Withholding for Non-Attorney Representatives
    We support the provisions of the Social Security Protection Act of 
2003, which require the Comptroller General to undertake a study 
regarding fee withholding for non-attorney representatives representing 
claimants before the Social Security Administration. The legislation 
sets forth several areas of concern that should be taken into account 
when the General Accounting Office compares non-attorney and attorney 
representatives, including the effect on claimants and program 
administration of extending fee withholding to unaffiliated non-
attorneys. Our accountability concerns do not pertain to paralegals 
employed by legal services organizations or law firms because the 
claimants they represent are afforded the same protections as clients 
represented by attorneys in those organizations or firms.
    We would urge the Subcommittee to ensure that the following issues 
are addressed by the study, which should be completed and evaluated 
before any changes are made regarding fee-withholding for non-attorney 
representatives.
Qualifications
    In order to become an attorney, individuals in every state must 
pass a minimum two-day bar examination and must prove they meet the 
character requirements necessary for the practice of law. Thus, each 
state bar association requires prospective applicants to complete a 
lengthy application detailing information on each aspect of their lives 
that sheds light upon their character. This includes information on all 
civil and criminal proceedings (including traffic citations), financial 
and credit information, as well as numerous character references. 
Further, many states now add a third day to the written bar examination 
that deals solely with ethical issues. Many states also require a 
personal interview with a representative from the state bar committee. 
Such thorough investigations into an individual's background serve to 
protect those seeking legal services, which includes those individuals 
seeking the assistance of an attorney in a Social Security disability 
case. It is evident that the Social Security Administration benefits 
from these thorough character examinations, and such benefits arise at 
no additional expense to the agency.
    In order to represent individuals before the Social Security 
Administration, the only requirement is completion of the one-page 
``Appointment of Representative'' form. The form requires only the 
representative's name, address, and telephone number. The Social 
Security Administration has no method for verifying the character of a 
non-attorney representative; nor does it possess the resources to do 
so. The Social Security Administration can only rely on the 
representative's self-certification as to their ``good character and 
reputation.'' In contrast, the Social Security Administration requires 
that an attorney must be admitted to practice law in a State and be in 
good-standing with that State's bar. Thus, attorneys must have been 
vetted by a state bar and have had to prove their good character before 
being allowed to engage in the practice of law.
Ethical Requirements
    The actions of attorneys also are more heavily regulated and face 
greater scrutiny than the actions of unaffiliated non-attorney 
representatives. States have enacted institutional controls to govern 
the conduct of professionals such as attorneys. The only controls that 
exist for non-attorney representatives are two short pages of 
regulations entitled ``Rules of Conduct and Standards of Responsibility 
for Representatives.'' By contrast, attorneys and paralegals they 
supervise must comply with both these Social Security Administration 
standards and state bar codes of conduct, which are much more stringent 
and impose much more severe punishments for violations. While the 
Social Security Administration standards for non-attorney 
representatives do provide a starting point, the standards are general 
and, to date, enforcement has been limited. In contrast, state 
institutional controls provide many protections for disability 
claimants who are represented by attorneys and those paralegals they 
supervise.
    Because unaffiliated non-attorney representatives do not fall under 
the purview of such institutional controls, claimants do not have many 
protections from unscrupulous non-attorney representatives. In order to 
practice law, attorneys must swear to abide by the ethical code of the 
state in which they practice. Failure to abide by such codes will 
result in fines, censure, or even disbarment. In contrast, non-attorney 
representatives are not under any similar ethical standards promulgated 
by a licensing body. The legislation this Subcommittee is considering 
today includes an important provision, which we support, that would 
increase the institutional protections afforded to claimants 
represented by attorneys. This provision would prohibit disbarred 
attorneys from serving as non-attorney representatives for Social 
Security disability and SSI claimants. Because non-attorney 
representatives are not governed by equivalent ethical standards, 
claimants are not afforded adequate protection against unscrupulous 
non-attorney representatives.
    More troubling, if an unaffiliated, non-attorney representative 
behaves unethically the client has no direct recourse. The client 
cannot bring a charge against the non-attorney representative before an 
ethics committee because such a committee does not exist. The client is 
limited to complaining to the Social Security Administration, which may 
or may not bring a charge against the non-attorney representative. 
Surprisingly, the Social Security Administration has no obligation to 
investigate a charge of misfeasance or malfeasance against a non-
attorney representative, unlike a state bar commission of professional 
conduct which is required by law to conduct an investigation of any 
charge of wrongdoing. Thus, the state licensing scheme for attorneys 
provides clients with direct recourse if they have a complaint.
    Furthermore, complaints against attorneys and any resulting 
disbarment proceedings are public records, and the information is 
available to potential and current clients. On the other hand, 
information that the Social Security Administration has disqualified or 
suspended a representative under its own rules is not available to the 
public. Unfortunately, Social Security and SSI disability claimants 
have no way to determine whether non-attorney representatives have had 
any complaints filed against them. However, they can obtain similar 
information about attorneys from the State bar. Thus, Social Security 
disability claimants have no way to determine whether certain non-
attorney representatives have had any complaints filed against them, 
but they can easily ascertain similar information about attorneys from 
a state bar association.
    The Social Security Administration standards of conduct for non-
attorney representatives are reactive and not proactive. Whereas 
attorneys can be disciplined for ethical lapses that do not involve 
their work as attorneys, the Social Security Administration can only 
punish non-attorney representatives after they have harmed a Social 
Security disability claimant. Consequently, the Social Security 
Administration standards by themselves do not adequately protect Social 
Security claimants. The absence of strict ethical guidelines to govern 
the conduct of representatives is troubling and is a powerful argument 
for a thoughtful, deliberate GAO study.
    More importantly, even state governments cannot protect their own 
citizens by prohibiting unskilled or disreputable non-attorney 
representatives from taking advantage of Social Security disability 
claimants who reside within their states. Under the law, the Social 
Security Administration is the only entity that can take action against 
those non-attorney representatives who bilk or otherwise harm Social 
Security disability claimants.
    Additionally, most states require attorneys to contribute to a 
``clients' security trust fund'' to reimburse clients for losses caused 
by attorney malfeasance. Such funds do not exist for non-attorney 
representatives, illustrating yet another control that protects 
attorneys' clients, but not non-attorney representatives' clients. 
Similarly, many states require attorneys to obtain malpractice 
insurance before they can practice law. Non-attorney representatives do 
not have such obligations, and claimants who suffer at the hands of 
non-attorney representatives cannot sue those individuals for 
malpractice. Furthermore, the Social Security Administration does not 
have the capacity to administer a similar ``clients' security trust 
fund'' for non-attorney representatives.
    Furthermore, in completing an ``Appointment of Representative'' 
form, non-attorney representatives are not required to certify that 
they have the training or experience to handle the appeal of a Social 
Security disability claim. As such, the Social Security Administration 
provides no opportunity to claimants to allow them to investigate the 
competence of non-attorney representatives. The Social Security 
Administration study mandated in this legislation will shed light on 
the proper level of training or education a non-attorney representative 
needs to adequately represent a Social Security disability claimant.
    Because of the importance of the outcome of Social Security 
disability appeals, we believe the issues of qualifications, 
competency, accountability, ethics, and training should be studied by 
the General Accounting Office in the report mandated by this 
legislation.
                      Other Provisions of H.R. 743
Representative Payment Protections
    We support the provisions in Title I of the bill that benefit the 
most vulnerable Social Security and SSI beneficiaries-those who require 
a representative payee. These provisions provide additional safeguards 
to ensure these individuals are protected from unscrupulous 
representative payees.
Issuance of Receipts to Acknowledge Earnings Reports or Change in Work 
        Status
    Under this legislation, the Social Security Administration, for the 
first time, would be required to issue a receipt whenever a beneficiary 
reports earnings or a change in work status. Overpayment due to work 
activity has been a serious problem for beneficiaries who take 
advantage of work incentives programs. These overpayments, which may 
amount to tens of thousands of dollars, often are caused by the lack of 
a single process for reporting earnings and the failure of Social 
Security Administration personnel to record earnings when they are 
reported. This legislation seeks to address this problem in a 
meaningful way.
Extending the Suspension of Benefits for Fugitive Felons
    Similar to a provision in H.R. 4070, this bill extends the denial 
of Title II benefits to ``fugitive felons and probation and parole 
violators.'' This ineligibility provision has existed in the SSI 
program since 1996. However, this legislation includes an important 
improvement-the ``good cause'' exception, which allows the Commissioner 
to continue benefits for fugitive felons. However, this exception does 
not apply to those in violation of probation or parole requirements. We 
urge that this provision is expanded to include fugitive felons and 
probation and parole violators.
    This good cause exception is extremely important, in light of the 
hardships caused by the SSI ineligibility provision. While the agency 
has lauded the tens of thousands of fugitive felons identified under 
this provision, SSI advocates around the country have been inundated 
with requests for assistance from SSI beneficiaries whose benefits have 
been terminated for often minor, decades-old offenses which prosecutors 
have no intention of pursuing. However, the good cause exception, as 
currently drafted, only applies to fugitive felons.
    We urge the Subcommittee to extend the good cause exception to 
probation and parole violators. In addition, the good cause exception 
should be extended to the SSI program. In determining whether to apply 
this exception, the Social Security Administration should consider: the 
seriousness of the alleged crime or violation; the length of time that 
has passed since the crime or violation occurred; whether there is an 
intent to extradite or prosecute the individual; any physical or mental 
limitations of the individual; and any linguistic and educational 
limitations of the individual. The inclusion of such protections, we 
believe, would ensure that the Social Security Administration considers 
all relevant information before determining the ineligibility of these 
individuals.
Conclusion
    In conclusion, the members of NOSSCR and those claimants we 
represent thank the Chair and all members of this Subcommittee for your 
interest in these issues. I would be pleased to respond to any 
questions you may have.

