[Senate Hearing 113-678]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 113-678



                               BEFORE THE
                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE


                             SECOND SESSION

                                 ON THE

                             NOMINATION OF



                             JULY 31, 2014

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                         COMMITTEE ON FINANCE

                      RON WYDEN, Oregon, Chairman

Virginia                             CHUCK GRASSLEY, Iowa
CHARLES E. SCHUMER, New York         MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan            PAT ROBERTS, Kansas
MARIA CANTWELL, Washington           MICHAEL B. ENZI, Wyoming
BILL NELSON, Florida                 JOHN CORNYN, Texas
ROBERT MENENDEZ, New Jersey          JOHN THUNE, South Dakota
THOMAS R. CARPER, Delaware           RICHARD BURR, North Carolina
BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania
MARK R. WARNER, Virginia

                    Joshua Sheinkman, Staff Director

               Chris Campbell, Republican Staff Director


                            C O N T E N T S


                           OPENING STATEMENTS

Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee 
  on Finance.....................................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     2
Cardin, Hon. Benjamin L., a U.S. Senator from Maryland...........     7

                         CONGRESSIONAL WITNESS

Mikulski, Hon. Barbara A., a U.S. Senator from Maryland..........     5

                         ADMINISTRATION NOMINEE

Colvin, Hon. Carolyn Watts, nominated to be Commissioner, Social 
  Security Administration, Baltimore, MD.........................     8


Cardin, Hon. Benjamin L.:
    Opening statement............................................     7
Colvin, Hon. Carolyn Watts:
    Testimony....................................................     8
    Prepared statement...........................................    19
    Biographical information.....................................    25
    Responses to questions from committee members................    39
Hatch, Hon. Orrin G.:
    Opening statement............................................     2
    Prepared statement...........................................   106
Mikulski, Hon. Barbara A.:
    Testimony....................................................     5
    Letter from the National Committee to Preserve Social 
      Security and Medicare to Senator Mikulski, dated July 28, 
      2014.......................................................   109
    Letter from AARP in support of the nomination of Carolyn 
      Watts Colvin to be Commissioner of the Social Security 
      Administration, dated June 10, 2014........................   110
Wyden, Hon. Ron:
    Opening statement............................................     1
    Prepared statement...........................................   111
    Fiscal Year 2013 Title II Payment Accuracy Report, Office of 
      Budget, Finance, Quality, and Management, May 2014.........   112


                          TO BE COMMISSIONER,


                        THURSDAY, JULY 31, 2014

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:07 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Ron 
Wyden (chairman of the committee) presiding.
    Present: Senators Carper, Cardin, Brown, Hatch, and Thune.
    Also present: Democratic Staff: Michael Evans, General 
Counsel; Anderson Heiman, International Competitiveness and 
Innovation Advisor; Tom Klouda, Senior Advisor for Domestic 
Policy; Jocelyn Moore, Deputy Staff Director; Joshua Sheinkman, 
Staff Director; and Kelly Tribble Spencer, Detailee. Republican 
Staff: Chris Campbell, Staff Director; Nicholas Wyatt, Tax and 
Nominations Professional Staff Member; and Jeff Wrase, Chief 


    The Chairman. The Finance Committee will come to order.
    The Finance Committee is here today to consider the 
nomination of Carolyn Watts Colvin to fill a role of 
extraordinary importance to millions of Americas; that is, the 
position of Commissioner of the Social Security Administration. 
If confirmed, Ms. Colvin will be managing the nuts and bolts of 
the Social Security program, a vital task given that more than 
62 million Americans depend on Social Security as an economic 
    I thought, Ms. Colvin and Chairman Mikulski, I would just 
hold up a Social Security statement, the reason being that I 
believe that, when Americans get this document that 
demonstrates what amount they have paid for their Social 
Security insurance and what benefits they have earned, they 
will hang onto this document, because it is a testament to just 
how important this program is. If you are confirmed, Americans 
are going to depend on you to ensure that Social Security is 
operating efficiently and providing the right amount to the 
right person at the right time.
    We all know that this is not a new role for you, because 
you have been the Acting Commissioner since February of 2013. 
Before that, you served as the Deputy Commissioner for more 
than 2 years, coming out of a well-deserved retirement to 
engage in this critical public service. Colleagues, as we begin 
consideration of the nominee, I would just like to note for the 
record that the Finance Committee approved Ms. Colvin's 
nomination for that position by a vote of 23-0. Sometimes--I 
will tell you, Ms. Colvin--I am not sure I could get a 23-0 
vote. So you have very strong support.
    Senator Hatch. I am not so sure either. [Laughter.]
    The Chairman. I was leading with my chin on that one.
    Senator Hatch. I think so. [Laughter.]
    The Chairman. Because of Ms. Colvin's years of experience, 
Ms. Colvin is well-versed with the challenges involved with 
running the Social Security Administration. One of those 
challenges is working within a tight budget and fiscal 
constraints. Social Security felt the same fiscal squeeze that 
every Federal agency has in recent years, and Social Security 
has worked hard to maintain critical services. That has 
required making some tough decisions, including reducing field 
office hours and consolidating some offices to address budget 
and staffing challenges.
    Ms. Colvin has been actively working on ways for Social 
Security to effectively manage its program integrity workload. 
As Acting Commissioner of Social Security, Ms. Colvin has also 
made several service improvements. She has made a strong push 
to make Social Security information more user-friendly and 
accessible to a broader swath of Americans. She has made Social 
Security work more efficiently with other Federal partners, and 
she has devoted significant time and significant resources to 
addressing the needs of the many disabled Americans the agency 
    And I am very pleased that that is the case, Ms. Colvin, 
because just a few weeks ago we had a hearing looking at 
chronic disease and those who are disabled. Right next to where 
Chairman Mikulski is sitting was Ms. Dempsey from Georgia, a 
woman who had done everything right in America. Ms Dempsey had 
been pounded with one illness after another, the daily 
medications for which nearly overflowed her table. For those, 
she depends on the Disability program that you have focused on. 
So I have no doubt that you are going to continue that 
important work, that advocacy work, for disabled Americans, 
once confirmed.
    Today's hearing, of course, is an opportunity for the 
Finance Committee, Ms. Colvin, to discuss how to guarantee the 
Social Security promise for today's seniors and future 
generations. I hope to see this nomination for head of Social 
Security move through the committee and the full Senate quickly 
so that Social Security will have a confirmed leader in place.
    [The prepared statement of Chairman Wyden appears in the 
    The Chairman. Senator Hatch will make his opening 
statement, and I am very pleased to be working with my 
colleague on this, again, in a bipartisan way. Then we will 
have an introduction from Chairman Mikulski and also from 
Senator Cardin.
    Senator Hatch?

