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Hearing on the Challenges Facing the Next Commissioner of Social Security

April 26, 2013

Hearing on the Challenges Facing the Next Commissioner of Social Security 










April 26, 2013


Printed for the use of the Committee on Ways and Means


DAVE CAMP, Michigan,Chairman

PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
DIANE BLACK, Tennessee
TOM REED, New York
MIKE KELLY, Pennsylvania

RICHARD E. NEAL, Massachusetts
JOHN B. LARSON, Connecticut
RON KIND, Wisconsin

JENNIFER M. SAFAVIAN, Staff Director and General Counsel
JANICE MAYS, Minority Chief Counsel


SAM JOHNSON, Texas, Chairman

MIKE KELLY, Pennsylvania






Advisory of April 26, 2013 announcing the hearing


The Honorable Patrick P. O’Carroll Jr.
Inspector General, Social Security Administration

Daniel Bertoni
Director, Education, Workforce, and Income Security, Government Accountability Office


Hearing on the Challenges Facing the Next Commissioner of Social Security 

Friday, April 26, 2013
U.S. House of Representatives, 
Committee on Ways and Means, 
Washington, D.C. 


The subcommittee met, pursuant to call, at 9:30 a.m., in Room B‑318, Rayburn House Office Building, Hon. Sam Johnson [chairman of the subcommittee] presiding.

 [The advisory of the hearing follows:]


Chairman Johnson.  Good morning to both of you. 

Every 6 years, a new Commissioner is nominated and confirmed to lead the Social Security Administration.  Congress deliberately created a term that might straddle political changes in the executive branch to underscore the importance of strong and independent leadership of this agency that touches the lives of every American.  Former Commissioner Astrue’s 6‑year term expired in January.  Carolyn Colvin, formally the Deputy Commissioner, is currently serving as Acting Commissioner until a new Commissioner is confirmed. 

Every new Commissioner should first and foremost make sure that Social Security serves the American public well.  Every Commissioner faces challenges at Social Security, some new, some that seem to never go away, and it will be no different for the next Commissioner. 

As part of its oversight responsibilities, this subcommittee takes the time to lay out the challenges facing the new Commissioner and strategies for how best to address them in order to meet the needs of the American public.  Today, Social Security stands at a crucial crossroads, and it is going to be up to the new Commissioner to pick the right path. 

But no matter what path he or she chooses, two facts are indisputable.  First, Social Security faces a predictable workload.  Not only are on average 10,000 baby boomers applying for benefits each day, but applications for disability triggered by the great recession and weak recovery have never been higher.  In just 4 years, the number of applications has grown from 2.3 million in 2008 to 3.2 million last year.  That is an increase of 40 percent.

Worse, in recent years the number of people filing for benefits far exceeded the number of new jobs being created.  Since 2010, the average number of people filing for disability benefits is just over 249,000.  At the same time, the average number of new jobs created is about 148,000 each month.  For the sake of the disability program and the sake of our great country, we have got to grow our economy and get Americans back to work.

Second, budget constraints are not going away.  Congress has repeatedly approved bipartisan legislation signed into law by the President placing stringent and necessary spending caps on appropriations, including President Obama’s sequestration proposal.  To assist the next Commissioner, I have asked the Government Accountability Office, or GAO, to take a look at the key challenges facing Social Security and what Social Security is doing about them.  And as we will soon hear, Social Security’s key management challenges include workforce planning, managing its disability programs, modernizing information technology, and effectively utilizing its office space. 

GAO concludes that Social Security needs a long‑term strategy to address all these issues, which it doesn’t have today.  The Social Security Inspector General agrees, and several important watchdog groups, including the Social Security Advisory Board, have already called on Social Security to move quickly on developing a long‑term plan.  Congress and the President have also called for a long‑term strategy in the agency’s funding for fiscal year 2012.  Then Social Security was directed to work with the National Academy of Public Administration to produce a long‑range strategic plan.  But to date, Social Security has failed to act.  I will urge the new Commissioner to make this a priority after confirmation. 

As we all know, this subcommittee continues to take a hard look at the challenges Social Security faces in managing the disability program.  In spite of the vast number of people who still wait over a year for a hearing, I was outraged to learn that the union which represents Administrative Law Judges just filed a lawsuit in Federal Court asking for an injunction against Social Security’s guidelines for judges, to handle 500 to 700 cases a year.  The union claims these goals are illegal quotas and that management’s efforts to meet Congress and the public expectations for timely decisions interfere with the judges’ decision‑making independence.  I have talked to Federal judges.  They don’t think that is unreasonable, by the way. 

This is the same union that argues that these highly paid Federal employees, who have no performance standards and cannot be fired without going through a time‑consuming and expensive process, should be allowed to work at home at least 1 day a week. 

Let me be clear.  No one is telling any judge what decision to make, so their independence is protected, and despite what the union argues, in fiscal year 2012, 79 percent of the judges were hearing at least 500 cases a year ‑‑ 79 percent, not very good, huh?  Most taxpayers would be surprised to learn that last year the union representing judges spent $1 million in taxpayer dollars not on holding hearings, but on union activities.  That is enough to fund a full year’s salary for nine judges.  In fact, total taxpayer dollars spent by all four unions at Social Security reached $14.3 million last year, enough to fund a full year’s salary for about 206 employees. 

You would love to have that in your automobile dealership, wouldn’t you? 

Taxpayers fund the operations of this program and the essential benefits Social Security provides.  They have a right to expect the agency will be well managed.  To that end, I hope our hearing will help the President nominate the kind of experience, talented and decisive leader Social Security and America needs, wants, and deserves.

Chairman Johnson.  I now recognize the ranking member, Mr. Becerra, for his opening remarks, anything you care to say.

Mr. Becerra.  Thank you, Mr. Chairman. 

Mr. Chairman, I am pleased that we are doing this hearing on Social Security today.  Social Security, as I have always said, is a bedrock of American society.  In nearly 78 years, Social Security has weathered 13 recessions and during that time it has always paid benefits in full and on time.  But Social Security will face challenges in the future.  In roughly a quarter of a century, we know that because of the baby boom generation retiring we have to deal with the fact that we have more people retiring and fewer people working to pay in benefits, and so we do have to face these challenges. 

