The DI and SSI programs are the two largest federal programs providing cash assistance to people with disabilities. The DI program, established in 1956 by the Social Security Act, provides monthly cash benefits to workers with disabilities (and their dependents and survivors) whose employment history qualifies them for disability benefits. In 2002, SSA paid about $55.5 billion in DI benefits to 5.5 million workers with disabilities (age 18 to 64). SSI is a means-tested income assistance program created in 1972 that provides a financial safety net for individuals who are aged or blind or have other disabilities and who have low income and limited resources. Unlike the DI program, SSI has no prior work requirement. In 2002, SSA paid about $18.6 billion in SSI federal benefits to about 3.8 million people with disabilities (age 18 to 64). To be considered eligible for benefits for either SSI or DI as an adult, a person must be unable to perform any substantial gainful activity by reason of a medically determinable physical or mental impairment that is expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months. Work activity is generally considered to be substantial and gainful if the person’s earnings exceed a particular level established by statute and regulations. To obtain disability benefits, a claimant must file an application online, by phone or mail, or in person at any of SSA’s field offices. If the claimant meets the non-medical eligibility criteria, the field office staff forwards the claim to the appropriate DDS office. DDS staff—generally a team composed of disability examiners and medical consultants—obtains and reviews medical and other evidence as needed to assess whether the claimant satisfies program requirements, and makes the initial disability determination. If the claimant is not satisfied with the decision, the claimant may ask the DDS to reconsider its finding. If the claimant is not satisfied with the reconsideration, the claimant may request a hearing before one of SSA’s federal administrative law judges in an SSA hearing office. If the claimant is still dissatisfied with the decision, the claimant may request a review by SSA’s Appeals Council. The 1954 amendments to the Social Security Act specified that disability determinations would be made by state agencies under individual contractual agreements with SSA. Under these agreements, SSA’s primary role was to fund the states’ disability operations. However, following criticism from GAO and others about the quality and uniformity of the disability determination process, Congress amended the Social Security Act in 1980 to strengthen SSA management of the disability programs and allow greater SSA control and oversight of the DDSs. The 1980 amendments directed SSA to issue regulations specifying performance standards and administrative requirements to be followed to assure effective and uniform administration of disability determinations across the nation. The regulations issued by SSA, which established the current federal-state relationship, allow SSA to remove the disability determination function from a state if the DDS fails to make determinations that meet thresholds for performance accuracy and processing time. SSA’s regulations give DDSs maximum managerial flexibility in meeting the performance standards, allowing them to retain substantial independence in how they manage their workforce. For example, under the regulations, the DDSs are to follow state personnel standards in selection, tenure, and compensation of DDS employees. As employees of the state, DDS staff are subject to the rules and regulations of each state’s individual personnel classification system. Classification systems generally categorize positions on the basis of job responsibilities and the knowledge, skills, and competencies required to perform them. Within a classification system, a group of positions that have sufficiently similar responsibilities are put in the same class. Arranging positions in classes with common levels of difficulty and responsibility makes it possible to set ranges of compensation for whole classes of jobs across multiple state agencies. Specifying the responsibilities of each position also allows the state to identify and develop effective hiring qualifications, promotion criteria, and training requirements. The development and operation of such a classification system depend upon the adequacy of information about individual positions. Within the federal-state relationship, each DDS reports to its own state government, usually to a parent agency such as the state vocational rehabilitation agency. DDS staff generally include a variety of positions, such as medical consultants, vocational specialists, quality assurance personnel, as well as disability examiners. The number of disability examiners varies substantially among the DDSs. Data from our survey show that the number of full-time permanent examiners in each DDS ranged from 9 to 529 at the end of fiscal year 2002. Our prior work has found that the examiner’s job—which involves working with medical consultants to determine impairment severity, ability to function, and disability benefit eligibility—requires considerable expertise and knowledge of complex regulations and policies. And according to the Social Security Advisory Board, changes in agency rules and in the types of disability claims received by the DDSs have made disability decision-making more subjective and difficult. In addition, as part of its efforts to reduce claims-processing times, SSA has been testing a new disability examiner position called the single decision-maker (SDM), which would expand an examiner’s authority to independently decide claimants’ eligibility for benefits. 