                    A U.S. SENATOR FROM UTAH

    Senator Hatch. Thank you, Mr. Chairman.
    Welcome, Ms. Colvin. I think it is a little unfair of you 
to bring Barbara Mikulski here to talk for you. We are all 
scared to death of her. We do whatever she tells us to do, is 
all I can say. We learned that a long time ago. [Laughter.]
    I have enjoyed meeting with you in the past. Today, and 
with questions to follow, we have an opportunity to learn more 
about your past management performance and how you would, if 
confirmed, face the challenges of the future.
    Over the past 10 years, the Social Security 
Administration's administrative budget has increased by 34 
percent. That is well above the 24-percent growth in the number 
of disabled and retired beneficiaries, to a level of almost 
$11.7 billion. The budget has grown at an average annual pace 
of more than 3.5 percent above the average growth of even 
nominal GDP.
    Social Security's administrative funding continues to take 
up greater shares of the Labor-HHS appropriations bill, 
inevitably crowding out other programs relating to health and 
education. Yet, all we seem to hear from SSA is the need for 
more and that any problems in administering programs can be 
solved if only SSA receives more funds. That is true of almost 
every agency today.
    In a hearing on this committee last week that was supposed 
to be a fresh look at the Disability program, the 
representative of SSA devoted significant time to repeating 
what are, in my view, becoming stale talking points, demanding 
more funds for the agency. SSA officials have been marching to 
the Hill repeatedly to decry staffing reductions that SSA 
itself decided to make, just as the agency decided to pay $244 
million in bonuses between fiscal years 2008 and 2013.
    What I would like to learn more about today, Ms. Colvin, is 
what you have done in managing administrative funding provided 
to SSA, which has accumulated to more than $104 billion over 
the past 10 years, and what you would do moving forward. I 
think those are fair questions, and hopefully we can enjoy 
working together on these things. And I hope that your answers 
will not simply be that SSA needs more funds.
    I hope to learn more today and in follow-up questions about 
what you have done and what you would do, if confirmed, to 
increase efficiency in the SSA, to reduce billions of dollars 
of administrative waste and overpayments associated with Social 
Security programs, and, of course, to fight fraud.
    And while there are many concerns to discuss, let me 
briefly identify just a few items. The first is fraud and 
overpayments. To give you an example, uncollected overpayments 
in the Disability program have recently grown to more than $10 
billion. Think about that. Overpayments in the Disability 
program alone are almost equal to the Social Security 
Administration's entire annual administrative budget.
    There also is an unacceptably high overpayment rate in the 
SSI program, and there have been discoveries of fraud, as in 
the Puerto Rico cases, the New York City cases, and the West 
Virginia cases.
    As for fraud, a bipartisan investigation by a Senate 
subcommittee led by Senators McCain, Coburn, Carper, and Levin 
has presented compelling evidence of fraud in the DI program in 
West Virginia. And even so, it is my understanding that an 
alleged rogue disability insurance attorney involved in the 
West Virginia cases is still representing claimants in Social 
Security's DI program. And, as I understand it, allegedly 
corrupt administrative law judges have retired with full 
retirement benefits from SSA.
    Now, it is hard to see how that is an adequate response and 
how, if this is indeed the case, we can effectively provide 
deterrence against future fraud. Ms. Colvin, I hope that today 
we will hear from you about your plans to address fraud and 
overpayments in the Social Security programs.
    The second item of concern is waste. There have been recent 
revelations that Social Security spent nearly $300 million over 
6 years on a computer processing system for disability cases 
that has been identified by an outside evaluator as having, 
quote, ``delivered limited functionality.'' The chairman of the 
House Ways and Means Subcommittee on Social Security has called 
for you to stop further spending on the system and has called 
for an investigation into the failed implementation of the 
    That is just one example of waste at SSA that has been 
uncovered. There are a number of other examples I could 
mention. Indeed, it is not hard to find enormous amounts of 
questionable and likely wasteful spending and payments when you 
read thoroughly the numerous reports by Social Security's 
Office of Inspector General. Now, Ms. Colvin, during today's 
hearing, I hope to get a better sense from you what your plans 
are to eliminate the obvious instances of wasteful spending we 
have been seeing at SSA.
    As you can see, Mr. Chairman, we have a lot to discuss 
today, and I am pleased, Ms. Colvin, that you are here today. 
And I honor you and expect a great deal from you as we go into 
the future. But naturally, today we want to learn more about 
your stewardship of a staggeringly large administrative budget 
and what your plans would be to improve SSA's management and to 
fight the disturbing amount of fraud and waste at Social 
Security, should you be confirmed.
    We welcome you to the committee, and these are matters that 
concern me greatly.
    Thanks, Mr. Chairman.
    The Chairman. Thank you, Senator Hatch.
    [The prepared statement of Senator Hatch appears in the 
    The Chairman. Carolyn Watts Colvin has been nominated to be 
the Commissioner of the Social Security Administration.
    It is our practice, Ms. Colvin, to give you the opportunity 
to introduce your family.
    Ms. Colvin. Thank you, Chairman Wyden.
    I would like to introduce my sister, Genevieve Unger, a 
resident of Maryland, who is here. And, if I may, I would like 
to introduce my colleagues Shirley Marcus-Allen, a long-term 
State employee, and Ernest Eley and his wife, Stacy Eley.
    Thank you.
    The Chairman. We are glad that you all are here. I would 
only say, as I reflect on Chairman Mikulski's being with us, 
that we have served together both in the Senate and in the 
other body. I would just say, Ms. Colvin, you are running with 
the right crowd when you are with Chairman Mikulski.
    Chairman Mikulski, we are pleased to have you do the 
opening introduction. You will be followed by Senator Cardin. 
Please proceed.