And with all due respect to our distinguished panel, I am concerned that we don’t have all the right experts here today to talk about what is clearly the biggest challenge facing the new Social Security Commissioner:  budget cuts that have left the Social Security Administration without enough resources to serve the public the way the public would like and the way Social Security should serve all of those who paid into the system.

Americans, remember, have contributed ‑‑

[Audio malfunction in hearing room.]

Mr. Becerra.   OK, are we back?  And, Mr. Chairman, if I could just make sure that ‑‑ the clock kept running while we were stalled there, so if you could just do me a favor and grant me a little extra time there.

But as I was saying, with all due respect to our panel who I believe have always provided us with excellent testimony as distinguished witnesses, I am concerned that not all the right experts are here today to talk about what is clearly the biggest challenge facing the new Social Security Commissioner.  As I said, it is budget cuts, budget cuts that have left the Social Security Administration without enough resources to serve the public the way Social Security should and the way Americans want the program they have paid for to serve them. 

And let’s not forget, Americans have paid for their Social Security.  Every paycheck, we take money out of their check to pay for Social Security and Medicare.  Yet this Congress has prevented Social Security Administration from investing what is needed in order to provide Americans with the services that they have paid for.

Let’s remember, even before the budget cuts, Social Security was extremely efficient, spending something around a penny, actually less than a penny on program administration for every dollar it spends paying the benefits American workers have earned.

So who is missing from today’s hearing?  Well, Mr. Chairman, as I discussed with you before and as I indicated in the letter that I sent to you, and I would like to submit that for the record at this stage ‑‑

Chairman Johnson.  Without objection.

Mr. Becerra.  Thank you.  We don’t have the Commissioner, the person who is in charge of running the entire agency here to tell us what the challenges are that she will face in leading the Social Security Administration.  We don’t have any of the front line employees from the district offices in our districts that provide the services every day to Americans who have earned their Social Security benefits.  And certainly, as you can see at this table, we don’t have anyone who is an American citizen who is receiving benefits and could tell us:  These are the challenges I think the agency faces as I walk through the doors to receive the benefits that I have paid for.

Mr. Chairman, there are consequences in not funding Social Security properly.  And I have pulled together some charts that we can see here today.  Three years of cuts have taken a toll on Social Security. 

We can go to the next slide. 

Let’s remember, the number of people that have been paying into and are now beginning to collect their benefits because they paid into it is not shrinking, it is growing.

Next slide. 

At the same time what has happened to the budget of the Social Security Administration while it tries to serve a growing population of people who have earned benefits?  It has been shrinking. 

Next slide. 

What is the result?  Well, Social Security at some point had to give.  And what has happened is you see that staff reductions have occurred throughout the United States, an average of a 10 percent cut.  So one in 10 of those workers we saw a few years back are no longer there.  In some places it is as high as one in every five of those Social Security workers is no longer there providing services.

Next chart. 

What has happened to the caseload of people coming to the Social Security Administration’s offices?  Well, you can see it is not shrinking at a time that we are shrinking the budget.  It continues to increase increase. 

Next slide. 

What happens to the wait time that people now are experiencing, Americans who paid for these benefits, what is going on right now?  You can see it right there.  People are waiting twice as long just to get on the phone to talk to folks.  This is like going to the grocery store and the grocer saying:  I am going to tell their cashiers to go take their break or take a furlough at the time that I am most busiest with the most patrons in my grocery store trying to shop and pay for the goods that they are going to get ready to pay for. 

Next slide. 

What is the result?  Well, remember, most of us on this committee have been working for some time to reduce the backlog of American citizens who are waiting in some cases years to receive the benefits they paid for.  We took a course of action a few years back to provide Social Security with the resources it needed to deal with that, and there is where you see the downtrend in the number of disability wait times, the amount of time.  Guess what has happened as a result of the budget cuts?  You see it creeping back up again.

Next slide. 

By the way, when we talk about the disability wait times, remember, we are talking about people waiting 500 days, over a year.  We got that down to about 150 days by fiscal year 2011.  But now it is going up again, as you can see there in that chart that we reverted you back to.  That is what happens when you underfund the agency even though it has the money to pay because people have paid for those things. 

Next chart. 

Unprocessed work.  Well, we talked about the disability casework that is not being handled in a timely way.  This unprocessed work is work that has not yet begun to be processed.  You can see what is happening.  It is mounting and mounting, and these are cases that at some point will have to be opened. 

Next chart. 

The worst perhaps sin I think that we can think of is the fact that when we know that we can save money ‑‑ and I think our two witnesses that are here today can talk about this ‑‑ when we go after the cases of abuse where people, maybe even by innocent mistake, claim benefits when they shouldn’t be getting them, we should be able to go after that.  We know we save $9 for every dollar we use to do those reviews of people to ensure the integrity of the system.  We can’t even get the funding for that.  It has been cut.

Mr. Chairman, we need to move forward.  We need to make sure that we all face the challenges that Social Security will encounter together.  Social Security has been a bedrock of our Nation.  People have paid for this.  And so I would just urge us to work together to make sure that we have the full testimony of everyone who can add some good word on what we can do. 

I look forward to the testimony of our two witnesses who I know will add a great deal.  I hope at some point soon, Mr. Chairman, we will finally have a hearing in this committee with jurisdiction on the issue of the Social Security Administration’s budget which has been cut to the point where American citizens and those who paid into this are paying the price.  Yield back.

Chairman Johnson.  The gentleman’s time has expired.

Chairman Johnson.  And I am going to make a couple of points in response to what the Ranking Member said. 

Number one, we have got at least three judges out there in Social Security that do not handle any cases.  And they are wanting our judges to handle less than what they do right now. 

I would like to make a couple of points.  First, the percent of the people rating Social Security as excellent, good, or very good reached 81 percent in 2012, up 3 percent since 2010.  Second, failing to get our fiscal house in order will jeopardize the very safety net the Ranking Member cares so much about.  And at the close of fiscal year 2009, the year President Obama took office, our Nation’s debt was $11.8 trillion, and this year it is going to reach $17 trillion.  And under the President’s budget, an additional $8 trillion of debt will be added. 

The fact is the President, along with the Democrats and Republicans, have agreed to Social Security’s funding levels.  The appropriators have kept Social Security’s budget level when most other agencies have seen sharp declines. 

