Clinton Says Social Security Is Y2K Ready

By JUBE SHIVER Jr

Dec. 29, 1998 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

President Clinton said Monday that officials have fixed a computer glitch that they once feared would disrupt the processing of millions of Social Security benefits after next year.

“The Social Security system is now 100% compliant with our standards and safeguards for the year 2000,” Clinton said. “The system works. It is secure. And therefore, older Americans can feel more secure.”

But some experts warned on Monday that it would be premature for the federal government to declare victory over the so-called Year 2000 computer bug, which stems from a programming shortcut that leaves many computers unable to distinguish between the year 2000 and the year 1900. That misinterpretation could cause the computers either to shut down or malfunction.

Clinton spotlighted the one federal agency that has aggressively tried to attack the Y2K bug, they said, while others are still lagging.

Rep. Stephen Horn (R-Long Beach), who chairs the House Government Reform and Oversight subcommittee on government management, information and technology, said Monday, for instance, that the federal departments of Energy, Defense, Transportation, State and Health and Human Services, “are all failing in their Y2K efforts. The administration must focus on these problem agencies.”

And despite the president’s assurances, some experts expressed concern about the year 2000 readiness of the Social Security Administration. They said that, while the agency’s own computers may be in order, it depends on computers outside its control to help issue $1 trillion in annual payments to 48 million Social Security beneficiaries.

“The Social Security Administration deserves tremendous credit for being the leading government agency for dealing with the year 2000, but the [agency] runs a complex program that depends on many other [outside] resources for its reliability,” said Dennis G. Grabow, chief executive officer of the Millennium Investment Corp., a private Chicago-based company called that has focused public attention on the Year 2000 computer problem.

“Americans need to understand this is not some issue that can be easily changed with one or two fixes,” Grabow added. “This is a long-range problem that will affect our government for years to come.”

Clinton has pushed agencies that have not solved their Year 2000 computer problems “because we just have a little more than a year to get the job done.”

Two Major Agencies Deemed Compliant

Since the Small Business Administration became the first agency to complete its Year 2000 work, 61% of all critical federal agencies have been certified as year 2000 compliant, officials said Monday. Among major agencies, only computer systems at the Social Security Administration and the SBA were deemed 100% compliant for the year 2000.

A spokesman for the Internal Revenue Service said that the agency is on track to achieve Year 2000 compliance with its critical computers by next month. In the past, however, the agency has been criticized for lagging far behind others in updating its computer system.

The weak links in the computer chain could undo the progress at agencies whose computers have been given a clean bill of health.

According to the General Accounting Office, for instance, Social Security could be undermined by independent contractors that share benefits data with the agency as well as the Treasury Department, which actually issues the monthly checks.

In a report issued last May, the GAO urged Social Security to strengthen its “monitoring and oversight” of 54 state disability services contractors who help determine the eligibility of applicants seeking benefits because of medical disabilities.

The GAO also said that the exchange of financial data with key government partners, such as the Treasury Department, poses a “major risk” to the Social Security program.

Treasury plays a key role in issuing payments to beneficiaries of such government programs as Social Security, Medicare and unemployment insurance. However, the department’s progress in preparing its computers to handle dates correctly after Dec. 31, 1999, has been mixed.

The Treasury’s Office of Thrift Supervision is credited with making good progress in updating its computer systems and in enforcing compliance among the financial institutions it regulates.

Treasury Lags Behind in Y2K Readiness

By contrast, Treasury’s Financial Management System, which handles the payment of Social Security checks, among other activities, had been widely seen as behind schedule.

As recently as last week, Deputy Secretary of Labor Kitty Higgins expressed misgivings about the system’s Year 2000 readiness, telling reporters that “Treasury has to be Y2K compliant so states” can have full assurance that the government will process claims for unemployment insurance in a timely fashion.

Jack Gibbons, a spokesman for the President’s Council on Year 2000 Conversion, acknowledged that Treasury has lagged behind the Social Security Administration in readying its computers for the year 2000.

But, he said, independent auditors certified two weeks ago that Treasury’s Financial Management System is Year 2000 compliant.

“They have been cutting checks since October to test the system, and we have been assured that everything works,” said Gibbons.

Along with the Defense Department and the Internal Revenue Service, Social Security has long been viewed by many experts as a linchpin in the administration’s efforts to prepare for the year 2000.

In the last year alone, private contractors reviewing Social Security’s computer systems pored over more than 33 million lines of software code to ferret out potential Year 2000 computer problems. It took 2,800 workers, including 700 computer programmers, to finish the task. And the administration has pushed the agency hard to avoid the potential political and fiscal embarrassment that would arise from a major problem in issuing Social Security checks.

Several States Promise Reforms

But other government agencies, including the IRS, Defense Department and many states that administer federal benefits programs, are far behind the Social Security Administration.

Last month, for instance, the Labor Department sent letters to the District of Columbia and seven states warning them that federal unemployment insurance benefits could be disrupted as early as next month if the states do not develop contingency plans to process claims and bring their computer operations up to date.

Since the letters went out, officials said that several of the states have promised reforms. But Montana, Delaware and New Hampshire said they would not be Y2K ready until at least the second half of next year, and other states said that they might have to manually process unemployment insurance claims.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

WHERE FEDERAL AGENCIES STAND ON Y2K

A look at the progress selected government agencies have made in enabling their most critical computer systems to handle the year-2000 (Y2K) date change:

(actual percentage in parentheses)

100% READY

Social Security Administration

Small Business Administration

80%-90% READY

EPA (90%)

General Services Administration (88%)

Federal Emergency Management Agency (85%)

Interior Department (82%)

Commerce Department (80%)

LESS THAN 80%

Defense (77%)