Summary: The combined Federal Old-Age, Survivors and Disability Insurance (OASDI) programs, commonly referred to as Social Security, provide protection against loss of earnings due to retirement, death, or disability. During calendar year 2001, the most recent year for which complete data were available at the time of our review, about 46 million people, including 91 percent of Americans age 65 or older, received $432 billion in benefits from the trust funds maintained for these programs. The Board of Trustees of the trust funds is required to report annually on the current and projected financial status of the Social Security programs to the Congress and the American people. The Social Security Administration's (SSA) Office of the Chief Actuary (OACT) provides estimates to the board to assist them in setting demographic, economic, and programmatic assumptions about OASDI's future performance that are needed to prepare long-range and short-range projections of the financial status of the trust funds for the trustees' reports. Based on the board's assumptions, OACT then prepares the projections and the trustees' report for the board. In its 2002 annual report, the Board of Trustees estimated that, under current rules, OASDI expenditures would begin to exceed revenue in calendar year 2017, causing the trust fund to be exhausted in 2041. Our specific objectives were to identify and evaluate the adequacy of OACT's (1) control activities over the projection process, (2) human capital practices related to workforce planning, and (3) tracking and resolution process to address recommendations from technical panels and other reviewers.
SSA's OACT has implemented some control activities to help provide assurance over OASDI trust fund projections, including informal reviews of data, calculations of projection components, and final projections. However, we found that documentation of OACT's long-range projection model, work processes, and work performed, including supervisory reviews, was insufficient. For example, there was no comprehensive description of the procedures necessary to prepare the long-range OASDI trust fund projections for the Trustees' reports, and documentation of the work performed by OACT while preparing projections was limited. Without explicit documentation of OACT's work processes and work performed, reviewers' opportunity for oversight was reduced, and the risk that errors in the projection process would go undetected was increased. While no major errors were identified in reviews of OACT's actuarial assumptions and methodologies, reviewers have pointed out the need for increased documentation. According to OACT officials, resource constraints were a key reason limiting the extent to which documentation was prepared. However, in light of potential near-term retirement of over 30 percent of OACT staff, documenting the projection process is becoming increasingly important to efficiently transition the work to new staff. We also found that OACT lacked a workforce plan to help ensure the availability of skills needed to achieve its mission. Such planning would typically include analyzing current and future workloads, identifying likely staff turnover and possible retention strategies, establishing skills sets for all key positions. and training staff to ensure that appropriate skill needs are met. Our recently issued tool for agency leaders, A Model of Strategic Human Capital Management, provides a framework for helping agency leaders plan and achieve effective use of their human capital. The lack of an adequate workforce plan coupled with insufficient policies and documentation, could negatively affect OACT's ability to achieve its mission in the future. OACT also lacks a monitoring policy and process for ensuring that recommendations from technical panels and other reviewers are tracked and addressed by OACT, leaving open the possibility that important initiatives and issues may not be completed in a timely manner. While OACT has taken steps to address some of the recommendations, it has not implemented a policy and associated procedures to (1) track recommendations it has received, (2) decide which recommendations should be implemented, (3) determine the order of priority, and (4) document the resolution of each recommendation. Without an established tracking and resolution process, OACT lacks a mechanism to help ensure that it addresses identified deficiencies and continues to improve its operations.