                                 

    Chairman SHAW. I find it very interesting, Mr. Morris, that 
you and Mr. Kaufman are seated next to each other.
    [Laughter.]
    Mr. Brady?
    Mr. BRADY. Mr. Chairman, on two issues--sunset and attorney 
versus non-attorney representatives. On the sunset provision, 
it seems to me in reading the original bill that a sunset 
mechanism gives us an opportunity to really measure the results 
of that change. It enforces the timetable for us to review it 
and lets us know if we are really accomplishing what we set out 
to accomplish. Is your concern with the sunset concept, or is 
it the 3-year period that is too short in order to measure that 
given the length of how long the process can work for a 
claimant? Can you be more specific about what the objections 
are--any of the panelists.
    Mr. MORRIS. Our concern is the longevity of taking a Social 
Security or an SSI claim from beginning to completion. I try 
cases every day; some claims have lasted as long as 8 or 9 
years. My office as well as most of my colleagues do a lot of 
the work that Social Security would do in terms of completing 
applications, completing forms, obtaining necessary medical 
evidence. My concern would be that if a law firm gears up to 
take care of this project and then finds out that it cannot 
successfully complete the actions, we have hired staff, we 
have----
    Mr. BRADY. Within the 3 years? Is it the shortness that 
concerns you?
    Mr. MORRIS. That is it at this point. I think we would have 
to further study whether the entire concept is totally 
bothersome. I would hate to see attorneys or non-attorney 
representatives gear up to take care of these cases and have 
the rug pulled out from under them.
    Mr. BRADY. That makes sense--but you do not object to the 
concept of us measuring the consequences of this change to see 
if it is really accomplishing what we want?
    Mr. MORRIS. I think that that is probably a good idea.
    Mr. BRADY. Good. Any other comments?
    Mr. KAUFMAN. I would like to interject on that. Presently, 
non-attorney representatives who do not have their fees 
withheld represent people for SSI. We have been doing it for 
years. For many members of our organization, their primary 
focus is on claimants with SSI. These are social workers, 
mental health workers, who have found out how to get through 
the process and how to help these individuals. There is no 
guarantee in the fees that these individuals receive, yet they 
have been doing it for years and helping these disabled, highly 
impaired individuals. Now what the attorneys are saying is let 
us un-level the playingfield, let us make it unlevel for the 
people who have been in business for years doing this work, 
helping these individuals, and--as he just said--we will ramp 
up and get started to process all of these individuals. What 
that will do, however, I believe, is it will put some of the 
people who have been doing this really good work for an 
extended period of time out of business or certainly reduce the 
business to a great degree.
    Mr. BRADY. Thank you. Any other comments?
    [No response.]
    Mr. Chairman, the study in the bill regarding attorney 
versus non-attorney representation--what is the timetable for 
reporting back on that?
    Chairman SHAW. Staff advises us that it is 1 year.
    Mr. BRADY. I think that is a good approach, because one, 
you can never underestimate the value of a law degree and the 
training and regulation that goes with it. On the other hand, 
some of the non-attorney representatives who have been in my 
office on this issue know the system well, and they are very 
sharp. It seems to me that if the system becomes more litigious 
and legal, that is where the emphasis ought to be. If we can 
start to reform this so that more decisions are made accurately 
before it gets to the activities of daily living system, then I 
think we need to have a good, strong system of non-attorney 
representatives in place. So, I think the study and the 1-year 
timetable is a very thoughtful approach. Thank you, Mr. 
Chairman.
    Chairman SHAW. Mr. Becerra?
    Mr. BECERRA. Thank you, Mr. Chairman. Actually, I would 
like to ask a few questions about the fugitive felon and parole 
and probation violators, but before I go to that, Ms. Coleman, 
I want to make sure that you understand that I think most 
Members of Congress respect the work that is done by some of 
the non-attorney representatives on behalf of disability 
clients and Social Security clients and SSI clients. Some of 
the work done by these individuals is tremendous. They are 
extremely qualified; they have demonstrated the ability, with 
or without a license, to practice law. At least for me, what 
would concern me is the fact that there is no way to ensure 
that there is a prohibition against those who are not 
qualified. If you are an attorney and you abuse your license as 
a representative of a disability applicant, you are subject to 
any number of disciplinary actions, perhaps disbarment, and 
under this legislation you would be barred from ever practicing 
in an administrative hearing for an SSDI claim. So, there are 
protections, and affording someone who is licensed to practice 
law that opportunity to be paid directly I think is a way of 
saying we expect that we can hold you to a higher standard. 
Also, remember that if you are disciplined or disbarred, it 
will not just be for practicing law in this area. It is from 
any other area of law; you lose that license if you should be 
disbarred.
    So, if there were something that non-attorney 
representatives had that was similar, perhaps I would have more 
comfort, but right now, I think that for the protection of the 
client, of the beneficiary, we need to do what we can to ensure 
that there is protection. I hope that we take a close look at 
this 3-year sunset, because to me, it does not seem to provide 
any additional protections to the beneficiary in trying to move 
through the process, which is already a big maze, as Mr. Brady 
pointed out. On the issue of violators of probation or parole 
and fugitive felons, it seems to me that because over half of 
the individuals who would be affected by this area on the 
parole or probation side, not necessarily fugitives from a 
felony, that we might want to look closely at this, because 
this bill applies to any parole or probation violator 
regardless of how minor that probation or parole violation 
might have been. If I could get comment from any of you on that 
particular matter and on the ``good cause'' exception that we 
provide in the legislation that would allow for some discretion 
on the part of the Social Security administrator to ensure that 
if there is good cause to provide payment to the beneficiary.
    We have to remember that these folks did pay into the 
system, so what we are trying to do is avoid those who are 
fleeing jurisdiction because they committed a felony, or they 
are violators of probation or parole, and we do not think they 
are entitled to this. For those who are innocently committing 
this violation--and it might be, in many cases, a very minor 
violation--perhaps what we could do is extend the ``good 
cause'' exception so that it applies not just to fugitive 
felons, as it does in this bill, but also to parole and 
probation violators. Perhaps what we should do is give some 
criteria for this ``good cause'' so that if someone makes an 
effort after being notified by Social Security that they are 
considered a parole violator, and you are in a nursing home, 
and you are not going to leave that nursing home, perhaps there 
is some way for you to show that you made a good faith effort 
to try to clear this, and if that is the case, all of a sudden, 
you will not find that you have been dropped from the rolls 
simply because the violation cannot be cured or has not been 
cured despite your effort. Any comments? Yes, Ms. Ford.
    Ms. FORD. We agree with your position. We think that the 
parole and probation violators should also be subject to the 
``good cause'' exception and that the entire ``good cause'' 
exception including parole and probation should apply to the 
SSI program. What I think we have learned from the Inspector 
General's work over the last year is that the computers are now 
very good at talking to each other and matching numbers and 
finding people. What is not appearing to happen in many cases 
is the human element of making a judgment about what is really 
going on there. Some of the cases that have come to my 
attention are people who had something filed against them in a 
State more than 20 years ago, and they have never even been 
notified of it, who learn about it in a nursing home when they 
are receiving benefits, and they get a letter from SSA. These 
are the kinds of situations that happen. Even when they take 
steps, they find difficulty in repairing the situation.
    Mr. BECERRA. The image of a fugitive felon that we have, or 
even a parole or probation violator, is not the image of the 
man or woman who is pretty much set up in a nursing home and 
has been and is not going to try to run and would probably find 
it very difficult even to try to cure the violation.
    Ms. FORD. Correct. In the cases that I have seen, it has 
taken a good deal of work for the attorneys or legal defenders 
to help the individual clean it up. Sometimes it is interstate. 
People have moved. The event was 20 years ago. It is very, very 
difficult sometimes to even remember the situation. There are 
lots and lots of things that need to be taken into account. In 
our testimony, I indicated that we also have to look at the 
issue of mental impairment. There are some people whose mental 
impairment--the very disability for which they are entitled to 
these benefits--is an important element in the fact that they 
are either fugitive felons or probation violators. That needs 
to be taken into account in looking at this issue, not just 
having the interface with the Social Security number and the 
judicial system. There is a judgment that has to be made in 
these situations. I would suggest that the Commissioner should 
have that authority to waive for good cause even if we have not 
yet seen the Inspector General's report in the fall.
    Chairman SHAW. I would say to the gentleman that we share 
their concerns, and that is still under study and may be 
addressed in the final legislation by amendment.
    Mr. BECERRA. Thank you, Mr. Chairman.
    Chairman SHAW. Mr. Lewis?
    Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Mr. Morris, 
is there a difference between an attorney and a non-attorney 
representative in the recourse that a claimant can have if they 
have been misrepresented?
    Mr. MORRIS. I think there is a vast difference. First of 
all, many States require malpractice insurance before an 
attorney can practice law. There are all sorts of ethical 
grievance committees that are out there in every jurisdiction 
in the country where the claimant can file a complaint. There 
are funds that are set up to protect claimants from attorneys. 
I have an escrow account; the interest from my escrow account 
goes to a fund maintained by the State of New York as a client 
security fund. There is the fear of disbarment, there is public 
censure. We read about attorneys in the newspaper. The bar 
associations publish the results of disciplinary activities. 
None of this would apply to a non-attorney. There is no 
mechanism set up to inform the public. This is a claimant-
oriented program, the SSA. It is not an issue between attorney 
and non-attorney. I believe the issue should be how do we best 
protect the claimants and allow the claimants to get those 
benefits that they need to maintain themselves. So, there is a 
vast, vast difference between the recourse available to a 
claimant when represented by an attorney or a non-attorney.
    Mr. LEWIS OF KENTUCKY. Mr. Kaufman, would you like to 
respond to that?
    Mr. KAUFMAN. I would, sir. The marketplace in and of itself 
takes place of quality representation or lack thereof. An 
individual who has never practiced before the SSA can come in 
today if they have a law degree, win their first case, and have 
their fee withheld. I, after practicing for 17 years, am not 
afforded that same option. What ends up happening is that 
inexperienced attorneys who do not truly understand the whole 
system and have not been able to grasp it, even though they may 
be very ethical and moral individuals and have all of the 
necessary background and studies and passed all the 
examinations that are necessary to pass the bar, they do not 
understand Social Security, just like they might not understand 
patent law. You would not want an individual to be able to 
obtain benefits that the government is granting to an explicit 
subset of representation. The SSA has always admitted that non-
attorney representatives are perfectly acceptable and can 
practice before them. It was discussed in the rules for 
representation back in 1998. There is no question that those 
things continue today. I believe that we are trying to raise 
the bar--there is no question about that--because there has not 
been a standard throughout the country that we have been able 
to work with. I am a member of NOSSCR and have been for 15 
years, and I still am today. It is a wonderful organization, 
but it does not look out, and it does not increase the bar or 
raise the bar or provide anything for non-attorney 
representatives, and that is what we are trying to do, sir, is 
to make it so that it becomes a more even playingfield.
    Mr. LEWIS OF KENTUCKY. Let me ask you this, Mr. Kaufman. 
For a claimant who would like to have some assurances with a 
non-attorney representative about their success, their 
background, and so forth, what is available for them to check 
out a non-attorney representative?
    Mr. KAUFMAN. Claimants call me all the time and say, ``I 
got your name from a friend of mine who said you do a great 
job.'' That is about the best that I think anyone can do, be it 
an attorney or a non-attorney. With an attorney, you can open 
the phone book and see that I do Social Security law. I cannot 
do that. There is nothing there that says ``Lawyer'' or ``Non-
Attorney Representation'' for me. So, I cannot advertise in 
that realm, but people can ask, ``Have you done a good job?'' I 
have long-term disability carriers that I have done work for 
for years, and this is a very important example as to how the 
marketplace works. I helped set up their Social Security 
program. I worked it; we got everything going. They would refer 
cases to me. That long-term disability carrier was purchased. A 
new carrier came in. When that carrier came in, they decided, 
``We are going to let the government pay for the checks that 
are going out to the representatives, and therefore, we are not 
going to provide any additional referrals to individuals who 
cannot have their fee withheld.'' I have been doing that work 
with that specific company for 10 years, and they were very 
happy with the work that I did, but because I cannot get my fee 
withheld now and the new company comes in, I am no longer able 
to. So, there are protections, and the protections are word-of-
mouth and the marketplace.
    Mr. LEWIS OF KENTUCKY. Do you want to respond to that, Mr. 
Morris?
    Mr. MORRIS. I was not aware that we would be engaging in a 
debate, Mr. Lewis, but I do not think the concern of this 
Committee should be who gets the greatest share of the 
marketplace. The concern of this Committee, I believe, should 
be how do we protect the disabled claimant who is out there 
struggling for a way to pay his bills, and the only way that we 
can protect the disabled claimant who is least able than 
anybody else to determine who is a good representative and who 
is not a good representative is for the Committee to ensure 
that for them. Three years of law school teaches advocacy 
skills. There are clinical programs. It teaches us ethical 
guidelines, trains one's mind how to think in an analytic, 
attorney-like way. The concern should not be can a non-attorney 
with 17 years of experience adequately represent a claimant, 
but can anyone with no experience, which is what this 
legislation would allow. Can the claimant's next-door neighbor 
say, ``I will take care of you, Joe; I will go in and I will 
represent you''? That is the concern that we have, and Joe, who 
may suffer from a psychiatric disorder or who may have 
cognitive defects, knows the next-door neighbor is a nice 
fellow, and he says, ``Sure, why don't you take care of it for 
me?'' That is the concern that we have is the protection of the 
claimant, not the market share and who makes money.