                  A U.S. SENATOR FROM MARYLAND

    Senator Mikulski. Thank you very much, Senator Wyden. I 
want to thank you for expediting this hearing on our last day 
in session before the August break, when there is much pressure 
on you, particularly in matters related to moving the highway 
trust fund. So we thank you for this courtesy.
    To both you and Senator Hatch, it is an honor to be here in 
the Finance Committee. Your committee, the Finance Committee, 
and my committee, the Appropriations Committee, are the only 
two committees in the Constitution. They are the only two 
committees that the founders of the United States of America 
felt important enough to put into the Constitution, because it 
is the revenue committee and the spending committee working 
hand-in-hand to provide the checks and the balances to ensure 
the functioning of the democracy, not an elected monarchy.
    I think when we look at this, your job is to be looking at, 
really, the significant issues of the solvency of the Social 
Security trust fund, what do we do to ensure the future 
viability of Medicare and Medicaid. But there is also the 
administration of these agencies, often overlooked in today's 
media-driven Congress where the headlines are not in the nuts 
and bolts of management. But under the leadership of you two, 
working with Senator Shelby and I, let us take a look at how 
Social Security is run. Does it have the right staff, the right 
technology, and the right way to do that, both at the Social 
Security Administration and, also, at CMS?
    So, hands across the aisle, hands across the committee, 
shoulder-to-shoulder, but no matter what we do, every agency 
needs a good leader. This is why I am so pleased to join with 
Senator Cardin today in bringing Carolyn Colvin to you to be 
nominated for the permanent Social Security Commissioner.
    I first met Carolyn Colvin when she came into government 
under the legendary William Donald Schaefer, and I worked 
hands-on with Carolyn under William Donald Schaefer as both the 
Mayor, she in the health department, I in the city council, and 
as Governor--I had moved to the Senate.
    William Donald Schaefer was known for many things, one of 
which was his passion for making sure that government worked. 
He was a legendary figure with his spoken, ``Do it now and do 
it right.'' So he recruited people who were intellectually 
brilliant, had enormous competency in terms of management 
skills, and possessed the sense of urgency about solving 
problems of ``do it now and do it right.'' But he also did 
something else. He reached out to people of color to make sure 
that they were actually coming into government, and, for all of 
their previous service, were actually promoted in government.
    Carolyn Colvin was over there at the health department. 
Bishop Robinson was our police commissioner. It was a new day, 
a new profile, a new demographic, and a new buzz in Baltimore. 
Carolyn was part of that reform movement. That buzz, that ``do 
it now and do it right,'' she has carried with her in the many 
positions that she has had in government.
    After William Donald Schaefer moved on, she was the 
Director of Human Services in the District of Columbia, was the 
Director of the Montgomery County Health and Human Services 
Department, was a special assistant in the Maryland Department 
of Transportation, and then became the Deputy Commissioner of 
Social Security, and, in February, also then was appointed the 
Acting Commissioner.
    So you know her resume, and, in each position, it was the 
nuts and bolts of government: fix problems, do it now, do it 
    She has inherited many significant issues at Social 
Security: backlogs, techno boondoggles, some of the issues that 
Senator Hatch has enumerated. But I think she is up for the 
job, and I think I am not the only one. The National Committee 
to Preserve Social Security and Medicare has supported her 
nomination. The AARP has submitted a letter.
    I ask unanimous consent that those letters be submitted 
into the record.
    The Chairman. Without objection, so ordered.
    [The letters appear in the appendix on p. 109.]
    Senator Mikulski. So I bring this to your attention and, 
also, that she has been recognized by many of the women's 
groups and leadership groups in Maryland. She is part of a 
group called Leadership Maryland to actually train people in 
working together in bipartisan relationships. Also, she is part 
of the Maryland 100. She and I joined. We are now part of the 
Maryland 1,000 people who have achieved prominence.
    But what I so admire about Carolyn is that she is ready to 
do the job, and I am just going to close with one example.
    When I became the chair of the Appropriations Committee, 
one of the perplexing issues was the disability backlog at the 
Veterans Administration. And as we talked then with General 
Shinseki, it resulted because Social Security and IRS were 
dragging out their response to the information VA needed from 
both of those agencies.
    Working with Senators Tim Johnson and Mark Kirk, I convened 
an all-hands-on-deck hearing with these agencies. Social 
Security immediately responded under Carolyn's leadership to 
make sure that the VA gets on a biweekly basis--biweekly, am I 
correct?--the information it needs so that the Veterans 
Administration can deal with its backlog.
    But she has her own backlog of disability cases, this 
techno boondoggle plagued by, once again--before she took 
over--no one in charge, everybody in charge, everybody 
dithering and moving their microchips around. You know that 
deal. And we saw it in the health exchange. We see it over 
here. But I think she is the person to fix it.
    So, Mr. Chairman and Senator Hatch, you can see my 
enthusiasm for her. And, if you want William Donald Schaefer 
smiling on you today about ``do it now and do it right,'' 
confirm Carolyn Colvin.
    The Chairman. Ms. Colvin, that is some kind of send-off.
    Thank you very much, Chairman Mikulski. Your passion and 
your commitment to these programs is renowned, and I especially 
appreciate your bringing up Mr. Schaefer, because I remember 
meeing him and realizing you could have a head and a heart, 
that you could focus on making sure you stretch resources while 
also caring for people. So you said it very well.
    Now, Senator Cardin has the challenging job of trying to 
match that.
    Senator Cardin?

