SSA administers three major federal programs. OASI and DI, together commonly known as Social Security, provide benefits to retired and disabled workers and their dependents and survivors. In fiscal year 2001, SSA provided OASI retirement benefits totaling more than $369 billion to over 38 million individuals and DI benefits of more than $59 billion to 6.8 million individuals. These benefits are paid from trust funds that are financed through payroll taxes paid by workers and their employers and by the self-employed. The third program, SSI, provides income for aged, blind, or disabled individuals with limited income and resources. In fiscal year 2001, 6.7 million individuals received almost $28 billion in SSI benefits. SSI payments are financed from general tax revenues. To administer these programs, SSA must perform certain essential tasks. It must issue SSNs to individuals, maintain earnings records for individual workers by collecting wage reports from employers, use these records and other information to determine the amount of benefits an applicant may receive, and process benefit claims for all three programs. To meet its customer service responsibilities, SSA operates a vast network of offices distributed throughout the country. These offices include approximately 1,300 field offices, which, among other things, take applications for benefits; 138 Offices of Hearings and Appeals; and 36 teleservice centers responsible for SSA’s national 800 number operations.The agency’s policy is to provide customers with a choice in how they conduct business with SSA. Options include visiting or calling a field office, calling SSA’s toll-free number, or contacting SSA through the mail or the Internet. To conduct its work, SSA employs almost 62,000 staff. In addition, to make initial and ongoing disability determinations, SSA contracts with 54 state disability determination service (DDS) agencies under authority of the Social Security Act. Although federally funded and guided by SSA in their decision making, these agencies hire their own staff and retain a degree of independence in how they manage their offices and conduct disability determinations. Overall, SSA relies extensively on information technology to support its large volumes of programmatic and administrative work. The process for obtaining SSA disability benefits under either DI or SSI is complex, and multiple organizations are involved in determining whether a claimant is eligible for benefits. As shown in figure 1, the current process consists of an initial decision and as many as three levels of administrative appeals if the claimant is dissatisfied with SSA’s decision. Each level of appeal involves multistep procedures for evidence collection, review, and decision making. Generally, a claimant applies for disability benefits at one of SSA’s 1,300 field offices across the country. If the claimant meets certain nonmedical program eligibility criteria, the field office staff forward the claim to the DDS. DDS staff then obtain medical evidence about the claimant’s impairment and determine whether the claimant is disabled. Claimants who are initially denied benefits can appeal by requesting the DDS to reconsider its initial denial. If the decision at the reconsideration level remains unfavorable, the claimant can request a hearing before a federal administrative law judge at an SSA hearings office and, if still dissatisfied, a review by SSA’s appeals council. After exhausting these administrative remedies, the individual may file a complaint in federal district court. The agency’s ability to continue providing Social Security benefits over the long term is strained by profound demographic changes. The baby boom generation is nearing retirement age. In addition, life expectancy has increased continually since the 1930s, and further increases are expected. This increase in life expectancy, combined with falling fertility rates, mean that fewer workers will be contributing to Social Security for each aged, disabled, dependent, or surviving beneficiary. Beginning in 2017, Social Security’s expenditures are expected to exceed its tax income. By 2041, without corrective action, experts expect the combined OASI and DI trust funds to be depleted, leaving insufficient funds to pay the current level of benefits. Unless actions are taken to reform the social security system, the nation will face continuing difficulties in financing social security benefits in the long term. Over the past few years, a wide array of proposals has been put forth to restore Social Security’s long-term solvency, and in December 2001, a commission appointed by the president presented three alternative proposals for reform. This solvency problem is part of a larger and significant fiscal and economic challenge facing our aging society. The expected growth in the Social Security program (OASI and DI), combined with even faster expected growth in Medicare and Medicaid, will become increasingly unsustainable over time, compounding an ongoing decline in budget flexibility. Absent changes in the structure of Social Security and Medicare, there would be virtually no room for any other budget priorities in future decades. Ultimately, restoring our long-term fiscal flexibility will involve reforming existing federal entitlement programs and promoting the saving and investment necessary for robust long-term economic growth. The disability determination process is time-consuming, complex, and