    Chairman SHAW. The time of the gentleman has expired.
    Mr. LEWIS OF KENTUCKY. Thank you. Thank you, Mr. Chairman.
    Chairman SHAW. Ms. Coleman looked like she was about to 
come across the table, so I will defer to her for a moment.
    Ms. COLEMAN. Thank you, Congressman. I am in a funny 
position. I am sitting here representing the ABA, and the 
question is whether there should be attorneys or non-attorneys 
doing this. I think I would reflect on what Mr. Morris said and 
suggest that there are five or six elements that I think really 
need to be looked at. One is the issue of malpractice insurance 
and whether or not from a claimant's perspective--we are 
talking about people who are very vulnerable--what is it if 
they do not have access to that kind of thing. The second is 
that there are disciplinary actions that State bars do take 
against attorneys. There are ethical rules that people must 
look at. There is a fee dispute mechanism in most State bars 
right now, so that if there is a difference between fees that 
are charged, they can go to that. Last is that--and I think Mr. 
Morris mentioned this--increasingly, there are funds that are 
put in escrow through client security funds. In fact, these are 
very voluminous kinds of things. They are taken very seriously, 
especially by vulnerable clients. So, I think those are the 
elements to look at. We at the ABA do not do disciplinary 
issues, so it is not our bailiwick, but it is what we support 
in terms of looking at State bars and providing issues for 
them.
    Chairman SHAW. Thank you. Ms. Tubbs Jones?
    Ms. TUBBS JONES. Thank you, Mr. Chairman. Mr. Kaufman is 
about to come over the table, so I am going to give him a 
minute and a half to respond to all these attorneys in the 
room--and I am one of them. Go ahead.
    Mr. KAUFMAN. Thank you. I truly appreciate that. As far as 
the fee dispute, just to respond to some of the things that we 
have been hearing this morning, the SSA sets the fee. It sets 
the fee for the attorney and non-attorney representative alike. 
Every, single step of the process from the beginning paperwork 
that an individual signs all the way through the very end when 
you get the Notice of Award, is identical. I have no say over 
what my fee is going to be. The Administration says this is how 
much you can charge--no more. I can charge less, and many non-
attorney representatives frequently do--but we do not charge 
more. If we did--and I think this is another important point--
this is basically what we do. We do Social Security 
representation. We do not do wills, we do not do divorces, we 
do not do personal injury work. Most of us do Social Security. 
If the SSA reprimands us and does not allow us to practice, we 
cannot go to another area of specialty as an attorney could. 
Now, granted, a bar may disbar you, but if they have a problem 
with Social Security, they can do something else.
    Ms. TUBBS JONES. Let me ask you this, Mr. Kaufman. So, in 
reality, what you are arguing to us is that you want to be able 
to have Social Security pay your fees directly, but otherwise 
you do not have any problem performing the services that you 
are performing.
    Mr. KAUFMAN. We want parity, and if that is the only issue 
that is left, then that is what we want.
    Ms. TUBBS JONES. I am too new to this to say that it is the 
only issue that is left one way or the other----
    Mr. KAUFMAN. I believe it is.
    Ms. TUBBS JONES. Let me ask you this, Mr. Kaufman. How do 
I, as Joe Jones out there on the street, learn about you doing 
this? Are you listed in the telephone book as a counsel? How do 
I find you?
    Ms. KAUFMAN. As I said, word-of-mouth, typically. We have 
been in business for 15 years. We finally found a place in the 
Yellow Pages after working against and with Verizon for years. 
They have headings and places. It is called ``Social Security 
Representatives and Counselors.''
    Ms. TUBBS JONES. You represent an organization of those 
folks; is that a fair statement?
    Mr. KAUFMAN. That is correct.
    Ms. TUBBS JONES. Is there a fee charged to be a member of 
your organization?
    Mr. KAUFMAN. Yes, $200.
    Ms. TUBBS JONES. Is there some certification for your 
representation?
    Mr. KAUFMAN. As I explained in my testimony, we are just a 
little over 2 years old--just under 3 years old at this point. 
We are working on all of those things, but----
    Ms. TUBBS JONES. So, are you asking us as Members of 
Congress, then, to wait until you can certify your guys in some 
way before we take away your ability to be able to get paid 
directly?
    Mr. KAUFMAN. We are receptive to certification as long as 
it is on an equal basis. If an attorney wants to----
    Ms. TUBBS JONES. On an equal basis with what?
    Mr. KAUFMAN. An attorney.
    Ms. TUBBS JONES. You cannot be on an equal basis with an 
attorney, sir. That is the reality of law. I am trying to 
figure out how we--first you ask for parity; now you are asking 
for equal basis. What are you asking for? It is not the same 
thing.
    Mr. KAUFMAN. Well, I had understood that it was 
interchangeable. We are asking for whatever an attorney gets as 
far as fee withholding; they would have to provide the same 
competency that we would have to provide. If a new attorney 
comes into the system, they should not have fee withholding if 
I am not able to access it as well. That is all that we are 
asking for.
    Ms. TUBBS JONES. It is really a dilemma that my colleagues 
and I are put in with regard to this issue, and I am not 
adverse to at least walking through it. The dilemma that you 
really face is age-old--what attorneys supposedly have it up on 
non-attorney representatives. What I would suggest to you is 
that you continue to walk down the path of certification and 
whatever else there is and ultimately to give us a basis upon 
which to make such a claim of parity. Otherwise we are caught 
in a catch-22 with people out here saying, ``Hey, how are we 
going to go after those people? Where did they come from? How 
do we find them?'' because in reality, if we wanted as Members 
of Congress to legislate something away from you, it would be 
to legislate that you cannot do the job. I do not think anybody 
wants to go that far away at all, and I just think that you 
guys and women who do this practice need to give us a reason to 
put you in the position. I am personally not quite there, but I 
am not averse. I yield back the balance of my time, Mr. 
Chairman, and I appreciate it. I did not give anybody else a 
chance to answer because you all had all the time. I gave you 
parity, Mr. Kaufman, remember that.
    Chairman SHAW. Mr. Pomeroy?
    Mr. POMEROY. It has been a very good discussion. I commend 
both sides advancing their interests in very articulate ways. I 
would note a reservation similar to my colleague, Ms. Tubbs 
Jones. You are asking for parity on the one hand, and then you 
are indicating but you are only 2 or 3 years along, and you are 
trying to get an organization and get some minimum 
certification or quality assurance dimensions. Let me pursue 
that just briefly. Mr. Kaufman, is there anything that would 
restrict me from calling Verizon now that you have got this 
Social Security counselor designation and saying, ``Put me down 
there,'' and without any further check or anything, I am 
holding myself out to the public without the assurance of any 
type of licensure or any administrative sanction if I do 
something wrong or withhold the money, and mostly a prospect of 
not having malpractice insurance coverage?
    Mr. KAUFMAN. I believe, Mr. Pomeroy, that you are an 
attorney?
    Mr. POMEROY. I am, actually.
    Mr. KAUFMAN. So, you would be able to qualify under that 
and have your fee withheld.
    Chairman SHAW. Well, I think, Mr. Kaufman, the record will 
show that you are outnumbered by attorneys here.
    [Laughter.]
    Mr. KAUFMAN. Yes, sir.
    Mr. POMEROY. The best thing I can say about my law practice 
is that the statute of limitations has now run; I am now out of 
the business. Hypothetically, let us say I am not an attorney. 
Let us say I am my brother-in-law. Could my brother-in-law call 
and get his name listed and just be ready to do this?
    Mr. KAUFMAN. He probably would be able to get his name 
listed; you are absolutely correct, sir. However, what we are 
trying to do----
    Mr. POMEROY. I hope no one would call my brother-in-law for 
this sort of thing.
    [Laughter.]
    Mr. KAUFMAN. What we are trying to say, sir, is that 
competency is the issue, and an individual who is not competent 
to practice in an area of specialization such as Social 
Security or patent law or things that just are not in the 
normal flow of practice--those individuals should not have 
their fees withheld. Whereas at the same time, individuals who 
are competent and have been doing it for an extended period of 
time--and obviously, the marketplace in this instance proves 
competency because if we do not get our fee approved by the 
Administration, we cannot collect it from the claimant, and if 
we do not collect it from the claimant, we cannot be in 
business for very long. If you are in business for 17 years or 
12 years or 3 years or 5 years, and you are successful, and you 
are continuing to get individuals that you are representing and 
bringing them before the Administration at any level--and that 
is one of the things that we pride ourselves on is that we do 
it at all levels, not focusing primarily at the administrative 
law judge level--if you can get those individuals, and you can 
get paid, then you are probably successful and competent. We 
suggest, sir, that maybe an issue of competency or a 
methodology of determining competency be established so that 
competent representatives, be they attorneys or non-attorneys--
that is the parity that we are talking about--get paid by the 
Administration. Those people who cannot or have not proven 
competency do not get the fee withheld. Therefore, you can put 
your name in there, but until you have proven competency, you 
can work as hard as you can and try to collect the fees 
individually, but when you prove your competency, then the 
Administration can withhold your fee, and you can get it paid 
by the Administration.
    Mr. POMEROY. Let us ask the ABA representative to respond 
to that because it is an interesting point.
    Ms. COLEMAN. First of all, competency is one thing. 
Screening people to understand what is probably only second to 
the tax system, the most complicated system in the world--the 
Social Security System--is, in fact, a very difficult one. I 
think that Congresswoman Tubbs Jones really hit it on the head. 
When you have a screening process that allows you to screen and 
certify and educate and prove to the public--which is really 
part of what we are doing--it is a sale on two sides. It is a 
sale to the public--that is, how do you advertise who you are--
and it is a sale to you guys and Social Security as to how they 
should be paid. It is a twofold thing. When that exists, I 
think you can go there. There could be a requirement of 
malpractice as well. It is certainly possible that Social 
Security could say to folks practicing in this area, ``You must 
have malpractice insurance,'' and seek to do it. There are lots 
of ways that people do that who are not attorneys as well. So, 
there are ways of doing that. Again, the ABA does not sit there 
and hold that bar up for folks to pass under, so we do not 
license or certify or do those things.
    Ms. FORD. Could I respond?
    Mr. POMEROY. Yes, please.
    Ms. FORD. Our fear from the beneficiaries' standpoint is 
the issue of those who are not competent and what happens to 
the beneficiary in terms of missing critical deadlines that may 
in fact have an impact on whether they are ever eligible 
because they could lose insured status. We try to come at this 
from the perspective of the beneficiaries, and we think that 
there are some issues like training, certification, monitoring, 
and enforcement that have run through this discussion that are 
really valid and need to be seriously look at. I think this 
whole discussion has pointed out the need for the GAO study for 
a year. I think we need to get all that on the table and look 
at it and figure out what makes the most sense--what needs to 
be done and who should do it, and how do you best protect the 
beneficiary in this process.
    Mr. POMEROY. Thank you. I yield back, Mr. Chairman. Thank 
you for this excellent hearing.
    Chairman SHAW. Yes, sir, I think this has been interesting, 
and I think it has been shown that we have a little bit of a 
dilemma which really boils down to the simple fact that we 
depend upon the States to monitor who is a lawyer and who is 
not. They make that determination, and each of the 50 States 
has their bar association with the ability to disbar or qualify 
or disqualify. Just because someone is an attorney does not 
mean they are competent in this area--I can tell you that--in 
fact, most attorneys do not know beans about this area, but at 
least it gives us a framework to work with, and that is the 
dilemma that we are facing. I think we have had a very open 
discussion of both sides of the argument. Now this Committee 
will have to decide how it is going to go. Thank you. The 
hearing is adjourned.
    [Whereupon, at 11:00 a.m., the hearing was adjourned.]
    [Submissions for the record follow:]
Statement of Association of Texas Professional Educators, Austin, Texas
    The 100,000-member Association of Texas Professional Educators 
(ATPE), the largest educators' association in Texas and the largest 
independent educators' association in the country, is opposed to HR 743 
in its current form. While ATPE supports the legislation's goal of 
reducing fraud and abuse in the Social Security and Supplemental 
Security Income programs, Section 418 of HR 743 will hurt Texas' 
ability to recruit and retain quality teachers for our classrooms. For 
that reason, HR 743 should be amended to strike Section 418.
    The state of Texas faces a teacher shortage approaching 40,000 and 
a $10 billion budget deficit for the 2004-05 biennium. One of the major 
concerns of ATPE members and other educators across the state is the 
loss of their retirement benefits due to the Government Pension Offset 
(GPO) and Windfall Elimination Provision (WEP).
    The GPO reduces, by two-thirds, the spousal or widow(er) Social 
Security benefits of those who also receive a government pension. The 
history behind the creation of this provision was Congress' desire to 
prevent ``dual entitlement'' of Social Security and spousal benefits or 
government pensions and spousal benefits. However, the practical 
consequence of the GPO has been a financial penalty against public 
educators and others who work in relatively low-paying public service 
careers and who are eligible for government pensions.
    Most educators affected by the GPO do not learn they will be 
subject to the provision until they are preparing for retirement; the 
Social Security Administration does not inform educators that their 
benefits will be reduced by the GPO when the administration sends 
benefit projection notices to educators. For these reasons, ATPE 
supports HR 594, the Social Security Fairness Act of 2003, which would 
completely repeal the GPO and WEP.
    Because of our opposition to the GPO and WEP, we cannot support 
Section 418 of HR 743. This section would effectively remove a 
provision in current law that allows Texas educators exemption from the 
GPO if they work a short period of time in school districts that pay 
into or participate in both the Teacher Retirement System and Social 
Security.
    Enactment of Section 418 could induce hundreds of veteran teachers 
to retire immediately so they can receive exemption from the GPO while 
the opportunity still exists. This would create a financial crisis for 
the state and local districts as they scramble to hire substitutes and 
replacements for those who retire. Plus, students would suffer the loss 
of the benefit of experienced and skilled teaching. In this time of 
teacher shortage and rising accountability standards, Texas needs its 
most experienced teachers to remain in the classroom.
    Public educators and other public servants who make the sacrifice 
to work in low-paying government careers should not have their 
retirement benefits reduced because they choose careers of service. 
Until legislation to repeal the GPO and WEP is enacted, the provision 
in current law that allows educators exemption from the GPO should be 
retained in its current form. For these reasons, ATPE urges the 
subcommittee to amend HR 743 to strike Section 418.