20 DDSs are testing this new position. Qualification requirements for new examiner hires vary substantially among the states. While five DDSs require a master’s or a registered nursing degree for certain new examiner hires, figure 1 shows that over one-third of all DDSs can hire new examiners with either a high school diploma or less. In addition, data show that examiners in nearly one-half of all DDSs are covered by union agreements, and issues related to compensation levels, hiring and promotion procedures, and weekly hours worked are open to union negotiation in the majority of these DDSs. To enhance the skills of both new and experienced examiners, SSA provides a number of optional training tools to the DDSs, including written materials covering new examiner basic training, interactive video programs supplementing basic training and providing refresher training and updates on policy changes, and materials and presentations provided by the regional offices and SSA headquarters. However, states have primary responsibility for training examiners, and many DDSs adapt or supplement SSA’s training to meet their examiners’ training needs. DDSs generally provide new examiners with SSA’s basic examiner training, followed by extensive on-the-job training, including mentoring by experienced examiners who guide the less experienced examiners in becoming more proficient in the disability claims process. New hires generally are not considered fully proficient until after one to two years of experience. The DDSs’ ability to hire examiners is affected by both SSA and state government funding decisions and hiring policies. SSA determines the funding available for each DDS and advises the DDSs about the number of full-time equivalent staff supported by this funding, and SSA adjusts these levels throughout the fiscal year based on workload fluctuations and funding availability. Normally SSA allows DDSs to replace staff who leave the DDS as long as they remain within authorized staffing levels, but for over half of fiscal year 2003, SSA froze DDS hiring, preventing DDSs from hiring new examiners or replacing those who had left. SSA officials told us that the temporary freeze was necessary to ensure that SSA’s expenditures did not exceed authorized levels and to avoid future layoffs of DDS staff. DDSs also have experienced state government hiring restrictions in recent years. Despite full federal funding, under the current federal-state relationship, DDSs generally cannot spend funds for new personnel without the approval of their state governments. States currently are facing severe budget crises, causing them to cut their payrolls for most state government functions. When states use methods such as hiring freezes, reductions in force, and early retirement incentives to limit spending on state employee payrolls, these policies sometimes prevent DDSs from hiring and retaining examiners at levels authorized by SSA. In earlier reports, we have noted that SSA’s disability determination process is mired in concepts from the past and needs to be brought into line with the current state of science, medicine, technology, and labor market conditions. With other federal disability programs similarly structured around outmoded concepts, we designated modernizing federal disability programs—including SSA’s DI and SSI disability programs—as a high-risk area in 2003. (See appendix III for a list of GAO reports on modernizing federal disability programs.) We made this designation owing in part to SSA’s (1) outmoded concepts of disability, (2) lengthy processing times, and (3) decisional inconsistencies: SSA’s outmoded concepts of disability. While technological and medical advances and societal changes have increased the potential for some people with disabilities to participate in the labor force, few DI and SSI beneficiaries leave the disability rolls to work. Our prior work shows that, unlike some private sector disability insurers and social insurance systems in other countries, SSA does not incorporate into its disability eligibility assessment process an evaluation of what is needed for an individual to return to work. These private insurers and other social insurance systems have access to staff with a wide range of expertise to apply, not only in making eligibility decisions, but also in providing return- to-work assistance. We have recommended that SSA develop a comprehensive return-to-work strategy that integrates earlier identification of work capacities and the expansion of such capacities by providing return-to-work assistance for applicants and beneficiaries. Adopting such a strategy is likely to require fundamental changes to the disability determination process, as well as changes to staff skill mixes and areas of expertise. Lengthy processing times for disability claims. The disability claims process can be lengthy, with many individuals who appeal SSA’s initial decision waiting a year or longer for final decisions on their benefit claims.