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Letter to Senator Kent Conrad and Senator Judd Gregg (Part 2)

Location: Washington, DC

Letter to Senator Kent Conrad and Senator Judd Gregg (Part 2)

testimony provided to the Committee during the 109th Congress, significant improvements may require fundamental changes to the design and operation of this system. During the 110th Congress, I will continue to explore what measures could be taken to ensure the long-term ability of VA to provide timely decisions to veterans.

b) Education Service

The President requests funding to support 939 FTE for the Education Service (including 45 IT FTE). This funding level would allow an increase of 14 direct FTE over the expected fiscal year 2007 level. In addition, this request includes $6.3 million to fund a year-round contract customer service center to handle telephone calls regarding education claims.

Although I support VA's efforts to find innovative ways to increase productivity by using contract services, I expect that veterans will receive at least the same level of service that would be provided by VA employees. For example, I expect that the call center employees will be provided with adequate training to provide rapid, accurate answers to callers' inquiries and that the call center will be held to performance goals comparable to the blocked call and abandon call goals currently in place for Education Service telephone activities. In addition, I expect that VA will continue to pursue efforts to provide additional information about pending education claims via the internet.

I anticipate that utilizing a year-round call center would allow at least 75 additional FTE to devote their time to processing education claims. With those FTE, along with the additional FTE requested in the FY08 budget proposal, the Education Service should be able to reduce its processing time (from 35 days expected in fiscal year 2007 to 25 days in FY08) and to reduce its pending inventory of claims.

c) Vocational Rehabilitation and Employment Program

The President requests funding to support 1,290 FTE (including 30 IT FTE) for the Vocational Rehabilitation and Employment Program (hereinafter, "VR&E"), an increase of 35 FTE over the fiscal year 2007 level. Those new FTE would be used for additional contracting specialists and for two initiatives - the Coming Home to Work initiative and the Process Consolidation initiative. I believe these additional FTE will ultimately assist the VR&E program in its core mission of helping veterans with disabilities to obtain and maintain suitable employment.

d) Loan Guaranty Service

The President requests a funding and FTE reduction for VA's Loan Guaranty Service, a reduction that has been a feature of nearly every VA budget submission since the early 1990's. Loan Guaranty FTE in 1997 stood at 2,254. The FY08 budget proposes an FTE level of 963 (including 70 IT FTE). These reductions have been sustained even though performance indicators have remained high. So to the extent the Loan Guaranty Service has been able to "do more with less," I applaud that effort.

This year's proposal gives me some concern in that it comes in the face of what is expected to be an increasing workload. VA expects to guarantee more VA loans in fiscal year 2007 and FY08, and it expects an increasing number of foreclosures and defaults resulting from rising interest rates. In response to a post-hearing question-for-the-record on this topic, VA responded as follows:

VA will be prepared to ensure taxpayers and veterans are well served should the Loan Guaranty program have to deal with a rise in defaults and foreclosures. A newly redesigned loan servicing business process and its supporting IT application will, among other things, improve service to veterans, and improve oversight capability over VA loan servicers. Under this new environment, many loan servicing functions are delegated to private sector loan servicers, and VA will utilize IT technology to directly oversee the work being performed by these servicers on VA's behalf.

I will, of course, be monitoring actual performance to ensure this is the case.

e) Insurance Service

For FY08, the President proposes funding to support 489 FTE (including 30 IT FTE) for VA's Insurance Service, a slight decrease over the existing fiscal year's FTE level. As is usually the case with respect to VA's administration of its insurance programs, performance is stellar. So long as all performance indicators -- such as the timely disbursement of proceeds of life insurance and Traumatic Injury Protection under Servicemembers' Group Life Insurance -- remain high, and I will continue to monitor those indicators, I have no reason to object to the President's request.

General Administration

For FY08, the President's budget recommends a $318 million appropriation (including $44 million proposed for IT realignment) for the administration of the offices of the Secretary, six Assistant Secretaries, one Appellate Board, and the Office of General Counsel. As noted above, I support an increase of $3.7 million above the President's request.

a) Board of Veterans' Appeals

The President requests funding to support 475 FTE (including 7 IT FTE) for the BVA, an increase of 31 FTE over the expected fiscal year 2007 level.