                                 

       Statement of Frank O. Cannon, North Hollywood, California
    I strongly support HR 743. However, it would be even more effective 
legislation, if it included a provision to keep Social Security numbers 
confidential. I recently had my SS # changed by the California DMV, due 
to an entry error made by a clerk during an application for replacement 
drivers license. I believe that SS numbers should only be used for the 
original intended purpose--for benefits tracking--and not for a 
convenient way to identify citizens.
    I would be very interested in your viewpoint on my comment.

                                 

 Statement of the Honorable Wally Herger, a Representative in Congress 
                      from the State of California
    Over the past several years, Chairman Shaw and other Members of the 
Ways and Means Committee have worked tirelessly to improve Social 
Security programs that provide an important safety net for many of our 
nation's neediest disabled and elderly individuals. These changes have 
been designed to ensure that the right benefits go to the right people, 
which should guide all our efforts on behalf of the taxpayers we serve. 
I am pleased that the Social Security Protection Act of 2003 continues 
this important work and builds so effectively on earlier Committee 
action.
    For example, we've made sure that drug addicts and alcoholics are 
no longer eligible for Supplemental Security Income (SSI) cash 
benefits. Also, thanks to changes we have made, thousands of prisoners, 
fugitive felons, and probation and parole violators have been 
disqualified from getting SSI cash benefits that should be reserved for 
those in need. In the process, literally billions of dollars have been 
saved for taxpayers and rightful recipients.
    Through such changes, we have made significant strides in reducing 
fraud and abuse in Social Security and SSI programs. It is noteworthy 
that SSI, which for years suffered from rampant abuse, was recently 
removed from the U.S. General Accounting Office's list of programs at 
high risk for fraud and abuse.
    Still, there is more work to be done. For instance, prisoners, 
fugitive felons, and probation or parole violators still collect Social 
Security benefits and can even act as representative payees for 
disabled individuals, entrusted to handle their cash benefits for them.
    The legislation being discussed today would end these destructive 
practices. In addition, it would make other important changes to 
protect Social Security programs and further prevent fraud and abuse. 
Doing so will save hundreds of millions of dollars more for taxpayers.
    I look forward to continuing to work with Chairman Shaw and the 
Social Security Administration as we look for more ways to stop fraud 
and abuse and further improve the integrity of these important 
programs. The  Social Security Protection Act of 2003 builds on the 
successful reforms we already have made, giving the Social Security 
Administration new tools to more effectively combat fraud and abuse. I 
strongly support this legislation.

                                 

            Statement of Sally Montague, Bridge City, Texas
    Please help to eliminate the GPO/WEP Offset law so that the public 
servants in 15 states can get their OWN Social Security. I have taught 
in the Texas Public Schools for 32 years, but worked for other 
businesses before and after to get more than forty quarters paid into 
SS. The government wants to give me only one-third of my benefits due. 
Being a widowed teacher, I am having to substitute teach in the schools 
to pay bills. My retired teacher friends and I would appreciate it if 
we could just get what we paid into the Social Security System. Please 
help!

                                 

                       National Association of Disability Examiners
                                          Madison, Wisconsin, 53707
                                                     March 11, 2003
The Honorable E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
1102 LHOB
Washington, DC 20515
    Members of the National Association of Disability Examiners (NADE) 
have reviewed with interest the testimony presented at the February 27, 
2003 hearing on H.R. 743, ``The Social Security Protection Act of 
2003''. We would like to offer our support for that legislation.
    NADE strongly supports the provision to amend existing law to 
provide a criminal penalty for corrupt or forcible interference with 
SSA employees acting in their official capacity. We appreciate the 
language in this bill that defines an employee to include state 
Disability Determination Service (DDS) employees, as well as SSA 
employees and contractors. We agree with the Inspector General's 
statement that, ``On a daily basis, SSA employees interact with members 
of the public who are undergoing times of great stress, such as after 
the death or disabling injury of a loved one. This exposes our 
employees to an increased risk of danger.'' This seems to be 
increasingly true and additional tools, such as those provided in H.R. 
743, are needed to protect employees.
    In addition, while we believe that most Representative Payees act 
in the best interest of the beneficiary they serve, additional 
safeguards are needed to protect this most vulnerable population. We 
support those provisions of H.R. 743 which would increase oversight of 
Representative Payees. In order for this oversight to be effectively 
conducted, however, adequate resources must be provided. Periodic 
onsite reviews, for example, can be very effective monitoring tools. 
They are also more labor intensive. As with any legislatively mandated 
initiative, appropriate resources must be allocated to enable SSA to 
conduct these reviews on a timely and ongoing basis.
    Thank you providing this opportunity to comment.
            Sincerely,
                                              Theresa B. Klubertanz
                                                          President

                                 

