Hearing Before
The Committee on Ways
and Means
Subcommittee on
Social Security
United States House
of Representatives
February 26, 2004
Statement
By Jo Anne B. Barnhart Commissioner, Social
Security Administration
Mr. Chairman and members of the Committee, I am pleased to
be here today to discuss the President's fiscal year (FY) 2005 budget request
for the Social Security Administration (SSA). I appreciate the Committee's
interest in and support of SSA in the past, and I look forward to continuing
to work with you.� I want to thank you for holding this hearing and giving
me the opportunity to tell you of our accomplishments and our plans for
the future.
Overview of SSA's Programs and Overall Budget
As you know, SSA advances the economic security of the Nation's
people through compassionate and vigilant leadership in shaping and managing America's Social Security programs.� These
programs include Old-Age and Survivors Insurance, commonly referred to
as Social Security, Disability Insurance (DI), and Supplemental Security
Income (SSI).� SSA also provides service delivery support to the Medicare,
Medicaid, Black Lung, Railroad Retirement, and Food Stamp programs.� The
President's Budget request for the Social Security Administration is driven
by our Agency Strategic Plan, which focuses on four strategic goals:� service,
stewardship, solvency, and staff.
For FY 2005, SSA will spend $557 billion to pay monthly
benefits to more than 52 million people.� SSA's administrative expenses,
driven by the size of the programs we administer - both in terms of the
amount of work we do and the number of people we need to do it - are less
than 2 percent of total outlays.
Let me give you a sense of the vast number of tasks that our
dedicated employees will perform in FY 2005.� We will process almost
6 million claims for benefits; issue 18 million new and replacement
Social Security number (SSN) cards; process 267 million earnings items
for workers' earnings records; handle approximately 52 million phone calls
to SSA's 800-number; issue 136 million Social Security Statements; adjudicate
appeals of disputed decisions; process millions of actions to keep beneficiary
records current and accurate; and conduct continuing eligibility reviews
to avoid erroneous payments to Social Security and SSI beneficiaries.
President's Request for SSA's Limitation on Administrative
Expenses
The President's budget includes $8.878 billion for the Limitation
on Administrative Expenses (LAE), a 6.8 percent increase over our
FY 2004 appropriation.� Given the very tight fiscal environment for FY
2005, we believe this increase in funding reflects the President's continued
support for our programs and confidence in the Agency.� And given the severe
budget constraints of the last two years, I want to go on the record as
thanking you for your support of our Fiscal Year 2004 and 2005 budget requests.
The 6.8 percent increase is needed
to provide the salaries and benefits, facilities, computer and telecommunications
equipment, and training needed to deliver service to the American public.� Mandatory
increases in personnel costs occur every year due to annual Federal employee
pay raises, career ladder promotions and benefit cost increases, and about
75 percent of our administrative resources are used for personnel
expenses.
Our budget places a priority on delivering high-quality, citizen-centered
service, and this year our commitment is to achieve at least a two percent
improvement in productivity.� With the proposed FY 2005 funding levels,
SSA will be able to keep up with key service workloads as well as fulfill
our responsibilities in implementing the historic Medicare prescription
drug law.� While I will describe each of the following workloads and initiatives
in more detail shortly, let me mention that the budget will allow us to
reduce hearings backlogs, increase the number of continuing disability
reviews (CDRs), and continue to lower overall disability processing times
for the American people.� It also allows us to focus on implementation
of AeDib, our new electronic disability claims process, which we began
to roll out in January.
SSA is a results-oriented organization, driven by our workloads.� We
recognize that the number of people we have to "do the job" matters significantly.� The
dedicated men and women of SSA will continue to give the American people
the service they expect and deserve.� However, the reality is that fewer
resources mean less work is completed, and that we must balance those resources
against our workloads carefully.
For instance, in FY 2003, we were not able to keep up
with our projected CDR workload, and the same will be the case in FY 2004.� We
know that CDRs are very cost-effective, and that they add significantly
to program savings.� For every $1 in administrative resources spent to
process CDRs, SSA has generated approximately $10 in government-wide savings.� However,
the alternative to reducing the number of CDRs conducted would be to process
fewer disability claims, thus increasing the time disability applicants
must wait for a decision, and that is a tradeoff I am not willing to make.
