The three major programs that SSA administers—OASI, DI, and SSI—provide cash income support to diverse populations. The Social Security Act established the OASI program to protect workers and their dependents and survivors from wages lost due to retirement. DI, enacted in 1956, provides monthly cash benefits to disabled workers and their families. The OASI and DI programs are funded through payroll taxes and are based on the contributions of individual workers and their employers. About 90 percent of all U.S. jobs are covered by these insurance programs. In 1995, the OASI and DI programs paid over $326 billion in benefits to more than 43 million eligible beneficiaries. SSI, enacted in 1972, provides cash assistance to aged, blind, or disabled individuals with limited income and assets. The federal SSI program replaced federal grants to state-administered programs, which varied substantially in benefit levels. The Congress intended SSI as a supplement to the OASI and DI programs for those with little or no Social Security coverage. Federal SSI benefits are funded by general revenues and based on financial need. In 1995, over 6 million recipients received about $25 billion in federal benefits, including 2 million individuals aged 65 and over and almost 1 million children. To administer these three programs, SSA must perform the following essential tasks: issuing Social Security numbers to individuals; maintaining earnings records for workers by collecting wage reports from employers, which are used to determine the dollar amount of OASI and DI benefits; and processing benefit claims for all three programs. SSA must also determine which applicants for disability benefits under DI and SSI meet the federal definition of disability; for SSI, the agency must also determine applicants’ levels of income and assets. In addition, SSA performs many actions to maintain accurate records for program recipients once they are enrolled. Moreover, SSA must periodically conduct reviews of the health status of disabled beneficiaries to ensure that those no longer eligible are removed from the rolls. For SSI recipients, SSA must also review their financial status. Table 1 gives an overview of the three programs. At this time of heightened attention to the costs and effectiveness of all federal programs, the Congress and the administration have supported efforts to promote a more efficient federal government that is responsive and accountable to the public. This is especially critical at SSA because the agency deals with thousands of individuals daily and nearly 90 percent of its employees directly serve the public. SSA has surpassed many federal agencies in these efforts by assessing and improving its service to the public, gaining experience in managing for results, and emphasizing financial accountability. Two federal efforts, the Government Performance and Results Act of 1993 (GPRA) and the National Performance Review (NPR), promote cost-effective service delivery governmentwide. To ensure that it is meeting the needs of the public and the requirements of GPRA and NPR, SSA regularly seeks customer feedback through mail and telephone surveys, comment cards in its field offices, focus groups, and special studies. It has also taken steps to use this information to improve its services. As demand for its 800-number telephone service increased, for example, SSA found its service lacking. Customer feedback indicated that this convenient telephone service was important to the public, yet SSA’s performance data showed that in fiscal year 1995, the “busy” rate for the 800 number was almost 49 percent; only about 74 percent of callers were able to get through within 5 minutes of their first try. SSA set a goal of answering 85 percent of its 800-number calls within 5 minutes of a caller’s first try in fiscal year 1996 and made operational changes to increase public access. As a result, the busy rate decreased to 34 percent, and 83 percent of calls were answered within 5 minutes. For fiscal year 1997, SSA’s goal is to answer 95 percent of its 800-number calls within 5 minutes of a caller’s first try. We are currently reviewing SSA’s efforts to improve this service. SSA has also worked under GPRA to strengthen its strategic management process and to identify and develop performance measures to help its managers, the Congress, and the public assess how well it is accomplishing its mission. During SSA’s recently completed participation as a pilot agency under GPRA, SSA gained experience in developing specific and quantifiable annual performance goals and measures. On the basis of this experience, it expects to develop performance measures for fiscal year 1998 that focus more on outcomes and results than in previous years. For SSA’s fiscal year 1997 goals and performance measures, see appendix I. In addition, SSA is a leader among federal agencies in producing complete, accurate, and timely financial statements that promote accountability to taxpayers. For fiscal years 1995 and 1996, SSA issued audited financial statements 3 months before its legal mandate. Moreover, SSA was among the first federal agencies to produce an accountability report, which is designed to consolidate current reporting requirements under various laws and provide a