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DEMOCRATIC PRESS RELEASE

February 22, 2008

Senate Committee on Veterans' Affairs Budget Views and Estimates for Veterans' Programs for Fiscal Year 2009

The Honorable Kent Conrad
Chairman
The Honorable Judd Gregg
Ranking Member
Committee on the Budget
United States Senate
Washington, DC 20510

Dear Chairman Conrad and Ranking Member Gregg:

Pursuant to Section 301(d) of the Congressional Budget Act of 1974, the Democratic and Independent Members of the Committee on Veterans' Affairs (hereinafter the "Undersigned Members") hereby report to the Committee on the Budget their views and estimates on the Fiscal Year 2009 (hereinafter, "FY09") budget for Function 700 (Veterans' Benefits and Services) and for Function 500 (Education, Training, Employment, and Social Services) programs within the Committee's jurisdiction, including the Court of Appeals for Veterans Claims. This letter responds to the Committee's obligation to provide recommendations on veterans' programs within its jurisdiction, albeit from the perspective of the Undersigned Members.

I. SUMMARY

The Department of Veterans Affairs (VA) requires, at a minimum, $4.577 billion in additional funding in FY09 over FY08 to support its medical care operations. Our requested medical services increase is $2.562 billion over the Administration's request. The total required for all of VA's discretionary accounts is $6.614 billion over FY08.

For the seventh year in a row, the Administration's proposed budget includes a number of legislative proposals designed to generate additional revenue from fees or savings and deter certain categories of veterans from using the VA system. Just as Congress has done over the past five years, the Undersigned Members unanimously reject each of the following legislative proposals - the increase in prescription drug copayments from $8 to $15 for "middle-income" veterans; the annual enrollment fee of $250 to $750 for veterans whose families make $50,000 a year or more; and eliminating the practice of offsetting VA first-party copayment debts with collections from insurance companies.

With respect to benefits, we disagree in particular with the discretionary funding request for staffing at the Board of Veterans' Appeals, education and Vocational Rehabilitation and Employment business lines' staffing, and for programs administered by the Department of Labor.

In addition, we believe that the benefit level of several mandatory programs must be increased to quell erosion of the benefits over time. We also recommend that Filipino veterans finally get recognition for their heroic service during World War II and be given pensions to aid them in their twilight years.

The projections in the President's budget for discretionary spending in the next 5-10 years are troubling. The VA health care system would be devastated should the Administration's budget for future years become a reality. It is our view that veterans, who have sacrificed for this country, are being asked to carry a disproportionate share of the burden to balance the Federal budget. We believe that the Government can be fiscally responsible and reduce the Federal deficit and debt, without abandoning its commitment to our Nation's veterans.

As the Congress continues to debate the conflicts in Iraq and Afghanistan, including the cost of prosecuting those efforts, we must clearly demonstrate our understanding that the cost of war includes the cost of caring for servicemembers, now and in the decades to come.

II. DISCRETIONARY ACCOUNT SPENDING

A. Medical Services

Policy Proposals

Prescription Drug Co-payment Increase for Priority 7 and 8 Veterans: The Undersigned Members oppose the Administration's proposed increase of the prescription drug co-payment from $8 to $15, for projected revenue of $335 million in FY09 and $3.7 billion over 10 years. Many Priority 7 and 8 veterans - some earning less than $28,500 a year - cannot afford to pay nearly double for needed prescription drugs.

Enrollment Fee of $250 to $750 for Priority 7 and 8 Veterans: The Undersigned Members oppose the Administration's proposed new enrollment fee of $250 for veterans with family incomes between $50,000 and $74,999; $500 for those with family incomes between $75,000 and $99,999; and $750 for those with family incomes over $100,000. This proposal is projected to generate $129 million in revenue in FY10 and $1.1 billion over 10 years.

Taken together, these two fee increases would be particularly hard on certain categories of veterans. For example, a family with two veteran wage-earners, each taking an average number of medications and each paying an enrollment fee of $250, would have to pay nearly $3,000 in new out-of-pocket costs for VA care if the prescription drug copayment increase and enrollment fee are enacted.