I will end this by saying, as the authorizing committee for this essential program we need to focus on what we can change.  We can start by working together to remove outdated provisions in the law to help the agency more effectively serve the public. 

As is customary, any member is welcome to submit a statement for the hearing record. 

Chairman Johnson.  Before we move on to our testimony today, I want to remind our witnesses to please limit their oral statement to 5 minutes.  However, without objection, all of the written testimony will be made part of the hearing record. 

We have one witness panel today.  Seated at the table are Patrick O’Carroll Jr., Inspector General, Social Security Administration; and Dan Bertoni, the Director of Education, Workforce, and Income Security Issues at the U.S. Government Accountability Office. 

Welcome to both of you for being here. 

And Mr. O’Carroll, please go ahead with your testimony.


Mr. O’Carroll.  Good morning, Chairman Johnson, Ranking Member Becerra, and members of the subcommittee.  Thank you very much for having me here today.

The next Commissioner of Social Security faces challenges that require forward thinking and long‑term planning.  SSA has been a model of government customer service for more than 75 years.  To continue that record of success, the agency must invest in information technology, modernize systems and services, and focus on program integrity.  And SSA must achieve this in a national spotlight shining on Federal spending and entitlement program solvency. 

More people are coming to Social Security at a time when resources and staffing are limited.  SSA must improve strategic planning and take greater advantage of technology to meet this demand.  For example, the agency expects to receive almost half of all benefit claims online by the end of the fiscal year.  Future generations will expect to do all business with SSA electronically.  SSA’s strategic plan, however, does not include a detailed roadmap to expand electronic and mobile capabilities to meet these expectations. 

The plan should address not only short‑term, but also long‑term service challenges.  SSA and DDS staff must also balance service initiatives, such as processing new claims, with stewardship reviews to ensure the integrity of agency programs. 

Reducing the complexity of SSA’s benefit programs and evaluating current policies could streamline operations and save millions of dollars each year.  I have included several recommendations in my written statement, but I am pleased to see SSA is moving forward with the Disability Claims Processing System.  DCPS is a nationwide state‑of‑the‑art computer system that could significantly improve the disability decision process.  It will integrate case analysis tools and electronic medical records and should provide consistent case processing across the country.  DCPS is currently being tested at several offices.  The system could be exactly the type of tool SSA needs to efficiently manage future workloads. 

Technology and data analysis can help SSA meet customer demands, and it can also improve program integrity.  For years, my office has encouraged SSA to pursue data matches among Federal, State, and local agencies to improve payment accuracy.  Government maintains a wealth of data that if matched among agencies could reduce payment error and prevent fraud.  Some of the data matches we have recommended include seeking pension data from State and local governments, accessing workers’ comp data maintained by States and the Department of Labor, and working with State bureaus of vital statistics to obtain death data and information on beneficiaries’ marital status. 

I should also take this time to say, as SSA develops a long‑term IT plan, it is critical that the agency closely monitor the construction of the new National Support Center.  The NSC will replace the aging National Computer Center.  A timely transition to the new center will eliminate the risk of an extended outage that could affect SSA’s ability to provide critical services. 

A related issue is SSA’s long reliance on its cost analysis system to examine data and allocate administrative costs to agency programs.  In recent years, we have recommended that SSA update its cost allocation methodology to account for changes in business processes and technology.  As SSA and its workloads and systems evolve, so, too, should its cost accounting system. 

In conclusion, SSA exists to serve the beneficiaries of today, but also to safeguard funds for the beneficiaries of the future.  So, again, to meet the goals of today and tomorrow, SSA should invest in information technology, modernize systems and services, and focus on program integrity.  Doing so will improve service, speed and accuracy, and protect taxpayer dollars for future generations.  I look forward to working constructively with the next Commissioner of Social Security to meet the challenges ahead.  I thank you, again, for the invitation to testify, and I will be happy to answer any questions.

Chairman Johnson.  Thank you sir.  Thank you for your testimony. 

[The statement of Mr. O’Carroll follows:]

Chairman Johnson.  Mr. Bertoni, welcome again, please proceed.


Mr. Bertoni.  Good morning.  Chairman Johnson, Ranking Member Becerra, members of the subcommittee, good morning.  I am pleased to discuss our work on the Social Security Administration’s critical management challenges.  SSA provides benefits and services that touch the lives of nearly every American and last year paid out over $800 billion in benefits. 

However, with the aging of the baby boom generation, the agency faces increased workloads and large numbers of potential retirements over the long term.  It is within this context that a new Commissioner will soon head the agency and face many complex issues. 

My statement today is based on our ongoing work and describes key management challenges SSA faces in meeting its mission and the extent to which the agency’s planning efforts address those challenges. 

In summary, over the next decade, SSA will experience challenges related to human capital management, disability program issues, information technology, and physical infrastructure. 

First, an expected wave of retirements, coupled with an extended hiring freeze, represents a challenge for the agency in meeting a projected growth in workloads.  However, our preliminary work suggests that SSA’s strategies for preventing a loss of leadership and needed skills may be insufficient due to the lack of an updated succession plan and curtailment of leadership development programs which have historically provided a pipeline of future leaders. 

Second, SSA also continues to face challenges in modernizing the medical record criteria and labor market information that underlies disability programs while balancing competing needs to reduce disability claims backlogs and conduct program integrity activities.  In particular, the agency still lacks a formalized cost estimate and research and development plan for its modernization efforts and faces uncertainty in its ability to meet disability case processing and program integrity review targets due in part to resource constraints and how it has prioritized its workloads. 

Third, while SSA has made strides in updating its IT systems, which are critical to addressing growing work demands, the agency continues to be challenged in ensuring its IT plan is periodically refreshed and adhered to, that outdated legacy applications are modernized to improve service delivery, and information security controls sufficiently protect sensitive information. 

And fourth, although SSA has taken steps to centralize its facilities management and has initiated some efforts to reduce its physical footprint, the agency has not systematically assessed potential approaches for consolidating or realigning its staff and organizational structure to better support changing methods of service delivery, such as more online transactions and other nonface‑to‑face interactions, which are more likely over the next decade and beyond, further challenging its ability to leverage limited program and staff resources. 

Mr. Chairman, staying out in front of these challenges will require thoughtful long‑term planning on SSA’s part.  However, the agency’s current strategic plan and draft service delivery plan maintain a short‑term focus, rather than articulating longer‑term strategies to address the issues discussed today.