 Statement of Witold Skwierczynski, American Federation of Government 
 Employees, Social Security General Committee, and National Council of 
         Social Security Administration Field Operations Locals
    Chairman Shaw, Ranking Member Matsui, and members of the Social 
Security Subcommittee, I respectfully submit this statement regarding 
H.R. 743 ``The Social Security Protection Act of 2003''. As a 
representative of AFGE Social Security General Committee and President 
of the National Council of SSA Field Operations Locals, I speak on 
behalf of approximately 50,000 Social Security Administration (SSA) 
employees in over 1300 facilities. These employees work in Field 
Offices, Offices of Hearings & Appeals, Program Service Centers, 
Teleservice Centers, Regional Offices of Quality Assurance, and other 
facilities throughout the country where retirement and disability 
benefit applications and appeal requests are received, processed, and 
reviewed.
Ticket to Work Enhancements (Section 202 and Title IV--Miscellaneous 
        and Technical Amendments; Subtitle A--Relating to Ticket to 
        Work and Work Incentives Improvement Act of 1999)
    As members of this Subcommittee are well aware, Congress 
unanimously passed the Ticket to Work and Work Incentives Improvement 
Act, including Section 121 calling for a corps of accessible and 
responsive trained work incentives specialists within SSA. This 
position is the key to delivering service to the public in the 
beleaguered and complex area of work incentives. The success of TWWIIA 
is dependent on implementation of this legislatively mandated position 
as SSA's corps of trained, accessible and responsive work incentives 
specialists.
    SSA created the Employment Support Representative (ESR) position as 
this work incentives specialist. The pilot of 32 ESRs that tested 
models of how best to service the disabled community concluded in 
August 2001. AFGE has testified on many prior occasions about the 
success of the ESR pilot. AFGE has advocated for the implementation of 
the Employment Support Representative (ESR) in SSA's field offices 
throughout the country since the enactment of TWWIIA. SSA's own pilot 
of the ESR position recommended that ESRs be established, as soon as 
feasible, in every SSA field office. The pilot results concluded that a 
key success factor for the Ticket to Work effort was national 
implementation of the ESR.
    There are numerous undisputed reasons the ESR is a key element of 
enabling beneficiaries to successfully understand and navigate work 
incentives and, consequently, is a key factor in a successful 
transition to work.
    The ESRs were able to develop a single point of contact with 
beneficiaries, monitor their work progress in a timely and supportive 
manner, and process work reports and work-issue Continuing Disability 
Reviews (CDRs) timely. This resulted in reducing large benefit 
overpayments and a reduction in anxiety for the beneficiary. ESRs gave 
examples of customers who, with ESR guidance, were able to reliably 
predict the outcome of their work activity and viewed benefit cessation 
as a mark of achievement.
    The significance of the single point of contact within SSA that the 
ESR provides cannot be overemphasized. Currently, little coordination 
exists in offices between the work incentives in SSI and SSDI. This 
confuses beneficiaries, and often results in discouraging them from 
working, or from not effectively utilizing all available work 
incentives. The ESR is a specialist in both SSDI and SSI work 
incentives, processes trial work periods, completes work issue 
continuing disability reviews, promotes Plans to Achieve Self Support, 
posts wages to SSI records, and explains Medicare and Medicaid 
entitlements. Furthermore, the ESR, as a specialist in work issues for 
both programs, recognizes and develops timely entitlement to SSDI 
benefits on the part of the SSI recipient.
    Many disabled individuals with mental impairments are those who 
would benefit from a return to work program. Work activity is a key 
element in the therapeutic treatment of mental conditions. The nature 
of work activity on the part of these individuals characteristically 
includes frequent work attempts, many different employers, and work 
under special conditions. These beneficiaries especially require the 
consistency and expertise that a single point of contact within SSA 
provides.
    The troublesome treatment in SSA of work reports made by disabled 
beneficiaries is the subject of Section 202 of H.R. 743, requiring SSA 
to provide a receipt each time a beneficiary reports a change in work 
activity. AFGE has previously testified about enormous overpayments 
incurred by beneficiaries, who have timely reported a return to work to 
SSA, yet the Agency failed to process such a report. Consequently, 
beneficiaries are confused about their reporting responsibilities. The 
requirement to issue a receipt amplifies the need to have a dedicated 
person within SSA acting on the reports in a timely and consistent 
manner. The ESR handles work reports effectively and promptly. The ESR 
controls and monitors the case on a continuing basis from the initial 
return to work by the beneficiary.
    Overpayments on backlogged cases can reach hundreds of thousands of 
dollars for an office, and employees have encountered overpayments on 
individual records reaching $100,000! Unfortunately, the Union is 
unaware of any statistical data regarding the numbers of work CDRs 
processed, the number pending, and the cessation rate due to work 
activity. SSA should be required to maintain and produce such data. In 
processing the medical issue CDRs, SSA contends that for every dollar 
spent, seven to twelve dollars in benefits are saved. The cost savings 
are greater for ``work'' CDRs since the cost of medical decision-making 
is eliminated, and the cessation rate on work issues is higher. AFGE 
estimates cost savings approaching $30 to the Trust Fund, for every 
dollar spent. Investing in the ESR position is a perfect example of 
applying stewardship responsibilities effectively and investing 
resources in a high cost-benefit manner. Full ESR implementation should 
have a significantly positive impact on the Trust Fund balance and 
consequently extend the solvency of the Fund.
    Unfortunately, SSA does not plan to implement the ESR position, due 
to shortages of staff and resources in field offices. SSA does not plan 
to ask for additional funding earmarked for ESR implementation. SSA's 
latest alternative strategy is apparently a combination of training all 
employees again on work incentives, providing ``systems enhancements'' 
and designating additional duties called ``Work Incentives Liaison 
(WIL)'' or `` Work Incentives Specialist (WIS)'' as collateral 
functions for existing Claims Representatives, Technical Experts, 
Management Support Specialists, Public Affairs Specialists, and other 
management personnel.
    AFGE conducted a Work Incentives Liaison (WIL) survey in August 
2001. The survey results indicated that most WILs had insufficient time 
to address their duties, that they received inadequate training, and 
were provided with no other workload adjustment to enable them to 
process their additional work incentives assignments. Many employees 
did not know who the WIL was in their offices.
    AFGE conducted an updated WIL survey in January 2003 in order to 
have a current picture of the WIL situation. This was done to assess 
the feasibility of assigning the duties of work incentives specialists 
to a myriad of management and bargaining unit positions.
    Nationally, the survey results were incredibly consistent in all 
the regions. Less than 10% of the WILs reported they spend more than 
25% of their time on WIL duties. Some noted they had spent no time, had 
no WIL duties, and a disturbing number had received no WIL training. 
Sixty percent of the more than 200 respondents said they had received 
no specialized training. Most of the WILs indicated their WIL duties 
basically consisted of serving as a point referral person for office 
staff and outside groups. Outreach functions, such as organizing 
workshops and conferences and coordinating or leading outreach 
activities for beneficiaries, were indicated in one-third of the 
respondents. Many respondents indicated they would like to have the 
opportunity and time to conduct this type of outreach.
    Ninety-six percent of the respondents said they had no workload 
adjustments to accommodate their WIL duties. They expressed 
frustrations with this. The following are representative comments from 
WILs:

            ``The broad possibilities of the WIL are only 
        slightly worked in our office.''
            ``All I do is answer phone calls averaging one 
        every 3-4 months.''
            ``My manager does not expect me to perform all the 
        WIL duties because manpower-wise we cannot afford it.''``I 
        would love to present workshops, but I don't have time.''
            ``I am not given time to research material needed 
        to further my knowledge of WIL duties.''
            ``I do not have the time or the training to 
        adequately perform WIL duties. In essence, I am a figurehead 
        solely for management to say that there is someone with that 
        title.''
            ``No training. No assignments. No idea what duties 
        might be, if any, ever.''

    WILs were asked to provide numbers, if known, of pending work CDR 
cases in their offices. Most were not responsible for processing the 
work CDRs. Many did not know the numbers pending. It appeared the work 
CDRs were disbursed among Claims representatives in many offices. 
Numbers reported varied widely, as high as 200, 350, 400, 600, and 1000 
were reported as pending work CDRs.
    There were some comments from WILs about work CDR cases:

            ``Someone needs to get a clue about how time 
        consuming work CDRs are. Frequent requests for info going back 
        10-15 years.''
            ``Work CDRs are some of the most labor-intensive 
        and technically demanding cases this Agency has. Just think 
        about subsidies, IRWEs, self employment SGA, etc., . . . trying 
        to uphold integrity in rules and regulations while making a 
        fair and timely decision for each claimant.''

    This survey clearly demonstrated that the approach by the agency of 
assigning work incentives duties to many existing positions has 
relegated work incentives to the back burner and not fulfilled the 
legislative mandate requiring trained accessible and responsive work 
incentives specialists within SSA.

    In contrast, following are views submitted by ESRs as to why this 
position is so successful with beneficiaries, your constituents, and 
with organizations:

            ``Congress should be concerned with the person 
        being treated fairly and getting the full benefit of the law, 
        not just how many work CDR's were cleared for an office. Cases 
        laid for 2-3 years and were never worked and then the claimant 
        had a tremendous overpayment to pay back. The whole point in 
        the Ticket legislation calling for this position was to correct 
        what was going on in the offices.''
            ``The other part of our job, which has been the 
        outreach, has been an invaluable service to the public. I have 
        provided training in most offices in my state on the MRTW and 
        Work CDRs. Still, most of the CRs, SRs and even TEs in the 
        field do not know work CDRs. They also were stupefied by the 
        complexity of the MRTW. It's not that they can't learn it, it 
        is that they don't have time for it!''
            ``These relationships, both with the claimants and 
        beneficiaries, and with the community, are essential if we are 
        to be serious in our endeavor to help individuals with 
        disabilities to work. The CRs, though most of them are 
        excellent servers of the public, cannot be dedicated to only 
        the task of work issues. There are just too many other issues 
        to be dealt with. It was necessary to have the ``dedicated'' 
        language in the legislation because an effort like this merited 
        one on one and on going attention. That was the problem with 
        the WILs; they were not dedicated and they could not 
        concentrate on the problem of work issues. This is the reason 
        we have so many overpayments. However, if you dedicate someone 
        to be the point person for these issues, then you curb these 
        negative effects.''
            ``The ESR acts as an ombudsman to the community, 
        resolving public relations problems, solving complex work 
        incentive issues, teaming with community leaders to form best 
        practices in addressing vocational needs in their area, and 
        acts as an expert resource for field office employees. There is 
        no computer program that can ``take over'' for these duties.''
            ``Additionally the outreach fosters better 
        relationships with organizations. This eliminates the fear 
        factor and fosters faster reporting, which also minimizes 
        overpayments. Overpayments are a major disincentive to keeping 
        the disabled in the workforce. When claimants receive an 
        overpayment letter the most likely course of action is for the 
        person to stop working. This is particularly true when the 
        nature of the impairment is mental rather than physical. The 
        added stress of the overpayment very frequently is enough to 
        trigger a relapse.''

    The following are some opinions expressed by disability advocates 
regarding SSA's ESR position:

            ``The ESR position is particularly helpful in 
        concurrent cases. Because (ESR) is knowledgeable in both 
        programs, he can figure out a complex situation or problem and 
        the beneficiary gets immediate resolution.''
            ``With the onset of the Benefits Planning, 
        Assistance and Outreach (BPAO) projects, the need for more ESRs 
        is clear. Our goal is to reach as many SSI recipients and SSDI 
        beneficiaries as possible, and to provide information which 
        will allow them to make an informed choice about employment. 
        Our efforts would be greatly enhanced by the addition of an ESR 
        for every resident.''
            ``Not all disabled are able to work, but for those 
        who can, an ESR should be available in every SSA Office to help 
        eligible individuals through a sometimes intimidating 
        process.''
            ``By giving beneficiaries and benefits planners 
        access to an ESR, the Social Security Administration will 
        improve communication between the local offices and the 
        communities they serve, resulting in better services, fewer 
        overpayments, and more time for beneficiaries with disabilities 
        to experience the joy of working.''

    AFGE believes an Agency decision not to implement the ESR would be 
a tragic mistake when the ESR has proven to be a winner for all 
parties. For SSA, it shows superb service to the public, provides 
stewardship in reducing benefits and overpayments, and results in SSA 
compliance with the legislative mandate for work incentive specialists 
within SSA. For the public, it provides stellar service, a single point 
of contact, and assists beneficiaries in leaving the disability rolls. 
For the taxpayer, it saves money and prolongs Trust Fund solvency.
    In the Union's view, the only way to ensure that Ticket to Work is 
successful is for Congress to mandate the rollout of the ESR position 
and to fully fund the ESR. AFGE has submitted a proposed amendment to 
HR 743, which is attached, that would ensure that the ESR is fully 
funded within SSA. Additionally, legislation should also require SSA to 
report on continuance and cessation rates of work issue CDRs, 
overpayments due to work cessations, and benefits saved the Trust Fund 
by work cessations.
    Thank you for the opportunity to submit this statement.