comprehensive picture of an agency’s program performance and its financial condition. In addition, for fiscal year 1996, as a pilot project, SSA and its Office of Inspector General collaborated to further streamline financial reporting by including the Inspector General’s Semiannual Report to Congress as part of the Accountability Report. To be most effective, SSA’s ongoing efforts to cost effectively serve its customers and be accountable to taxpayers will need to be well coordinated and continually improved. The agency has taken steps to better integrate its strategic planning, performance measurement, and customer service efforts and to improve the ways that it collects and uses customer feedback. SSA faces challenges, however, as do all federal agencies, in integrating results-oriented management into its agency culture and daily activities. Moreover, SSA must determine how to balance its customers’ needs and expectations with those of taxpayers by assessing the cost-effectiveness of its customer service improvements. As the baby boom generation ages, growing numbers of people will receive Social Security retirement and survivors benefits through OASI in the years to come, as shown in figure 1. By the year 2015—as baby boomers begin entering their mid-60s—the numbers of individuals receiving benefits will reach an estimated 50.4 million: more than one-third greater than the 37.4 million people receiving Social Security retirement and survivors benefits in 1995. Once on the rolls, retirees can be expected to receive benefits for longer time periods than past recipients. A 65-year- old male who began receiving Social Security benefits in 1940—the first year SSA began paying monthly benefits—was expected to live, on average, about an additional 12 years. By 2015, a 65-year-old male will be expected to live about an additional 16 years—a 33-percent increase. During that same time period, the life expectancy for women aged 65 will increase by almost 50 percent—from an average of over 13 years to an average of nearly 20 years. Meanwhile, the ratio of contributing workers to beneficiaries will decline. By 2015, an estimated 2.6 workers will be paying taxes into the Social Security system per beneficiary; in 1950, 16.5 workers were paying Social Security taxes per beneficiary. This retirement explosion threatens the long-term solvency of the Social Security system. Beginning in 2012—15 years from now—program expenditures are projected to exceed tax income. By 2029, without corrective legislation, the trust funds are expected to be depleted, leaving insufficient funds to pay the expected level of OASI and DI benefits. (In an upcoming report, we will discuss in greater detail the issues affecting the major sources of retirement income—Social Security, private pensions, savings, and earnings.) Concerns about the long-term solvency of the Social Security system are fueling a public debate about the fundamental structure of this system. The Advisory Council on Social Security, for example, has put forth three different approaches to addressing the Social Security system’s long-term deficit. All three approaches call for some portion of Social Security payroll taxes to be invested in the stock market. Two of these approaches call for allowing individuals to invest some portion of their payroll taxes in individual retirement accounts. This would be a significant departure from the current program design, in which benefits are based on past earnings and trust fund moneys are invested and managed centrally. Given the magnitude of the financial problems facing the Social Security system and the nature of the proposals for changing the system, we can expect the debate over the financing and structure of the Social Security system to continue and intensify in the coming years. In our report on SSA’s transition to independence, we noted that the agency’s independence would heighten the need for it to work with the Congress in developing options for ensuring that revenues are adequate to make future Social Security benefit payments. SSA could, for example, analyze options and assess their possible effects on individuals and on SSA’s operations. Nearly 2 years after gaining independence, however, SSA is not yet ready to fully support policymakers in the current public debate on financing issues. SSA has acknowledged that it has not undertaken the policy and research activities it needs to examine critical issues affecting its programs, including long-term financing, and to provide support to policymakers. The agency recognizes the need to be more active in these areas and, in May 1996, took steps to reorganize and strengthen its policy analysis, research, and evaluation offices. It believes this reorganization will better position it to take a leadership role in critical policy and research issues related to its programs. By November 1996, SSA’s reorganized Office of Research, Evaluation, and Statistics had formed new links with outside experts to strengthen its research and evaluation capabilities. In addition, it had created an office to coordinate all policy planning activities. Although this is a positive first step, SSA officials also acknowledge that they are just beginning to focus on Social Security’s long-term solvency.