Social Security: Overview1

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AGENDA FOR SOCIAL SECURITY:

CHALLENGES FOR THE NEW CONGRESSAND THE NEW ADMINISTRATION

Social Security Advisory BoardFebruary 2001



Social Security Advisory BoardAn independent, bipartisan Board created by the Congress and appointed by the

President and the Congress to advise the President, the Congress, and the Commissioner of Social Security on matters related to the Social Security and Supplemental Security Income programs



TABLE OF CONTENTS

INTRODUCTION ..........................................................................................................................i

I. Ensure the Long-Range Solvency of the Social Security System ......................1The Value of Social Security to Workers and Their Families ..................................................... 1The Looming Financing Shortfall .............................................................................................. 1The Status of the Trust Funds ................................................................................ ...................4The Advantages of Acting Sooner Rather Than Later................................................................ 5

II. Reform the Disability Insurance and SupplementalSecurity Income Disability Programs ............................................................7

The Need for Comprehensive Review.......................................................................................7Major Issues Need to Be Addressed .........................................................................................8The Elements of Reform ......................................................................................................... 11

III. Improve the Social Security Administration’sService to the Public ...........................................................................................15

Present and Future Challenges to Providing Quality Service................................................... 15What the New Administration and the New Congress Need to Do ......................................... 17

IV. Increase Public Understanding of Social Security ...............................................21SSA’s Obligation to Communicate with the Public ................................................................. 21What the Public Thinks About Social Security ........................................................................ 21What SSA Should Do to Increase Public Understanding of Social Security ............................ 23

V. Improve the Quality of Service and the Integrity of theSupplemental Security Income Program ...................................................25

The Impact of the SSI Program on the Functioning of the Agency ..........................................25The Need for a Better Understanding of the Service Needs of the SSI Population .................. 27Integrating Program Integrity and Quality of Service .............................................................. 28

VI. Address the Problem of Misuse of Social Security Numbers ..........................33

VII. Strengthen the Agency’s Capacity to ProvideGreater Policy Leadership ...............................................................................35

VIII. Conclusion ...................................................................................................... 37

How the Board Has Conducted Its Work ............................................................................39

The Social Security Advisory Board .....................................................................................43



• Issuing Social Security Numbers – SSAemployees must evaluate the validity of documents proving identity, age, and citizenshipor alien status when taking applications forSocial Security numbers.

• Maintaining Wage Records – SSA maintainsrecords of the lifetime earnings of all workerswho are covered by Social Security. Incalculating benefits, both the amount and thenumber of years of earnings are considered.

• Determining Eligibility for OASDI Benefits –SSA employees must verify work history, age,and marital or survivor status before awardingSocial Security retirement or survivor benefits.They also obtain medical and work historyinformation needed for State disability agenciesto determine Disability Insurance eligibility.

• Determining Eligibility for SSI – SSAemployees review applicants’ income, assets,living arrangements, age, and citizenship todetermine eligibility and payment amount forSSI old age and disability benefits. Disabilityapplications (which are more than 90 percent of all SSI applications) also require employees todevelop medical information for eligibilitydeterminations by State disability agencies.

• Keeping Up With Changes in Beneficiary

Circumstances (Postentitlement Changes) –SSA employees record address changes, replacelost checks, work with beneficiaries to resolveover and underpayments, conductredeterminations of eligibility, and monitorrepresentative payees. They also adjust SSI

payment amounts as needed. In addition,SSA and State disability agency employeesconduct continuing disability reviews todetermine whether individuals remain eligiblefor disability benefits.

• Delivery of Related Beneficiary Services –SSA determines eligibility for Medicare, andalso performs work on behalf of theMedicaid, Food Stamp, Railroad Retirement,and Black Lung programs. Field offices alsoprovide beneficiaries with informationregarding other public and private programsavailable in their communities, such asvocational rehabilitation and welfare.

• Providing Public Information – SSAemployees prepare pamphlets, use the publicmedia, and give speeches in localcommunities to communicate with the public.In October 1999, SSA began mailing Social

Security Statements to all taxpayers age 25and over showing the amount of SocialSecurity taxes they have paid and theirestimated benefits.

• Developing Program Policy – SSA adoptsrules and regulations to ensure its programsare administered according to law. Itconducts research and analysis to help policymakers address problems and developproposals for change.

• Resolving Disputes – Individuals may appealSocial Security decisions through anadministrative appeals process, including ahearing before an administrative law judge.

The responsibilities of the Social Security Administration in serving the public are numerous andcomplex. In summary, they include:

SSA’s RESPONSIBILITIES



INTRODUCTION

Social Security touches nearly every family in immediate and direct ways. Today, about 154million workers are engaged in employment covered by Social Security and, together with theiremployers, are paying the taxes that are used to support the system. About 45 million individuals

are receiving retirement, survivors, or disability benefits.

Since the Social Security program was enacted in 1935, responsibility for ensuring that taxesare properly credited to a worker’s account and beneficiaries receive monthly checks that areaccurate and paid on time has rested with the Social Security Administration or its predecessorinstitution, the Social Security Board. SSA is also responsible for issuing Social Security numbers,determining whether individuals are disabled and whether low-income individuals qualify forSupplemental Security Income (SSI) benefits, and for performing other functions as well. Howwell the agency fulfills its complex and numerous responsibilities has a profound impact on thewell-being of the public at large.

In the years prior to the enactment of legislation that established SSA as an independent agency,there was a growing sense that important policy and administrative issues were not being brought tothe attention of policy makers so that shortcomings could be rectified. It was believed that this wasat least partially due to the fact that SSA was a subordinate unit within another governmentdepartment and the Commissioner was unable to deal directly with the President and the Congress.

The Social Security Independence and Program Improvements Act of 1994 gave SSA newresponsibilities and new opportunity to fulfill its mission. The position of Commissioner wassignificantly elevated. The Commissioner is now at a level equivalent to a cabinet officer, andreports directly to the President and the Congress. The Commissioner and Deputy Commissionerhave six-year terms with the Commissioner, once confirmed, being removable only for cause.

The 1994 law also created an independent, bipartisan Social Security Advisory Board to advisethe Congress, the President, and the Commissioner of Social Security on issues relating to theSocial Security and Supplemental Security Income programs. The Board has operated to help theagency set its agenda and provide a bridge to the Congress and the public, so that problems of policy and of service to the public will be recognized and addressed.

The establishment of this new leadership structure for Social Security has made it possible tofocus increased attention on issues that are critically important to the future of the Social Security

i

Social Security touches nearly every family in

immediate and direct ways. Today, about 154 million workers are engaged in employment covered by Social Security and, together with their employers, are

paying the taxes that are used to support the system. About 45 million individuals are receiving retirement,

survivors, or disability benefits.



and SSI programs. Since the Board began meeting in the Spring of 1996, it has issued a series of reports on major issues that need to be addressed if public confidence in these programs is to beensured. As the Board’s reports have made clear, many of the agency’s problems are long-standing and stem from many factors. The agency has made headway in addressing some of them,but much remains to be done.

Social Security’s problems are twofold, involving both financing of benefits and programoperations. Policy makers and the public are well aware of the first of these – there iswidespread recognition that change is needed to ensure the long-term solvency of the SocialSecurity system. But there is relatively little awareness of the changes that are needed if the SocialSecurity Administration is to be able to meet its public service and public informationresponsibilities, which are also important to public confidence.

The purpose of this report is to provide the new Congress and the new Administration anoverview of the major issues that confront the Social Security and SSI programs and the SocialSecurity Administration. The analyses and the recommendations for changes that are presentedare based on the work the Board has conducted over the last four and a half years.

Reflecting the mandate that the Congress gave the Board in the 1994 legislation, the Board’swork has been focused on a broad range of major issues. Our approach to these issues has beenon a nonpartisan basis because we believe that both Social Security and the Social SecurityAdministration are too important to the American people to allow partisanship to intrude on theeffort to preserve and strengthen them for future generations.

One of the first concerns of the Board was how SSA, as an independent agency, could bestrengthened so that it can meet the policy development responsibilities that the Congress hasgiven it. The Board’s first report recommended that the agency establish a policy office thatwould have the capability of addressing major policy issues.

Subsequently, the Board has issued a “primer” on the Social Security financing problem thathas been used by both Republican and Democratic Members of Congress and by the White House.

ii

Social Security’s problems are twofold, involving both financing of benefits and program operations. Policy

makers and the public are well aware of the first of these there is widespread recognition that change is

needed to ensure the long-term solvency of the Social Security system. But there is relatively little awareness of the changes that are needed if the Social Security

Administration is to be able to meet its public service and public information responsibilities, which are also

important to public confidence.

*

The Board’s reports are listed on page 40. All of the reports are available on the Board’s web site atwww.ssab.gov.*



It has also issued reports recommending structural reform and other changes in the disabilityprograms, changes that need to be made to improve the Social Security Administration’s service tothe public, and how the Social Security Administration can increase public understanding of SocialSecurity.

Many of the changes the Board has recommended are within the purview of SSA itself, andover the last two years the agency has responded by issuing a number of reports that have outlinedthe steps the agency is taking to address the Board’s concerns. These include, among others,reports on managing the disability programs, short-term initiatives to improve 800 numbertelephone service, workforce planning for the agency, and informing the public about SocialSecurity. Most recently, in response to the Board’s recommendation that the agency develop aservice delivery plan for how it intends to handle its rapidly growing workloads, the agency issueda 2010 Vision , which outlines the principles for service delivery in the future. These are usefulbeginnings that can be built upon in the coming years.

In addition, there are many other changes recommended by the Board – particularly thoserelating to the disability programs and service to the public – that will require legislative or

funding changes. The agency will have to work closely with policy makers in the new Congressand the new Administration to make the case for why these changes are needed. We pledge oursupport in this effort.

The Social Security Administration has important strengths. The agency’s field operationsremain fundamentally strong, with dedicated and experienced employees and effective nationalreach. The agency’s management ranks among the top of government agencies. Employees in theagency continue today, as they have in the past, to regard SSA as the premier Federal agency.They have a tradition of loyal service to the agency and the public. As we emphasize in thisreport, however, there are serious policy and service delivery challenges that need promptattention. We hope that this report will be helpful to the new Congress, the new Administration,and the agency as they consider how these challenges will be met.

The Social Security Administration has important strengths....As we emphasize in this report, however, there

are serious policy and service delivery challenges that need prompt attention. We hope that this report will be helpful to

the new Congress, the new Administration, and the agency as they consider how these challenges will be met.

iii



iv



For the last several years the Nation hasbeen engaged in an important discussion aboutthe future of Social Security. There is broadconsensus on the high value of the SocialSecurity program to the American people bothnow and in the future, but there are manydifferent views about the kinds of changes thatshould be made to ensure its solvency over thelong term.

Social Security is a social insuranceprogram to which nearly all workers, alongwith their employers, are required to contributein order to provide income protection for thosewho have reached the age of retirement or whorisk loss of wages due to disability or death of a worker. Retired workers make up 62 percentof all beneficiaries, and Social Security is themajor source of income for most of them,

I. ENSURE THE LONG-RANGE SOLVENCYOF THE SOCIAL SECURITY SYSTEM 1

providing 40 percent of the total income to theaged and making up more than half of theincome of about two-thirds of the aged.

The program’s income protection extendsbeyond retired workers. According to estimatesby Social Security’s actuaries, about 4 out of 10 young men, and 3 out of 10 young women,who are now age 20 will die or becomedisabled before reaching age 67. Today, 10

percent of all Social Security beneficiaries areworkers who are disabled and have notreached retirement age; 11 percent arespouses and children of retired and disabledworkers; and 16 percent are spouses andchildren of deceased workers. Whateverchanges are enacted, Social Security mustcontinue to protect these vulnerableindividuals.

1

The demographic changes that are occurring in the United States mean that in future years there will be more retirees, but relatively

fewer workers to pay for their benefits.

The Value of Social Security to Workers and Their Families

The Looming Financing Shortfall

1 The analysis presented here is based on the AdvisoryBoard’s July 1998 report, Social Security: Why ActionShould Be Taken Soon.