In recent years, the number of cases received at the BVA has been trending steadily upward, from a low of 19,000 in fiscal year 2001 to 43,000 expected in both fiscal year 2007 and FY08. At the same time, staffing for the BVA has been trending downward (from 455 in fiscal year 2001 to 437 in fiscal year 2007) and the number of pending cases has been rising dramatically (from a low of 7,700 at the end of fiscal year 2001 to 40,000 expected at the end of fiscal year 2007). In addition, the appeals resolution time has generally been trending upward, from 595 days in fiscal year 2001 to 700 days expected in FY08.

Although I appreciate the Administration's focus on improving claims processing at VBA, I believe additional focus must be placed on claims that have been appealed. I do not believe the additional 31 FTE requested for the BVA would allow the BVA to handle an incoming caseload of 43,000 appeals, to reduce its existing backlog, or to significantly improve timeliness. Therefore, I support an additional $3.7 million for the BVA, which should allow an FTE level of approximately 500. I expect that, with this FTE level, the BVA will be able to handle its incoming caseload in a timely manner and will begin reducing the number of pending appeals to an acceptable level.

b) Office of General Counsel

The President requests funding to support 671 FTE (including 26 IT FTE) for the Office of General Counsel, an increase of 15 FTE over the fiscal year 2007 level. I support the President's request, but will monitor the allocation of FTE to ensure that sufficient FTE are available to handle an increasing caseload before the CAVC.

E. Major Construction

The President requests $727 million for major construction projects in FY08. Included in that request is $511 million to continue funding six projects related to VA's Capital Asset Realignment for Enhanced Services (hereinafter, "CARES") program, all of which were authorized by the Congress in Public Law 109-461. I strongly support VA's efforts to complete projects it has already begun prior to initiating new capital projects that would require resources beyond those anticipated under the CARES program.

F. Minor Construction

The President requests $233 million for minor construction. This account supports critical upkeep of VA's facilities. With over 150 hospitals currently in operation, this funding level would support just over $1.5 million for each hospital's minor construction needs. I believe this request is too low to ensure that VA's facilities will be maintained at the highest standards of quality, safety, and cleanliness.

For many years, VA's minor construction account has been short-changed by budgets that, when given difficult choices between patient care resources and capital infrastructure upkeep, have consistently sided with patient care. Although those decisions in isolation were clearly correct, cumulatively they are beginning to have negative, long-term consequences on VA's buildings. As was noted by Mr. Dennis Cullinan, Director of the National Legislative Service at the Veterans of Foreign Wars of the United States (VFW), at the Committee's February 13, 2007, hearing:

The last decade of underfunded construction budgets has led to a reduction in the recapitalization of VA's facilities. Recapitalization is necessary to ensure safe and fully functional facilities. Failure to adequately invest in the system will result in its deterioration, creating even greater costs down the road.

Accordingly, I support an increase of $51 million above the President's request, for a total FY08 funding level of $284 million.

G. State Extended Care Facility Grants

The President requests $85 million in FY08 for State Extended Care Facility grants. There are two main purposes of this grant funding. The first is to help states build or acquire new nursing home facilities. The second is to help states maintain the highest life and safety code standards in existing facilities.

I support a funding level for this grant program sufficient to fulfill the Federal government's commitment to states with already-established nursing facilities that are in need of life and safety upgrades. However, I believe a suspension of grant funding for the purpose of establishing new nursing facilities is in order at this time.

Long-term care services in America are rapidly moving from institutional settings, such as state home beds, to home and community-based programs that care for individuals with disabilities in their own towns close to their families and friends. VA's own long-term care program is moving in that direction.

Today, there are approximately 18,500 institutional beds in the State Home system for long-term care and very little non-institutional care services. As the old saying goes, "when all you have is a hammer, the whole world looks like nails." In State Homes, this means there is a bias towards institutional care because that is what the State Homes provide. Each additional construction project brings hundreds of new beds on line that, naturally, continue to feed into this single-dimensional approach to care. Congress' efforts in the State Home Program should be more in line with the President's budget for VA's long-term care program, which contains a proposed 25% increase in non-institutional long-term care funding.