                  A U.S. SENATOR FROM MARYLAND

    Senator Cardin. Thank you, Mr. Chairman. I agree with 
Senator Mikulski. [Laughter.] You are not going to get away 
quite that easily, Senator Hatch.
    But let me first concur completely in Senator Mikulski's 
comments about Carolyn Colvin. She is an extraordinary person.
    We have only had 15 permanent Commissioners of the Social 
Security Administration. It is interesting: Franklin Delano 
Roosevelt announced that he wanted to send to Congress the law 
creating the Social Security Administration. He announced that 
in June of 1934, 80 years ago. He then, by executive order, set 
up a commission to report back to him. By the end of the year, 
he introduced legislation. Congress took it up, and by August 
1935 it was signed into law.
    That is a model for us in taking up issues and resolving 
issues, and, of course, Social Security is a critically 
important program to millions of Americans; it is the only 
inflation-proof, guaranteed lifetime income source for millions 
of Americans.
    The permanent Commissioner is an extraordinarily important 
position, as Chairman Wyden has said. Not only are millions of 
Americans dependent upon the agency's services, but it has more 
than 68,000 employees.
    We are very proud, Senator Mikulski and I, that the 
headquarters of the Social Security Administration is in 
Woodlawn in Baltimore County, MD, and we are very proud of the 
dedicated workforce that is committed to the mission and to 
public service. One-fifth of Americans depend upon the agency's 
services directly.
    I have known Carolyn Colvin for 30 years, Mr. Chairman, and 
I concur completely in Senator Mikulski's evaluations. When I 
think of Carolyn Colvin, I think of a person who is dedicated 
and who has commitment and integrity. Carolyn is dedicated to 
public service and improving the lives of others. Throughout 
her career, she has carried with her an unmatched level of 
    To her current position of Acting Commissioner, she has 
brought the integrity needed to ensure that beneficiaries, 
applicants, and the SSA workforce are treated fairly and that 
the benefits are administered according to the law.
    Mr. Chairman, Senator Mikulski brought out many parts of 
Carolyn Colvin's career, but it is interesting that she began 
at SSA in August of 1963 when she was hired as a clerk 
stenographer, and now she is Acting Commissioner. This really 
is the American story of a person who has worked hard, is 
dedicated to public service for the right reasons, and has 
accomplished so very much.
    She has experience working for municipalities, for 
counties, for the State, and for the Federal Government. She 
has also worked in the private sector. So she brings all of 
that, and this commitment, to this position.
    I might also say that she was the director of field 
operations for my predecessor, Senator Paul Sarbanes. So she 
brings a great deal of experience. She knows us, and she also 
knows how to deal with challenges, whether it is the budget 
challenges facing Social Security, modernizing the disability 
claims system, or restoring a constructive, positive 
relationship between labor and management at SSA.
    There is one thing I know: Carolyn Colvin has never shied 
away from a challenge, and I know that she will give her best. 
I know she has the talent. I know she is there for the right 
reasons, and I strongly support her nomination and hope that we 
will confirm her shortly.
    The Chairman. Thank you, Senator Cardin.
    Ms. Colvin, with the ringing endorsement of 100 percent of 
Maryland Senators, you are now going to have the opportunity to 
make a statement. Your prepared statement is automatically 
going to be made part of the record. If you could perhaps take 
5 minutes or so to summarize, we would like you to proceed.
    Chairman Mikulski, you are welcome to stay, and, of course, 
I know you have a very hectic day, so we appreciate your 


