The remaining $4.9 million increase covers unbudgeted payments to GSA for services incurred for renovation of space to house four computers and for other space improvements and maintenance not covered in the President's budget.

Partially offsetting these increases in "other objects" are reductions from the President's budget. Obligations for printing are down by approximately $7.0 million and result from SSA's previous overestimate of price increases for all types of printed materials, a decrease in workload related forms and delays in the printing of public information pamphlets and booklets. Another reduction from the President's budget occurs in purchase of equipment amounting to about $2.0 million principally due to a decision to continue the rental of optical scanning equipSSA did not purchase the optical scanning equipment because of concern about its adequacy to process future workloads.

ment.

The funds budgeted for Medicare contractors and health insurance State agency costs were reduced by $6,596,000 from the original estimate. The greater part of this reduction, $6,502,000 was in the Medicare contractors because greater productivity was achieved in FY 1975 than was estimated. This higher productivity obtained in part from prior year systems improvements was carried into the revised 1976 estimate.

Funds budgeted for the Disability State Agencies are now $14,858,000 greater than were in the 1976 President's budget. Experience to date indicates that State agency salaries and fee schedules for medical examinations are increasing at a rate greater than originally projected. Also, 1975 experience indicates that the State agencies require more manpower than originally budgeted in 1976. The State agencies lost productivity in 1975.

Requirements for governmental agencies who are still assisting in the Supplemental Security Income program drop by $6,572,000. This was the amount originally budgeted to monitor the treatment of New York City drug addicts and alcoholics. This function will be handled at less cost than previously estimated and those funds formerly carried in Salaries and Expenses are now included in the SSI appropriation account under the activity entitled "Vocational Rehabilitation."

The revised estimate for 1976 also includes $15 million ($7 million in the transitional quarter) to reimburse State agencies under contract to assist the SSA in the plan to enumerate all recipients of the AFDC program by the end of December 1976. About 15 million applications for social security numbers will be taken by State workers and transmitted to SSA for processing. The FY 1976 President's budget assumed that the States would perform this function without reimbursement.

Emphases in the Fiscal Years 1976-1977 Budgets

I. Improvements in Accuracy Processing Times and Quality of Service

For the two years since January 1974, the Social Security Administration has had to place its major emphasis on getting the new and complex Supplemental Security Income (SSI) program off the ground. During this implementation period when the priority had to be placed on getting checks into the hands of millions of needy people who had never before received supplemental security income protection from the Federal Government, it was almost inevitable that the degree of payment accuracy acceptable to the Congress and to the Social Security Administration itself would not be achieved. During this implementation period it is also not surprising that deficiencies developed in the speed and quality of service rendered to the public in both the social security and SSI programs. These deficiencies must be corrected. Therefore, the major emphasis in the administrative budget for 1976 and 1977 are to improve the payment accuracy, timeliness and overall quality of SSA's service to the public. The following elements of the budget reflect these emphases:

--The budget request for 1977 contains an additional 1,855 man-years to improve quality of service. Steps SSA intends to take include more complete claims interviews of beneficiaries, a more thorough development of each claim, the expanded use of automatic data processing equipment to verify entitlement data, and an improved workflow management system. While increasing SSA's overall level of service and accuracy, these and other steps will also speed the average processing time for many claims by removing the inaccuracies which have slowed action in the past and brought about the need for expensive manual processing to achieve

corrections.

--The Social Security Act requires periodic redeterminations to verify the eligibility and payment amount of each SSI recipient. The major effort on SSI redeterminations begun in fiscal 1975 will continue in 1976 and 1977. The goal of the Social Security Administration is to make these redeterminations once each year. The purpose of the redeterminations is to correct overpayments and underpayments and to remove ineligibles from the rolls. The table below summarizes the redetermination workloads and the man-years budgeted to process them:

The manpower for redeterminations decreases by 191 man-years in 1977 as a result of a combination of factors. While the volume of redeterminations increases slightly (6.4 percent) in 1977, the additional manpower for this workload is more than offset by a variety of procedural and systems improvements and man-years saved because of a more thoroughly trained and experienced staff.

--In fiscal 1977, SSA proposes to expand free telephone service, at a cost
of $6.5 million, to the approximately 20 percent of the public who
presently must pay long distance charges to contact a social security
office. This service is offered by other Federal agencies and assists
many beneficiaries who have limited financial resources. In addition,
rising fuel costs and the need to conserve scarce fuel make it
desirable to encourage the public to contact SSA by phone when possible.

II. Additional Training is Budgeted

The initial crunch of SSI necessitated a reduction in employee training both ongoing for existing staff and for the thousands of new employees SSA recruited because of SSI. At times initial training courses were cut in length by one-third with the result that many new employees were trained in only certain aspects of their jobs. Since much of the on-going training was of necessity devoted primarily to SSI, on-going training in the regular social security program suffered. Shortcuts in employee training account ir part for the deficiencies in accuracy and service noted previously. Conditions now permit a return to full basic training for new employees and increased on-going training to meet the needs of many employees who did not receive full basic training.