When I began my term as Commissioner of Social Security, I
vowed not to manage the status quo.� I began a Service Delivery Assessment
to determine what our goals for service should be and to plan how we would
achieve those goals within five years.�� The budget increase the President
is proposing for SSA in FY 2005 enables the Agency to stay on track
to meet my service delivery goals by the end of the original five year
period - 2008, producing positive results for the millions of Americans
who depend on our Agency.�
Let me describe some of our recent accomplishments in meeting
our service delivery challenges.
SSA's Recent Accomplishments
In FY 2003, SSA paid nearly $499 billion
in Federal benefits to 39.3 million OASI beneficiaries, 7.3 million
DI beneficiaries, and 6.6 million SSI recipients, including individuals
receiving benefits from more than one program.� In addition to carrying
out these responsibilities, SSA made progress in meeting a wide range of
challenges despite tough choices required to operate within appropriated
resources.
In FY 2003, we exceeded our Agency-wide
productivity goal.� SSA offices processed over 2.5 million disability claims
- an increase of more than 350,000 from FY 2001.� Administrative Law Judge
(ALJ) productivity rates were the highest in history - at 2.35 cases per
day.� SSA's Office of Hearings and Appeals processed 40,000 more hearing
decisions than FY 2002.� In November 2001, the average time to appeal an
unfavorable hearing decision was 467 days.� In November 2003, it took 252
days.�� The number of people doing business with SSA and rating our service
as "good", "very good," or "excellent" exceeded 84 percent.
Maintain Service in the Face of Growing Workloads
The President's FY 2005 budget for
SSA will allow us to continue to provide this level of service for the
American public.� �In FY 2005, we will be able
to add an additional 2,000 work years to our operations.� This level
will be enough to maintain or improve service
and will be used largely to enhance our staff in SSA field offices and
the Office of Hearings and Appeals.
As I mentioned earlier, SSA will be able to reduce hearings
backlogs while continuing to lower overall disability processing times.� In
FY 2005, SSA expects to increase the number of hearings it processes
to 596,000 from 538,000 in FY 2004 - an 11 percent increase.� This
lowers the number of pending hearings from 586,000 in FY 2004 to 550,000
in FY 2005 - a decrease of 36,000.� We project our average hearings
processing time for FY 2005 to be 344 days.� Additionally, we will
meet our commitment to process as many initial disability claims as we
receive, keeping up with the pending workload level, while maintaining
the accuracy of our decisions.
In FY 2005, SSA expects to issue nearly 18 million new
and replacement Social Security cards after obtaining and evaluating evidence
of identity.� As a way to streamline and improve service, we opened a pilot
Social Security Card Center in Brooklyn, New York in 2002.� The Brooklyn Card Center exclusively processes requests for
new or replacement Social Security cards. While I am waiting to see the
final results from the review of the pilot, initial feedback has been extremely
positive.� After considering the final results, I hope to open at least
one additional Card Center in FY 2004.�
In FY 2005, SSA will also expand
the range of services we offer electronically to the public.� We will continue
to encourage the public to use SSA's Internet website, and will partner
with other Federal, State and local entities to promote consolidated service
delivery.� SSA has invested substantially in electronic service delivery
and will continue to do so as an efficient means of providing service to
the burgeoning population of baby boomers who will come to us for service.�
SSA now has many of our forms and applications
available online at www.socialsecurity.gov. SSA is
testing the marketing of Social Security online services through the distribution
of bookmarks and other promotional materials in libraries, and is publicizing
online services among human resource professionals in large businesses
and organizations.�
Invest in Technology and Implement an Electronic Disability
Claims Process
As you can see, Mr. Chairman, SSA
places a high priority on information technology investments.� Our FY 2005
budget authority for information technology is increasing from $392 million
to $420 million, an increase of $28 million, or 7.1 percent.� SSA plans
to invest in infrastructure and office automation necessary for the support
of ongoing operation, including maintenance of SSA's National Computer Center, telephone services, and hardware
and software nationwide.�
The most notable strategic investment is AeDIB, an electronic
disability claims filing process, which replaces the paper-driven process
with a more efficient electronic system, and is expected to reduce processing
times significantly over the long term.� As you know, SSA began to roll out
AeDIB in January of this year.� This system is critical to our ability
to maintain and improve upon the progress we've made in making our disability
process better, and the funds in the President's budget request will allow
us to complete the roll out within our 18 month schedule.�
As I mentioned earlier, SSA made significant progress in improving
overall disability processing times in 2003.� In addition to the processing
time improvements of SSA's Appeals Council, average processing time for
initial claims was 97 days, an improvement from the FY 2002 processing
time of 104 days.�
However, we recognize that there is still much more to be done.� Individuals
who initially are denied disability benefits and who appeal have to wait
almost an additional year before a final hearing decision is made, and
that is simply unacceptable.�
AeDib is truly revolutionizing the way we do work and is essential
for making changes for the long-term.� While we have found that the process
does increase the time spent in the field office preparing the claim by
approximately 15 to 20 minutes,� this additional time will result in more
complete case files and thus save many hours in overall processing time.�� In
addition, in the paper-driven process, when a claimant requests a hearing,
it often takes more than a month simply to locate the claimant's folder
and deliver it to the appropriate hearing office.� This will change with
the new electronic process as costs related to locating, mailing, and storing
paper files will be significantly reduced.