                                 

              Statement of National Education Association
    On behalf of the National Education Association's (NEA) 2.7 million 
members, we would like to thank you for the opportunity to submit our 
comments onthe Social Security Protection Act (H.R. 743). Our comments 
will focus solely on Section 418 of the Act, which would require a 
public employee to work a minimum of 60-months in a job covered by 
Social Security in order to avoid application of the Government Pension 
Offset (GPO).
    NEA strongly supports complete repeal of the Government Pension 
Offset and the Windfall Elimination Provision (WEP), which unfairly 
reduce the Social Security and Social Security survivor benefits 
certain public employees may receive. We oppose efforts, such as that 
in Section 418 of the proposed Social Security Protection Act, that 
would close the so-called ``loophole'' employed by some public 
employees in order to avoid the devastating impacts of the GPO. 
Instead, we urge the Subcommittee, and the entire Congress, to address 
the underlying problem, by repealing the GPO and WEP. Although Section 
418 attempts only to close the ``loophole'' with respect to the GPO, we 
will address both the GPO and WEP in our testimony.
The Government Pension Offset: Background
    The original Social Security system, established in 1935, excluded 
state and local government employees from coverage. In the 1960s, 
however, state and local employees were given the opportunity to elect 
to participate in the Social Security system. As a result, public 
sector employees in 36 states opted to enroll in Social Security in the 
1960s and 1970s.
    In 1977, Congress enacted legislation requiring a dollar-for-dollar 
reduction of Social Security spousal benefits to public employees and 
retired public employees receiving earned benefits from a federal, 
state, or local retirement system. This offset impacted educators in 15 
states as well as other public servants--including police, 
firefighters, and federal workers across the country.
    In response to significant calls for repeal of this dollar-for-
dollar reduction, Congress and the President agreed in 1983 to limit 
the spousal benefits reduction to two-thirds of a public employee's 
retirement system benefits. This remedial step, however, falls well 
short of addressing the continuing devastating impact of the GPO.
The Windfall Elimination Provision: Background
    The original Social Security formula was intended to help low-paid 
workers by replacing a higher proportion of their earnings than for 
workers with higher earnings. However, the formula could not 
differentiate between those who worked in low-paid jobs throughout 
their careers and those who appeared to have been low paid because they 
worked many years in jobs not covered by Social Security. Congress 
enacted the WEP in 1983, intending to remove this advantage. Yet, 
instead of protecting low-earning retirees, the WEP has unfairly 
impacted lower-paid retirees such as educators.
The Impact of the GPO on Public Employees
    The GPO penalizes individuals who have dedicated their lives to 
public service, often at substantial financial sacrifice. Nationwide, 
more than one-third of teachers and education employees, and more than 
one-fifth of other public employees, are not covered by Social 
Security, and are, therefore, subject to the Government Pension Offset. 
These individuals lose benefits earned by their spouses--benefits they 
counted on in planning their retirement.
    The Government Pension Offset (GPO) reduces public employees' 
Social Security spousal or survivor benefits by two-thirds of their 
public pension. Estimates indicate that 9 out of 10 public employees 
affected by the GPO lose their entire spousal benefit, even though 
their deceased spouse paid Social Security taxes for many years. 
Moreover, these estimates do not include those public employees or 
retirees who never applied for spousal benefits because they were 
informed they were ineligible. The offset has the harshest impact on 
those who can least afford the loss: lower-income women. Ironically, 
those impacted have less money to spend in their local economy, and 
sometimes have to turn to expensive government programs like food 
stamps to make ends meet.
    For example:

            Stella, and NEA member, worked for over 20 years in 
        the Colorado public school system as a teacher's aide. She 
        receives a monthly pension of $637. Her husband worked in the 
        private sector, paying into Social Security for 50 years. After 
        her husband's death, Stella expected to receive $520 a month in 
        survivor benefits. However, the GPO reduced Stella's survivor 
        benefits by \2/3\ of her public pension. As a result, Stella 
        only receives $96 a month in Social Security. Her total monthly 
        income is $733, instead of the $1157 she would have gotten if 
        not for the GPO.
            NEA member Martha began working as a teacher in 
        Texas in 1978. Martha's husband worked in the private sector 
        and paid into Social Security. Based on his earnings, Martha 
        should have been eligible for $970 in widow's benefits. 
        However, Martha has also been told that, should she outlive her 
        spouse, her widow's benefits would be reduced by \2/3\ of her 
        public pension, or by $949 a month. Therefore, her $970 benefit 
        would be reduced to only $21 a month.
The Impact of the WEP on Public Employees
    The Windfall Elimination Provision (WEP) reduces the earned Social 
Security benefits of an individual who also receives a public pension 
from a job not covered by Social Security. While the amount of 
reduction depends on when the person retires and how many years of 
earnings he or she has accumulated, many public employees can lose up 
to 60 percent of the Social Security benefits they earned in other 
jobs.

            Debbie, an NEA member in Georgia, worked for 
        several years in the private sector and then for 14 years as a 
        school bus driver. She expected to receive a monthly Social 
        Security benefit of $600. However, Debbie's actual Social 
        Security benefit is only $61 a month because of the WEP--a loss 
        of over $500. Debbie fears having to turn to food stamps and 
        other government programs to survive.
            NEA member Bob worked for many years in Oklahoma in 
        jobs covered by Social Security before moving to California and 
        becoming a teacher. He was informed by the Social Security 
        Administration that he would receive approximately $360 a month 
        based on his earlier earnings in the private sector. However, 
        when he retired, Bob discovered his Social Security benefit was 
        reduced to $172 a month because of the WEP. Bob calculates he 
        loses $2196 a year, because of the WEP and has already lost 
        nearly $11,000 in total.
The National Impact of the GPO and WEP
    The GPO and WEP have an impact far beyond those states in which 
public employees like educators are not covered by Social Security. 
Because people move from state to state, there are affected individuals 
everywhere. The number of people impacted across the country is growing 
every day as more and more people reach retirement age.
    Perhaps most alarming, the GPO and WEP are impacting the 
recruitment of quality teachers to meet urgent national shortages. 
Record enrollments in public schools and the projected retirements of 
thousands of veteran teachers are driving an urgent need for teacher 
recruitment. Estimates for the number of new teachers needed range from 
2.2 to 2.7 million by 2009.
    At the same time that policymakers are encouraging experienced 
people to change careers and enter the teaching profession, individuals 
who have worked in other careers are less likely to want to become 
teachers if doing so will mean a loss of Social Security benefits they 
have earned. Some states seeking to entice retired teachers to return 
to the classroom have found them reluctant to return to teaching 
because of the impact of the GPO and WEP. In addition, currentteachers 
are increasingly likely to leave the profession to reduce the penalty 
they will incur upon retirement, and students are likely to choose 
other course of study and avoid the teaching profession.
    The GPO and WEP also impact other critical public services fields, 
including police and firefighters. Our nation can ill-afford to allow 
the very real fear of poverty in retirement to force talented, 
dedicated individuals out of these professions.
The So-Called ``Loophole''
    Educators in some states have sought to avoid the unfair and often 
devastating impacts of the GPO and WEP by transferring from non-Social 
Security school districts to school districts in which educators are 
covered by Social Security. By retiring from a Social Security 
district, these educators are then able to collect the Social Security 
benefits they or their spouse have earned.
    The rationale behind these educators' actions is clear and 
understandable. Educators who have served in the public schools their 
whole lives, and who have counted on spousal benefits when planning 
their retirement, are often shocked and frightened to learn these 
benefits will not be there for them. Similarly, educators who paid into 
Social Security in previous careers are also surprised to learn that 
they cannot collect from the system they spent years paying into. 
Individuals facing retirement on substantially less income than they 
anticipated cannot be faulted for attempting to salvage their 
retirement benefits.
    Given the reality of the impact of the GPO and WEP on public 
employees, it is clear that the underlying GPO and WEP, not the 
``loophole,'' must be fixed.
Recommendations
    NEA urges Congress to respect, not penalize, public service. We 
urge you to delete Section 418 of the proposed legislation as you move 
the rest of the bill forward. Instead of working to close a 
``loophole'' that allows dedicated educators to avoid the harsh impacts 
of the GPO, Congress should focus its efforts on addressing the 
underlying problem.
    Representatives McKeon (R-CA) and Berman (D-CA) have introduced the 
Social Security Fairness Act of 2003 (H.R. 594). This bipartisan 
legislation, which already has over 100 cosponsors, would eliminate the 
GPO and WEP, thereby allowing public employees, like all other 
employees, to collect the benefits they earned and need. The McKeon-
Berman legislation garnered the bipartisan support of over 180 Members 
of Congress last year.
    NEA urges the Subcommittee, and the entire House of 
Representatives, to take immediate steps toward passage of the McKeon-
Berman bill. Passage of this legislation would restore equity to public 
employees, would prevent public servants from facing poverty in 
retirement, and would eliminate the need for the so-called ``loophole'' 
addressed by Section 418 of the legislation before the Subcommittee 
today.
    We thank you for your consideration of these comments.

                                 