expensive. Individuals who are initially denied benefits by SSA and appeal their claim experience lengthy waits for a final decision on their eligibility, and questions have been raised about the quality and consistency of certain disability decisions. Since 1994, SSA has introduced a wide range of initiatives intended to address long-standing problems with its disability claims process. However, the agency’s efforts, in general, have not achieved the intended result, and the problems persist. Because SSA’s DI and SSI programs are expected to grow significantly over the next decade, improving the disability determination process remains one of SSA’s most pressing and difficult challenges requiring immediate and sustained attention from the new commissioner. Additionally, in redesigning its disability decision-making process, SSA still needs to incorporate into its eligibility assessment process an evaluation of what is needed for an individual to return to work. We have recommended developing a comprehensive return-to-work strategy that focuses on identifying and enhancing the work capacities of applicants and beneficiaries. SSA’s complex disability claims process has been plagued by a number of long-standing weaknesses that have resulted in lengthy waiting periods for claimants seeking disability benefits. For example, claimants who wish to appeal an initial denial of benefits frequently wait more than 1 year for a final decision. We have reported that these long waits result, in part, from complex and fragmented decision-making processes that are laden with many layers of reviews and multiple handoffs from one person to another. The cost of administering the DI and SSI programs reflects the demanding nature of the process. Although SSI and DI program benefits account for less than 20 percent of the total benefit payments made by SSA, they consume nearly 55 percent of annual administrative resources. In addition to its difficulties in processing claims, SSA has also had difficulty ensuring that decisions about a claimant’s eligibility for disability benefits are accurate and consistent across all levels of the decision- making process. For example, our work shows that in fiscal year 2000, about 40 percent of applicants whose cases were denied at the initial level appealed this decision and about two-thirds were awarded benefits. This happens in part because decision makers at the initial level use a different approach to evaluate claims and make decisions than those at the appellate level. The inconsistency of decisions at these two levels has raised questions about the fairness, integrity, and cost of SSA’s disability programs. In 1994, SSA laid out a plan to address these problems, yet that plan and three subsequent revisions in 1997, 1999, and 2001 have yielded only limited success. The agency’s initial plan entailed a massive effort to redesign the way it made disability decisions. Among other things, SSA planned to develop a streamlined decision-making and appeal process, more consistent guidance and training for decision makers at all levels of the process, and an improved process for reviewing the quality of eligibility decisions. In our reviews of SSA’s efforts after 2 years, 4 years, and again in 2001, we found that the agency had accomplished little. In some cases, the plans were too large and too complex to keep on track, and the results of many of the initiatives that were tested fell far short of expectations. Moreover, the agency was not able to garner consistent stakeholder support and cooperation for its proposed changes. Despite the overall disappointing progress, the agency did experience some successes. For example, it conducted a large training effort to improve the consistency of decisions, which agency officials believe resulted in 90,000 eligible individuals’ receiving benefits 500 days sooner than otherwise might have been the case over a 3-year period. In addition, the agency issued formal guidance in a number of areas intended to improve the consistency of decisions between the initial and appellate levels. Overall, however, significant problems persist and difficult decisions remain. For example, SSA is currently collecting final data on the results from an initiative known as the Prototype, which was implemented in 10 states in October 1999. Although interim data indicated that the Prototype resulted in more awards at the initial decision level without compromising accuracy, it also indicated that the number of appeals would increase. This, in turn, would result in both higher administrative and benefit costs and lengthen the wait for final decisions on claims. As a result, SSA decided that the Prototype would not continue in its current form. Recently, SSA announced its “short-term” decision to revise some features of the Prototype to improve disability claims processing time while it continues to develop longer-term improvements. It remains to be seen whether these revisions will retain the positive results from the Prototype while also controlling administrative and benefit costs. Even more pressing in the near term is the management and workload crisis that SSA faces in its hearings offices. The agency’s 1999 plan included an initiative to overhaul operations at its hearing offices to increase efficiency and significantly reduce processing times at that level; however, this nationwide effort not only has failed to achieve its goals but, in some cases, has made things worse.