For years, we and others have recommended that SSA propose a long‑term vision to ensure it has the processes, staff, and infrastructure to provide services in the future.  However, absent a dedicated entity within SSA to spearhead such an initiative and uncertainty with SSA’s budget, such activities have not been an agency priority for many years.

In conclusion, the challenges SSA faces will affect its ability to address critical concerns in the coming years.  However, SSA’s efforts to meet many of its challenges have been complicated by budgetary constraints and uncertainty about the current and future fiscal environment.  Despite these constraints, SSA still needs to balance competing resource demands both in terms of managing day‑to‑day budget decisions and planning for longer‑term issues.  And absent prompt action early in the new Commissioner’s term, the agency jeopardizes its ability to provide quality service to the public in the coming years. 

Moreover, the interrelated nature of SSA’s challenges calls for a longer‑term integrated strategy to ensure actions taken are coordinated and effective.  However, without focus and sustained leadership across the agency’s many organizational silos, SSA may miss an opportunity to assess and make sound decisions, including how many and what types of employees are needed in the future, how the agency will service competing workloads, and more strategically use information technology and physical infrastructure to best deliver services.

Mr. Chairman, this concludes my statement.  I am happy to answer any questions that you or other members of the subcommittee may have.  Thank you.

Chairman Johnson.  Thank you for your testimony.

[The statement of Mr. Bertoni follows:]

Chairman Johnson.  As is customary, we will ask questions.  In each round I will limit my time to 5 minutes and ask my colleagues to also limit their time during the questioning session. 

Mr. O’Carroll, one of the concerns I have is the safety of Social Security’s huge databanks of sensitive information.  I understand you share this concern and, in fact, have raised a red flag, Social Security’s first‑ever material weakness in their audit report because internal systems could be accessed by auditors.  Social Security was warned about this the year before and did nothing. 

Tell me, have they fixed the problem? 

Mr. O’Carroll.  Mr. Chairman, it is an ongoing process of repair on it.  I must say that the Acting Commissioner has made it a priority, and as a result of that my office and Grant Thornton, the contract auditor that identified the problems, meet probably on a monthly basis with the agency.  We met as recently as last week, management teams, to discuss it.  They have tiger teams working to correct the problem on it.  So I must say SSA is aggressively taking steps to identify the issues that were raised, and we are hoping that they will be able to alleviate the problem as soon as possible.  So I have to say we are on top of it, we are watching it very closely, and I am seeing at least a commitment on the part of SSA to fix it.

Chairman Johnson.  Well, are they accessing that system from outside or at the local offices or up here? 

Mr. O’Carroll.  The way they are doing is, is that they have ‑‑ they, Grant Thornton, hires hackers that are constantly pinging SSA to see if there are any vulnerabilities.  And what they were finding is, is that by not outside, which is good news, so it is not an external penetration on it, but from internal use of any of the ‑‑ what they are doing is, is that by accessing internal systems in SSA, they can get much better permissions and then get deeper into the security functions.  That is what happened last year, and that is what is being prevented now.

Chairman Johnson.  Are they stealing Social Security numbers? 

Mr. O’Carroll.  No, they are not.  And what that is, is it is really, as I said, it is internal, there hasn’t been any extent of where they are being able to do it from externally or a different country doing it or anything else.  So at the moment the internal ones are being fixed.

Chairman Johnson.  Well, for both of you, do you believe the way Social Security serves the public today will work in the future?  And if not, what does Social Security need to do to modernize the way it does business?  You going to let Bertoni go first? 

Mr. Bertoni.  I think one area, it is structural in design but it really has an operational aspect here, and it is the agency really needs to modernize its medical and vocational criteria and develop an occupational information system that is really reflective of what it means to have a work disability in this country, what jobs are in the national economy.  We have long said that they need that, to have criteria that is more reflective of what it means to be disabled today. 

We know they are working on modernization of their criteria, they are moving forward with an occupational information system.  They are behind.  We have some real concerns with design and implementation.  But if they get this right, I think it really has operational implications to help them free up resources that they are now expending and sometimes not expending and to the great concern of the Congress.  That is, if we can really get people on the rolls who are truly reflective of what it means to be disabled today, we will likely have less instance of folks violating the work rules, going out and working later on.  In essence they are having to chase that money through the work CDRs and the medical reviews. 

Right now we know that the bulk of overpayments in the work at the back end is to follow up on work activity.  So if we really have a system that says you cannot work in the national economy, there is no job in the national economy for you, then perhaps you will have fewer folks wading into this unauthorized work activity and in essence having to chase it at great administrative cost and the Congress asking them why they are not doing that work because they are making some priority choices.

Beyond that, I think there are real opportunities to look at services that they should be providing, modes of services, electronic access, online access, smart phones, kiosk in remote locations.  Those are ways to leverage their limited resources and to work smarter.  I think they need to be part of that vision, to say:  Here is where we can move, here is where it is not feasible, and here is what it is going to cost for us to do that. 

Chairman Johnson.  How many of those are you catching every day in the IG’s office? 

Mr. O’Carroll.  We are catching quite a few of those.  And I will go into those a little bit more in depth later.  But I agree with what Dan said in terms of electronic service.  That should be the role of the future. 

Chairman Johnson.  Okay.  My time has expired. 

Mr. Becerra, you are recognized. 

Mr. Becerra.  Thank you, Mr. Chairman. 

And once again thank you for the work that you are doing and we hope that you will continue to work ‑‑ I know you are going to continue to work with Social Security Administration on this.  And we need to make progress on technology, the modernization, and I hope we are able to do that, because the workload for Social Security is not going to decrease, it is going to increase. 

And I think, Mr. Bertoni, in your, I think, if I am looking at your testimony, your written testimony, you point out that, in a chart, back in 2002 there were 50.8 million, about 51 million Americans who were receiving benefits from Social Security.  So 51 million Americans who were coming into Social Security to get services; 2012, last year, 62 million Americans receiving benefits and services.  By 2025 the projection, 85.5 million people.  So it is not going to stop, it is just going to grow.  And so we have got to deal with the fact that we need the capacity to deal with more folks quickly and accurately so we don’t pay out benefits to people who don’t deserve them and we don’t delay benefits for those who have earned them. 