Offset of First-Party Debt: The Undersigned Members oppose a proposed change in law that would eliminate the practice of offsetting VA first-party co-payment debts with recoveries from insurance companies. Many veterans are drawn to VA because of low-cost prescription drugs. Yet, in most cases, acquiring these drugs requires visits to a specialty care provider. Furthermore, many of these veterans are elderly and on a fixed income. While they are not "high-income" by any standard, their incomes are over the VA means-test threshold. While the current primary care co-payment of $15 is in line with most private insurance companies, VA's specialty care co-payment is $50 per visit. That amount is high enough to be an immediate disincentive to seeking medical care from VA if it cannot be paid for by third-party insurance. VA estimates this change would yield $44 million in increased collections in FY09 and $415 million over 10 years.

The Undersigned Members also oppose the proposal to return revenue from the above new fees to the Treasury, rather than reinvesting the funds in veterans' health care. That proposal clearly signals that the fees are proposed to address overall deficit reduction and are not intended to support VA health care.

Components of Recommended Increase

1. Current Services (+$1.995 billion)

Medical care inflation (at an overall rate of 4.63 percent), increases in the costs of goods, and other "uncontrollables" dictate a funding increase of at least $1.434 billion in FY09 simply to maintain the level of current services. Increased intensity (which encompasses changes in medical care delivery to adjust for more complex care) and utilization of medical services by existing patients also continues to drive costs up as well. The Administration has requested an additional $534 million in funding in FY09 to meet these latter costs, and we support this request.

2. OEF/OIF Demand and Services (+$742 million)

For the past five years, VA has significantly underestimated the number of Operation Iraqi Freedom and Operation Enduring Freedom (OIF/OEF) veterans who are likely to seek health care services in succeeding years, and we are concerned that this mistake is being repeated in the FY09 budget. Veterans of these conflicts are now eligible for five years of VA care upon separation from service. While VA estimates that any potential workload from OIF/OEF will be negligible relative to the overall number of new enrollees next year, VA has consistently underestimated the number of OIF/OEF veterans it projects will come for care. By the end of FY08, for example, VA is projecting it will have seen 293,345 total OIF/OEF veterans since the start of the wars; yet its own data from the Health Care Utilization Report provided to Congress for the 4th quarter of FY07 lists the total number of OIF/OEF veterans VA had seen by that time at 299,585. VA is essentially projecting, via its budget submission for FY09, that it will see 6,240 fewer patients in FY08 than it saw by the end of FY07.

The Undersigned Members recommend a total funding level of $742 million to furnish services to OIF/OEF veterans under current law, an increase of $518 million over FY08. $432 million would be for direct care and services. The remainder would be to support enhancements to the following areas:

Outreach. VA must undertake a serious effort to reach out to returning servicemembers so that these new veterans will be made aware of the services for which they are eligible. This is especially important with respect to returning members of the National Guard and Reserves. The Undersigned Members have yet to see an aggressive, nationwide outreach effort made by VA to identify veterans in need of help and to provide services through appropriate mechanisms.

Sufficient resources and energy must be devoted to ensuring that those in need of care receive that care. Congress has done its part already by widening the window for automatic eligibility for care from two years to five years. Additional outreach funding is required to move VA from a passive approach of waiting for returned servicemembers to seek care to a much more aggressive one designed to help prevent suicides and long-term mental health problems and to improve quality of life for veterans. VA must be able to reach these veterans in their communities and ensure they are getting the services and care that they need.

Traumatic Brain Injury and Polytrauma. Traumatic brain injury (TBI) has been described as the signature wound of Operations Iraqi and Enduring Freedom, due to the use of Improvised Explosive Devices. Medical science is only beginning to understand the mental and physical effects of this injury. VA has a responsibility to be at the forefront of TBI research and treatment. The Undersigned Members believe that VA must have adequate staff and equipment to help brain-injured veterans with recovery and rehabilitation, and to return them to an independent existence in their communities when possible.