With regard to long-term improvements,
the last time I appeared before this committee, I announced a new approach
for improving the disability determination process.� The approach I discussed
focuses on making the right decision as early in the process as possible
and improving the quality of decisions at all levels of the process.�� The
proposal is predicated on the successful implementation of AeDib, which
would allow disability claims and quality reviews to be worked at any location.� We
are continuing to pursue a collaborative approach in developing the new
process as we receive input, comments and ideas from Congress, the public,
organizations, advocacy groups and employees to refine the new approach.
Increase SSA's Overall Productivity
As SSA deals with significant workload growth and an increased
number of employee retirements, improved productivity is essential to meeting
the challenges ahead.� In FY 2003, we exceeded our Agency-wide productivity
goal.� We achieved a 2.1 percent increase in productivity, due largely
to the dedication of our employees.� Considering that we had a 5.1 percent
increase in productivity in FY 2002, our achievement in FY 2003
is even more noteworthy.� Our goal for FY 2005 is to again increase
productivity by at least 2 percent.
In addition to our other systems improvements and automation
efforts� I have already mentioned, the President's budget includes a legislative
proposal to implement an Electronic Death Registry (EDR) where states would
report the death of an individual within five days.� The budget also includes
funding to make improvements to the earnings process, continuing redesign
of the Title II system, and modernization of our SSI systems.
Ensure the Integrity of SSA's Programs
SSA's mission demands that we balance
our commitment to service with our responsibility to be good stewards of
the programs we administer.� We fulfill this responsibility through program
integrity work such as CDRs, periodic non-disability redeterminations of
SSI payments, overpayment collections, and strengthened management of our
programs.�
As I mentioned, the President's budget proposes $561 million
in dedicated funding to ensure continuation of CDRs, which have a very
high return in program savings for administrative dollars spent.� The President's
budget proposes that discretionary spending caps be reinstated in any budget
reform legislation that Congress considers.� If caps are reinstated, the
President proposes to adjust the caps for SSA's funding for CDRs.� I know
the Committee is familiar with the cap adjustment for CDRs under the previous
discretionary spending caps.�� In FY 2005, SSA will process 1.569
million CDR's, an increase from 1.537 million in FY 2004.�
We will continue to strengthen our
management of the SSI program by reducing erroneous payments through use
of such tools as periodic non-disability redeterminations, and proposing
legislative remedies consistent with the Agency's SSI Corrective Action
Plan, which was developed in response to GAO's designation of SSI as a
high-risk program.� As you know, many of the legislative proposals in the
Corrective Action Plan are in H.R. 743, and we are continuing to look for� ways
to improve and simplify the SSI program.� We will propose legislative remedies
as necessary based on this ongoing analysis.� We expect to process 2.21
million redeterminations in both FY 2004 and FY 2005.�
We will also continue to reduce SSN fraud through improvements
to the enumeration process. The SSN has become the single most widely used
identifier for Federal and State government, as well as the private sector.� As
uses of the SSN increase, so has the potential for misuse.�� Individuals
seeking an SSN must provide proof of identity, age, and U.S. citizenship or legal alien and work
authorization status, and SSA must evaluate all of these documents for
authenticity.� To detect fraudulent documents and to prevent improperly
issuing SSNs, we are developing ways to share information with other Federal
and State agencies to decrease reliance on documents presented by SSN applicants.� We
are also developing automated alerts to detect potential fraud.
Finally, Mr. Chairman, we are looking forward to implementing
all the provisions in H.R. 743 as they serve to further strengthen the
integrity of our programs.