But I think you would agree that you need people to do some of this stuff.  It would be great if we could handle this through just automation and computers, but we will need people, and the growing workload will require you to have smart, intelligent people.  And I think you point out that the folks that Social Security seems to be losing now with these budget cuts are people who are very experienced.  The retirements, the chart that you point out, retirements, it is a little ominous.  We are losing a lot of the folks who have done the work for a long time, and we may not have the resources at the Social Security Administration to do the training for any folks who might come in.

The worst part of this, of course, is the Social Security has a hiring freeze, right, so they are losing experienced people and they are not able to hire folks to replace them.  Is that a good prescription to try to deal with the growing workload that we have? 

Mr. Bertoni.  I think the prescription for dealing with the growing workload is certainly to have the right people in the right place at the right time with the correct knowledge, skills, and abilities.  And there is no question that the agency is stretched to the limit, near limits, in what they are doing with the staff they have now.  But I do believe world class organizations, regardless of the budget situation, you have to do something.  And right now it looks like there is almost no succession plan.  We have been told this was a luxury.  But I don’t think it is a luxury.  I think it is more than that.  I think there are opportunities to leverage what they are doing in the human capital office to have some level of succession planning.

Mr. Becerra.  Have you had a conversation with the interim administrator, Social Security administrator, on what she plans to do on this issue of successor ‑‑

Mr. Bertoni.  Ms. Colvin?  Ms. Colvin.

Mr. Becerra.  Yes.

Mr. Bertoni.  No, we have not.  We have talked to folks in the offices associated with ‑‑

Mr. Becerra.  As I said, Mr. Chairman, Ms. Colvin should be here.  We should be able to hear from her.  Because when you tell us you testify about things that need to happen, it would be great to then say:  So, Ms. Colvin, what do you say?  How do you respond? 

Your testimony is critical.  But we are missing a piece.  We are missing a piece from the folks who could tell us, well, this is what we are trying to do in response to what we have been told by GAO or the Inspector General.  We should have someone at this table who is from the district offices who could say, we would love to do what Mr. Bertoni is asking us to do, but this is the problem, or this is what we are doing.  We are missing that.  And of course the person who actually receives the service at the end of the day, the person who paid for your salary, my salary, and put the money in the bank for Social Security so the benefits could be paid, the American person, the American citizen, beneficiary, not here. 

This is a good hearing, but it is an incomplete hearing.  And I hope we don’t give people this impression that this is all we can do, is talk to two very important witnesses without hearing from the others as well. 

Mr. Bertoni, you mentioned in your testimony the growth in the caseload.  What has happened to Social Security Administration’s budget in the last 2, 3 years? 

Mr. Bertoni.  It has remained fairly static.

Mr. Becerra.  Okay, steady.  While the caseload keeps growing its budget number ‑‑ is the budget today as big as it was in 2011? 

Mr. Bertoni.  I believe it is. 

Mr. Becerra.  In 2010? 

Mr. Bertoni.  I can get those figures.  I don’t have them specifically.

Mr. Becerra.  My understanding is that the budget today has gone down to what it was back in 2010, and in those 3 years we have added hundreds of thousands, if not millions of people to the caseload. 

So by the way, I think a point we should make, Mr. Chairman, is that Social Security has money to pay for its administration.  We pay taxes for that.  As I mentioned before, about one penny out of every dollar that people contribute in taxes is used for the cost of administration.  We are shortchanging SSA from the ability to provide services to people who paid for those benefits even though the money is there to pay for the cost of administering the programs.  Unlike other agencies in the Federal Government, Social Security does have money to pay for administration and it does it very efficiently.  But once again we don’t have anyone from SSA to tell us about that. 

And with that, I will yield back the balance of my time.

Chairman Johnson.  Mr. Renacci, you are recognized. 

Mr. Renacci.  Thank you, Mr. Chairman.  And I want to thank the witnesses for being here. 

You know, it is interesting, as I hear, we talk about budget cuts and operations, I think of being a small business owner for almost 20 years and a CPA who had to deal with many small business owners who every day had to get up with limited dollars and get things accomplished and still provide the same services.  So I am not sure it is always budget issues.  I think sometimes we are really have to be more efficient. 

We have a program here in Social Security that we need to make sure is solvent for the long term, that its systems are working properly.  But it is interesting because I was sitting here listening, I am thinking, boy, as a small business owner, which there are many of them out there in America right now listening, they wish they had more money but they know every day they have to run more efficiently with what they have.  And I think that is probably the most important thing that I hope here in the government we can start doing, living with bringing efficiencies into the system. 

So a couple things, though, when I think about some of the issues that we are talking about, we are talking about a Commissioner and having the Acting Commissioner here.  Mr. Bertoni, we have had acting managers in the business world.  We real really need a Commissioner.  It would be probably important if the administration would nominate a Commissioner so we can move forward.  But what can an Acting Commissioner do when he or she knows that maybe another Commissioner will come in and change things? 

Mr. Bertoni.  I think that is an excellent question, and I think if you look government‑wide whenever we have acting situations you don’t see big, bold moves.  You are going to see administration of the current priorities and the recent priorities of the prior Commissioner.  I think it is very difficult for an Acting Commissioner to be big and bold and to begin to articulate a vision that represents considerable change to convince folks in the agency who will be there when they potentially leave, if they don’t convert to the Commissioner, and to convince you all that you should buy into some grand vision for change. 

So I do think that the acting status is not helpful to SSA for an extended period of time. 

Mr. Renacci.  Mr. O’Carroll, I think in your testimony you talked about a system, it has not been updated since 1976, I am talking about the Social Security time and cost accounting systems.  I understand this has been covered in a series of audits.  Tell us what you did find and what actions Social Security has taken in response to that.

Mr. O’Carroll.  Yes, Mr. Renacci.  What we found is, is that basically that system is not capturing the work level that it is reporting.  And when you think back in the 1970s when it was designed, it was basically taking a look at different functions that SSA was doing.  And since then computers have taken over a lot.  A lot of the workload that was done in paper and tally sheets and that type of information has all been replaced by computers.  So what we are hoping for is that SSA would start updating that system so it would be more reflective of the workloads that it is reporting. 