    Ms. Colvin. Chairman Wyden, Ranking Member Hatch, and 
members of the committee, my name is Carolyn Colvin, and I am 
the Acting Commissioner of the Social Security Administration. 
I am honored and grateful to appear before you today as 
President Obama's nominee for Commissioner of Social Security.
    I want to thank Senator Mikulski and Senator Cardin for 
their very, very kind introductions. I would also like to thank 
the Senators and their staff for taking time out of their busy 
schedules to meet with me during this confirmation process.
    It is a privilege to have the opportunity to lead the 
Social Security Administration as the Commissioner. The scope 
of what we do is truly enormous, and it is both a humbling and 
rewarding experience to go to work every day knowing that what 
my colleagues and I do for families helps our fellow citizens.
    We serve with the same spirit of compassionate public 
service that President Roosevelt envisioned. I am very 
fortunate to have spent so much of my life in public service, 
most of it leading Federal, State, and local health and human 
service organizations that provide critical safety net services 
to those most in need. Quite often I have led these 
organizations through periods of change and uncertainty. My 
career has included several executive positions in policy and 
operations at SSA. Most recently, I was confirmed as the Deputy 
Commissioner on December 22, 2010, and, since February 14, 
2013, I have served as the Acting Commissioner.
    One of my top priorities since becoming the Acting 
Commissioner has been to position SSA to provide excellent 
service for future generations. At SSA, we have not always 
engaged in truly long-range strategic planning. This is why I 
created the position of Chief Strategic Officer, who reports 
directly to me and is responsible for developing strategy and 
promoting innovation across SSA. We are well on our way toward 
developing a long-range plan.
    I am committed to protecting SSA's programs from waste, 
fraud, and abuse, and I am proud to serve as the agency's 
Accountable Official for Improper Payments. I have promoted new 
and innovative ways to prevent, detect, and recover improper 
    I am pleased with the progress we have made in expanding 
our electronic services. We have created secure and convenient 
electronic services for individuals who want to do business 
with us online. As of June 2014, over 12.5 million users had 
registered for my Social Security online accounts. With the 
success of our online services, we are able to conserve field 
office resources for those who prefer to visit the offices. We 
are fully committed, now and in the future, to sustaining a 
field office structure that provides face-to-face service and 
is responsive to members of the public who need or prefer to 
come into the local office.
    I have appreciated the opportunity to collaborate with my 
colleagues across the government and contribute toward 
improving the overall efficiency and effectiveness of our 
service to the public. I am particularly proud of our 
collaboration with the Departments of Veterans Affairs and 
Defense, which has led to several initiatives that improve 
services to America's veterans.
    SSA has many challenges ahead of it. If confirmed, I look 
forward to addressing them. First, we must complete a long-
range plan that will help us adapt to a rapidly changing world 
and continue to provide excellent service for generations to 
    Second, we must make wise investments in technology. If 
confirmed, I will continue aggressively to increase the 
agency's use of modern technology that maximizes the return on 
the taxpayers' investment.
    Third, I am committed to ensuring that we balance timely, 
high-quality service with our program integrity 
    Fourth, we must do more to help individuals with 
significant disabilities succeed in the workforce. Accordingly, 
the President's fiscal year 2015 budget contains a proposal 
requesting resources and demonstration authority for us to 
collaborate with other agencies to test early intervention 
strategies to help people with disabilities remain in the 
    Finally, if confirmed, I will continue to work to provide 
the best service possible for the American people. In the few 
years before fiscal year 2014, limited funding and 
sequestration constrained our ability to meet our mission. We 
lost employees, and we had to cut back on services.
    Our employees are our best asset. Despite tight budgets and 
growing workloads, I have witnessed our employees make often 
heroic efforts to serve our customers quickly and 
compassionately. However, without adequate resources, they can 
do only so much to serve the public. The fiscal year 2014 
funding level positioned us to begin to restore services to the 
public and increase our program integrity efforts. I ask you to 
support the President's fiscal year 2015 budget request, which 
will keep us on this path.
    In conclusion, I believe that my policymaking experience, 
management expertise, problem-solving skills, and passion for 
the work make me well-suited to be Commissioner of this 
wonderful agency.
    Thank you for the opportunity to appear before you today. I 
would be happy to answer any questions you have.
    The Chairman. Ms. Colvin, thank you.
    [The prepared statement of Ms. Colvin appears in the 
    The Chairman. Now, I think you have been advised by the 
staff that we have a number of standard nominee questions that 
we simply have to go through with all of our nominees.
    The first is, is there anything you are aware of in your 
background that might present a conflict of interest with the 
duties of the office to which you have been nominated?
    Ms. Colvin. No.
    The Chairman. Do you know of any reasons, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Ms. Colvin. No.
    The Chairman. Do you agree, without reservation, to respond 
to any reasonable summons to appear and testify before any duly 
constituted committee of the Congress, if you are confirmed?
    Ms. Colvin. Yes.
    The Chairman. And do you commit to provide a prompt 
response in writing to any questions addressed to you by any 
Senator of the committee?
    Ms. Colvin. Yes.
    The Chairman. Very good. Let me start by reflecting on your 
plans after confirmation. I am particularly struck by how the 
agency has changed over the years. You were there between 1994 
and 2001. You joined the agency as Deputy Commissioner in 2010. 
So, obviously, you have seen a lot, and you have learned a lot.
    Particularly, in terms of your plans for the next 2 years, 
I have been struck by the comments that you have made about new 
technologies and how you would apply new technologies. And I 
note that the recent report from the National Academy of Public 
Administration addresses that as well.
    So let us start with that. What are your thoughts about 
how, given the report, you can use new technologies, again, to 
better serve people and make better use of scarce resources?
    Ms. Colvin. Thank you, Mr. Chairman.
    Social Security is a wonderful organization, and we have 
known for some time that our rolls would increase. Right now, 
we have about 10,000 individuals per week who are turning 65. 
So, it is not surprising that our rolls are increasing as a 
result of the demographics.
    In order to be able to keep up with those increasing 
workloads and to get the efficiencies we need, technology is 
the solution. We have already begun to make great strides in 
online services. We have the my Social Security service where 
individuals can sign up for an account, go online, and transact 
much of their business. We have had great success with my 
Social Security. Well over 12 million individuals have already 
signed up in the short time that we have had this service.
    We also have other applications, such as disability and 
retirement applications, and about 50 percent of all people who 
apply for those benefits now apply online. But we realize we 
have to continue to expand in that area, and the reason is 
because our population is not homogenous. There will be people 
who must, in fact, have the availability of coming into the 
office to be personally served. Their situation may be complex, 