 Statement of Gerald A. McIntyre, National Senior Citizens Law Center, 
                        Los Angeles, California
    In over thirty years of advocacy on behalf of America's low income 
elders and people with disabilities, the National Senior Citizens Law 
Center (NSCLC) has long recognized the pivotal role played by Social 
Security and SSI in enabling older Americans to live independently with 
a modicum of dignity. We are concerned that Sec. 203(a)(4) of the bill 
expands a significant hole in the Social Security and SSI safety net 
and, for that reason, must oppose passage of the bill as currently 
written.
    We recognize that the bill contains provisions which are beneficial 
to America's elders and people with disabilities. In particular, we 
applaud the inclusion of the provisions of Title I of the bill, 
designed to protect vulnerable beneficiaries from misuse of funds by 
representative payees. However, the benefits of Title I will be 
significantly outweighed by the harm which will ensue from 
Sec. 203(a)(4) of the bill which will extend to Title II, the 
restriction on receipt of benefits for those who are ``fleeing to avoid 
prosecution, or custody or confinement . . . for . . . a felony'' and 
those who are ``violating a condition of probation or parole.'' If the 
experience of the last couple of years with the parallel provision in 
SSI, 42 U.S.C. Sec. 1382(e)(4), is any guide, this provision is likely 
to result in the loss of benefits for hundreds of thousands of the most 
vulnerable beneficiaries and will serve no useful law enforcement 
purpose.
    NSCLC has no quarrel with Sec. 203(a)(5) of the bill, which 
authorizes the Commissioner, with appropriate safeguards, to release 
information to law enforcement authorities with respect to the address, 
Social Security number and photograph of individual beneficiaries. We 
agree that someone who has been accused of a crime should not be able 
to hide under the confidentiality provisions of the Social Security Act 
to elude law enforcement. It is the analogous provision for reporting 
to law enforcement agencies which is responsible for virtually all of 
the apprehensions reported in the SSI program, not the provision which 
renders individuals ineligible for benefits.
    Section 203(a)(4) will penalize only those individuals law 
enforcement agencies have decided not to pursue. It is important to 
recognize that the Social Security Administration (SSA), in its 
implementation of the parallel provision governing SSI benefits, does 
not even notify the SSI recipient that benefits will be suspended until 
after it has notified the appropriate law enforcement agency of the 
individual's whereabouts and given the law enforcement agency ample 
opportunity (60 days) to take the individual into 
custody.[1] Thus, it is only those who law enforcement has 
chosen not to pursue, for whatever reason, who will be penalized. 
Ironically, those who law enforcement decides to apprehend and who 
presumably are wanted for more serious offenses will not be subject to 
the loss of benefits by this bill because they will either 1) be 
incarcerated and thus not eligible for benefits under 42 U.S.C. 
Sec. 402(x) or 2) they will be released on bail or on their own 
recognizance and will then be eligible for full benefits because the 
warrant will have been vacated. Thus, only those whose offenses are too 
minor or too remote in time are likely to suffer the loss of benefits. 
This is borne out by the requests for assistance on this issue that 
NSCLC has received and by the Los Angeles County Public Defender in 
responding to requests from SSI recipients who had lost their benefits. 
In an informal survey done in one office of the Los Angeles County 
Public Defender last year of individuals who contacted them because 
they had lost their SSI benefits as a result of 42 U.S.C. 
Sec. 1382(e)(4), 40 of 61 warrants were more than ten years old and a 
majority of the defendants had been diagnosed with either a serious 
mental illness or cognitive impairment. In one case the warrant was 38 
years old and in another the SSI recipient was 91 years old. 
Fortunately, the experience of the Los Angeles County Public Defender 
is that they are able to get most of these warrants vacated, and 
benefits are thus presumably restored, although after a significant 
period of deprivation. Unfortunately, in other jurisdictions it is 
often more difficult for an individual to obtain assistance in getting 
the warrant vacated. Since most of the cases involve warrants from a 
state other than the one in which the individual resides,[2] 
it is close to impossible for an individual of limited means to return 
to the jurisdiction from which the warrant was issued and remain there 
until the matter is disposed of.
---------------------------------------------------------------------------
    \[1]\ GAO (U.S. General Accounting Office), GAO-02-716, Welfare 
Reform: Implementation of Fugitive Felon Provisions Should Be 
Strengthened 35, Figure 2: SSA's Process for Identifying and 
Terminating SSI Benefits to Fugitive Felons and Providing Information 
about Them to Law Enforcement Agencies.
    \[2]\ SSA., Office of Inspector Gen., Audit Report A-01-98-61013, 
Identification of Fugitives Receiving Supplemental Security Income 
Payments 10 (2000).
---------------------------------------------------------------------------
    While the number of people affected by the SSI ``fugitive'' 
provision was relatively small in the first several years of the 
statute, the number of people losing benefits in the last couple of 
years has increased dramatically. More SSI recipients lost their 
benefits because of this provision in FY 2001 than in the previous 4 
years combined.[3] By September 30, 2001, SSA reports that 
45,071 people had been determined ineligible as ``fugitive 
felons.''[4] By June 30, 2002, SSA reports that the number 
had increased to 77,933, an increase of 32,862 over a nine month 
period.[5] At this pace, the number of individuals who have 
lost SSI benefits is certainly over 100,000 by now. Extension of this 
penalty provision to the much larger Title II program would be sure to 
impact a far greater number of older Americans and people with 
disabilities. The number of vulnerable individuals who will be 
subjected to needless deprivation by Sec. 203(a)(4) of this bill will 
far exceed the number who will be saved from loss of benefits by the 
representative payee provisions of Title I of the bill.
---------------------------------------------------------------------------
    \[3]\ GAO-02-716, supra, 15, Table 3.
    \[4]\ Id.
    \[5]\ SSA, Office of Inspector Gen., Fact Sheet, Fugitive Felon 
Program (June, 2002), available at www.ssa.gov/oig/
executive-operations/factsheet3.htm.
---------------------------------------------------------------------------
    We strongly believe that Sec. 203(a)(4) serves no useful purpose 
and should be deleted from the bill because of the significant harm it 
will bring to some of our most vulnerable citizens. However, if this is 
not possible, consideration should be given to ameliorating some of its 
harsher effects. One way to limit the harm done by the statute would be 
to limit the sanction to situations where the underlying offense is a 
crime of violence. An additional possibility might be to not apply the 
sanction if the warrant is more than five years old since a successful 
prosecution is much less likely in such situations. Also, it is often 
more difficult to obtain access to older police and court records since 
they are likely to be archived. Another option might be to restrict the 
application of the statute to probation or parole violators to those 
instances in which the underlying offense is a felony.
    Finally, it is worth noting that one area in which more problems 
might be expected when the ``fugitive'' provisions are extended to 
Title II, is cases of mistaken identity. A small number of such cases 
have been brought to our attention in the context of SSI. However, 
cases of mistaken identity are likely to be much more common among 
Title II beneficiaries because of the increasing prevalence of identity 
theft. This is likely to have a greater impact on those receiving 
retirement benefits since, by and large, they are a more attractive 
group of victims for this particular type of crime since they are 
likely to have better credit ratings than most SSI recipients.
    In sum, we believe that Sec. 203(a)(4) is by far the most important 
part of this bill. It is the one section that will have the most far 
reaching impact on America's most vulnerable elders and people with 
disabilities. It should be deleted from the bill. If this provision 
remains in the bill, the bill should not be enacted into law.
    We are attaching as an Appendix to this statement, a few sample 
cases to demonstrate how the analogous ``fugitive'' provision in the 
SSI program affects SSI recipients.
                                 ______
                                 
                                APPENDIX
                      ``FUGITIVE FELON'' EXAMPLES
          1.  Flight to a Nursing Home--In April, 1978, J.B. of Macon, 
        Georgia, was sent to Seattle, WA as part of his job as a 
        telephone installer/repairer. After he settled into his motel 
        his employer notified him that the job fell through and that he 
        would not receive the advance pay he had been told he would 
        receive. He had no money to pay the motel bill and the 
        innkeeper seized all his belongings when he left to go to his 
        next assignment in Portland, OR. As far as he was concerned, 
        that was the end of the unpleasant episode. What he did not 
        realize was that in August, 1978, long after he left Seattle, 
        the motel owner filed criminal charges for fraud against an 
        innkeeper for his failure to pay the bill and that in August, 
        1978 a Seattle Justice Court issued a warrant for his failure 
        to appear on the charge. He was not aware of the warrant or the 
        criminal charges filed against him until October, 2001, by 
        which time he was residing in a nursing home. At that time, 
        both his SSI and Social Security[6] benefits were 
        terminated because he was allegedly fleeing to avoid 
        prosecution. He was also sent an overpayment notice for all 
        benefits received since October, 1998. In January, 2002, he 
        obtained representation from a legal services office, which, in 
        turn, contacted the Office of the King County Public Defender. 
        The public defender brought the matter to the attention of the 
        court in Seattle, which then dismissed the charges in February, 
        2002. SSA then agreed to restore benefits prospectively, but 
        refused to concede entitlement to benefits for the period 
        before dismissal of the charges and continued to pursue the 
        overpayment. In September, 2002, an ALJ reversed the 
        determination finding that J.B. was not notified of the 
        criminal case and found there was justification for his conduct 
        in leaving Washington.
---------------------------------------------------------------------------
    \[6]\ Title II benefits are not covered by the current fugitive 
felon provisions and those benefits were soon restored after a legal 
services office in Georgia intervened.
---------------------------------------------------------------------------
          2.  Flight to Care for an Ailing Grandfather--M.G. of 
        Richmond, CA is a California native who receives SSI on the 
        basis of the combined effects of a developmental disability and 
        mental illness. In 1981, at age 14 she moved to Virginia with 
        her mother who was transferred there by the U.S. Navy. She 
        remained there until June, 1990 when she moved back to 
        California with her mother who needed to return to care for 
        M.G.'s ailing 86 year old grandfather, whose wife had just 
        died. However, in May, 1990, before she left Virginia, she was 
        charged with unauthorized use of a motor vehicle. After her 
        arrest, there was a fire in the courthouse resulting in the 
        courthouse being closed because of asbestos contamination on 
        the day later in May when she was scheduled to appear. She then 
        moved to California in June and states that she did not receive 
        notice of a new court date. In December, 2001 she was notified 
        that her benefits would be terminated. She requested 
        reconsideration by means of a formal conference at which she 
        would be able to present witnesses, cross-examine adverse 
        witnesses and see any documentary evidence the agency has. 
        However, she was denied her right to a conference. Instead SSA 
        just sent her a Notice of Reconsideration affirming the 
        original decision without stating any reasons. Her benefits 
        were then discontinued in February, 2002. On April 26, 2002 an 
        ALJ reversed the agency's decision to terminate benefits, 
        stating that he found the facts in her case to be 
        ``compelling'' and noting that she had a reason for returning 
        to California and was now experiencing ``considerable 
        hardship.'' Nevertheless the Appeals Council took the case on 
        own motion review and in July, 2002 reversed the ALJ decision. 
        The Appeals Council cited undisclosed ``Social Security 
        Administration guidelines'' for the proposition that whenever 
        there is an active felony warrant, ``the claimant is assumed to 
        be a fugitive felon.'' M.G. has now been without benefits for a 
        full year and has had to rely on the kindness of members of her 
        church. She has appealed her case to the U.S. District Court, 
        but a determination is not likely before summer. M.G. has no 
        money to be able to return to Virginia to defend the charges.
          3.  Mistaken Identity--J.G. is a severely ill AIDS patient in 
        San Diego, CA who is unable to leave his home because of severe 
        respiratory problems. He has an extremely common name which 
        also happens to be the name of a serial offender in Los Angeles 
        who was born on the same day he was. J.G. is a Mexican 
        immigrant who has never had criminal charges filed against him 
        either in Mexico or in the United States. He has also never 
        been to Los Angeles which is where all the offenses have 
        occurred. When his benefits were terminated, it was ascertained 
        that all of the offenses were alleged to have taken place in 
        Los Angeles and that the defendant, while having the same name 
        and birth date, had a different Social Security number. 
        Nevertheless, he was told that the warrant would have to be 
        satisfied for benefits to be restored. Fortunately for him, the 
        police in Los Angeles did catch up with the other J.G. and put 
        him behind bars for a period, thus causing the warrant to be 
        recalled. SSA then restored benefits to J.G. in San Diego. 
        However, J.G. in Los Angeles is apparently on the loose again 
        and J.G.'s benefits in San Diego have once again been 
        terminated.
          4.  Mistaken Identity--G.A., a Mexican-American woman from 
        California, had her SSI benefits terminated based on a warrant 
        from Massachusetts although she had never been to the East 
        Coast. With the assistance of a public defender working with a 
        legal services lawyer in California, benefits were restored 
        when it was established that the defendant in Massachusetts, 
        who had the same name, was Puerto Rican and was in fact a 
        different woman.
          5.  Shoplifting--J.G., a Connecticut resident, returned to 
        his native Georgia for his mother's funeral over ten years ago. 
        At the time he was drug addict and his life was a shambles. He 
        had no money and nothing to eat. He was charged with 
        shoplifting. However, he was unable to stay to respond to the 
        charges because he had no place to stay and no money to live 
        on. Instead he returned to Connecticut. In the intervening 
        decade he has become a different person and has kicked his drug 
        habit. However, he has AIDS and is unable to work and was 
        receiving SSI because of his AIDS diagnosis. His SSI benefits 
        were terminated last year because of the pending Georgia 
        warrant. He is waiting for an ALJ hearing and still has no 
        benefits. He is financially unable to return to Georgia to 
        defend the charges.
          6.  Hazy Memories of a Visit to New York--L.G. is a Texas 
        resident who had her benefits terminated in early 2002 based on 
        a warrant from New York City. She clearly recalled visiting New 
        York over twenty years ago but her serious mental limitations 
        made her a very poor historian and she was unable to recall 
        anything about the alleged incident. However, a dogged pro bono 
        attorney in a law firm in Houston enlisted the assistance of a 
        Legal Aid Society lawyer in New York and they discovered that 
        the underlying charge from over twenty years ago was for fourth 
        degree larceny involving an undisclosed item valued at $7.00 
        and that the charge was not a felony. Thus it clearly does not 
        fall within the purview of the statute. However, that did not 
        end the matter. The attorney representing L.G. reports that it 
        took over a month of persistent haggling to finally restore 
        benefits in November, 2002.