Current projections of income and spendingfor Social Security indicate that there will not beenough money coming into the program to meetthe obligations of the program to futurebeneficiaries. This is because most of the moneyused to pay benefits for current retirees comesfrom the payroll taxes paid by current workersand their employers. The demographic changesthat are occurring in the United States mean thatin future years there will be more retirees, butrelatively fewer workers to pay for their benefits.

There will be more retirees…

A major shift in the relative size of theworking age and elderly populations will begin tooccur in the first few years of this century. Thelarge numbers of people born during the post-World War II “baby boom” currently make up



most of the workforce paying Social Securitytaxes. But they are nearing retirement age, andthe oldest of the baby boomers (those born in1946) will reach age 65 in 2011. By 2030,about 20 percent of the population is expectedto be 65 and over as compared to about 12percent in 1990. When the baby boomers movefrom being taxpayers to being beneficiaries, thecost of the Social Security program will rise

quickly.

Chart 1. - Relative Age of U.S. PopulationCY 1950 - 2050

10090

8070605040302010

0

1 9 5 0

1 9 7 0

1 9 9 0

2 0 1 0

2 0 3 0

2 0 5 0

Another factor contributing to increasingretirement costs is that people are livinglonger. Longer lives for retirees mean moreyears receiving Social Security benefits. In1940, when the first Social Security benefitswere paid, a man who reached 65 could look forward to fewer than 13 years of life, and awoman had a life expectancy of fewer than 15years. By 2030, when virtually all theboomers will have retired, life expectancy atage 65 is projected to be nearly 18 years formen and more than 20 years for women.

P e r c e n t

Male

Female

2075

2060

2040

2020

2000

1980

1960

1940 Y e a r a t t a

i n i n g a g e

6 5

Chart 2. - Life Expectancy at Age 65

Number of years

10090

80706050403020100

12.714.7

17.413.2

19.014.8

19.215.9

19.816.9

21.018.122.0

19.122.7

19.9

When the baby boomers move from being taxpayers to being

beneficiaries, the cost of theSocial Security program will rise quickly. Another factor contributing to increasing

retirement costs is that people are living longer. Longer

lives for retirees mean more years receiving

Social Security benefits.

2

0 5 10 15 20 25

Age 65 and over

Age 20 to 64

Age under 20



…and relatively fewer workers

While spending for Social Security willcontinue to grow, other factors will cause aslowdown in the growth of the labor force.

Projections indicate that the average rate of growth of the labor force will slow from the 2percent a year it achieved from 1960 through1989, to 1.2 percent annually for the years1990 through 1999, 0.9 percent for the years2000 through 2009, and slowing to 0.2 percentby 2075.

The major reason for this slowdown is thedecline in the birth rate that began in the1960s. During the mid- to late-1960s, fertilityrates began to decline dramatically, shrinking

from above 3.00 children per woman from1947 to 1964 to a low of just 1.74 by 1976.Since then it has edged up slightly, to justabove 2.00. Over the long run, the SocialSecurity actuaries project a fertility rate of about 1.95. Because of lower birth rates, therewill be fewer workers to replace the babyboomers as they retire.

Another reason for the slower growth inthe number of workers is that the rapid growthin labor force participation by women isexpected to level off. The female labor forceparticipation rate increased from 34 percent in1950 to 60 percent in 1999. Greater laborforce participation among women has offsetsome of the costs of the growing number of Social Security retirees, but this trend musteventually end. Over the long term, femaleparticipation rates are expected to increaseonly slightly above today’s level.

Chart 3. - Number of Workers PerSocial Security Beneficiary

CY 1960 - 2070

6

5

4

3

2

1

0

1 9 6 0

1 9 7 0

1 9 8 0

1 9 9 0

2 0 0 0

2 0 1 0

2 0 2 0

2 0 3 0

2 0 4 0

2 0 5 0

2 0 6 0

2 0 7 0

5.1

3.4

2.1 1.9

With more retirees and little growth in the number of workers, the ratio of workers to beneficiaries will

decline substantially for several decades.

The decline in the number of workers per beneficiary

Since most of the money used to paybenefits under the Social Security program

comes from the payroll taxes paid by currentworkers and their employers, the number of workers relative to the number of beneficiariesaffects the ability of society to meet obligationsto retirees. With more retirees and little growthin the number of workers, the ratio of workersto beneficiaries will decline substantially forseveral decades. In 2000 there were 3.4workers for every beneficiary. This ratio willdecline to 2.1 workers per beneficiary over theperiod 2030 to 2040. Between 2040 and 2075,the number of workers per beneficiary willcontinue to decline slowly, reaching 2.0 in theperiod 2045 to 2060, and 1.9 in the period2065 to 2075.

3



x

x

x

x

x

x

x

x x

The current situation

In 2000, total income to the SocialSecurity Old-Age, Survivors, and DisabilityInsurance Trust Funds exceeded spending byabout $150 billion, and the amount of thisexcess income is expected to increase over thenext 13 years. At the end of 2000, the TrustFunds had assets of more than $1 trillion.Assets are expected to grow to more than $6trillion by 2023. By law, Social Securityincome that is not needed to pay benefits isinvested in U.S. Treasury bonds.

In 1999, payroll taxes accounted for nearly87 percent of income to Social Security,interest on Trust Fund investments accountedfor almost 11 percent, and income from taxeson Social Security benefits accounted for about2 percent.

Income from payroll taxes and taxes onbenefits is expected to be higher than spendingfor benefits and administrative expenses untilthe year 2015. Thus, until 2015 the SocialSecurity program will be a net plus for theFederal budget. This surplus currentlyaccounts for most of the surplus in the so-called “unified Federal budget,” which includesthe operations of both the general funds of thegovernment and a number of trust fundsdesignated for special purposes, such as theSocial Security, Medicare, and Highway TrustFunds. The U.S. Treasury borrows SocialSecurity’s surplus income, uses it for othergovernment activities or to retire the nationaldebt, and issues bonds to the Social Security

Trust Funds.

Income from payroll taxes and taxes on benefits is expected to be higher than spending for benefits and administrative expenses

until the year 2015. Thus, until 2015 the Social Security programwill be a net plus for the Federal budget.

Spending will exceed taxes in 2015

Beginning in 2015, Social Securityexpenditures will be higher than tax income.At that time, an amount equal to all of the taxincome and a part of the interest due to theTrust Funds on outstanding bonds will beneeded to pay the benefits that are due. TheFederal government will either have to findadditional funds elsewhere, or (if the budget isin surplus without considering Social Securitytax income) retire less publicly held debt.

Spending will exceed taxes plusinterest in 2025

Beginning in 2025, Social Securityspending will exceed total Social Securityincome (taxes plus interest on the bonds). Atthis point the government will have to beginpaying back the funds it has borrowed from

Chart 4. - Social Security Income,Outgo, and Assets

(in billions)$7,000$6,000$5,000$4,000$3,000$2,000$1,000

0

2 0 0 0

2 0 0 6

2 0 1 2

2 0 1 8

2 0 2 4

2 0 3 0

2 0 3 7

OutgoIncomeAssets

4

The Status of the Trust Funds



Social Security. This will provide thegovernment with a public finance issue that willneed to be addressed because, in order to pay thebenefits that are due, the Treasury will have toredeem the bonds held by the Trust Funds.

By cashing in the bonds, Social Securitywill be able to pay the full amount of promisedbenefits until 2037. In that year, all of the assetsof the Trust Funds will have been used up andthe ongoing income to the program will beinsufficient to meet all of the benefit obligations.

The situation in 2037

By 2037, income to Social Security will beequal to about three-fourths (72 percent) of the

promised benefits. However, the rate of growthin benefit obligations will increase faster thanthe rate of growth in tax income, so the

The Congress has never allowed thefinances of the Social Security program to reachthe point that benefits could not be paid, and itis not expected to do so in the future. There are

many options that can be considered. However,as time goes by the size of the Social Securityproblem grows, and the choices available to fixit become more limited. Thus, there areimportant reasons for making changes earlier.

• There are more choices available earlier .For example, the sooner you change theway Social Security benefits are financed or

By 2037, income to Social Security will be equal to

about three-fourths(72 percent) of the promised benefits....dropping to about two-thirds (67 percent) for

the year 2074, and it isexpected to continue to

fall after that.

calculated, or the age at which people canreceive benefits, the more choices you haveabout how to make the changes.

•

Changes can be phased in more gradually .By acting sooner, you can avoid makingextreme changes at a future crisis point, andcan instead phase them in gradually. Makinggradual changes avoids creation of the largedifferences in benefit or tax levels betweensuccessive generations of retirees and workersthat can result when modifications are madeprecipitously.

• The cost of repairing Social Security can bespread more evenly over more generationsof workers and beneficiaries . The cost of fixing Social Security will be the samewhenever the changes are made, but thepossibilities for distributing this cost acrossgenerations will diminish as time passes. Thenet effect of delaying action is to reduce oreliminate the burden of repairing SocialSecurity on earlier generations and to place aneven heavier burden on later generations.

5

The Congress has never

allowed the finances of theSocial Security program to

reach the point that benefits could not be paid, and it is

not expected to do so in the future.

The Advantages of Acting Sooner Rather Than Later

percentage of the benefits that can be paid withcurrent income will continue to decline,dropping to about two-thirds (67 percent) for theyear 2074, and it is expected to continue to fallafter that.



• The longer change is delayed, theheavier the impact will be on eachindividual who is affected . Largerincreases in tax rates or benefit cuts greatlyincrease the magnitude of the loss in well-being experienced by each individual.Conversely, making smaller changes inbenefits or taxes soon, so that they couldapply over a longer period of time, wouldaffect more people – but by less perperson.

• There will be more advance notice forthose who will be affected, so they canplan for their retirement . For those stillin the workforce who need to build reliablepension and investment strategies for

retirement, knowing what they can expectfrom Social Security is a critical factor.Some changes in program benefits arealready occurring. Beginning in 2000,scheduled increases in the normalretirement age from 65 to 67 are resultingin a decline in Social Security replacementrates for all new retirees. The effect of delaying change is to deprive workers of important information upon which they canbase their lifetime plans for retirementsecurity.

• Confidence in the ability of SocialSecurity to continue to pay benefits tofuture generations of retirees will bestrengthened . According to a 1999survey, only 36 percent of those polledwere very or somewhat confident thatSocial Security retirement benefits “will bethere for you when you retire.” Fixing the

program quickly would eliminate theuncertainty that is currently erodingconfidence in the program.

• There will be less disruption in labormarket participation . Changes in eitherSocial Security benefits or taxes affect thework and retirement decisions of individuals and the hiring decisions of employers. Benefit cuts, for example,would likely induce some people to stay inthe labor force longer, while payroll taxincreases may in the short run causeemployers to hire fewer workers and thuslimit employment opportunities for olderworkers. The sooner that both employeesand employers know about future changes,

the more time they have to alter theirchoices gradually and avoid creatingsudden shifts in the availability of workersor jobs.

• There will be less disruption in decisionsabout consumption and saving . SocialSecurity can affect household decisionsabout how much to consume and save.Raising taxes reduces the take-home payof households and forces people to eitherconsume less, save less, or work more.Reducing expected benefits duringretirement years causes people to eithersave more during their working years orwork more to make up for the loss, or tohave a reduced standard of living inretirement. The sooner that householdsbecome aware of the changes so that theycan plan ahead, the smaller would be thedisruptions to consumption and saving.

6

Future Board Report

The Board intends to revise and update its July 1998 report, Social Security: Why Action Should Be Taken Soon . The new report will include a description of options that have been proposed toaddress the long-term solvency issue, including the impact on costs and savings.



The Nation’s two primary disabilityprograms – Social Security DisabilityInsurance (DI) and Supplemental SecurityIncome (SSI) disability – are a vital butcomplex part of our social insurance andwelfare systems, requiring vigilant attention inorder to keep their policy and administrativestructures sound and up to date.

