SSA is the largest operating division within HHS. As such, it accounts for approximately 65,000 FTE employees or about 51 percent of HHS’ FTE positions. SSA’s fiscal year 1995 budget of about $371 billion accounts for over one-half of HHS’ total budget for that year. SSA administers three major federal programs and assists other federal and state agencies in administering a variety of other income security programs for individuals and families. The programs administered by SSA are the OASI program and the DI program—two social insurance programs authorized under Title II of the Social Security Act. SSA also administers the SSI program, a welfare program authorized under Title XVI, to provide benefits to the needy aged, blind, and disabled. SSA serves the public through a network that includes 1,300 field offices and a national toll-free telephone number. Under the Title II programs, over $300 billion in benefits were paid in 1993 to over 40 million eligible beneficiaries. About 95 percent of all jobs in the United States are covered by these insurance programs. SSA also performs a number of administrative functions to pay Social Security benefits. For example, it maintains earnings records for over 140 million U.S. workers, which are used to determine the dollar amount of their OASI and DI benefits. To do this, SSA collects annual wage reports from over 6 million employers. Since 1990, it has issued new Social Security numbers to an average of over 7 million people annually. Under Title XVI, SSA provides almost $22 billion in SSI benefits annually to about 6 million recipients. This program was established to provide cash assistance to low-income individuals who are age 65 or older or are blind or disabled. In the mid-1970s, SSI replaced the categorical programs for the needy aged, blind, and disabled that were administered by the states. SSA began as an independent agency with a mission of providing retirement benefits to the elderly. A three-member, independent Social Security Board was established in 1935 to administer the Social Security program. The Chairman of the Board reported directly to the President until July 1939, when the Board was placed under the newly established Federal Security Agency (FSA). At that time, the Social Security program was expanded to include Survivors Insurance, which paid monthly benefits to survivors of insured workers. In 1946, the Social Security Board was abolished, and its functions were transferred to the newly established Social Security Administration, still within FSA. The FSA administrator established the position of Commissioner to head SSA. In 1953, the FSA was abolished and its functions were transferred to the Department of Health, Education and Welfare (HEW). Moreover, the position of SSA Commissioner was designated as a presidential appointee requiring Senate confirmation. In 1956, the Social Security program was expanded to include the DI program to provide benefits to covered workers who became unable to work because of disability. In 1965, amendments to the Social Security Act increased SSA’s scope and complexity by establishing the health insurance program known as Medicare. The purpose of Medicare was to help the qualified elderly and disabled pay their medical expenses. SSA administered the Medicare program for about 12 years before Medicare was transferred to a new division within HEW, the Health Care Financing Administration. Further amendments to the Social Security Act created the SSI program, effective in 1974. This program was designed to replace welfare programs for the aged, blind, and disabled administered by the states. The SSI program added substantially to SSA’s responsibilities. The agency then had to deal directly with SSI clients, which entailed determining recipients’ eligibility based on income and assets. SSA has remained a part of HHS (formerly HEW) since 1953. Since 1984, congressional committees responsible for overseeing SSA’s activities have considered initiatives to make SSA an independent agency. While the reasons for independence have varied over the years, legislation seeking independence from HHS has been introduced in several sessions of the Congress. Concerns expressed in congressional hearings and reports of the past decade have focused on a variety of issues, including the need for (1) improved management and continuity of leadership at SSA; (2) greater public confidence about the long-term viability of Social Security benefits; and (3) removal of the program’s policies and budgets from the influence of HHS, OMB, and the administration. Statements by committee chairmen have shown a desire to make SSA more accountable to the public for its actions and more responsive to the Congress’ attempts to address SSA’s management and policy concerns. The act requires the Secretary of HHS and the Commissioner of SSA to develop a written interagency transfer agreement, effective March 31, 1995, which specifies the personnel and other resources to be transferred to an independent SSA. Our review of the agreement and the supporting documentation shows that SSA and HHS have developed a reasonable methodology for, and progressed well toward implementing the transition. Specifically, we found that HHS and SSA have