And the other part is anything that goes back to the 1970s isn’t as automated, and a lot of the information is manually put into it, and when you have the manual input in these days that is where oftentimes you are having your problems in terms of, it is when we did our audit we were finding that the accuracy level was very low when it is done manually. 

So again it is a top priority, SSA’s Acting Commissioner is looking at this, Grant Thornton gave a briefing on it about 2 weeks ago, and we are doing everything we can to support having that updated.

Mr. Renacci.  Mr. O’Carroll, can you also talk about the work incentive simplification pilot?  Could you tell us a little more about the pilot program?  And do you feel it could yield savings? 

Mr. O’Carroll.  Yes, Mr. Renacci.  To be truthful, I can’t really comment on it because it is a pilot that is being done by SSA right now trying to simplify the work incentives on it.  One of the other thing that we have worked on is Ticket to Work, and we are finding that that hasn’t been all that successful, and we are finding that the work incentives simplication program is going to probably be ‑‑ what we are hoping for is better than the Ticket to Work in terms of simplifying the incentive program.

Mr. Renacci.  Thank you.  I see my time has run out.  I yield back.

Chairman Johnson.  Thank you. 

Mr. Thompson, do you care to question? 

Mr. Thompson.  Thank you, Mr. Chairman.  I do.  Thank you for holding the hearing.

And thanks to both of you for the work that you are doing.

Mr. O’Carroll, there have been a number of reports lately, most of these have been on the radio, portraying Social Security disability as the new unemployment.  Can you comment on that? 

Mr. O’Carroll.  Yes Mr. Thompson.  Well, first I guess was it last month that the actuary of Social Security testified before this committee and was talking about how a lot that is effecting the rise in the number of claims that are going towards SSA is being driven mostly by demographics.  And one of the things that we have been finding and I think everybody has found is, is that there has been a 93 percent increase in unemployment, and at the same time there has been about a 33 percent increase in disability claims towards SSA.  So we are finding that they are not necessarily rising dramatically or identically. 

And what we are also finding, too, is, is that the SSA’s amount of allowances has been decreasing.  So again it hasn’t been SSA is putting more people on the rolls.  In fact, they are decreasing the number of allowances that are happening.  So again I think what we are trying to, or at least what the agency was trying to do and the actuary is saying is, is that at this point now 10 years ago they were predicting that there would be the raise in the amount of people applying for disability mostly because the demographics of the baby boomers are all coming into that time period.  They are of the age 50‑plus, which is the time when most disabilities are being reported.  So is that sufficient? 

Mr. Thompson.  Thank you.

Mr. O’Carroll.  You are welcome.

Mr. Thompson.  Also in your testimony you estimate that for every dollar that is spent on continuing disability reviews that you yield $9 in savings.  And you also note that there is a little over a million cases in backlog.  So if your budget were increased or if it hadn’t been cut to the extent that it been over the course of the last 3 years, would that help process this backlog and maybe even return some money for the program? 

Mr. O’Carroll.  Absolutely.  Something that we have been insisting on is that SSA has to do that balance between stewardship and service.  And what oftentimes happens is, is that SSA feels that when resources decline, they are going to go more for service than for the stewardship.  And just as we were saying, is you get anywhere from 15 to 1 on a work CDR, you are getting about a 9 to 1 on a medical CDR.  And then again if you even do with redeterminations are a 7 to 1.  That is why we are usually saying it is averaging out right in the 9 to 1 range on the benefit of them. 

One thing that we feel on it is, is that it is really an SSA decision where they put their resources, and what we are hoping for is, is that they put more resources towards the redeterminations in the continuing disability reviews no matter what, that should always be a priority when they are balancing out the service and stewardship.  But it is a decision that management at SSA makes.  

Mr. Thompson.  Thank you.  My last question is a little out of the ordinary and I apologize upfront for asking it.  But since Congress has been talking about ways to minimize or prevent gun violence prevention, I know my office, I don’t know about the rest of you all, but we have had an inordinate number of contacts from people who are claiming that the Social Security Administration, along with I believe NOAA, is stockpiling hollow point bullets. 

Are you all trying to take over the world?  Or is there some explanation for this? 

Mr. O’Carroll.  Believe it or not, I have got this answer quite well because I just testified with another committee yesterday about this.  One, what we are trying to do ‑‑ or, one, all of our agencts are 1811 law enforcement officers.  And part of our having law enforcement authority is that we have to qualify with our duty weapon on a quarterly basis.  And what happened was is that when we did a procurement about a year ago for more ammunition, the Web sites picked it up and the blogosphere had it out that we were arming Social Security offices and bringing ammunition in should there be civil unrest.

Mr. Becerra.  You may have to do that if you keep cutting the number of employees. 

Mr. O’Carroll.  And then what we reported back, in fact, to the Chairman on it and we put it on our blog was that the number of ammunition that we order is identical to the amount that we shoot every year for our qualifications, and it is not like we are trying to stockpile weapons.  And I have to say, give ourselves a plug, is yesterday we credited with keeping better track of all the ammunition that we have in comparison to the Department of Homeland Security.  We were used as sort of the model for accountability when it came to the ammunition that we have.

Mr. Thompson.  Well, thank you.  I will sleep better tonight.

Chairman Johnson.  I remember in Korea and Vietnam we didn’t have to account for them, we just shot them.

Mister ‑‑

Mr. Tiberi.  Me? 

Chairman Johnson.  Yeah, you.

Mr. Tiberi.  Is that a yes or a no?

Chairman Johnson.  Tiberi, you are recognized. 

Mr. O’Carroll.  On civil unrest or ‑‑

Mr. Tiberi.  On Mr. Thompson’s question. 

Mr. Bertoni, have you ever been to Disney World.

Mr. Bertoni.  Yes.

Mr. Tiberi.  Been there lately? 

Mr. Bertoni.  Yes.

Mr. Tiberi.  Pretty special place.

Mr. Bertoni.  Agree.

Mr. Becerra.  Careful now.

Mr. Tiberi.  This has nothing to do with this particular testimony that you have, but you are an auditor.  Does it ever cross your mind of what you do at GAO and where you audit, wow, what they do at Disney World is pretty special in terms of something Mr. Renacci talked about, efficiency, stewardship, and service that you mentioned.  I was thinking of that when you all were talking.  And by the way, one of my daughters recently said, boy, all these people are so nice, people who work there, whether they were 18 or 80 and in between, everybody was so nice and they weren’t getting paid $100,000 to be nice.  The culture was unbelievable. 