or they may just simply not be comfortable with the Internet, 
or they may prefer face-to-face services. So we will always 
have a field presence.
    On the other hand, my goal is to develop systems that will 
be easy to use and convenient, so that those who prefer to, can 
handle their business in the privacy of their home. What that 
does, Mr. Chairman, is allow us to free up employees in the 
offices to serve people who need face-to-face service.
    We have been very successful in developing applications. 
For instance, we know that the Supplemental Security Income 
error rate is partially due to people's inability or 
unwillingness to report their wages. We now have both a 
telephone process where they can call in their wages and a 
mobile application where they can report their wages. This 
mobile application has already seen well over 80,000 people use 
it in the very short time since its inception. My goal would be 
to get most of those people who are in need of reporting their 
wages using those systems.
    We want to also have a process where individuals would be 
able to go online and get the service that they need online in 
real time, including a chat service; where they would be able 
to complete their business and then not have to come back 
another time.
    So for us, technology is extremely important, and it is 
what we need in order to continue.
    The Chairman. That is helpful, Ms. Colvin, and I appreciate 
    Let me ask you about one other aspect of this whole IT 
issue. It is no surprise that we are focusing on that, and this 
has been a special priority of mine since coming to the Senate.
    My State was always about wood products and forestry--it 
always will be--but we have also put a major focus on 
information technology, and that is what I wanted to ask you 
about in regard to Social Security.
    Now, I have been informed that the agency has nearly 3,000 
data exchange agreements with Federal, State, and private 
entities and processes an average daily volume of 150 million 
individual transactions.
    Ms. Colvin. Yes.
    The Chairman. We compared that to Amazon, and Amazon has 
only 27 million transactions. That was the case back on Cyber 
Monday in 2012.
    Now, we understand that much of this IT is, at its core, 
COBOL-based. It is the computer language developed in 1959, 
essentially before color television. And, while many of the IT 
managers acknowledged that a COBOL-based system works, they 
also have indicated that it is less efficient and agile than 
more modern computer languages. So what can the agency do to 
update the technology that it must possess to manage this eye-
popping amount of data that you are dealing with every day?
    Ms. Colvin. I think one of the underlying challenges you 
just mentioned is the tremendous volume of data that we 
process. We recognize that we have to move away from COBOL to 
some extent, but not fully, because in some instances, it is 
the best language.
    So, there is a transition to modernize our systems. One of 
the challenges will be how quickly we can do that, because 
there are still other types of Information Technology projects 
that we must also develop at the same time to make our system 
useful and efficient, both for our employees and for the 
public. We have an IT plan that will, in fact, gradually remove 
some of that COBOL language and replace it with other types of 
language, but not fully replace it.
    The Chairman. My time has expired.
    Senator Hatch?
    Senator Hatch. Thank you, Mr. Chairman.
    Ms. Colvin, Social Security has long been criticized for 
not formulating long-term plans. Last year, the nonpartisan 
Government Accountability Office identified that SSA faces four 
key areas of management challenge over the next decade. These 
are SSA's lack of an updated succession plan, even though the 
agency faces a retirement wave; Disability program issues, 
including a need to incorporate what GAO says is, quote, ``a 
more modern concept of disability;'' information technology, 
including internal weaknesses in information security; and 
physical infrastructure.
    I have a note that the lack of funding was not identified 
as a key area of management challenge. GAO wrote that, quote, 
``SSA has ongoing planning efforts, but they do not address the 
long-term nature of these management challenges.''
    Now, Ms. Colvin, how will you, if confirmed, confront those 
challenges in human capital, Disability modernization, 
information technology, and physical infrastructure?
    Ms. Colvin. Senator Hatch, we have recognized that the 
agency does need to have a long-term vision. We are in the 
process of doing that right now. We have the National 
Association of Public Administrators that was commissioned by 
Congress to help in this process. They have submitted their 
    We will use some of that report to inform decisions as we 
finish our own planning process. We expect to have a long-term 
vision plan around the first of the year. We need to make sure 
that we have extensive engagement with our stakeholders, 
Congress, our advocates, and customers, et cetera.
    So, we are looking at making sure that all of that has been 
done, but we do expect to have a long-term vision document 
completed by the beginning of the new fiscal year. The last 
vision document was, in fact, done in 2000 when I was at SSA, 
and it was for the years up to 2010. So, we recognize the need 
    We are also in the process of developing a human capital 
plan which looks at succession planning and at the gaps that we 
need to fill. Probably about half of our employees are now 
eligible for retirement. The fact that our program is very 
complex means that this will be a major problem for us. So we 
are, in fact, doing skill gap training.
    Senator Hatch. Well, look at those four critical ones.
    Ms. Colvin. And we are, in fact, modernizing our system. So 
those three areas that were identified, we are currently 
    Senator Hatch. All right. Well, thank you. In our hearing 
last week about the Disability program, views were expressed 
that the DI trust fund exhaustion has been foreseen for 20 
years, and that increases in the Disability rolls have been 
expected for some time.
    Now, this means that SSA has ample time to update its DI 
program to adapt to changes. However, as I understand it, 
decision-makers in the DI program utilize tens of thousands of 
pages of instructions to decide who should get benefits, 
including 37-year-old medical criteria, 35-year-old vocational 
criteria, and 23-year-old guidelines to determine what jobs 
exist for individuals with disabilities.
    Now, according to the nonpartisan GAO's high-risk list in 
2013, disability programs managed by SSA, quote, ``rely on out-
of-date criteria to a great extent in making disability 
    So I have two questions about this. The first is whether 
2013 was the first time that GAO identified high risk in SSA's 
Disability program, and the second is why it is taking so long 
for SSA to update its criteria and guidelines, especially since 
you have had so much time and foresight about troubles with 
Disability finances.
    If you could address those, I would appreciate it.
    Ms. Colvin. Senator Hatch, it is my understanding that 
there have been other earlier recommendations related to the 
need to update some of the medical tools that we use in 
determining disability.
    The Disability program, as you know, is a very complex 
program. Any change is going to generate significant discussion 
both here in Congress and the community. So any change that is 
made has to be evidence-based. It has to be based on research 
and medical advancements.
    We are in the process right now of working with the 
Department of Labor to update the occupational list that we 
use, and that has been happening for some time. The 
occupational standards that we currently use are, in fact, not 
going to be updated. We are working with the Department of 
Labor to develop a tool that will be helpful in making our 
disability decisions. We do not have a timeline, but we have 
been working aggressively on development of that tool.
    Our medical listings are updated on an ongoing basis. These 
are the criteria that are used in making the disability 
determination. Most have been updated and are presently on a 