progressed well in (1) identifying and transferring personnel and other resources; (2) effecting organizational changes prompted by the transition; and (3) addressing changes to SSA’s budget process, as called for in the act. The interagency agreement submitted by HHS and SSA to the Senate Committee on Finance and House Committee on Ways and Means on December 27, 1994, notes that all major transition tasks have been completed or are under way and that personnel and resource transfers will be completed on March 31, 1995. Elements of the agreement relating to transferring personnel, resources, and property appear to meet OMB guidelines for such transfers. Under the interagency agreement, the approximately 65,000 FTE employees currently under SSA will remain with the agency. In addition, about 1,143 HHS FTE personnel who provide support services to SSA are expected to be transferred. Of these, 478 will provide personnel administration services for SSA, 289 will provide legal support, and 263 will perform audit and investigative activities. The remaining 113 FTEs will provide other administrative support services for the agency. SSA expects to reimburse HHS for providing payroll and certain other support services to SSA on an interim basis. Similarly, HHS will reimburse SSA for providing certain services to Medicare recipients through its local offices and telephone service centers. In developing the agreement, HHS surveyed its division heads to identify the functions and FTEs currently supporting SSA. At the same time, SSA developed its own estimate of the number of HHS personnel performing work for it. To supplement these data, SSA also relied on its managers’ assessments of the number of HHS FTEs currently supporting the agency. HHS and SSA then engaged in extensive negotiations to agree on the final number of FTEs to be transferred. Virtually all individuals have been identified, and HHS expects to issue final staff transfer notices by February 21, 1995. Personnel have been selected primarily on the basis of the percentage of their work spent on SSA activities. However, all employees had an opportunity to appeal the transfer actions and some volunteers were sought to obtain the proper skill levels. HHS and SSA have also agreed on nonpersonnel resources to be transferred, such as funds, computer equipment, and furniture. These decisions are contingent on the numbers and specific personnel transferring to SSA. HHS and SSA are required to prepare for OMB a written itemization of resources to be transferred. OMB officials told us that no problems have arisen and it expects to provide the certification necessary to complete resource transfers on March 31, 1995. SSA will make several organizational changes to be a fully functional independent agency. (See app. I for the SSA organization charts for before and after the transition.) We believe that SSA has reasonably planned for these changes. Our assessment of the transition activities, combined with the review of the SSA and HHS interagency agreement, indicates that the organizational changes should be completed on March 31, 1995. SSA plans to establish its own Office of the General Counsel and an Office of Inspector General. SSA’s Office of the General Counsel will provide the necessary legal advice and litigation services for the programs administered by SSA. An acting General Counsel will be designated to head the office until a permanent appointment is made. The SSA Office of Inspector General will conduct audits and investigations of the agency’s programs and operations. The Inspector General will report directly to the Commissioner to ensure objectivity and independence from internal agency pressures. The HHS Inspector General has agreed to act as SSA’s Inspector General until a permanent Inspector General has been confirmed. SSA expects that additional organizational changes will occur in conjunction with the transition. For example, SSA plans to merge the functions of its Offices of Programs and Policy and External Affairs. The new Office of Programs, Policy, Evaluation and Communications will be responsible for research, policy analysis, and program evaluation. SSA’s Office of Legislation and Congressional Affairs will also be repositioned to report directly to the Commissioner. This office will facilitate a working relationship between SSA and the executive and legislative branches. SSA plans to establish a Washington, D.C., office to facilitate a closer working relationship with the Congress and the executive branch. Staffing in the Washington office is estimated at 150 to 200 permanent employees, including the Commissioner, Principal Deputy Commissioner, legislative liaison staff, Inspector General, the General Counsel, and research and statistics personnel. The agency has defined needed space requirements and acquired temporary office space. It should obtain permanent space by early 1996. SSA also plans to decentralize and transfer more management authority from its headquarters to its regional offices. Following the transition, Regional Commissioners will have direct authority over public affairs and personnel administration in their respective regions. These functions are currently managed by SSA’s headquarters or by HHS.