These programs have grown steadily overthe years to the point where in fiscal year 2001they are expected to account for about $90billion in Federal spending, or nearly fivepercent of the Federal budget. They require agrowing portion of the time and attention of Social Security Administration employees atall levels. In 2001, about two-thirds of theagency’s $7.1 billion administrative budget,nearly $5 billion, is expected to be spent ondisability work.

As the baby boomers reach the age of increased likelihood of disability the growth inthese programs will accelerate. The Social

II. REFORM THE DISABILITY INSURANCEAND SUPPLEMENTAL SECURITY INCOME

DISABILITY PROGRAMS 2

1 9 6 0

1 9 7 0

1 9 8 0

1 9 9 0

2 0 0 0

2 0 1 0

10

8

6

4

2

0

M i l l i o n s

Chart 5. - Number of Disability Beneficiaries

CY 1960 - 2010

DI SSI Disability

Estimated Historical

2 For more information on this subject, see theAdvisory Board’s January 2001 reports , Chartingthe Future of Social Security’s Disability Programs:The Need for Fundamental Change and Disability

Decision Making: Data and Materials, as well as How SSA’s Disability Programs Can Be Improved,issued in August 1998.

Security Administration’s actuaries project thatbetween now and 2010 the number of DIbeneficiaries will increase by nearly 50 percent.

The growth in SSI disability is projected to beslower, increasing by 15 percent. This projectedgrowth in the number of disability claimantsthreatens to overwhelm a policy andadministrative infrastructure that is alreadyinadequate to meet the needs of the public.

In recent decades, disability policy has cometo resemble a mosaic, pieced together inresponse to court decisions and other externalpressures, rather than the result of a well

This projected growth in the number of disability claimants threatens to

overwhelm a policy and

administrativeinfrastructure that

is already inadequate to meet the needs

of the public.

7

The Need for Comprehensive Review



thought out concept of how the programs shouldbe operating. Compounding the problem, thedisability administrative structure, now nearly ahalf century old, has been unable to keep pacewith the increasing demands that have been

imposed upon it. Policy and administrativecapacity are dramatically out of alignment in thesense that new and binding rules of adjudicationfrequently cannot be implemented in a reasonablemanner, particularly in view of the resources thatare currently available.

It has been more than two decades sinceeither the Congress or the Administration hasreviewed in a comprehensive manner the questionof whether the administrative structureestablished nearly five decades ago should bestrengthened or changed. Numerous regulationsand rulings affecting how disability decisions aremade have been implemented without review bypolicy makers. The question of whether thedefinition of disability for adults should be

changed has not undergone close examination formore than 30 years.

In recent decades, disability policy has come to resemble a mosaic, pieced together in response to court decisions

and other external pressures, rather than the result of

a well thought out concept of how the programs should be operating.

grew to nearly 72 percent in 1995, fell to 63percent in 1998, and grew again to 66 percent in2000.

For many years both Members of Congressand others who have studied the disability

programs have expressed concern aboutvariations such as these. Analysts haveidentified many factors which they believecontribute to inconsistencies in outcomes, suchas economic and demographic differences amongregions of the country, court decisions, the factthat the claimant has no opportunity to meet withthe decision maker until the face-to-face hearingat the ALJ level, and the record remains openthroughout the appeals process.

But many who are knowledgeable about theprograms – including disability examiners in theState agencies as well as administrative law

judges – have long believed that there are alsoreasons relating to program policy, procedures,and structure that are responsible for some if notmany of these inconsistencies. In a recent studyof SSA’s quality assurance processes, the LewinGroup found that although the information on

8

Major Issues Need to Be Addressed

Are disability decisions consistent and fair?

There are substantial data that show strikingdifferences in decisional outcomes over time,

among State agencies, and between levels of adjudication, raising the question of whetherdisability determinations are being made in auniform and consistent manner.

For example, in 2000 the percentage of DIapplicants whose claims were allowed by a Stateagency ranged from a high of 65 percent in NewHampshire to a low of 31 percent in Texas. Asanother example, a strikingly large percentage of cases denied by State agencies are reversed uponappeal to an administrative law judge hearing,and, at least at the State level, there appears to beno correlation between high State agencyallowance rates and low ALJ reversals of thesedecisions. Both State agency and hearing levelallowance rates have varied substantially over theyears. The hearing level allowance rates(allowances as a percent of all decisions) for bothDI and SSI disability stood at 58 percent in 1985,



Num ber Per centTotal 1,106,344 100.0Initial Applications 759,191 68.6Reconsiderations 90,805 8.2ALJs 253,615 22.9Appeals Council ** 1,999 0.2Federal Court *** 734 0.1

Numbe r Per centTotal 1,106,344 100.0Initial Applications 759,191 68.6Reconsiderations 90,805 8.2ALJs 253,615 22.9Appeals Council ** 1,999 0.2Federal Court *** 734 0.1

Allow38%

Remand22%

Dismiss2%

Deny74%

Remand48%

Dismiss6%

Deny39%

Dismiss12%

Deny29%

Deny84%

Allow16%

Allow59%

Allow2%

Allow6%

Deny62%

current consistency of the disability programs issomewhat mixed and not as definitive as onewould like, “The evidence of inconsistencies iscompelling….” 3

Despite the long-standing concern aboutconsistency, the agency has no effectivemechanism to provide the information needed tounderstand the degree to which the programs’own policies and procedures – including theiruneven implementation – are causinginconsistent outcomes in different regions of thecountry and different parts of the disability

As long as variations in decision making remainunexplained, the integrity and the fairness of the disability programs are open to question. These programs are too

valuable and important to the American public for thisissue not to be addressed.

3 The Lewin Group, Inc. and Pugh Ettinger McCarthyAssociates, L.L.C., Evaluation of SSA’s DisabilityQuality Assurance (QA) Processes and Development of QA Options That Will Support The Long-Term

Management of The Disability Program ,June 21, 2000, p. C-24.

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Chart 6. - DI and SSI Disability Determinations and Appeals *FY 2000

* Data relate to workloads processed (but not necessarilyreceived) in fiscal year 2000,i.e., the cases processed at eachadjudicative level may includecases received at 1 or more of the lower adjudicative levels

prior to fiscal year 2000. Not all denials are appealed to thenext level of review.

** Includes ALJ decisions not appealed further by theclaimant but reviewed by the

Appeals Council on “ownmotion” authority.

*** Remands to ALJs by the AppealsCouncil and courts result inallowances in about 60 percent of the cases.

Total Allowances

system. As long as variations in decision makingremain unexplained, the integrity and the fairnessof the disability programs are open to question.These programs are too valuable and important tothe American public for this issue not to beaddressed.

Initial Level1,988,425

Reconsiderations584,540

ALJ Dispositions433,584

Appeals Council122,780 **

Federal CourtDecisions***12,011



10

Is disability policy being developed coherently and in accord with theintent of the Congress?

Although Congress has not changed the lawdefining disability for adults for more than 30years, the determination of what constitutesdisability has changed in fundamental ways. Forexample, there has been a gradual but persistenttrend away from decisions based on the medicallistings to decisions that increasingly involveassessment of function. Today, many moredecisions involve mental impairments than was thecase in the past. In addition, changes in agencyrules mean that now all adjudicators must adhere tomore complex and intricate requirements regardingsuch matters as determining the weight that shouldbe given to the opinion of a treating source andmaking a finding as to the credibility of claimants’statements about the effect of pain and othersymptoms on their ability to function. All of thesechanges have made decision making moresubjective and difficult.

These policy changes have been made throughchanges in regulations and rulings. A number of themost significant changes have grown out of courtdecisions, many of which have not been appealed.

None of them have been reviewed by the Congressas to their effect on decision making or whetherthey are operationally sustainable for a programthat must process massive numbers of cases.

Can today’s administrative structure support future program needs?

When the DI program was enacted in 1956, theexpectation was that the program would be

There are many who believe that the Social Security Act definition of disability, which requires claimants to prove they cannot workin order to qualify for benefits, is inconsistent with the Americans

with Disabilities Act and is at odds with the desire of many disabled individuals who want to work but who still need

some financial or medical assistance.

relatively small. But over the last half century,the original Federal-State administrative structurehas had to accommodate a growth in program sizeand complexity that it has been ill equipped tohandle. In addition to working within afragmented administrative structure, employees atall levels have been buffeted by periodic surges inworkloads and funding shortfalls.

At the present time, all parts of theapplications and appeals structure areexperiencing great stress with every indicationthat the difficulties each is facing will continue togrow unless changes are made. There are about15,000 disability adjudicators throughout thedisability system. Their qualifications and therules and procedures they follow differ, sometimes

dramatically. For example, adjudicators at theState agency and ALJ levels may receive vastlydifferent training and draw upon very differentresources. Factors such as these raise questionsabout how well the administrative structure willbe able to handle the growing workload.

Is Social Security’s definition of disability appropriately aligned with national disability policy?

There are many who believe that the SocialSecurity Act definition of disability, whichrequires claimants to prove they cannot work inorder to qualify for benefits, is inconsistent withthe Americans with Disabilities Act and is at oddswith the desire of many disabled individuals whowant to work but who still need some financial ormedical assistance. Recent Ticket to Work legislation is aimed at helping people who arealready on the disability rolls to return to



The Elements of ReformTo build a disability system that can meet

the challenges of the future will require changesin policy, procedure, and structure. The Boardhas proposed a number of changes that we urgepolicy makers in the Congress and theAdministration to consider. These changeswould represent fundamental reform. Insummary, they include the following elements.

Strengthen SSA’s capacity to manage

SSA’s ability to manage the disabilityprograms is undermined by three majorshortcomings —

There is a lack of managementaccountability. Nearly every staff componentof the agency has a role in administering thedisability programs.

The policy infrastructure is weak. Thereare too many voices articulating disabilitypolicy. Adjudicators in different parts of thesystem are bound by different sets of rules.Important policy elements are out of date. Asthe result of downsizing and lack of new staff to replace those who have left the agencythrough retirement or otherwise, the level of expertise in areas such as medical and

vocational factors has declined.

The agency lacks a quality managementsystem that can provide the comprehensiveinformation that is needed for accurate andconsistent decision making.

The Board recommends that SSA addressthese shortcomings by —

work by providing increased services and newincentives, but does not fully address these basicinconsistencies.

In recent testimony the Consortium of Citizens with Disabilities questioned whether the

Social Security definition of disabilityadequately captures “the spectrum andcontinuum of disability today. Does it reflectthe interaction of vocational, environmental,medical and other factors that can affect theability of someone on SSI or SSDI to attain alevel of independence?”

• organizing the agency so as to ensure greateraccountability and unified direction for thedisability programs,

• developing a single presentation of policy toguide all adjudicators and enhancing themedical and vocational expertise of its staff,and

• developing and implementing a new qualitymanagement system that will (1) providethe information that policy makers andadministrators need to guide disability

Reform of the disability programs must beevaluated within the context of clear goals andobjectives:

•

All who are truly disabled and cannot work should receive benefits.• Those who can work but need assistance to do

so should receive it.• Vocational rehabilitation and employment

services should be readily available andclaimants and beneficiaries should be helpedto take advantage of them.

• Claimants should be helped to understand thedisability rules and the determination process.

• The disability system should provide fair andconsistent treatment for all.

• The disability system should ensure highquality decisions by well-qualified and trainedadjudicators.

• The disability system should provideexpeditious processing of claims. When casesare complex and require more time, claimantsshould be informed so that they willunderstand why there is delay.

Reform Should Have ClearGoals and Objectives

11



ensure high quality, uniform administrationthroughout the country.

The issue of federalizing the disabilitydetermination process needs to be examined in thelight of anticipated future needs of thedisability programs. In the short term we believeit is necessary to strengthen the present Federal-State arrangement. Underpinning this view is thefact that SSA currently lacks the administrativeand staffing capacity to take on the significantadditional responsibility that federalization wouldentail. Nevertheless, the present arrangement isinadequate to meet the needs of the disabilityprograms today, and problems need to beaddressed as quickly as possible.