cycle to be reviewed every 3 years. We follow the advances in 
medicine. So if, in fact, there are new developments in science 
that make disability decisions different, then we use that 
    This update is something that is ongoing and therefore is 
always going to be in need of review. There is tremendous 
progress going on within the agency, so I do not want to leave 
the impression that we are not making advances. The changes 
that we are making, though, will not have a significant impact 
on the trust funds. It is our hope that Congress will find a 
bipartisan way to address the need to have additional funding 
    You are aware that Congress many times in the past has 
reallocated between the two trust funds. The President has 
indicated that he hopes that they do this again so that we have 
adequate time to make long-term decisions, and that whatever is 
decided will be a bipartisan decision. We know that that will 
take a lot of discussion.
    Senator Hatch. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Hatch.
    Senator Brown?
    Senator Brown. Thank you, Mr. Chairman.
    It is good to see you, Ms. Colvin. Thank you for joining 
    First, I just wanted to exhort you to work hard in terms of 
improving and expanding SSA's communication with the general 
    Like I do, as many of us do, I have done literally hundreds 
of roundtables and calls with senior groups and various kinds 
of tele-town halls, and I hear so many of the same myths about 
Social Security, about Disability, that they are not going to 
always be there and all the things that people say, and I just 
want to exhort you to do what you can to help dispel those 
    I know we talked about that; you agree with that. But let 
me talk about a couple more serious things, a couple other more 
administrative things, if I could.
    My office got a copy of a memo to the hearing office of the 
chief administrative law judge in the Office of Disability 
Adjudication Review in New York. I also received a memo from 
the chief administrative law judge that mandates a 600-case-a-
year quota.
    The first memo I mentioned contains a number of fairly 
mundane details, but it also makes two important assertions. An 
ALJ, administrative law judge, should be issuing 500 to 700 
legally sufficient and timely decisions each year. If you 
continue to fail to consistently and efficiently manage your 
workload, the agency may initiate disciplinary action against 
    Could you, Commissioner Colvin, please elaborate on SSA 
policy regarding quotas for administrative law judges?
    Ms. Colvin. Senator Brown, we do not have quotas. The 
agency has set targets or goals toward which they want to see 
the ALJs work. Those targets were developed by chief judges 
who, in fact, have held cases. The agency has about 7 years' 
experience now with the targets.
    The majority of our ALJs do, in fact, reach that target of 
between 500 and 700 decisions per year. The reason I say it is 
not a quota is that no one gets disciplined because of their 
failure to reach that number. It is just a goal that we work 
    We are a production agency. Our first priority is quality--
to make sure that the decision is policy-compliant and legally 
defensible. But we know it is a high-volume business. When we 
train ALJs, we mention that to them. And we have, as in any 
other organization, some who meet that target, and some who go 
above it, and some who do not meet it. But it is not a quota.
    Senator Brown. Thank you for that. It seems, talking to 
them, to many of them it feels like a quota, and I do not need 
a comment on that, but I just hope that you will sit down and 
find a way to open up communications with them and, again, 
reinforce what you just said to this committee right now that 
it is not a quota, that it is a recommendation and that there 
is no discipline. I think they just need to hear that directly 
from you.
    Let me shift briefly to the labor and management relations. 
Even with the presidential executive order calling for labor-
management partnerships throughout the Federal Government, it 
seems from our reports that it has only gotten worse, to the 
point where some labor organizations tell us it is as bad as it 
gets in the entire Federal Government.
    What explains this? Why is this? And can I have a 
commitment from you to provide my office and this committee 
with a detailed update on progress you are making toward fully 
implementing your office plans to improve labor relations as 
specified in executive order 13522?
    Ms. Colvin. Senator Brown, I hear your concern about the 
labor-management relationships in the agency. In every 
organization I have worked in, we have had very strong and 
effective relationships with the union. I think it is very 
important when union and management work together, because it 
benefits the agency and the employees that we both represent. 
And I believe that the unions have the same goal that we have, 
which is to do the best we can for our employees and for the 
American public.
    Historically, there has always been a very acrimonious 
relationship in the agency. I worked with the union when I was 
here from 1994 to 2001 under President Clinton, and we had what 
we call a partnership. In fact, I was the one who signed that 
contract at that time, and I felt that relationships had 
improved. When I returned, I was amazed to see the 
deterioration. But what I have done is, I meet with them on a 
regular basis. I have lunch with them without management staff 
so that we can begin to just get to know one another.
    I have had relationship training given by the Federal Labor 
Relations Board to have managers and the union come together to 
look at how we can build trust, how we can communicate better, 
et cetera. You have my commitment that I will continue to do 
that. I will say that, when you have a huge organization like 
SSA with 62,000 employees, it takes a long time to change the 
culture and the relationships. But you have my commitment to 
continue to try to move that gap a little bit closer so that we 
can work better together.
    Senator Brown. And also, a commitment to report to my 
office and to this committee of progress, labor progress.
    Ms. Colvin. Absolutely.
    Senator Brown. Thank you very much. Good luck in your 
confirmation. Thanks.
    The Chairman. Thank you, Senator Brown.
    Senator Carper?
    Senator Carper. Thank you, Mr. Chairman.
    First of all, let me just say how pleased I was to meet 
with you earlier this morning.
    Ms. Colvin. Thank you, sir.
    Senator Carper. And thank you for your service and for your 
leadership at the Social Security Administration for these many 
months as our acting leader. My hope is that you will be 
    Ms. Colvin. Thank you, sir.
    Senator Carper. I went to Ohio State as an undergrad. I get 
invited back there from time to time. I was back last year and 
had an opportunity to speak to about 400 or 500 young men 
between the ages of 18 and 22, some from Ohio State, others 
from other States in the Midwest, and I talked to them about 
leadership, I talked to them about values, and I talked to them 
about some of the challenges that we face.
    Among the questions that they asked me were questions 
relating to our future as a country, the economy, their ability 
to get jobs, and so forth. I asked them a question too. I asked 
them a couple of questions. I said, ``How many of you think 
that someday you will receive a Social Security check? Raise 
your hand.'' Not one person out of 500 guys raised his hand, 
not one. And I said, ``How many of you think you will ever 
benefit from Medicare?'' Not one. Not one.
    I said, ``Our job here is to make sure if you ever need a 
Social Security check when you are 65 or 70 or 75, it will be 
there, and our job is to make sure that if you ever need 
Medicare or you need health care, and you probably will, that 
it will be there for you as well.''
    I think we have a moral imperative to the least of these in 
our society to look out for their needs. I also think we have a 
fiscal imperative to make sure that we are meeting that moral 
imperative in a fiscally responsible, fiscally sustainable way.
    I chair the Committee on Homeland Security and Governmental 