For these reasons, I recommend an FY08 funding level of $10 million. My recommendation will support every life and safety grant project VA has identified as needing full funding in FY08. Again, I reiterate, I recommend that the budget support funding in this account that addresses facilities in need of life and safety upgrades only and not new construction.

H. State Cemetery Grants

The President requests $32 million for the state cemetery grant program. State cemetery grants may be used to establish, expand, or improve state veterans' cemeteries. Although the funding requirements associated with pending state cemetery grant pre-applications far exceed the $32 million appropriation request for this program, it is not until each proposed project adheres to VA's design standards, plan review requirements, and other requirements that actual funds are obligated. For example, even though $32 million was appropriated for state cemetery grants in fiscal year 2006, $14.2 million was carried over into fiscal year 2007 because some projects were not ready to proceed according to the original operating plan.

What this means is that the $32 million in annual appropriation is, at this time, consistent with prior year obligation patterns, and is therefore sufficient to cover all approved projects in FY08. However, 14 new state cemeteries in varying stages of completion are expected to begin operation from fiscal year 2009 to 2012. Thus, an increase in the state cemetery grant appropriation may be in order during that time period.

I. Inspector General

The President requests $73 million in FY08 for the VA Office of the Inspector General (hereinafter, "IG").

Assuming adoption of the President's request, VA IG funding will have increased by 135% since 1998. As VA's budget has gradually expanded over the last decade, the investment in the VA IG's office has been necessary to protect veterans and taxpayers against waste, fraud, and abuse. I will continue to rely on the IG to monitor VA's delivery of quality medical care, timely processing of benefits claims, financial management practices, and procurement practices. In addition, as VA reorganizes its IT infrastructure and strives to better protect the personal information of veterans and employees, VA's IG must provide necessary oversight.

J. National Cemetery Administration

The President requests $171 million (including $4 million proposed for IT realignment) for the National Cemetery Administration (hereinafter, "NCA"). This funding level will support operational expenses related to 105,000 total expected interments at NCA cemeteries and the maintenance of over 2.8 million graves.

The appearance of NCA's national cemeteries is best measured through the eyes of those who regularly visit them. In fiscal year 2006, 97 percent of survey respondents rated the appearance of NCA cemeteries as "excellent." To maintain and improve the appearance of its cemeteries NCA is engaged in a multi-year initiative to address nearly $280 million worth of cemetery repair projects identified in a 2002, Congressionally-mandated report. NCA completes repairs on these "national shrine" projects using funds from several sources, specifically, its own operations and maintenance budget and funds available from the major and minor construction accounts. Through fiscal year 1996, NCA had completed $99 million worth of repairs. Roughly $17 million is planned for fiscal year 2007; and $11.1 million is planned for FY08. Additional, unspecified amounts for national shrine projects will be expended through NCA's regular operations and maintenance activities. I support NCA's efforts to continue towards completion of all repair projects in a reasonable period of time, preferably before fiscal year 2013.

K. Veterans' Employment and Training Service

The President requests $228.096 million to fund VETS, a 2.3% increase over the fiscal year 2007 funding level. That request includes $161.894 million to fund two employment programs for veterans: The Disabled Veterans' Outreach Program (hereinafter, "DVOP") and the Local Veterans' Employment Representative (hereinafter, "LVER") program; $23.620 million to fund the Homeless Veterans' Reintegration Program; $7.351 million to fund the Veterans' Workforce Investment Program (hereinafter, "VWIP"); $1.949 million to fund the National Veterans' Training Institute (hereinafter, "NVTI"); and $33.282 million to support Federal Management.