SSA’s regulations should be revised toimprove the agency’s ability to manage Stateagency operations and to provide greater nationaluniformity. States should be required to followspecific guidelines relating to educationalrequirements and salaries for staff, training,

12

* Processing times shown above are additive.** Field office processing time includes all components of the field office work, including taking the claim and

processing it after the State agency makes a determination.*** SSA reports DDS initial processing time by programs; average total processing time (DI and SSI) is not available.**** SSA does not have data available for SSI reconsideration processing times.

Chart 7. - DI and SSI Claims Process: Steps andAverage Processing Time*

FY 2000

SOCIAL SECURITY ADMINISTRATIONSSA Field Offices**

DI: 23.2 daysSSI: 35.5 days

Office of Hearings and Appeals:Administrative Law Judges

297 days

Office of Hearings and Appeals:Appeals Council

505 days

Disability Determination ServicesInitial Decision ***

DI: 81.5 daysSSI: 84.5 days

Disability Determination ServicesReconsideration ****

DI: 62.8 days

FEDERAL COURTS18 months

2

3

4

5 6

1

STATE AGENCIES

Claimant starts here

policy and procedures and (2) ensure accuracyand consistency in decision making.

Change the disability adjudication process

Strengthen the Federal-Statearrangement . – Although the law gives SSAthe basic responsibility for administering thedisability programs, it requires that disabilitydecisions be made by State agencies rather thanby SSA itself. The Federal government pays100 percent of the cost.

Whether the disability decision makingauthority should belong to the States or to SSA

has been a subject of debate since Congressestablished the Federal-State arrangementnearly five decades ago. Proponents of federalizing the process argue that the presentstructure is inherently difficult to manage andthat federal administration is necessary to



13

carrying out quality assurance procedures, andother areas that have a direct impact on thequality of their employees and their ability tomake decisions that are both of high quality andtimely.

Reform the hearing process . – Theformal right of claimants to a hearing wasadopted in 1940 with only 12 “referees” to hearappeals. But with the enactment of the disabilityprograms, the hearing process has becomemassive, with about 1,000 administrative law

judges and nearly 7,000 other employees.

Along with becoming a much largeroperation than originally envisaged, SSA’shearing process has also changed as the result of

the fact that most claimants are now representedby attorneys or other representatives. Becausethe agency is not represented as well, manybelieve the hearing process has become too one-sided. We think that having an individualpresent at the hearing to defend the agency’sposition would help to clarify the issues andintroduce greater consistency and accountabilityinto the adjudicative system and, as in a moretraditional court setting, would help to carry outan effective cross-examination. Considerationshould also be given to allowing the individualwho represents the agency at the hearing to filean appeal of the ALJ decision.

We also recommend that the Congress andSSA review again the issue of whether the recordshould be closed after the ALJ hearing. Leavingthe record open means that the case can changeat each level of appeal, requiring a de novodecision based on a different record. Many ALJshave told the Board that leaving the record opengives attorneys an incentive to withhold evidence

in order to strengthen an appeal at a later stage,and provides an inherent incentive to withholdevidence in order to prolong the case andincrease fees. Other ALJs do not believe thatrepresentatives hold back evidence for thesereasons. If evidence is held back, they maintain,it is because the rules for presenting evidence arelax and representatives do not take the time orspend the money to obtain additional evidence

unless required to do so as a result of anunfavorable hearing decision. Closing the recordwould heighten the need to develop the record asfully as possible before the decision is made inorder to ensure that claimants are not unfairlypenalized. Closing the record would notpreclude filing a new application.

Third, we recommend that consideration begiven to establishing a system of certification forclaimant representatives and to establishinguniform procedures for claimant representativesto follow. The objective would be to provide fora more orderly and expeditious hearingprocedure than currently exists.

Consider changes in the current

provisions for judicial review . – Concernsabout national uniformity in policy andprocedure have led many to consider whetherthere is a need for change in the currentprovisions for judicial review. Under the currentsystem, Federal courts frequently issue decisionsthat vary from district to district and circuit tocircuit. Over the years a number of bills havebeen introduced in the Congress that wouldcreate either a Social Security Court or a SocialSecurity Court of Appeals that would specializein Social Security cases, thus establishing aframework that could produce greater uniformityin decision making. The statutorily-establishedCommission on Structural Alternatives for theFederal Courts of Appeals, chaired by JusticeByron White, stated in its final report inDecember 1998 that Congress should seriouslyconsider proposals that would place judicialreview of Social Security cases in an Article Icourt. We believe that the question of whetherexisting arrangements for judicial review shouldbe retained or replaced by a new court structure

deserves careful study by the Congress and theSocial Security Administration.

Align policy and administrative capacity

Nearly every part of the Social SecurityAdministration has been affected by the



...disability policy and

administrative capacity are now seriously out of

alignment and threaten to become more so...

institutional arrangements, and funding. Inaddition, the Board has urged the agency todevelop a comprehensive workforce plan andbase its appropriations requests on this plan, asdirected by the 1994 independent agencylegislation. We also urge the Administrationand the Congress to exclude SSA’sadministrative budget for Social Security fromthe statutory cap that imposes a limit on theamount of discretionary government spending.

Examine ways to improveincentives for early rehabilitation

and employment

The issue of whether the present structureof assistance to the disabled provides sufficienthelp and incentive for employment needscareful review. Many experts believe that themost effective intervention is to help disabledindividuals return to work as quickly aspossible. More comprehensive research onways to improve incentives for rehabilitationand employment early in a period of disabilityis needed. This may include new or differentarrangements for cash or medical benefits orfor rehabilitation and employment services.The experience of other countries and of both

private and public employers in the UnitedStates should be taken into account.

Included as part of this comprehensiveresearch effort should be a study of whetherproviding some type of short-term disabilityassistance, combined with rehabilitationservices, would improve assistance for thosewho have disabilities while also relievingpressure on the permanent disability programs.The studies that are conducted should includecost-benefit analyses. Where needed, specificlegislative authority and funding for thesestudies should be provided.

14

The issue of whether the present structure of assistance to the disabled provides sufficient help and incentive for

employment needs careful review.

downsizing and restraint on government hiringthat has occurred over the last two decades. Butfor various reasons, the disability programs inparticular have tended to suffer. As resourceshave been constrained, SSA has issued numerousregulations and rulings that require more time andexpertise on the part of all adjudicators than wasthe case in the past and workloads have grownsubstantially. The result is that disability policyand administrative capacity are now seriously outof alignment and threaten to become more so asthe agency moves toward national implementationof several new initiatives.

Of particular importance are the “processunification” rulings issued by SSA in 1996, whichwere aimed at bringing State agency and ALJ

decisions closer together. Many State agencyadministrators claim that some of them are socomplex that State agency employees cannotadhere to them without spending substantiallyincreased time on a large percentage of the casesthey are adjudicating. In addition, these new rulesfor adjudicating cases require analytical andwriting skills that many employees do not have.

Both the new Administration and the newCongress will share the responsibility formaking the changes that are needed to ensure thatdisability policy and administrative capabilitiesare properly aligned. This will likely involve acombination of changes in policy, processes,



15

III. IMPROVE THE SOCIAL SECURITYADMINISTRATION’S SERVICE

TO THE PUBLIC 4

The magnitude of the Social SecurityAdministration’s service delivery responsibilitiesis reflected in its basic workload statistics. Infiscal year 2000, the agency processed morethan 277 million earnings reports and more than6.6 million claims for Social Security andSupplemental Security Income (SSI) benefits.The agency’s 1,300 field offices had about 27

million visitors and about 87 million calls wereplaced to its 800 number. A determination as towhether a claimant was disabled was made onbehalf of more than two million individuals.

SSA’s capacity to serve the public isincreasingly at risk

Despite a dedicated workforce, SSA isfacing serious service delivery problems incarrying out its important responsibilities. These

problems stem from a combination of factors,including a prolonged period of downsizing, agrowing workload, and increasing programcomplexity. Since 1982, downsizing hasresulted in a 29 percent decline in the numberof employees who work in the agency’sregional and field offices, teleservice centers, andprogram service centers. The agency’s effort tomeet the 15-to-1 staff-management ratiorecommended by the National PerformanceReview in 1993 has reduced the number of managers and supervisors in field offices andteleservice centers by nearly one-half, reducingthe capacity to provide the training, mentoring,and other activities necessary to ensure thequality and accuracy of the work that is beingperformed.

Employees throughout the agency’s fieldoperations are having increasing difficulty inkeeping up with their growing workloads, andthe emphasis on meeting processing time goals iscausing burnout and affecting employee morale.Overworked managers and supervisors lack thetime to provide the training and perform thequality reviews that are needed to ensure the

accuracy and integrity of the Social Security andSSI programs.

4 For more information on this subject, see theAdvisory Board’s September 1999 report, How theSocial Security Administration Can Improve ItsService to the Public.

Chart 8. - SSA On-Duty Employment*

100

90

80

70

60

50

40

30

20

10

0

1 9 7 5

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

Total

Field **

* Includes full-time, part-time, temporary,

seasonal, and student employees as of the end of the fiscal year.**Includes employees in regional and field offices,

program service centers, and teleservice centers.

Present and Future Challenges to Providing Quality Service

FY 1975 - 2000(in thousands)





17

number, approximately 12 percent of the callersreceived a busy signal. Nearly 17 million callswere abandoned by the caller, either while waitingfor an agent to handle the call or before usingautomated services. This means that only about66 percent of the calls placed were actuallyserved.

Many who visit one of SSA’s field officesencounter overcrowded waiting areas and longwaits for service. Field office managers have toldthe Board that in many offices, primarily urbanoffices, waits of 2, 3, or 4 hours are notuncommon.

What the New Administration andthe New Congress Need to Do

Within this context, in its September 1999report the Board made four overarchingrecommendations for how SSA should proceedin order to be able to improve the quality of service that it provides to the public.

The agency needs to develop a service delivery plan that describes how it will deliver service over the

short term and the long termSSA needs to resolve how it will handle its

growing workloads, whether through increasesin staffing, technological improvements,changes in the way the agency processes itswork, or a combination of these approaches.In response to the Board’s recommendation,the agency recently took a first step in thisplanning effort by issuing what it calls the2010 Vision , which outlines the principles forservice delivery in the future . The newAdministration should advance the work theagency has begun by developing acomprehensive and detailed plan for how theagency will meet its needs in the areas of human resources, technology, and work processes. This plan should address both theshort-term and the long-term objectives of theagency.

SSA’s administrative problems will not beeasy to address. There are both external andinternal factors that impose constraints on theagency’s ability to act, including the fact thatthe budget is not under its control but isdetermined by the legislative process, otheragencies have significant authority overpersonnel and acquisition rules and policies,and management-union agreements establishparameters for how the agency conducts its

business. More than 60 years of history haveproduced a service delivery system that can bechanged only with energy and commitment.

SSA needs to resolve how itwill handle its growing

workloads, whether throughincreases in staffing,

technological improvements, changes in the way the agency

processes its work, or a combination

of these approaches.

Heavy workloads and pressures to meetprocessing times mean that field office employeesoften do not have sufficient time to help claimantsunderstand complex disability eligibility rules orto help them file adequately documented disabilityclaims. The result may be an improper denial of benefits, and a claimant may suffer a prolongedperiod without benefits while going through theagency’s slow and overloaded appeals process.Heavy workloads are also contributing to arapidly growing backlog of postentitlementactions that are necessary to maintain theaccuracy of the benefit rolls.



18

The Administration and the Congress need to ensure that SSA has the resources it needs to carry out its plan

In our September 1999 report the Board madethe point that the agency cannot sustain anyfurther reductions, and in fact now faces staffingshortages in key parts of its organization. Wewere pleased that the Commissioner used theauthority provided to him in the 1994 independentagency legislation to submit a budget request for2001 that provided for much-needed but modestincreases in staffing for the agency. Although theOffice of Management and Budget and theCongress did not agree to support this increase,

the Commissioner’s action reflected an importantshift from the position that the agency has takenin prior years that it would somehow manage tocarry out its work even though the appropriationwas inadequate for its needs.