Implement Medicare Reform
SSA is facing new responsibilities
as we help to implement the Medicare prescription drug law signed by the
President in December 2003.� SSA will answer general inquiries and make
referrals and send letters this spring to Medicare beneficiaries who may
be eligible for the prescription drug discount card and related transitional
assistance.� We will calculate Part B premiums for high-income beneficiaries
and withhold the premiums for this program from beneficiaries' Social Security
checks.� We will also determine eligibility of low-income seniors for drug
benefit subsidies under Medicare Part D.�
I have created a team in my office to work with the Department
of Health and Human Services and oversee the Agency's implementation efforts.� I
would like to take this opportunity to express my appreciation for their
hard work and efforts to make sure we fulfill our responsibilities under
this important legislation.� I know the team has made good progress in
assessing what we need to do and how we will do it to effectively implement
the new law.� Their analysis will include plans for efficient use of our
available resources to accomplish all that is required of us.� As we complete
our assessment and proceed with our implementation, we will keep you informed.�
Congress provided $500 million for
SSA's startup costs in FY 2004 and FY 2005.� In addition to these funds,
the President's FY 2005 budget includes an additional $100 million
for a Medicare reform contingency reserve, which will remain available
through FY 2006.� This reserve will ensure that all eligible persons
seeking benefits under the new law can be served if the original appropriation
for implementation is exhausted. �Consistent with the provisions in the
original legislation, the reserve funds may be transferred between SSA
and the Centers for Medicare and Medicaid Services.�
Conclusion
The President's FY 2005 administrative budget for SSA,
including $8.878 million for LAE, $100 million in a Medicare reform
contingency reserve, and $92 million for the Inspector General will provide
the resources to help us:� maintain service in the face of growing workloads;
fully implement an electronic disability claims process; continue to increase
overall productivity; ensure the ongoing integrity of our program; and,
help administer the Medicare prescription drug plan.
I am proud of our record of accomplishment
in management of the Social Security Administration.� We earned the highest
status score - green - on the President's Management Agenda in Financial
Management.� We are one of only four Federal agencies to have a green in
status in Financial Management.� We also scored green in progress on all
5areas of the President's Management Agenda, specifically:� improved financial
management; strategic management of human capital; expanded electronic
government; budget and performance integration; and competitive sourcing.
We also are proud that we have received a number of awards
and good "grades" from independent sources.� We have received unqualified
opinions on our financial statements since 1994 and the Association of
Government Accountants "Certificate of Excellence in Accountability Reporting"
for fifth straight year.�� Our computer security efforts earned a B+ on
the House Committee on Government Reform's annual report card, placing
SSA among the top three Federal agencies.� In addition, SSA executives
have received individual awards from the Association of Government Accountants,
the Joint Financial Management Improvement Program, the General Services
Administration, the American Society for Public Administration, and the
National Academy of Public Administration.
We also are pleased that SSA's SSI
program has been removed from GAO's high-risk list of government programs
considered especially vulnerable to waste, fraud or abuse.� To continue
to reduce improper payments, we are committed to processing substantial
numbers of continuing disability reviews, SSI redeterminations and special
workload cases affecting the accuracy of benefit payments; and to continuing
to make progress on the SSI Corrective Action Plan.
I want to thank this Committee for
all its hard work in the recent passage of H.R. 743.� The bill includes
many important provisions, but I want to point out two SSI provisions that
were in H.R. 743 and also in an Administration bill that SSA submitted
to Congress last July.� One provision would exclude small amounts of income
paid as interest or dividends on an SSI beneficiary's resources and increase
from $20 a month to $60 a quarter the amount of infrequent income an individual
can receive without it affecting his or her SSI benefit. �By eliminating
the reporting and recording of these very small amounts of income, SSI
overpayments are avoided and the program is simpler and more efficient.�
The second provision eliminates the
situation in which income received in the first month of eligibility is
counted three times even if it were only received once.� This triple-counting
caused beneficiary confusion and was very difficult for SSA employees to
administer and explain.� While the budget impact of these provisions is
negligible because they do not affect very many individuals, the proposals
are an important first step in simplifying the SSI program.� I assure you
that we will continue, with the help of Congress, to improve and simplify
SSI.
Thank you for the opportunity to discuss SSA's budget request
with the Committee.� I look forward to working with you and appreciate
your continued support of our programs and people.
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