Affairs. We have a subcommittee led by Carl Levin and, until a 
year ago or so, by Tom Coburn. They did an in-depth analysis, 
as you know, of Disability Insurance fraud in one place, in 
Huntington, WV. And what they found was--and I mentioned this 
to you in our meeting--they had one judge who was, in all his 
cases from one attorney, from one law firm, approving about 99 
percent of them, and, almost magically, a cash payment was 
deposited into the bank account of the judge every month for 
year after year after year.
    We have to be smart enough to detect that, find it, and do 
something about it. In the private sector, they have the 
ability to use a technique called predictive analytics. 
Predictive analytics. And this is just an area that is ripe for 
    I think the average approval rate for Disability Insurance 
applications is about 40 percent. When somebody, a judge, is at 
50 percent, it is not unusual, 60 percent or 70 percent, but 99 
percent, 95 percent, 90 percent is unusual, especially when the 
bulk of a judge's cases are coming from one lawyer. We should 
be able to pick this stuff up. We should be able to pick this 
stuff up, and they do it in the private sector all the time.
    I just want you to talk to us about how we plan to use the 
same kind of tools and techniques in order to defend a fund 
that I think is going to run out of money in 2016 or so: the 
Disability Insurance fund.
    I think the Social Security trust fund will start having to 
chop down the benefits in the early to mid-30s, 20s. But just 
talk to us about how we are going to use it, how we are using 
predictive analytics to get at this problem.
    Ms. Colvin. Thank you, Senator Carper. We are enhancing our 
anti-fraud activities. We are, in fact, using data analytics. 
We are working internally. We also want to be using external 
groups so that we can maximize this.
    Our fraudsters have become much more sophisticated. So we 
are seeing third-party fraud, and that is why data analytics is 
going to be so important, because it will show us the trends 
that are happening, and we will be able to identify things that 
we would not be able to identify without that.
    So we are, in fact, working on that. But let me just 
mention that we have a zero tolerance for fraud in the agency, 
and, even though the Inspector General has indicated in reports 
that we have less than 1 percent fraud, even one case is too 
    Every time we have a case, we look at lessons learned so 
that we can benefit from that. Most of the fraud is identified 
by our front-line employees who tend to be our best defense 
against fraud.
    We also have--I do not know if you are familiar with our 
Continuing Disability Investigation Units. These are the units 
that are partners with the Office of Inspector General, the 
local Disability Determination Services, and with local law 
enforcement. I initiated the first unit in 1998 when I was 
here. We now have 25. As a result of the increased funding that 
we got this year for program integrity, I am opening up another 
    What these units do is identify fraud before we pay out the 
first check. This is important, because it is so much easier to 
not pay the money than it is to recoup it once we have made the 
benefit payment. So, we are aggressive in that area.
    For example, our front-line employees made about 22,500 
disability-related fraud referrals to the Office of the 
Inspector General in fiscal year 2013. We have been working 
with the Department of Justice to try to get them to be more 
aggressive in prosecuting the cases, and, in some instances, we 
have to defer any administrative action that we take until such 
time as the criminal action has been taken. That is a benefit 
to us because, if criminal action is taken, we can get 
restitution, whereas if we take an administrative action, we do 
not know how much of the money we can get back.
    Senator Carper. Great. Well, that is encouraging. We want 
to be your partner.
    I want to say, Mr. Chairman, a special thanks before I 
yield. Thanks to you, and I want to thank Senator Hatch and 
your staffs for working with Dr. Coburn and me on something 
called improper payments, $106 billion in improper payments 
last year. And some of those are hard to correct, but a lot of 
them can be fixed.
    We have a situation where the Social Security 
Administration has a Death Master File that pretty much keeps 
track of who is alive and who is dead so that we do not pay 
benefits to people who are dead, and we need to be able to make 
that available to other Federal agencies so that they have the 
right and the most accurate information.
    But I want to say, Senator Wyden, Mr. Chairman, and to 
Senator Hatch, thank you very much for working in concert with 
Dr. Coburn and me to make sure that we can address this issue, 
$106 billion in improper payments--not all from Social Security 
by any means. We are doing better, but we could do better 
still, and this bill will help us to. So thank you.
    The Chairman. Thank you, Senator Carper.
    I want you to know, as I have indicated to Senator Hatch--
because we had a hearing on Disability Insurance--that where 
there is fraud, we are going to find it and we are going to 
fight it, and the reason we are is because this program is so 
important for the kind of person like Ms. Stephanie Dempsey. I 
talked about her before you came.
    She was really the face of the Disability Insurance program 
when she came for our discussion of chronic conditions, and she 
did everything right. She just got clobbered by one disease 
after another, and she was sitting there at the end of the 
table where Chairman Mikulski was with medications piled up one 
box after another that she takes every day. So we owe it to 
her; we owe it to taxpayers.
    I also have this report with respect to Social Security 
about the question of improper payments, and I am going to put 
that into the record, which would indicate that, in the 
overwhelming number of instances, the agency gets it right. But 
your point is, when they do not and when there is particularly 
fraud, we have to find it, we have to fight it, we have to root 
it out, and we are going to do that in a bipartisan way.
    [The report appears in the appendix on p. 112.]
    The Chairman. So let me recognize Senator Hatch. Would you 
like to say anything else, Senator Hatch?
    Senator Hatch. Just welcome and we are happy to have you 
testify here today. I enjoyed our meeting in our office 
together and look forward to working with you.
    The Chairman. The only thing I would say in closing, Ms. 
Colvin--and you could see this from the remarks of the 
Senators--is that sometimes government is kind of an 
abstraction: there is ``some agency'' in ``the office of 
acoustics and ventilation,'' and the citizen tries to figure 
out, well, what does that exactly have to do with me, etc. That 
is not the case with Social Security.
    This is what I was getting at earlier when I held up an 
earnings statement and talked about what receiving one means to 
someone. There have been changes in the policy--yes--but people 
hold onto this because it tells them what they have earned, 
what they have paid in, what they have coming to them.
    So I support your nomination, and I think you have 
addressed the concerns of the Senators here, and I am doing it 
because I think you have the experience. Indeed, you have had 
several stints at the agency, so you have seen the changes over 
time. And I think you will work with us, particularly in an 
area I am personally very interested in, to make sure that we 
are using modern technology.
    Ms. Colvin. Absolutely.
    The Chairman. We have 21st-century challenges, yet what we 
have to meet them has been in place since before color TV, sort 
of 20th-century technologies. That is why we have to play some 
catch-up, and we have to work together, and we have to move 
quickly, and we have to do it given the challenge of 
constrained resources.
    I feel you are going to work closely with us, and I intend 
to support your nomination.
    With that, the Finance Committee is adjourned.
    [Whereupon, at 11:06 a.m., the hearing was concluded.]
                            A P P E N D I X

              Additional Material Submitted for the Record