SSA will need the support of theAdministration and the Congress in order to meetits human resource needs. The agency shoulddevelop a comprehensive workforce plan and baseits appropriations requests on this plan, asdirected by the 1994 legislation. The plan shouldreflect the real needs of SSA’s programs. Itshould be developed using a work measurementsystem that accurately assesses the work to bedone and the amount of time required to performit in a manner that ensures a high quality of service. A workforce-based budget will allow thePresident and the Congress to make better-informed decisions about appropriate fundinglevels for the agency. SSA should also continueits work to develop a new work measurementsystem that will provide a better understanding

than the agency now has of the time employees inthe field are spending in carrying out the agency’smany varied responsibilities.

As noted earlier in this report, we urge thenew Administration and the new Congress toexclude SSA’s administrative budget, like itsprogram budget, from the statutory cap thatimposes a limit on the amount of discretionarygovernment spending. Both workers andemployers contribute to the self-financed SocialSecurity system, and are entitled to receive servicethat is of high quality. It is entirely appropriatethat spending for administration of Social Securityprograms be set at a level that fits the needs of Social Security’s contributors and beneficiaries,rather than requiring it to compete with fundingfor health, education, and other human servicesfunctions within the current government cap ondiscretionary spending.

...we urge the new Administration and the new

Congress to exclude SSA’s administrative budget, like its

program budget, from the statutory cap that imposes a

limit on the amount of discretionary

government spending.

The agency needs to make majorimprovements in a number of its

service delivery practices and strategies

The agency should follow the example of themost successful public and private entities andbecome much more oriented toward meeting

The agency should follow the example of the most successful public and private entities and become much more oriented

toward meeting the needs and expectations of its clients.



19

changing the culture of the agency. Theproblems include a culture that discourages opendiscussion and timely resolution of problems,weaknesses in communication between SSA’sheadquarters and operations in the field, andinadequate teamwork. We have observed that inmore recent months the agency’s leadership hasbeen working to address these problems andsome progress has been made. But it willrequire continued strong leadership to buildupon these beginnings.

The need to encourage opendiscussion of agency problems . – As wenoted in our September 1999 report on serviceto the public, SSA has a strong institutionalresistance to open discussion of the agency’s

problems. Although this attitude has apparentlyexisted for many years and may be related to theagency’s historic “can do” approach, it isparticularly inappropriate and troubling today,given the scope and magnitude of the agency’sproblems. This kind of problem is difficult tocorrect. It requires a fundamental change inagency culture – a change that can be broughtabout only by strong leadership from the top.

the needs and expectations of its clients. Itshould improve the way it measures its service tothe public and use the information it receives toguide its decisions on how to deliver high qualityservice most cost-effectively. SSA also needs toimprove the way it measures its performance,and should test its performance against that of successful organizations in the public andprivate sectors.

We were pleased that in the fall of 2000 theagency accepted the Board’s proposal for jointsponsorship of a forum on the measurement anduse of customer service information. This forumbrought together experts from the private sectorand academia to advise the agency on ways itcan improve its measurement and use of

customer service information so as to improvethe quality of service it provides to the public.

SSA has made delivering “customer-responsive world-class service” one of the fivemajor goals in its current five-year strategicplan. SSA has thus set a goal, which we believeto be appropriate, that will require the agency tomeasure its service against the best that isoffered in both the public and private sectors. If it is to meet this goal in the foreseeable future, itmust make dramatic improvements in itstelephone service, accelerate its ability todevelop and use new technologies, andrestructure and improve the way it conductsmuch of its work, particularly with respect to thedisability programs. In order to implement manyof the changes that are needed, it will need thesupport of both the Administration and theCongress.

The agency’s leadership needs to address long-standing institutional problems

Although SSA’s long-standing institutionalproblems relate to all of the agency’s work, theydirectly affect SSA’s ability to serve the public.These are problems that have grown over manyyears and to some degree are endemic to anylarge institution. To address them will require

...SSA has a stronginstitutional resistance to open discussion of the

agency’s problems. Although this attitude has apparentlyexisted for many years and

may be related to the agency’s historic “can do” approach, it is particularlyinappropriate and troubling

today, given the scope and magnitude of the

agency’s problems.



20

The need for better communicationbetween management in headquartersand employees in the field . – A relatedproblem is a feeling of misunderstandingbetween SSA’s managers in headquarters andemployees in the field, including in Statedisability agencies. Many employees in thefield have expressed concern that SSA’smanagement in headquarters is unaware of theproblems they are having in serving the publicand uninterested in hearing their suggestions forhow these problems might be resolved.Consistent with these observations, a recentreport on organizational culture conducted bySSA’s Office of Workforce Analysis found that“employees in the field feel strongly that SSAHeadquarters is out of touch with them.” 5

This finding underscores the need for theagency to do far more than it has been doing inthe past to assure employees in the field thatwhat they are saying is actually being heard andthat their suggestions for improvements willreceive thoughtful consideration within theagency. The outreach that the agencyconducted in developing its 2010 Vision is anillustration of the kind of effort that needs to bemade on a systematic and consistent basis.

SSA should consider organizationalchanges to create a more service-oriented agency . – A reorganization of SSA

in 1979 established the agency’s first functionalorganization, replacing an organization basedon program bureaus that went back to the earlydays of the program. Over the last 20 yearsthere has been an expansion of the number of functional components, leading to a dispersionof responsibility and a narrowing of accountability. Many of the components haveoverlapping lines of authority, requiring a greatdeal of coordination.

SSA needs to make organizational changesto satisfactorily address its service deliveryproblems. Clearer lines of responsibility andmore precise accountability for major segmentsof the agency’s work would be desirable. Inaddition, the agency should address a number

of fundamental questions relating to how it isorganized to serve the public, including how farcan, and should, the agency go to reducereliance on resource-expensive face-to-facesettings, and how far can, and should, theagency go to increase the use of the telephone,and in turn, electronic communications, toprovide more responsive service at lower cost.

The Board urges the new Commissioner toundertake a study of the agency’s organization,with a view toward providing a sharper focuson how the agency can improve its service tothe public.

The Board urges the new Commissioner to undertake a study of the agency’s organization, with a view toward

providing a sharper focus on how the agency canimprove its service to the public.

5 See Organizational Culture Project: Final Report,Social Security Administration, May 2000, p. 6.



21

SSA has a responsibility to communicatein an authoritative, credible, accurate, andaccessible manner with two important groups:first, the 154 million workers who pay thetaxes needed to finance the Social Securitysystem; and second, the 45 million individualswho are currently receiving Social Securitybenefits.

SSA has a particular obligation to informworkers, whose dedicated taxes pay for SocialSecurity, about the benefit protections providedto them by Social Security, the financing of benefits, and the operations of the Trust Funds.

The agency’s efforts to communicate withthe public should extend beyond providingbasic descriptions of the Social Securityprogram. SSA should take the lead amonggovernment agencies in educating workers andtheir families about retirement planning.

Adequate retirement income depends on the

strength of each of the legs of the “three-leggedstool” – Social Security, employer pensions,and private savings. Helping individualsunderstand what they need to do to ensure theireconomic security in retirement should be amajor objective of the agency.

IV. INCREASE PUBLIC UNDERSTANDINGOF SOCIAL SECURITY 6

SSA’s Obligation to Communicate with the Public

The public also needs balanced andobjective information about the complex issuesinvolved in ensuring the long-term solvency of Social Security. SSA has the opportunity andthe responsibility to provide information andanalysis that will be helpful in the nationaldebate on this issue.

SSA has a responsibility

to communicate in an authoritative, credible, accurate, and accessible

manner with two important groups: first, the 154 million

workers who pay the taxes needed to finance the Social Security system; and second,

the 45 million individualswho are currently receivingSocial Security benefits.

6 For more information on this subject, see the AdvisoryBoard’s September 1997 report, Increasing PublicUnderstanding of Social Security.

What the Public Thinks About Social Security

Over the years the Social Security programhas enjoyed widespread public support. Despite

this strong support, the numerous studies andsurveys of public understanding of SocialSecurity that have been made in recent yearsshow that understanding of many aspects of Social Security is weak.

There is confusion about what Social Security does and does not do

A 1999 survey by SSA shows that more thanhalf (52 percent) of people surveyed think theyknow some about Social Security and anadditional 11 percent think they know a lot.



22

About 80 percent know that Social Securityprovides for disability and survivor benefits, aswell as retirement benefits. But there are majorareas of confusion. For example, one-fifth of respondents erroneously think that Social Securitypays for the food stamp program and anadditional one-third are unsure whether it does ornot. Sixty percent think that Social Security taxesgo to pay for the SSI program and an additionalone-third are uncertain. Only 8 percent correctlythink that Social Security taxes are not used topay for SSI.

Another 1999 survey conducted by non-governmental institutions backs up these findings.Asked why the system is in trouble, more people(65 percent) selected “money in the Social

Security trust fund is being spent on programsother than Social Security” than any otherreason. 7

Over the years there has been a widely heldview that there is a significant amount of fraudand abuse in the program. This view continues toprevail. The non-governmental survey referred toabove found that more than half (54 percent) of those surveyed think that fraud and abuse bypeople who are not entitled to benefits is a majorreason why the program faces financingdifficulties.

Public confidence in the program has declined...

Public confidence in the program declined inthe late 1970s and early 1980s, a period of extensive media coverage of the short-termfinancing problems of Social Security thatpreceded the reform amendments of 1983. It roseagain in the late 1980s before beginning

another decline in the early 1990s, when theissue of long-term solvency of Social Securitybecame a frequent topic of media attention. Inthe 1999 SSA survey more than half of non-retirees who were polled were only a littleconfident or not confident at all that SocialSecurity retirement benefits will be there forthem when they retire. The 1999 non-governmental survey found that 52 percenthold the view that the program has majorproblems, and an additional 30 percent think the program is in crisis. Three-quarters saidthat the program is likely to go bankrupt if Congress fails to take any action.

…but there is continuing strong public support

This same survey suggests that concernabout the future of Social Security does notimply a lack of public support for the program.When given a list of Federal governmentprograms, 85 percent of respondents said thatSocial Security was very important – morethan for any other program listed, includingMedicare (80 percent) and Medicaid (67percent). Nearly three-quarters (73 percent)said that helping make Social Security

financially sound should be one of the toppriorities for the use of any budget surplus,compared to 57 percent for Medicare and 50percent for increased spending on domesticprograms, such as health, education, and theenvironment.

...concern about the future of Social Security does not imply a lack of public

support for the program.

7 Survey conducted by National Public Radio, theKaiser Family Foundation, and Harvard University’sKennedy School of Government, May 1999.



23

What SSA Should Do to IncreasePublic Understanding of Social Security

In its September 1997 report, IncreasingPublic Understanding of Social Security , theBoard made a number of specificrecommendations for changes the agencyshould make to increase public understandingof Social Security. The Board recommendedthat SSA:

• Develop a long-range plan for how theagency can take a far more active role ininforming the public about Social Securityand how it fits into an individual worker’slong-term financial planning.

• Take the lead among government agenciesin educating workers about retirementplanning.

• Use new tools to improve publicunderstanding, including the SocialSecurity Statement (formerly called thePersonal Earnings and Benefit EstimateStatement), the Internet, and other modesof communication. The Board urged theagency to make the Social Security

Statement one of its highest priorities andto improve its content and design so that itcan be an effective tool in enhancing publicunderstanding of the program and inindividual financial planning.

• Target efforts on areas where publicunderstanding is weak, including ensuringlong-term solvency, improvingunderstanding of disability and survivorsbenefits, informing younger workersregarding Social Security taxes andbenefits, informing the public about thealready-scheduled increase in theretirement age, and clarifying that SSIbenefits are funded out of general revenuesrather than Social Security taxes.

• Assure that the Office of Communicationsand field offices have sufficient staff to

perform their public informationresponsibilities and that they haveappropriate experience and training.

• Make the most of agency resources bymaximizing the ability of the Commissionerto call the attention of the media to SocialSecurity issues and by placing renewedemphasis on increasing public understandingthrough the agency’s field office managersand other employees.