Have you ever thought as a GAO auditor that maybe there is something that we could do at the Federal level to change the culture, that it is not all about money, that it is about efficiency, service, stewardship?  What can we do to implement what you talked about, what you found concerning succession planning, disability issues, information technology, and physical infrastructure?  Some of that has to do with money, but does it all have to do with money? 

Mr. Bertoni.  I would say no.  And to all due respect to Mr. Becerra, I think most agencies today would say we could use more resources.  But I don’t see a lot of resources on the horizon.  So efficiency and stewardship has to come into play.  And again I think even with the resources they have been given over the last several years, while some might think that is insufficient, I can give you numerous examples where SSA has rolled out initiatives to fix the disability programs and make it better that were poorly designed, were poorly implemented, and never evaluated.  So when you look at funds expended versus funds received, efficiency didn’t wring out.  And we have had numerous occasions where a backlog reduction initiative had made it worse. 

So I think there are opportunities to lay some of this on the management doorstep, say you need to work more efficiently within the resources you have, you need to define business plans, define plans that articulate return on investment, evidence of due diligence before you strike out on very large pilots and demonstration projects.  We haven’t seen that.  I have been in this business for many years, and we haven’t seen enough of that. 

We certainly are frustrated.  I can understand frustration on the part of the overseers who, when the agency comes to the table for more resources, these business plans, these documents that would document return on investment, if you give us X, we can deliver Y, we haven’t seen, I think, if they could come to the table in some critical areas with those information, I think the Congress would have more information to make those funding decisions, better information. 

Mr. Tiberi.  So I know you don’t have the ability to audit Disney, but would it be worthwhile for GAO to maybe give maybe some additional guidance to some of these agencies based upon what other people have done successfully to use fewer dollars to implement better programs? 

Mr. Bertoni.  Absolutely, and we do that on a regular basis.

Mr. Tiberi.  You do already do that? 

Mr. Bertoni.  We can talk best practices, we talk what is common in the various communities for managing backlogs for demonstration projects, pilots, years and years of recommendations.  Sometimes they take them up, sometimes they don’t.

Mr. Tiberi.  Mr. O’Carroll, you have provided some information to Social Security, I understand, in your testimony where they could save billions of dollars based upon your audits, but they have not implemented them.  Do you know why? 

Mr. O’Carroll.  Mr. Tiberi, again this would probably be best answered by the agency on it.  What we do is, is we track what recommendations that we make and then go back to see which ones have been implemented by the agency. 

Mr. Tiberi.  But you would contend that you have made recommendations for them to save billions of dollars that has not been done yet? 

Mr. O’Carroll.  Yes.  Amongst which is the continuing disability reviews that we just talked about.  Billions could be saved if they were done on a regular basis and prioritized.

Mr. Tiberi.  Would you argue as a taxpayer that maybe we should make sure that those recommendations are done before more money is given? 

Mr. O’Carroll.  Yes.  But what I would do on that same line, Mr. Tiberi, would be is if this committee or the appropriators could designate that CDRs have to be done, make it a condition on any type of appropriation that they get that they have to do a certain number of them.  And in the past that has been designated in the appropriation and they were done and at that time it was very efficient.

Mr. Tiberi.  Thank you.  I yield back.

Chairman Johnson.  Is it a lack of people to do those follow‑up things or money? 

Mr. O’Carroll.  I think it is probably a combination.  I think it is prioritizing, deciding which ones are the most important things to do for the agency.  And that is what we have always said is, is that, as everybody, when you have a pot of money in front of you, you have to make your decisions which area you want to put it into.  And our feeling is, is that in the fraud prevention and the identifying of money before and after is important.

Chairman Johnson.  Thank you. 

Mr. Griffin, you are recognized. 

Mr. Griffin.  Thank you, Mr. Chairman. 

Thank you all for being here today.  I suspect if you went around the city of Washington and brought just about any agency in to Congress and asked them if they needed more money, I don’t know one that would say that they have got sufficient money. 

When I look at this, particularly with the systems that are used, and it is not just Social Security Administration, it is throughout government, there is a lot more going on than just funding. 

The VA has a big backlog, and their computer systems can’t talk to DOD.  Now, a lot of that has to do with, I think, contractors making unique systems so they will have jobs forever.  And this goes on all around Washington. 

It seems to me that asking for more money to support a 1976 accounting system is like a race car driver telling us that if we will just give him more money he can win with his 1975 Pinto. 

Mr. Griffin.  It can’t happen.  It just can’t happen.  And the sad thing is, it is not just Social Security Administration.  Pick the agency.  Just pick one.  They are all top down.  They are all lost in the old.  They are all working on 20‑, 30‑, 40‑year paradigms.  They are trying.  They are trying.  But look at what the VA has done with the backlog.  It is disgusting.  It is ridiculous.  And a lot of it is not that they need more money.  It hasn’t worked with the VA.  We throw money away. 

And so what a lot of us are saying is, show some innovation, change your culture, do things differently.  Maybe you are hampered in large part by the laws that this Congress has passed, the civil service system or whatever, you know.  Congress can bear some blame there.  But the idea that you are going to give more money to a Federal agency and everything is going to be just okay, it is just a bunch of nonsense. 

I was running with a general down the mall the other day and I said, how is sequester affecting DOD?  And he said, you know, you are not going to hear this a lot but I am being told at the Pentagon that we may not be able to spend all the money. 

And I said, what? 

He said, yeah, you know, we are going to find places to spend it. 

I met with a commander at an air base in my district who said ‑‑ I asked him about sequester ‑‑ he said, you know, in a weird way I think the Air Force is going to be stronger than ever. 

I said, really? 

He said, we have never had to make choices before now.  We have always had plenty of money to waste.  And now we have to make smart decisions.  That is the commander. 

So, you know, I think that innovation and efficiency and reform is the path forward.  And I want to ask you, Mr. Bertoni ‑‑ and I enjoyed our meeting in our office and I know we are going to have some more.  I think you are doing some great stuff. 

Mr. Bertoni ‑‑ and since I have talked with you so such, I am going to ask Mr. Bertoni a question ‑‑ a recent GAO report looked at the technology spending and how it is divided between maintaining and investing in new technology.  Could you talk a little bit about that split and why maintenance costs have been growing so rapidly? 