In recognition of the needs of veterans with traumatic brain and other injuries, Congress directed VA to establish specialized centers for rehabilitative care. The four existing Polytrauma Centers in Tampa, Palo Alto, Minneapolis, and Richmond (a fifth is proposed in San Antonio) are generally regarded as successful. We understand that VA is in the process of expanding comprehensive polytrauma and rehabilitative (including prosthetics when necessary) care to all Veterans Integrated Service Networks to meet the needs of severely injured veterans and their families - and resources must be provided to support this effort accordingly.

We also note that the National Defense Authorization Act of 2008 (NDAA) contained a number of provisions authored by this Committee that seek to address TBI care. We are concerned that the Administration has not adequately budgeted for intensive multi-disciplinary care and case management for veterans with multiple traumas, including TBI. We are also concerned about VA's capacity to provide specialized TBI outpatient care, home-based services, residential rehabilitative programs and long-term care for those more severely injured. We support VA's ongoing efforts to improve their assessments of returning servicemembers for TBI, but we do not believe that the Administration has committed the resources necessary to provide this service.

Assistance to Families. The Undersigned Members believe that families are essential to veterans' recovery and well-being. Indeed, family members are often the primary caregivers for veterans. VA has taken steps to reach out to families in recent years, but much work remains to be done. Legislation reported favorably by the Committee, S. 2162, would require expanded services for families. Pilot programs conducted by VA in locations around the country are expanding outreach and education services for families. As part of the recommendation to meet the needs of OIF/OEF veterans and their families, the Undersigned Members recommend an additional $100 million to support these efforts.

VA-DoD Senior Oversight Committee. The Joint VA-DoD Senior Oversight Committee (SOC) was created in the wake of the media reports about problems at Walter Reed Army Medical Center to manage the implementation of the many recommendations and requirements from the President's Commission on Care for America's Returning Wounded Warriors, other reports stemming from the problems at Walter Reed Army Medical Center, and the NDAA. No funding has been identified in the President's budget to sustain VA's contribution to this office in 2009. Because the Undersigned Members believe that this is a vital enterprise that must be sustained, we recommend that at least $10 million be dedicated to this effort in FY09.

3. Rescinding the Ban on Priority 8 Veterans (+700 million)

In January 2003, the Administration halted enrollment of Priority 8 veterans, those veterans with no compensable service-connected disabilities and with incomes above the HUD geographical low-income threshold for their respective counties. The Administration's budget for FY09 assumes that the enrollment ban on Priority 8 veterans will continue.

The Undersigned Members do not accept this assumption and estimate that new resources of approximately $700 million are needed to restore some form of access for these veterans. Legislation is currently pending in the Senate to open the system up to all Priority 8's. In addition, proposals have been circulating that would allow some subset of currently excluded Priority 8's to enroll. The $700 million figure is based on VA's own estimate ($1.4 billion) of what it would cost to reopen the system to Priority 8 veterans, and is prorated to reflect that if the ban is lifted, it will be done in a responsible manner.

We believe that veterans in need of VA care should not be prohibited from enrolling in the system. Indeed, adequate funding should be appropriated to VA so that all veterans who choose to enroll with VA have access to needed care and services. Many of the Priority 8 veterans bring private health care coverage with them and are also subject to co-payments, effectively bringing revenue into the system, thereby offsetting the cost of their care.

The Undersigned Members note that VA's cost estimate for rescinding the ban on Priority 8 veterans would be significantly reduced if the impact of third-party insurance and co-payments for care and prescription drugs were factored in.

4. New Initiatives (+$579 million)

The Undersigned Members accept the Administration's proposed "new initiatives". While we support each of these initiatives, we believe that more can and should be done - especially in the areas of mental health, readjustment counseling, women veterans, personnel enhancements, and rural veterans' access. The Undersigned Members also support the expansion of many existing initiatives and recommend increases in the specialized services discussed below.

Mental Health. The Undersigned Members are very concerned about VA's capacity to meet the mental health needs of returning servicemembers. For example, while the number of veterans diagnosed with substance abuse problems is increasing, the President's request would cut funds for substance abuse treatment. Rather than account for growing demand for mental health care services, the budget also projects reductions in inpatient psychiatric and residential care.