The agency has taken steps toimprove communications with

the public

Since the issuance of the Board’s report,SSA has taken a number of steps to improve itscommunications with the public. Strengtheningpublic understanding of Social Security hasbecome one of the five goals in the agency’sstrategic plan. SSA has established the objectiveof having 90 percent of the public knowledgeableabout the Social Security program in five areasby 2005. These areas include basic programfacts, the financial value of the program toindividuals, the economic and social impact of

Since the issuance of the Board’s report, SSA has

taken a number of steps toimprove its communications

with the public.

Strengthening publicunderstanding of

Social Security has become one of the five goals in the agency’s

strategic plan.



24

the program, the current financing arrangement,and financing issues. SSA has developed aprocess to measure improvement.

The agency has also been conducting anoutreach campaign, which includes holding publicevents and media campaigns, developing newbrochures and printed materials, improving theSocial Security Statement, and expanding theinformation and services that it makes availablethrough the Internet. Recently, for example, theagency has provided a “Retirement Planner” on itsWeb site that allows workers to compute estimatesof their future Social Security retirement benefits.

In the past, SSA depended largely on fieldrepresentatives who worked in field offices and

had the specific responsibility of maintainingcommunications with their communities throughvisits to local organizations and working with themedia. In 1982 there were 1,400 fieldrepresentatives, but as the agency has beendownsized, these positions have been reduced toabout 400 today, and the focus of their work hasbeen shifted away from public information.Today, most of SSA’s communications efforts arebeing handled by staff professionals, includingabout 100 public affairs specialists who work inmajor local media markets. The agency has alsobeen providing communications training to its fieldoffice managers and regional public affairs officersand has conducted an “Ambassadors Program” toeducate all employees on financing and othermajor issues. As the Board noted in its 1997report, however, we are concerned that field officemanagers and others who work in communitiesthroughout the country are so hard pressed byheavy workloads and inadequate resources thatthey no longer have time to carry out importantpublic information activities.

Another area of concern is the notices thatSSA sends to millions of individuals each year.The agency mails approximately 240 millionnotices annually to its claimants, beneficiaries,and their representatives. These notices explainprogram policy, administrative processes, and thecriteria upon which SSA’s decisions have beenmade on individual cases. The quality and clarityof many of these notices have been called intoquestion by reviewers both inside and outside of SSA, including a recent study conducted by thePacific Consulting Group. Many of SSA’snotices are produced by an automated noticeproduction system that has been criticized byexperts both within and outside the agency asoutdated. In addition, about 150 million noticesare produced manually, most of which are

preprinted form letters that may containsuperseded, out-of-date policy information. Whilethe agency has included “notice improvements”among its key initiatives outlined in itsperformance plan for fiscal year 2001, andimprovements are being made, we believe that theagency should strengthen its efforts.

Much remains to be done

Although increasing public understanding hasbecome a major focus for the agency, as thestatistics above show there is still much that needsto be done. The agency’s efforts to improve thework that it is doing will need the support of boththe Administration and the Congress. Therecommendations made by the Board in 1997 andsummarized above continue to provide a usefulframework for assessing how well the agency isdoing in improving understanding of SocialSecurity not only by the beneficiaries of theprogram, but even more importantly, by theworkers and employers who support it.

...we are concerned that field office managers and others whowork in communities throughout the country are so hard pressed

by heavy workloads and inadequate resources that they no longer have time to carry out important public information activities.



25

V. IMPROVE THE QUALITY OF SERVICE AND THEINTEGRITY OF THE SUPPLEMENTAL SECURITY

INCOME PROGRAM 8

8 For more information on the Board’s work regarding the SSI program, see the “AdditionalStatement by the Social Security Board” that hasaccompanied SSA’s Annual Report of theSupplemental Security Income Program for fiscalyears 1998, 1999, and 2000.

In 1972, when the Supplemental SecurityIncome program was enacted, questions wereraised in the Congress and elsewhere aboutSSA’s capacity to absorb administrativeresponsibility for the complex new welfareprogram without compromising its ability toadminister the much larger Social Securityretirement, survivors, and disability programs.The Congress ultimately chose the Social

Security Administration to administer the SSIprogram, in part because of the agency’snetwork of offices accessible to the public andits reputation for providing high qualityservice.

The Congress believed that the SSIprogram, which was intended to serve as asupplement to the Social Security programs,could function best in close connection withthem. It was hoped that joint administration of the programs would result in improved servicefor low-income aged, blind, and disabledindividuals, and that they would experienceless stigma than under the prior State-administered welfare programs.

The agency had difficulties from thebeginning in taking over the complexresponsibility of administering the means-tested SSI program, and over the last 25 yearsthe impact of the SSI program on the

functioning of the agency has grown. Today SSIcontinues to represent a major challenge forSSA’s management and for employees in thefield.

The SSI program is inherently more complex to administer than Social Security

As a means-tested program, SSI is inherentlymore difficult to administer than the earned-rightSocial Security program. Social Securityeligibility depends upon generally objective andstable factors, such as date of birth, date of death, and marital status. In contrast, under SSIthe fact and degree of eligibility can change frommonth to month based on changes in income,resources, individual living arrangements, andplace of residence.

Administration is further complicated by thefact that the SSI program has becomepredominantly a disability program and thusshares with Social Security all of the

The agency had difficulties from the beginning in taking over the complex responsibility of administering the means-tested SSI

program, and over the last 25 years the impact of the SSI program on the functioning of the agency has grown. Today SSI continues

to represent a major challenge for SSA’s management and for employees in the field.

The Impact of the SSI Program on the Functioning of the Agency



26

complexities involved in the multi-step disabilitydetermination process. Today, 91 percent of SSIapplications are for disability benefits. The 5.2million SSI disability beneficiaries greatlyoutnumber the 1.3 million beneficiaries whoreceive benefits on the basis of age. This is incontrast with the situation prevailing at the timethe SSI program began, when the agedconstituted the majority of beneficiaries.

SSI disability applications often presentspecial complexities. Many applicants lack documentation of work or medical histories.This requires more work on the part of SSA andState agency employees to gather medicalevidence and makes it more difficult to determinewhether these individuals are able to work. In

1999, 59 percent of disabled SSI beneficiarieshad a mental impairment. Adjudicating mentalimpairment cases can require the use of muchmore subjective judgment than is required in thecase of most physical impairments. In addition,nearly a quarter of all SSI disability applicationsare for children, whose conditions often changerapidly over time, requiring more frequentreviews than other cases.

As a result of all these factors, the cost of administering the SSI program (including bothold age and disability benefits) is high inproportion to benefit outlays. Although in 2000SSI accounted for only about 7 percent of SSA’sbenefit outlays, it accounted for about 36 percentof the agency’s administrative budget (ascompared to about 47 percent for the SocialSecurity programs and 16 percent for Medicare

measures, however incremental, that willsimplify the SSI program from the standpoint of the individual applicant and beneficiary, andfrom the standpoint of the agency. The Congressshould also be cognizant of the desirability of program simplification, and consider legislativechanges where they are appropriate.

responsibilities). The proportion of SSA’sadministrative budget devoted to SSI has grownsince the early years of the program. In 1980, SSIaccounted for only 27 percent of SSA’s totaladministrative costs.

The agency’s service delivery could almostcertainly be improved if the complexity of SSIprogram rules were reduced. While notunderestimating the difficulty of the task, weencourage SSA to take the lead in developing

The agency’s service delivery could almost certainly be improved if the complexity of SSI program rules were reduced. While notunderestimating the difficulty of the task, we encourage SSA totake the lead in developing measures, however incremental, that

will simplify the SSI program from the standpoint of the individual applicant and beneficiary, and from the standpoint of the agency.

Chart 11. - Spending forAdministration by Program

FY 2000

OASDI47%

Medicare16%

SSI36%



27

Better data are needed to help the agency target its efforts to improve service

All of these recommendations appear tohave validity. At the present time, however,SSA has very little data that it can use todetermine how it should target its efforts toimprove service to the diverse SSI population.For example, although the agency has data thatidentify service satisfaction levels for the SSIpopulation as a whole, it does not systematicallycollect and use data relating to large andimportant segments of the SSI population – theaged, disabled, those who are working, disabledchildren, or those with specific types of impairments. It also lacks data that present apicture of clients’ needs or satisfaction withspecific aspects of the agency’s responsibilities— performance in field offices, State disabilityagencies, or the Office of Hearings and Appeals.

The Need for a Better Understanding of theService Needs of the SSI Population

Because of the factors discussed aboverelating to the complexity of SSI rules andprocedures and the special characteristics of thepopulation, SSA has been called upon to take onsubstantial casework responsibility, aresponsibility that it is presently not staffed tofulfill.

Many SSA field office personnel, as well asadvocates for the poor, believe that the agencyshould do more to assist aged and disabledindividuals. Specific recommendations theBoard has heard include:

• SSA should provide more assistance to SSIclaimants than it is currently providing,particularly to those who are infirm or havedisabilities that make it difficult for them topursue their claims on their own.

• The agency should be more diligent andcareful in helping to obtain representativepayees for those who are unable to managetheir own resources, and in monitoring howtheir funds are spent.

• SSA should find ways to make it easier forindividuals to report income and otherchanges that will result in a change inbenefits and should process these reportsquickly and reliably.

• The agency should do more to help SSIapplicants and beneficiaries find and retainemployment.

Many SSA field office personnel, as well as advocates for the poor, believe that the agency should do more to assist

aged and disabled individuals.

At the present time...SSA hasvery little data that it can use to determine how it should targetits efforts to improve service to

the diverse SSI population.

SSA would be able to target its efforts andimprove its performance much more efficientlyand effectively if it collected data such as theseand used them to drive its actions.



A more accurate work measurement system should be a high agency priority

Along with expanding and improving itsmeasures of the service needs and satisfactionof SSI claimants and beneficiaries, SSA shouldmake its current effort to develop a new andmore accurate work measurement system a highpriority. Field employees who spoke to usabout the current system universally described itas inaccurate and unfair. Among otherproblems, they believe that it fails to giveappropriate credit for many SSI-relatedactivities, particularly SSI postentitlementwork. They also view the system as tiltedtoward quantity and speed of work at theexpense of quality and responsiveness toclaimants’ needs. Because SSA’s work measurement system is used to allocate staffingfor all regions of the country, it has a stronginfluence on how employees conduct their work.

SSA established a working group that hasrecommended numerous changes in the work measurement system. Many of therecommendations are complex andimplementing them will require significant

changes in computer systems. It will takestrong leadership to give changes in the work measurement system the priority that theydeserve within the agency. But work measurement, like measurement of clientsatisfaction, can undermine quality service if it

is not carried out appropriately. And a systemthat is as widely criticized as the present work measurement system can only serve toundermine the confidence of the agency’s ownemployees in the fairness of the agency’s

procedures.There is a strong relationship between

measures of client satisfaction and work measurement. Both of these measures areimportant drivers of behavior, affecting the day-to-day actions of individual employees as wellas the priorities of the agency as a whole.These measures need to be developed incoordination so that they will reinforce eachother and serve as consistent reminders of whatthe agency values as high quality service to the

public.

Along with expanding and improving its measures of the

service needs and satisfaction of SSI claimants and

beneficiaries, SSA should make its current effort to develop a new and more

accurate work measurement system a high priority.

Integrating Program Integrity and Quality of Service

Because of resource limitations andpressures to process work quickly, programintegrity and serving the public are viewed bymany within the agency as competing objectives.But program integrity is in fact integral to goodservice to the public. Certainly taxpayers whosupport the SSI program view it as good serviceif their tax dollars are accurately dispensed.Similarly, beneficiaries view it as good service if

their payments are correct and they do not have

the inconvenience or hardship of eitheroverpayments or underpayments.

The concern about programintegrity

In fiscal year 2000, SSA processed 3.3million SSI overpayments, more than twice as

28



many as in 1990. Despite this large number of clearances, the number of unresolved SSIoverpayments pending in field offices at the endof fiscal year 2000 was twice what it was at theend of 1990.

excellent, half rated their SSI claims work asonly fair or poor.