Nearly 71 percent of the requested funds will be used to provide grants to States to run the DVOP and LVER program. Last year, the Committee held a hearing to examine the effectiveness of these programs and learned that there are no reliable data demonstrating that the programs are effective in helping veterans find quality jobs. During the 110th Congress, I will continue to examine whether veterans would benefit from fundamental changes in how these funds are used, particularly in light of the increasing focus on employment services by VA's VR&E program. Although I will support the requested funding of $161.894 million because it is restrained and responsible, I do not recommend funding beyond that level.

The NVTI provides training for DVOP specialists and LVERs. Under Public Law 109-461, States are now required to ensure that all DVOP specialists and LVERs who obtain those positions on or after January 1, 2006, complete the NVTI training within three years. In view of the additional workload that may result for the NVTI, I recommend an increase of $150,000 over the Administration's request, for a total of $2.099 million.

The VWIP grants are competitively awarded to entities to provide targeted employment services for specific groups within the veteran population, such as recently separated veterans. Given that young, recently separated veterans continue to experience higher unemployment rates than non-veterans of the same age group, I support an additional $150,000 for this program, for a total of $7.501 million.

I otherwise support VETS' budget as requested by the Administration.

L. United States Court of Appeals for Veterans Claims

For FY08, the CAVC requests $21.217 million, of which $1.120 million will be available for the purpose of providing pro bono representation. The CAVC's request includes $350,000 to continue two special initiatives: The implementation of an electronic case-filing system and the study and planning stages for a Veterans Courthouse and Justice Center. It also includes funding for additional attorneys to work in the Central Legal Staff and to serve as law clerks for any retired judges who are recalled to perform substantial service for the CAVC.

Last year, the Committee held a hearing to examine dramatic increases in the number of cases being received by and pending at the CAVC and what measures could be taken to help the court deal with that high volume of cases. I am very pleased that, after that hearing, the Chief Judge recalled retired judges in order to assist the CAVC in handling its caseload. The CAVC's fiscal year 2007 funding level included one attorney to assist recalled judges and supplemental funding of $310,000 for three additional attorneys to assist the recalled judges. The CAVC's FY08 budget request includes continued funding for all of those attorney positions.

Given that the CAVC's productivity has increased by almost 20 percent since the CAVC began recalling judges, I believe this has been a useful tool in dealing with its extraordinary caseload. With the CAVC continuing to receive record levels of incoming cases and with almost 7,000 cases pending at the CAVC (the highest level in the CAVC's history), I expect the CAVC will continue to recall judges throughout FY08. Therefore, based on that assumption, I will support the CAVC's request in its entirety.

M. American Battle Monuments Commission

The President requests $42.1 million for the ABMC. I enthusiastically support this request.

I accompanied Committee Members Burr, Isakson, and Specter on a visit to several of ABMC's overseas cemeteries during the Memorial Day holiday last year. Shortly after our trip we learned of a backlog of necessary infrastructure repairs that had been identified in a 2000 report commissioned by ABMC. The report identified approximately $25 million of needed repairs to the cemeteries' electrical, water, and drainage systems. These are improvements critical to sustaining the beauty of these cemeteries, all of which are 60 to 80 years old. $8.2 million of the repairs have been completed. The problem is that funding for the remaining repairs had been limited in prior budgets, with an estimated completion in 2033.

I am very pleased that the FY08 budget request puts ABMC on a path similar to NCA's for completing all of the needed cemetery repairs in a more reasonable period of time. In addition, funding is included in this budget to begin a phased upgrade of ABMC's outdated financial accounting system. ABMC's current accounting system lacks modern functionality, and it costs more to maintain it over time than it would to simply purchase a modern, upgraded version.


This concludes my views and estimates for Function 700 programs. During a time of fiscal restraint, I believe the President has placed the correct priority on meeting the needs of our nation's veterans. Indeed, when defense and homeland security-related spending is factored out, the President's overall discretionary spending increase is $8 billion for FY08. Approximately $3 billion of that increase is proposed for VA; the remainder amounts to a 1.3 percent increase for the rest of government.

Thank you for your consideration of my views on these important issues. Should you or your staffs have any questions about this letter, please contact the Committee's Republican Staff Director, Lupe Wissel, at (202)224-2074.


Larry E. Craig

Ranking Member

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