We believe that VA needs greater resources for mental health services and recommend $377 million in additional funding over FY08 levels.

This level of funding would ensure funds remain to support expansion of VA's specialized mental health and substance abuse programs; expand VA's capacity to provide inpatient psychiatric and residential care; provide funds to address family-related needs of returning veterans experiencing distress following their reentry into civilian life; support more effective treatment for post-traumatic stress disorder (PTSD); and advance efforts to prevent suicide among veterans. In addition, the Undersigned Members believe that VA must take a preemptive, proactive approach to assist families dealing with the stresses and challenges caused by servicemembers' deployments to combat zones and their return to civilian life.

Rural Access. The Committee believes that we must continue to modernize VA's beneficiary travel program and bring payments under the program closer in line with today's cost of travel. The conference report accompanying the Consolidated Appropriations Act of 2008 specified that $125 million of the funds provided for Veterans Medical Services should be used to increase the travel reimbursement rate. In response to that language, the Secretary of Veterans Affairs recently increased the travel reimbursement rate to 28.5 cents per mile. While we are pleased with the rate increase - the first one since 1977 - we believe that with rising gas prices, service-connected veterans merit a larger increase. We recommend that the travel benefit be brought in line with the rate that federal employees are currently paid for their official travel. The cost of doing so would be an additional $125 million.

We also note that S. 1233, the proposed "Veterans' Traumatic Brain Injury and Other Health Programs Improvement Act of 2007," includes a provision that would strike a provision in current law that allows the Secretary to raise or lower the deductible for reimbursements in proportion to a change in the mileage rate. This would have the effect of holding the deductible to $3 per a one-way trip.

The Office of Rural Health (ORH) continues to play an essential role on improving care for veterans in rural areas. The resources, education, and support provided by ORH have proven helpful throughout the VA health care system. Demand for the services and support of ORH is likely to grow, given the high number of National Guard and Reserve deployed in Iraq and Afghanistan in recent years, many of whom returned to homes in rural locations. S. 1233, currently pending consideration by the full Senate, would require ORH to make a number of reports to Congress on fee-basis health care and on rural outreach efforts. In light of the greater demands placed on ORH, funding for this office ought to be increased significantly.

The Undersigned Members recommend $10 million over FY08, $9 million more than the President's request for ORH in FY09.


Vet Centers. As the conflicts in Iraq and Afghanistan continue, the number of veterans seeking readjustment counseling and related mental health services through Vet Centers will continue to grow. Experts predict that as many as 30 percent of returning servicemembers may need some kind of mental health treatment - from basic readjustment counseling to care for debilitating PTSD. A study published on March 1, 2006, in the Journal of the American Medical Association, reported that 35 percent of Iraq veterans accessed mental health care services during their first year at home. VA's own OIF/OEF Health Care Utilization Report from the last quarter of FY07 cited that 40 percent of those who have already accessed VA health care may have mental disorders of some kind. Despite an increase in the number of veterans coming to Vet Centers, the budget for the program has remained relatively flat. We note that legislation to authorize $180 million in funding for Vet Centers, S. 3421, was by passed by Congress and signed into law on December 22, 2006, as Public Law 109-461.

We recommend that Vet Centers receive a funding increase of $22 million above FY08 to meet that goal.

Homeless Grant and Per Diem Program. Veterans are disproportionately represented among the homeless population, accounting, according to most estimates, for one in three homeless persons on any given night. VA has a responsibility to help the roughly 400,000 veterans experiencing homelessness over the course of the year. VA's Grant and Per Diem program is effective in creating and aiding local shelters as they help our Nation's veterans by providing transitional housing, vocational rehabilitation, and referrals for clinical services.

We recommend $23 million in additional resources for this program in FY09 to fully fund it at the $130 million level that was previously authorized by Congress (Public Law 109-461).

Women Veterans. Women make up a growing segment of the armed services, and thousands have been deployed to Iraq and Afghanistan. VA must be prepared to provide services to these servicemembers in appropriate settings when they return. While some facilities have found innovative solutions to meet the unique needs of women veterans, others are still lagging behind. The Undersigned Members believe that to adequately serve this growing special population of veterans, additional funding is required.