Mr. Bertoni.  Actually, that wasn’t a part of the scope of this review, so I am not your best expert to touch on those issues.  That had to do with sort of rise of maintenance costs versus the decision to go to new modernized technology.  I believe that report noted that there are a range of factors that can drive maintenance costs, including salaries, but that report made no definitive linkage between what actually was the driver of those costs. 

So I would defer to our IT folks, happy to submit a question for the record.  I do know from an IT standpoint at SSA, they had historically not had sound or rigorous business plans to justify why they are moving forward on expensive initiatives, on initiatives in general. 

Mr. Griffin.  So they are buying systems, spending money on systems that may or may not be part of a coherent plan.  Is that what you are telling me? 

Mr. Bertoni.  Exactly.  They didn’t have sufficient business plans to support investment or metrics that could be used to prove how this initiative will have an impact on the area that it was being applied to.  We have made recommendations that they do so, that they have a more rigorous business plan.  That is a good thing.  We also know that they haven’t historically updated their IT strategic plan and they haven’t adhered to it.  Instead, they have tended to be bound by the shorter‑term budget cycle. 

We have recommended that they continue to update this plan; that they abide by it; that they remain consistent with their longer‑term goals.  And hopefully that will result in a more strategic purchasing of the systems they need to make the process work better.  We have those recommendations.  I believe they have agreed, and what we are waiting to see is how they play out. 

Again, that is another team.  I can get you a more definitive answer.  If you want to submit that for the record, we can certainly do that. 

Mr. Griffin.  That would be great.  Thank you so much.  Appreciate you.

Chairman Johnson.  Thank you. 

Mr. Schock, do you care to question? 

Mr. Schock.  Thank you, Mr. Chairman.  And thank you both to our witnesses.  I think a lot of good comments have already been made, but particularly I want to follow up on a line of questions I had last year about the Social Security Administration’s ability to keep the public informed about the status of their accounts.  And particularly, I know most of us who have been getting paper statements for a while, the administration, the agency made the call that because of the lack of funding they disbanded the paper statements.  I know the President’s request, he asked for somewhere in the $100 million to $200 million to reinstitute the process of mailing those paper statements.  I would be interested in you commenting on that request, whether you think that is a wise use of funds, number one. 

Number two, we have made significant investment in going online, to allow people if they register with SSI to be able to get their information online.  However, I am always surprised back home how no one seems to know that they can get their information online or that Social Security Administration has disbanded the practice of giving their statements.  I don’t know if they notified people that was being done or they just went ahead and did it.  But I know that folks ask me all the time why they don’t get the statement anymore, and I tell them, but messengers of one aren’t all that effective. 

So I guess my question is, what do you think the best way is of moving forward?  Obviously, if people don’t know what is in their account, that is problematic, and I am not sure the President’s request of $100 million to $200 million to go back to the 20th century of mailing statements, which is not in my opinion a long‑term solution.  Wouldn’t it be better to spend money to inform the public that they can go online and get their information, register online, so it is a much more efficient and cost‑effective way to continue that communication moving forward? 

Mr. O’Carroll.  I will take the first part, Mr. Schock, on this one.  And that one of the things that is of concern to us is, and it ties into what we have been talking about before with strategic planning for the agency, is really looking at electronic service.  And that would be part of the, you know, the long‑range strategic plan for the agency is to incorporate in how electronic service is going to replace the paper that we were talking about.  And I agree with you that it does seem almost like a giant leap backwards to be focusing so much on paper statements at the same time when the SSA has released my SSA, which is pretty much a one‑stop electronic location where any of your constituents can go, can register and get their information, the same one they would be getting from their paper statement. 

And I have got to say, this is something that you have to be checking with your constituents in terms of what is the public’s request for these paper statements or not.  Because I think a lot of times it is because of the public request for paper statements that that keeps coming up as an issue on it. 

Mr. Schock.  Let me ask you, though, do you think that is because they are not aware?  I mean, look in the 21st century, you go and open a bank account, you open a credit card account, you open anything now financial, they want your email address.  Because unless you specifically request your broker send you paper trades, your bank send you paper statements, everything is electronic.  Because people move around.  It is more expensive.  And we all know why. 

And so part of me believes the reason why people are asking for the paper statements because that is all they know, and we have done a lousy job, if a job at all, of either collecting the information ‑‑ I don’t know whether that should be employer responsibility or the request needs to be sent out ‑‑ but I interject because I know that people are still asking for it.  I just happen to believe that the same people who get their bank statements online and their broker statements online and in some cases pay their taxes online, or real estate taxes online, would prefer to just get their SSI information online as well.  They just don’t know about it. 

Mr. O’Carroll.  I agree with you.  I think, you know, papers is, you know, a sort of a step backwards on it.  And I think that, you know, the publicizing of the electronic services of SSA is important.  There are 21 services that they have.  We feel that they should be expanding them dramatically.  We are thinking up to and including, very supportive if we can get the security put into it, of mobile application, so that instead of getting that statement that you are talking about in the mail, that you could actually do it on a mobile device. 

But again, our concern with all of that is the security.  It is keeping everyone’s information safe.  And I have got to assure you that that is what we are looking at very closely with all of SSA’s programs, and looking very closely at my SSA just to make sure that the fraudsters aren’t trying to get your information electronically. 

The other one, too, goes back to why we disagree with paper is, is that that is a lot of information that you really don’t want in the mail anyway.  So we would like to see it electronic. 

Mr. Schock.  Okay.  Thank you. 

Chairman Johnson.  Thank you for that question.  I agree with you, but, you know, there are still some people who don’t have access to computers, although you can get to them almost anywhere you need to. 

I thank you to our witnesses for your testimony, and I think we have had a good session on how Social Security needs to prepare for the future.  And I am sure we will be talking to both of you in the future. 

I thank also our Members for being here.  In the meantime, we look forward to the White House nominating a new Commissioner as quickly as possible.  Americans want, need, and deserve no less. 

With that, the committee stands adjourned.  Thank you.

[Whereupon, at 10:36 a.m., the subcommittee was adjourned.]

Public Submissions For The Record

American Association of University Women
Daniel Solomon
Social Security Works