               Many attorneys and other advocates report similar 
        experiences with clients whose severe impairments prevent them 
        from providing an adequate account of the circumstances 
        surrounding the warrant.

          7.  No knowledge of charges--C.C. is a Cambodian refugee who 
        arrived in the United States in 1981 and settled in Allston, 
        Massachusetts. He remained there until 1985 when he and his 
        family moved to San Francisco. Their departure 18 years ago was 
        a case of flight to escape the cold winters of the Northeast. 
        He began receiving SSI in 1989 and now resides in Antioch, CA, 
        outside of San Francisco. He was unaware of any criminal 
        charges until he received a notice dated June 26, 2002 telling 
        him his benefits would be terminated because he was a fugitive 
        felon. Benefits were terminated on July 1 without any 
        opportunity for reconsideration.

               With the assistance of both a public defender and a 
        legal services lawyer in Massachusetts, documentation was 
        obtained from the Brighton Municipal Court where the charges 
        were filed. The court records show that the charges were for 
        welfare fraud and were filed on September 1, 1988, three years 
        after C.C. left Massachusetts. The reason given for issuance of 
        the warrant was that the prosecutor had indicated that the 
        defendant ``may not appear unless arrested.''
               C.C. requested reconsideration of SSA's decision in 
        July. SSA promptly responded with a notice stating ``we are not 
        reconsidering your claim since the principal issue is that we 
        received an Office of Investigations notification that you are 
        a fugitive felon.'' The notice goes no to state ``you will need 
        to clear up this warrant before SSI benefits are reinstated.'' 
        He has had no benefits since June of last year and has no funds 
        to return to Massachusetts to respond to the charges. He is 
        currently awaiting an ALJ hearing.

          8.  No criminal charges--C.B. is a Los Angeles resident who 
        lost his SSI benefits because he is alleged to be a ``fugitive 
        felon'' on the basis of a warrant in a child support case in 
        Chicopee, Massachusetts. Since child support proceedings are 
        not criminal proceedings, they clearly do not fall within the 
        statute and the matter should be resolved.
          9.  Contract dispute--J.G. is a 69 year old man currently 
        residing in California who lost his SSI benefits in September, 
        2001 because he was determined to be a fugitive felon. He had 
        been receiving benefits on the basis of disability since 1996. 
        He lived in Nebraska in 1992 and that year entered into a 
        contract to do some carpentry work for which he was given a 
        $2,000 advance. In the fall of that same year he moved to 
        Colorado prior to completing the work. However, before he left 
        Nebraska, he met with the property owner and a friend of his 
        who agreed to complete the work. The three of them agreed to 
        the terms and he paid the friend the $2,000 advance and left 
        for Colorado. In May, 1997 the owner of the property wrote to 
        him in Colorado alleging that the work was never completed and 
        that J.G. owed him $2,000. J.G. agreed to pay $75 per month 
        with the understanding that criminal charges would not be 
        filed. He was only able to continue this for a few months on 
        his limited SSI income. It was only when his SSI benefits were 
        stopped in 2001 that he learned that criminal charges that had 
        been filed against him in Nebraska on Dec. 29, 1993, more than 
        a year after he left the state.

               After spending a year without SSI benefits, J.G. 
        received an ALJ decision restoring his benefits in September, 
        2002. The ALJ noted that J.G. was unaware of the criminal 
        charges, that the County Attorney's office in Nebraska had 
        declined extradition and that J.G. could not afford to travel 
        to Nebraska to defend the charges.

         10.  Flight to a Nursing Home--L.B. has had three heart 
        attacks and is another nursing home resident in Macon, Georgia. 
        She was threatened with termination of benefits in July, 2001 
        for failure to appear on a charge of filing a false instrument 
        in Elmira, NY that dated to 1979. Prompt coordinated action by 
        a legal services lawyer in Georgia, and the public defender and 
        the District Attorney in Elmira resulted in a judge promptly 
        dismissing the charges in the interests of justice in August, 
        2001 and benefits continuing.
         11.  Flight to a Nursing Home--In yet another case of flight 
        to a nursing home, also in Macon, Georgia, M.F. had been 
        accused of fleeing to avoid prosecution for an eleven year old 
        burglary charge in Texas. A legal services advocate in Georgia 
        obtained verification that the charges in Texas had been 
        dismissed and benefits were promptly restored.

                                 

             Statement of Barbara Padgett, Iowa Park, Texas
    As a public school teacher in Texas, I am distraught that your 
committee continues to ignore the many thousands of Federal, State and 
local government workers such as myself in our plea to repeal the 
Government Pension Offset provision of Social Security law. I find it 
even more disturbing that you will soon further try close any 
possibility of myself and many of my fellow Texas teachers of being 
able to receive spousal S.S. because of the offset penalty. Your 
provision to lengthen the time of working for a system that pays Social 
Security to at least 5 years is a very unfair, discriminatory proposal. 
It would be unfair to change S.S. law now because it would single out 
teachers such as myself who are retiring and prevent us from receiving 
the same benefits that are now being enjoyed by those who who have 
preceded us in retirement. I am not asking for full benefits that are 
received by those who have worked in professions where social security 
was paid. I do however feel that I should be able to receive spousal 
S.S. benefits based on my husbands S.S. benefits. Why should I be 
denied benefits solely because I chose to be productive and work 
outside the home when a spouse who never worked in a paying job will be 
able to receive spousal and widows benefits without any penalty 
whatsoever? Sure, I will have some retirement benefits based on my 
years of teaching, but it will scarcely be enough to meet my basic 
needs in my retirement years. In the event of my husbands death I will 
be living in poverty since I will have NO S.S. benefits to assist me in 
my basic needs. I plead that you amend H.R. 743 to exclude Section 418. 
I further ask that you as members of Congress, that you lend your 
wholehearted support to H.R. 594 and S 349 which both seek to repeal 
the offset provisions in Social Security law that reduces and in most 
cases eliminate Social Security benefits for thousands of teachers and 
other government employees. Think about the phrase'' Teaching is the 
profession that teaches all other professions.'' As you weigh your 
decisions think about all the dedicated teachers who helped to mold and 
to encourage you to be what you are today. Is this the way that you 
want to penalize these dedicated individuals by denying them benefits 
that others now enjoy? I think not!! Just examine your heart and 
conscience and I know you will undo this gross injustice. Thank you.

                                 

 Statement of Joan Rutkoski, Jane Sweeney, and Ruth Wise, San Antonio, 
                                 Texas
    We are sending an appeal to you on behalf of all educator--the 
majority of which have held down full teaching positions, dedicating 
themselves to the betterment of our youth and therefore our nation. At 
the same time, they have both supported and helped their spouses to 
achieve success in their chosen fields. Yet, these educators will not 
qualify for social security based on spousal benefits.
    This is just another slap in the face for those of us who have 
dedicated our lives to helping America's children reach their 
potential. We beseech you to either eliminate the social security 
windfall provision totally for educators or allow the loop hole to 
remain in place. The loop hole would at least allow those who are 
eligible for benefits to find alternate employment with a district 
paying social security at the end of their career.
    You know, this nation is supported by us, the working class. We 
raise our families, support our Presidents, send our children to war, 
pay our taxes--Do you not think it is time to give us some support. In 
our cases, as I am sure is the case of other educators, the windfall 
provision will make a difference of approximately $1,000. in retirement 
income. We listen daily to talk shows that condom our educators and 
educational system, yet arrive each morning at 7:30 to tutor, often 
here till 5:00. It is provisions like the Windfall that continue to 
demoralize good and caring teachers and will do nothing but cause 
future competent teachers to think twice about this profession.
    If we can be of any assistance to you or answer any questions, 
please contact us through e-mail or at Madison High School, San 
Antonio, Texas. We thank you for the opportunity to voice our concerns.

                                 

               Statement of Lynne Walters, Auburn, Maine
    As a soon-to-be retired teacher and recent widow, I implore you to 
do everything you can to eliminate the WEP and the GPO! Teachers and 
other public employees in a number of states are hurt badly by the 
current laws regarding the offsets.
    These offsets hurt me in several ways. As a retiree, my earnings 
under Social Security would be offset and thus, substantially reduced 
by more than half. As a widow, I will be entitled to ZERO benefits 
based on my pension from the state. We have always heard from the 
government that Social Security, a pension plan, and savings should all 
be counted on for retirement. Now, one of those basic pieces has been 
eliminated. A large portion of the people who are hurt are widows like 
myself.
    There are other problems and questions: How about teachers and 
other public workers in the affected states who work at a second job? 
They are paying into Social Security with every check, but will never 
get in retirement what workers in the other states will receive. How 
about people who change to teaching, for example, in mid-career? If 
they work in an affected state, they will lose much of their Social 
Security for themselves as well as their spouses. (Laura Bush has made 
a concerted effort to encourage career changes in order to get many 
more teachers, yet they will lose a great deal financially.) How about 
people who live in other than the 15 states, but work in an affected 
state? These offsets affect many, many people.
    I have heard the phrase ``double-dipping'' when referring to the 
affected people. There are people who have been in the military, had 
second and even third careers, receive pensions for all, plus full 
Social Security. Friends and family in PA (where I used to work) 
collect from both Pennsylvania State Retirement System and Social 
Security and receive full benefits from each.
    The offsets are an insult to people who have worked hard all of 
their lives in public service. We have had low-paying jobs, and since 
our salaries determine the amount of our pension, we therefore have low 
pensions. Then we are penalized in our Social Security benefits.
    Please support Senate Bill 349 which would repeal the offsets. 
Please also help convince other members of Congress how important this 
bill is and what it will mean for senior citizens throughout the 
country who have spent their careers working in the public sector.
    Thank you.

                                 

          Statement of Stephen Zwirn, Fort Lauderdale, Florida
    My name is Stephen Zwirn, a vendor under the name of the Work 
Search Organization, Coconut Creek, Florida, under contract with the 
Social Security Ticket to Work program, assisting disabled Floridian's 
return to work.
    I write in support of this legislation, and ask the Sub Committee 
to pass this important piece of legislation on behalf of many disabled 
beneficiaries who want to work.
    An important component to HR 743 in my view is the provision to 
allow tax credits to qualify employers who hire a disabled beneficiary 
under the provisions of the Ticket legislation.
    In addition, I am a member of U.S. Chamber of Commerce and member 
in the national organization Society for Human Resource Management, and 
wish to state for the record, tax credits for businesses are highly 
relevant.
    This provision in the proposed bill, will give individual 
Employment Networks the opportunity to issue the tax credits directly. 
This will allow greater flexibility in the issuance of the tax credit 
and allow many employers to deal directly with Employment Networks 
without having to go through a State or other bureaucratic agency, thus 
reducing the costs, with greater efficiency.
    Thus, to re-state, as a Florida Employment Network, alongside other 
Florida Employment Networks, asking to support this legislation.

                                
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