The man-years for training budgeted for the workload operations staff are summarized below:

Several new laws and court decisions have created new workload responsibilities for the Social Security Administration and result in the need for additional manpower. The table below lists the man-years budgeted

SSA's due process needs result mainly from the 1974 case of BuffingtonBiner vs. Weinberger which requires SSA to provide oral hearings before adjusting or reducing benefits to recover overpayments. Other court decisions affect the reduction, suspension, or termination of benefits. The requested manpower, which is needed for mailing notices, offering reconsideration reviews, and for waiver determinations on all overpayments, is conservative. For example, the budget does not reflect the manpower that would be needed to implement the recent Cardinale, et al. vs. Mathews decision. This decision extends Goldberg vs. Kelly protection to a number of SSI areas previously excluded by regulation. For example, it requires SSA to give advance notice of a benefit change and offer the opportunity for a hearing while continuing unreduced payments, even in a case where SSI benefits have been reduced because of an increase in social security benefits, or because of a clerical error, or because of facts the beneficiary himself reported to SSA. SSA is asking the court to clarify some areas of the decision and is contesting its retroactive application.

The Privacy Act (P.L. 93-579 enacted December 31, 1974) requires additional manpower to: (1) inform individuals of the need for and uses of the information collected from them; (2) provide individuals who request it access to their records to review the information contained therein; and (3) maintain a file listing all disclosures made to other agencies about individuals.

The Employee Retirement Income Security Act, P.L. 93-406, dated September 2, 1974, (or "pension reform") requires SSA to: (1) establish and maintain a record of pension fund names and addresses and of employees who have vested rights in these plans, and (2) supply the pension funds with earnings history information about these employees. The budget assumes

IV.

V.

that the pension funds will reimburse SSA for the cost of supplying this detailed earnings information, and the Advances and Reimbursement budget contains 268 man-years in 1976 and 825 man-years in 1977 for this purpose not included in the above table. Additionally, this Act is expected to cause increases in such regular SSA workloads as requests for earnings information from individuals, earnings discrepancies, and correspondence.

Direct deposit is a program whereby a beneficiary may elect to have the Treasury Department upon instruction from the Social Security Administration send his benefit check directly to his bank for deposit rather than have the check come to his home. Direct deposit of benefit checks does not result from legislation or court decisions, but is an SSA initiative to improve service to the public and to guard against the loss or theft of benefit checks.

Hearings Backlog Decline

Hearings backlogs are presenting a major problem to SSA, and the 19761977 budgets both for "Black Lung" and "Salaries and Expenses" provide added resources for reducing these critical backlogs. This will be accomplished by recruiting and training additional administrative law Judges, SSI hearing examiners, clerical personnel, professional support personnel, and law clerks in the Bureau of Hearings and Appeals. ВНА man-years for all programs are budgeted to rise from 3,313 man-years in 1975 to the 4,400 level in 1976 and 1977. The table below displays the trend in the backlogs for each program.

Beginning in fiscal 1975, and continuing into 1976 and 1977, SSA has purchased or plans to purchase new automatic data processing equipment or equipment presently being rented to keep pace with workloads. Purchase is undertaken when a cost benefit analysis proves that this is less costly than rental. Four large-scale computers are scheduled for installation in fiscal 1976 under an installment purchase plan. The fiscal 1977 budget contains about $37 million to purchase these computers as well as an additional four new systems. These systems will meet the critical shortage of computer capacity SSA currently faces and will reinforce SSA's efforts to improve program accuracy and service.

The telecommunications budget for fiscal 1977 increases about $5.6 million due to the expansion of the SSA Data Acquisition and Response System (SSADARS). This system allows field offices to access central office computers for payment and entitlement information needed for the claims and post-entitlement processes, which is essential for reducing processing times to a minimum. These extra funds will expand the SSADARS network to more field offices.

In 1976, SSA began a project to review in total its operating systems and processes in order to design and implement an advanced overall SSA process responsive to the public's needs given the workloads of the future. This project will take 6 years to complete and will cost an estimated $350 to $400 million through the target completion date of September 30, 1981. This cost includes new technology and hardware as well as manpower to conduct the project. The purposes of the project are to enable SSA to keep pace with the inevitable growth in program workloads without accompanying increases in manpower, or with reduced manpower, to develop improved systems to better serve the public, and to take advantage of the most advanced technology available.

The budget request contains 71 man-years for this project in fiscal year 1976 and 214 man-years in 1977. To assure that the new process takes maximum advantage of the most advanced ADP technology available, the budget also included $646,000 in FY 1976 and $2,454,000 in FY 1977 for contracts with experts in this field.

Approximately 32 Cents Out of Every Administrative Dollar
in 1977 is Budgeted for Third Parties

As indicated in exhibit 1, in 1977 32 cents out of each dollar requested for Salaries and Expenses will go to third parties who assist in carrying out the provisions of the Social Security Act. These third parties are State agencies who perform functions under the disability, health insurance, and supplemental security income programs as well as non-profit private contractors who perform functions under the health insurance program.

Of the 32 cents, more than 11 cents will go to State agencies who make disability determinations for the social security and supplemental security income programs on (1) initial claims for benefits, (2) reconsideration claims resulting from medical denials, and (3) investigations of continuing eligibility for benefits. These disability determinations must be made on all claims where eligibility involves meeting medical disability criteria.

About 1 cent of the 32 cents going to third parties goes to health insurance State agencies (principally public health agencies), which certify that providers of services--i.e. hospitals, skilled nursing facilities, home health agencies and independent laboratories--meet Medicare standards and thus are eligible to participate in the program.

The remainder of the 32 cents--about 21--go to health insurance contractors such as Blue Cross and Blue Shield organizations and private health insurance companies. These third parties process most Medicare bills and claims for payment and perform certain other administrative functions.

Work Output and Productivity

Work Output

Work output represents the number of units of program workloads processed adjusted for substantive changes in the quality of the product and non-recurring work involving the use of agency manpower.

The following table shows the percent increase in the work output projected for the various components engaged in processing the work of the Social Security Administration.