In our observation, many of the problemsthat can lead to inaccurate benefit paymentsstem from the fact that too often employees inthe field lack the time they need to process theirworkloads with proper care. There are manyexamples of this. For instance, overworkedemployees in field offices have told us that theysometimes do not pursue certain lines of questioning, such as the details of anindividual’s living arrangements, because ittakes too long to resolve the issues that may beraised. Agency employees are not processingreports of earnings or changes in livingarrangements as promptly as they should

because interviewing claimants who are sittingin overcrowded waiting rooms is a higherpriority. And many report that they do not havetime to investigate properly the quality andreliability of the representative payees whomthey assign to manage payments on behalf of beneficiaries who are physically or mentallyimpaired.

...many of the problems that can lead to inaccurate

benefit payments stem from the fact that toooften employees in the

field lack the time they need to process their

workloads with proper care.

We have been told of similar concerns inState disability agencies, where examiners arepressed to meet processing times that make itdifficult or impossible for them to gather all theevidence that is needed to make accurate andfully substantiated disability determinations.

29

According to the agency’s data, the SSIpayment accuracy rate, measuring the accuracy of current, retroactive, and estimated futurepayments, increased from 93 percent in fiscal year1997 to 94.2 percent in 1999. However, both of these numbers are below those reported in theearlier part of the decade. For example, in fiscalyear 1991 the SSI payment accuracy rate stood at96.2 percent.

The General Accounting Office has placed theSSI program on its list of government programsthat are at “high risk” of waste, fraud, and abuse,and the Board has talked with many in the agency,particularly in field offices, who are alsoconcerned about the integrity of the program. Theresults of a 1999 survey of field office managers

underscore the concerns that we have heard. Thesurvey, conducted by the National Council of Social Security Management Associations,included 111 managers representing a cross-section of offices from all regions, ranging fromlarge metropolitan offices to small rural offices.While three-quarters of those responding rated thequality of their office’s Social Security retirementand Disability Insurance claims work as good or

300

250

200

150

100

50

0

Chart 12. - SSI Overpayments Pending inField Offices(in thousands)

1990 1995 2000



We believe that both the employees whoadminister SSI and the individuals who benefitfrom it would have a much more favorable viewof both program integrity and quality of service if there were greater emphasis on preventingproblems before they occur.

SSA’s efforts to correct errors in payments

SSA conducts two types of reviews to catcherrors in payments to SSI beneficiaries. It hasmade redeterminations of SSI non-disabilityeligibility factors a high priority, and over thelast decade has been conducting between 1.5 tomore than 2 million redeterminations a year.SSA also conducts reviews of the disabilitystatus of SSI beneficiaries. Until the last fewyears, the agency conducted very few of thesereviews. In 1993, SSA processed only 12,000SSI continuing disability reviews (CDRs).

Legislation requiring additional CDRs forSSI beneficiaries and special earmarked fundingenacted by the Congress in 1996 enabled theagency to increase this number to more than672,000 in 2000. The agency has alsosupported expanded program integrity efforts bythe Office of the Inspector General, which has

We believe that both theemployees who administer

SSI and the individuals who benefit from it would have a much more favorable view of both program integrity and

quality of service if therewere greater emphasis on

preventing problems before they occur.

acquired increased resources and hassignificantly stepped up its investigations of fraud and abuse in the SSI program. In fiscalyear 2000, the Office of the Inspector Generalrecovered or saved $118 million as the result of its SSI investigative activities.

The agency is to be commended for theseimportant efforts. We believe, however, thatthese efforts should go hand in hand withincreased emphasis on careful handling of claims at the front end of the process.

The need for a better balance between meeting processing time goals and careful claims processing

As we indicated in our report on SSA’sservice to the public, there is always a dangerthat the pressure to meet processing time goals,because they are easily measured, will overrideprogram needs that are also essential but aremore difficult to quantify, such as carefulclaims processing, adequate levels of trainingand review, and appropriate attention to clientneeds. The agency needs to take steps toachieve balance between better performanceand workload processing so that programintegrity and high quality service will be anintegral part of all of the agency’s work.

The agency needs to take steps to achieve balance

between better performance and workload processing so that program integrity and high quality service will be

an integral part of all of the agency’s work.

30



We understand that more carefulinterviewing, better training, and increasedmonitoring for quality will require additionalresources in some if not many offices. This isanother area where the agency needs the supportof both the Administration and the Congress inorder to ensure that its staffing needs are met.

As indicated above, the agency should ensurethat its work and performance measurementsystems provide an appropriate balance betweenquality and quantity. For example, currently,when field office employees try to provide goodpublic service by responding to general inquiriesand referring people to other sources of assistance, they are given no work credit for thisactivity. And if, as the result of a careful

interview and thorough explanation of the rules,an individual decides not to file a claim, theincomplete claim is not counted, while completinga claim for someone who is clearly ineligible iscounted as a work unit.

The agency is taking more and more claimsby telephone and it is also exploring ways toincrease the kinds of work that it can perform byInternet. Although these efforts to increaseefficiency and reduce costs are needed and willexpedite service delivery to many whom SSAserves, the agency needs to take great care tobuild in safeguards that will ensure programintegrity. Many SSA and DDS employees havetold the Board that they are concerned that thereduction in face-to-face contact with claimants isincreasing the likelihood of errors and of fraudand abuse, as well as making it more difficult toprocess claims in an accurate and timely manner.

Problems in the agency’s quality assurance program

SSA should also reexamine its qualityassurance program as it relates to SSI. In the

last few years, SSA has dramatically reducedthe number of full time staff who work on thequality review of SSI workloads. At the start of fiscal year 1993, the agency had 325 individualsin the field who performed this work. As of theend of September 2000, the number had beenreduced to 187 – a 42 percent reduction. Wehave heard from individuals who perform thiswork in the field that because of downsizingthey do not have time to make the careful checksthey think are needed. For example, they arerelying more on telephone interviews to obtaininformation to verify accuracy rather thanmaking home visits.

There are other problems as well. There isa widely held view in the field that SSA’squality assurance program for disability is notuniformly applied among the regions of thecountry, and that it is applied differently tocases at different levels of review. Employees inthe field also think that it would be helpful if more information about SSA’s quality assurance

procedures and findings were shared with themso that they could use it to improve theiroperations. It is a matter of serious concernwhen SSA and State agency employees questionthe validity and usefulness of the qualitymeasuring system.

31

We understand that more careful interviewing, better training, and increased monitoring for quality will require additional resources in some if not many offices. This is another area where the agency needs the support of both the Administration and the

Congress in order to ensure that its staffing needs are met.



32

The need to build quality into work processes from the beginning

Improvements in quality cannot rest only oreven primarily on quality assurance and

investigations of fraud and abuse, important asthese activities are. While these efforts willdiscover serious systemic problems, they are notcurrently operating in a way that helps localoffices improve the quality of their products.Quality needs to be built into work processes fromthe beginning, not just measured at the end.

Downsizing and the accompanying reductionin the number of managers and supervisors haveled to a decline in the amount of review, training,and mentoring in the field. Managers across thecountry have told us that the reduction in first-line supervision has raised questions about thequality of work that is being performed in theiroffices. Review, training, and mentoring will beincreasingly important as SSA begins to hirelarge numbers of new employees to replace theexperienced employees who will soon be lost toretirement.

Quality needs to be built into work processes from the beginning, not just measured at the end....Review, training, and mentoring

will be increasingly important as SSA begins to hire large numbers of new employees to replace the experienced

employees who will soon be lost to retirement.



33

include the use of stolen and counterfeit SSNs toobtain employment, establish credit, and defraudFederal programs. Individuals also misuse SSNsto conceal their true identity while committing avariety of other crimes.

In 1999, the OIG fraud hotline received over75,000 allegations of fraud, over 80 percent of which involved misuse of the SSN. About half of these instances involved SSA programs, withthe other half involving other types of activity.The OIG expects these numbers to escalate and

has been stepping up fraud investigations whereSSN misuse is alleged.

In September 2000, the OIG issued a reportindicating that there may be serious problemswith the validity and types of documentation thatSSA accepts for identity verification. The OIGconducted a non-random sample review of 3,557SSNs and found that the assignment of 28 percent of them was based on invalid orinappropriate documents. Inappropriateassignment of SSNs has a direct impact not onlyon the accuracy of SSA’s wage and earningsdata, but also on the integrity of payments madefrom both Trust Fund and general fund programsadministered by the agency. The IG’s reportstated that to effectively combat criminals andreduce the occurrences of fraudulent SSNattainment, SSA must employ effective front-endcontrols in its enumeration process.

VI. ADDRESS THE PROBLEM OF MISUSE OFSOCIAL SECURITY NUMBERS

The Social Security number (SSN) isincreasingly being used for purposes not relatedto the administration of the Social Securityprogram. Within the Federal government it isused for cross-program identity verification anddata collection. Its use in programs from civilservice to income taxes to student loans ismandated by Federal law. It is used widely byState and local governments, especially inwelfare and Medicaid programs, and for purelyState level purposes, such as drivers’ licenses.The SSN is also widely used by private

businesses.

The Social Security number(SSN) is increasingly being

used for purposes not related to the administration of the

Social Security program.

Because of its wide availability and use, theSocial Security number has become a prime toolfor illegal activity. In a report issued by SSA’sOffice of the Inspector General (OIG) in May1999, investigators concluded that most identity-related crimes involve the fraudulent use of aSocial Security number. Reports by the FederalTrade Commission, law enforcement agencies,and inspectors from the United States PostalService have indicated that the nationwide

incidence of identity-related crimes is growingrapidly.

According to SSA’s Inspector General, theintroduction of the SSN into the stream of electronic commerce has been accompanied by adramatic increase in SSN misuse. Examples

Because of its wide

availability and use, theSocial Security number has

become a prime tool forillegal activity.



34

Until recently, SSA’s view has been thatidentity-related crimes involving the fraudulentuse of SSNs are a law enforcement issue andoutside of the agency’s jurisdiction. Hard dataon identity-related crimes and other misuses of

SSNs are not collected in a systematic way,making the magnitude of the problem difficultto discern. Suggestions, such as those made inthe past by former Senator Daniel Patrick Moynihan and others, that SSA replace thecurrent paper Social Security card with onethat is tamper-resistant have been rejected bythe agency as too costly. Given the upwardtrend in SSN misuse, it may be time for SSAto take a new look at options for a secureSocial Security card.

The Board has become increasinglyconcerned about the growing fraudulent use of the Social Security number. We have beenexamining both the authorized andunauthorized uses of Social Security numbers,vulnerabilities in SSA’s enumeration process,

and the role that Social Security numbers play inidentity-related crimes. As part of our studies, wehave consulted with the Consumer ProtectionBureau of the Federal Trade Commission on therole that Social Security numbers play in identity

theft and other identity-related crimes. We havealso discussed with the Inspector General the rolethat SSA can and should play in reducing themisuse of the SSN.

Recently, SSA has become involved indeveloping pilot projects with the StateDepartment and the Immigration andNaturalization Service to increase the integrity of the SSN enumeration process for immigrants andtravelers. This is a promising initiative. We urgethe Congress and the Administration to studycarefully additional actions that should be taken toaddress the serious and growing issue of SSNmisuse, including actions that the agency shouldtake on its own initiative as well as any changesthat should be made in the law.





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growing workloads, whether through increases in staffing, technological improvements, changes inpolicy, changes in the way the agency processes its work, or a combination of these approaches.

Addressing the problems of administering the disability programs is particularly urgent. Inaddition, major improvements need to be made in a number of the agency’s service delivery practicesand strategies, including the measurement of customer service needs and agency performance. Anew quality management system capable of providing the information needed to ensure high qualityand consistent decision making in the disability programs needs to be implemented. Issues relatingto SSI program integrity and misuse of the Social Security number need to be addressed.

Organizational changes should be considered. Clearer lines of responsibility and more preciseaccountability for major segments of the agency’s work are needed if SSA is to be able to manage itsvast responsibilities.

The agency also has to address longstanding institutional problems. For many years, SSA hashad a culture that discourages open discussion and timely resolution of problems. There have beenproblems in communication between SSA’s headquarters and operations in the field, and inadequate

teamwork. In recent years efforts have been made to address these problems and some progress hasbeen made. But the present situation developed over many years and it will require strong leadershipover a sustained period of time to provide an agency culture that will ensure that problems will beaddressed and the public will receive the high quality service that it deserves.



HOW THE BOARD HASCONDUCTED ITS WORK

The Social Security Advisory Board began its work in the Spring of 1996. Since then, the

Board has met with Social Security Administration officials, officials from other Federal and Stateorganizations, Congressional staff, claimant advocates, union and employee organization officials,and representatives from the White House. We have traveled to Social Security offices throughoutthe country and met with employees in all parts of SSA’s administrative structure. We have alsoheld public hearings, where we heard from public officials, experts, advocacy groups, and otherindividuals who shared their views with us.

Meetings of the Board. Since 1996, the Board has generally met monthly at its offices inWashington, D.C. It has also held conference calls.

Site Visits. The Board has visited Social Security Regional Offices in Boston, San Francisco,Philadelphia, Dallas, New York City, Kansas City, Chicago, and Atlanta. We have visited hearingoffices, including offices in Boston, Massachusetts; Pasadena, Downey, and Oakland, California;Harrisburg, Pennsylvania; Lansing, Michigan; Brooklyn and New York, New York; New Orleans,Louisiana; Richmond, Virginia; Fort Worth, Texas; and Birmingham, Alabama. The Board hasvisited SSA field offices throughout the country, including Boston; Los Angeles; Philadelphia;Dallas; Atlanta, Rome, Marietta, and Tucker, Georgia; Fort Lauderdale and Miami, Florida;Kansas City, Kansas; Kansas City, Missouri; Chicago; Fort Worth; and New York City. We havemet with employees in SSA’s teleservice centers and program service centers in San Francisco,Philadelphia, Dallas, Ft. Lauderdale, Chicago, Kansas City, New York City, and Atlanta.

In addition, the Board has met with officials and employees from State and local governments,including State Disability Determination agencies in Lansing and Detroit, Michigan; Austin, Texas;Richmond, Virginia; Washington, D.C.; Boston, Massachusetts; Los Angeles and Oakland,California; Harrisburg, Pennsylvania; and New York and Brooklyn, New York. In Oakland,California we met with a number of the Alameda County Supervisors, and talked withrepresentatives of the Oakland Center for Independent Living.

The Chairman has met with and addressed the National Council of Disability DeterminationDirectors and the National Council of Social Security Management Associations. He has addressedrepresentatives of the American Federation of Government Employees, the National Association of Disability Examiners, the national forum for State Disability Determination Directors, and thehearing office chief administrative law judges.

Public Hearings. The Board has held public hearings in San Francisco, Dallas, and Chicago. The

Board heard from Social Security officials, advocates for the elderly and disabled, Stategovernment officials, academics, legal services attorneys, representatives from private and non-profit organizations concerned with Social Security issues, and members of the public.

Board Forums. The Board has held three public forums to discuss issues facing the SocialSecurity Administration. The first was held in June 1997 on developing a long-range research andprogram evaluation plan for SSA. Twelve academicians and researchers participated as presentersor moderators. The Board’s second forum was held in October 1998 to discuss the implications of raising the Social Security retirement age. Participants included academicians, researchers, andgovernment officials. In January 2000, the Board held a third forum to discuss the report of the

39



40

1999 Technical Panel on Assumptions and Methods. At this forum recommendations on the economicand demographic assumptions and methods used to project the status of the Old-Age, Survivors, andDisability Insurance Trust Funds were discussed. Attendees of these forums included Congressionalstaff, SSA officials, individuals from other government organizations, members of the press, and otherindividuals with an interest in Social Security issues.

The Board also co-sponsored a forum with the Social Security Administration on the measurement of customer service expectations and needs, and how SSA can better use customer information to drivedecision-making. The forum brought together a panel of experts from the private sector and academiato discuss with the leadership of the agency and the Board how successful private sector companiesmeasure customer service and use this information to improve service delivery.

Board Testimony. In October 1997, the Chairman testified before the Senate Committee on Financeon the role of the Advisory Board. On March 12, 1998, he provided testimony for the HouseCommittee on Ways and Means hearing on the “Challenges Facing the New Commissioner of theSocial Security Administration.” On November 19, 1998 he provided testimony for the HouseCommittee on Ways and Means hearing on “Saving Social Security.” On February 10, 2000

Chairman Ross and Sylvester Schieber testified at a hearing held by the Human Resources and SocialSecurity Subcommittees of the House Ways and Means Committee on the issue of SSA’s readiness forthe impending wave of baby boomers. On April 5, 2000 the Chairman presented testimony for therecord to the Subcommittee on Labor, Health and Human Services, and Education of the HouseAppropriations Committee.

Appointment of Technical Panel. In 1999, the Board appointed a panel of experts to review theassumptions and methods used by the Board of Trustees of the Old-Age, Survivors, and DisabilityTrust Funds to project the future financial status of the funds. The panel issued its report inNovember 1999.

Board Reports and Statements. The Board has issued the following reports and statements:

1. Agenda for Social Security: Challenges for the New Congress and the New Administration ,February, 2001.

2. Charting the Future of Social Security’s Disability Programs: The Need for FundamentalChange , January, 2001.

3. Disability Decision Making: Data and Materials , January 2001.4. Annual Report Fiscal Year 2000 , October, 2000.5. Selected Aspects of Disability Decision Making , September 2000.6. “Statement on the Supplemental Security Income Program,” Additional Statement by the

Social Security Advisory Board in the Annual Report of the Supplemental Security IncomeProgram, Social Security Administration, May 2000.

7. The Technical Panel on Assumptions and Methods, Report to the Social Security Advisory Board , November 1999.

8. Annual Report Fiscal Year 1999, October 1999.9. How the Social Security Administration Can Improve Its Service to the Public, September,

1999.10. Forum on the Implications of Raising the Social Security Retirement Age, May 1999 (Staff

document).



11. “Statement on the Supplemental Security Income Program,” Additional Statement by theSocial Security Advisory Board in the Annual Report of the Supplemental Security

Income Program, Social Security Administration, May 1999.12. Annual Report Fiscal Year 1998, October 1998.13. How SSA’s Disability Programs Can Be Improved, August 1998.14. Social Security: Why Action Should Be Taken Soon, July 1998.15. “Statement on the Supplemental Security Income Program,” Additional Statement by the

Social Security Advisory Board in the Annual Report of the Supplemental Security Income Program, Social Security Administration, May 1998.

16. Strengthening Social Security Research: The Responsibilities of the Social Security Administration, January 1998.

17. Increasing Public Understanding of Social Security, September 1997.18. Forum on a Long-Range Research and Program Evaluation Plan for the Social Security

Administration: Proceedings and Additional Comments , June 24, 1997 (Staff document).19. Developing Social Security Policy: How the Social Security Administration Can Provide

Greater Policy Leadership , March 1997.

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Establishment of the Board

In 1994, when the Congress passed legislation establishing the Social Security Administrationas an independent agency, it also created a 7-member bipartisan Advisory Board to advise thePresident, the Congress, and the Commissioner of Social Security on matters relating to the SocialSecurity and Supplemental Security Income (SSI) programs. The conference report on thislegislation passed both Houses of Congress without opposition. President Clinton signed theSocial Security Independence and Program Improvements Act of 1994 into law on August 15,1994 (P.L. 103-296).

Advisory Board members are appointed to 6-year terms, made up as follows: 3 appointed bythe President (no more than 2 from the same political party); and 2 each (no more than one fromthe same political party) by the Speaker of the House (in consultation with the Chairman and

Ranking Minority Member of the Committee on Ways and Means) and by the President protempore of the Senate (in consultation with the Chairman and Ranking Minority member of theCommittee on Finance). Presidential appointees are subject to Senate confirmation. Boardmembers serve staggered terms.

The Chairman of the Board is appointed by the President for a 4-year term, coincident with theterm of the President, or until the designation of a successor.

Members of the Board

Stanford G . Ross, Chairman

Stanford Ross is a partner in the law firm of Arnold & Porter, Washington, D.C. He has dealtextensively with public policy issues while serving in the Treasury Department, on the WhiteHouse domestic policy staff, as Commissioner of Social Security, and as Public Trustee of theSocial Security and Medicare Trust Funds. He is a Founding Member and a former Director andPresident of the National Academy of Social Insurance. He has provided technical assistance onSocial Security and tax issues under the auspices of the International Monetary Fund, World Bank,and U.S. Treasury Department to various foreign countries. He has taught at the law schools of Georgetown University, Harvard University, New York University, and the University of Virginia,and has been a Visiting Fellow at the Hoover Institution, Stanford University. He is the author of many papers on Social Security and Federal taxation subjects. Term of office: October 1997 toSeptember 2002.

Jo Anne BarnhartJo Anne Barnhart is a political consultant and public policy consultant to State and local

governments on welfare and social services program design, policy, implementation, evaluation,and legislation. From 1990 to 1993 she served as Assistant Secretary for Children and Families,Department of Health and Human Services, overseeing more than 65 programs, including Aid toFamilies with Dependent Children, the Job Opportunities and Basic Skills Training program,

THE SOCIAL SECURITY ADVISORY BOARD

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Child Support Enforcement, and various child care programs. Previously, she was Minority Staff Director for the U.S. Senate Committee on Governmental Affairs, and legislative assistant fordomestic policy issues for Senator William V. Roth. Ms. Barnhart served as Political Director forthe National Republican Senatorial Committee. First term of office: March 1997 to September1998; current term of office: October 1998 to September 2004.

Martha KeysMartha Keys served as a U.S. Representative in the 94th and 95th Congresses. She was a

member of the House Ways and Means Committee and its Subcommittees on Health and PublicAssistance and Unemployment Compensation. Ms. Keys also served on the Select Committee onWelfare Reform. She served in the executive branch as Special Advisor to the Secretary of Health,Education, and Welfare and as Assistant Secretary of Education. She was a member of the 1983National Commission (Greenspan) on Social Security Reform. Martha Keys is currentlyconsulting on public policy issues. She has held executive positions in the non-profit sector,lectured widely on public policy in universities, and served on the National Council on Aging andother Boards. Ms. Keys is the author of Planning for Retirement: Everywoman’s Legal Guide .First term of office: November 1994 to September 1999; current term of office: October 1999 toSeptember 2005.

David Podoff David Podoff is visiting Associate Professor at the Department of Economics and Finance at

the Baruch College of the City University of New York. Recently, he was Minority Staff Directorand Chief Economist for the Senate Committee on Finance. Previously, he also served as theCommittee’s Minority Chief Health and Social Security Counselor and Chief Economist. In thesepositions on the Committee he was involved in major legislative debates with respect to the long-term solvency of Social Security, health care reform, the constitutional amendment to balance thebudget, the debt ceiling, plans to balance the budget, and the accuracy of inflation measures andother government statistics. Prior to serving with the Finance Committee he was a Senior

Economist with the Joint Economic Committee and directed various research units in the SocialSecurity Administration’s Office of Research and Statistics. He has taught economics at theUniversity of Massachusetts and the University of California at Santa Barbara. He received hisPh.D. in economics from the Massachusetts Institute of Technology and a B.B.A. from the CityUniversity of New York. Term of office: October 2000 to September 2006.

Sylvester J. SchieberSylvester Schieber is Director of the Research and Information Center at Watson Wyatt

Worldwide, where he specializes in analysis of public and private retirement policy issues and thedevelopment of special surveys and data files. From 1981 to 1983, Mr. Schieber was the Directorof Research at the Employee Benefit Research Institute. Earlier, he worked for the Social SecurityAdministration as an economic analyst and as Deputy Director at the Office of Policy Analysis.

Mr. Schieber is the author of numerous journal articles, policy analysis papers, and several booksincluding: Retirement Income Opportunities in An Aging America: Coverage and Benefit

Entitlement; Social Security: Perspectives on Preserving the System; and The Real Deal: The History and Future of Social Security . He served on the 1994-1996 Advisory Council on SocialSecurity. He received his Ph.D. from the University of Notre Dame. Term of office: January1998 to September 2003.

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Documents

Social Security: Overview1