We recommend an additional $10 million over FY08.

Personnel - Nurses. The Undersigned Members are concerned that the Administration has not adequately budgeted for enough physicians and nurses to meet the projected increase in demand for VA medical care in FY09. The number of physicians, nurses, and all other health professionals currently employed by the Veterans Health Administration (VHA) cannot keep pace with increasing demands on the system. The Undersigned Members believe that resources in this area must be spent on the hiring of additional clinical staff to better meet demand. VA faces a competitive market for health care providers, particularly nurses, and must dedicate additional resources to recruit and retain staff. The Undersigned Members also recommend providing additional funds to support debt relief and scholarship programs for health personnel to promote recruitment and retention efforts.

The Undersigned Members recommend that an additional $12.482 million be included for these programs, for a total of $40 million in FY09.

5. Medical Facilities

The Medical Facilities account delineates a specific line of funding for the maintenance and operation of hospitals, nursing homes, domiciliaries, clinics, and all other facilities of the Veterans Health Administration. The Undersigned Members support the Administration's request of $561 million over FY08, for a total of $4.66 billion. This amount is $85 million over the recommendation of the Independent Budget for FY09, and the Undersigned Members believe this level of funding is sufficient to keep VA health care facilities in proper condition.


Our overall recommendations [in thousands of dollars] for medical care spending are summarized in the chart below:

Needed Discretionary Revenue Above FY 08 Level (thousands)

MEDICAL SERVICES
Current Services $1,995,000

New Initiatives and Program Expansions
Mental Health $376,600


Homeless Grant and Per Diem Program $23,000


OIF/OEF Veterans $742,000

Women Veterans $ 10,000
Personnel $12,482


Rural Initiatives $135,000


Vet Centers $22,000


Priority 8s $700,000


Total Medical Services $4,016,082

MEDICAL FACILITIES $561,000

Total Recommended For Medical Care $4,577,082

President's Medical Care Request Over FY08 $2,015,283

Majority Recommendation Vs. Administration $2,561,799

B. Proposed Discretionary Spending for FY10-FY13

For the second year in a row, the Administration's proposed budget for discretionary spending in future fiscal years would devastate VA health care. The President's budget cuts VA medical care funding for Fiscal Years 2010 through 2013.

We view the current strategy as one that gives in the first year and cuts heavily thereafter, in order to improve the overall appearance of the President's budget. A frozen appropriation coupled with cuts in other programs would translate to a reduction of services and benefits. The Undersigned Members believe that any budget resolution must reverse these cuts in future years.

C. Medical and Prosthetic Research

The Administration's proposed FY09 budget for VA research is $442 million, a $38 million cut from the current year level of $480 million. This sum cannot sustain current research initiatives or provide the program growth necessary to attract and retain quality research personnel. The Administration's proposal would result in the direct loss of 49 FTE and 294 projects in key areas such as acute and traumatic injury and mental illness. Increased funding is required to sustain current VA research and development program commitments, and to cover inflationary cost increases associated with these commitments. VA must be able to continue addressing the special needs of our Nation's veterans, and continue to recruit and retain the highest quality physicians. We recommend an additional $75 million over the FY08 level for a total funding level of $555 million.

D. Grants for State Extended Care Facilities

The State Extended Care Facilities (SECF) grant program assists States in acquiring or constructing State home facilities that intend to provide nursing home care to veterans, as well as in remodeling or converting existing buildings into long-term care facilities. VA can provide up to 65 percent of the total cost of the project, and the States must provide the remaining share of the cost.

This year again, the Administration proposed a significant reduction in funding for this program, requesting $85 million for SECF grants in FY09. Congress provided the SECF grant program with $165 million in FY08 - an unprecedented, but very necessary increase. The Administration's budget would essentially cut this program by $80 million, delaying the many projects that are currently in the queue. Furthermore, new grant proposals from the States continue to increase, in response to an ever-growing population of veterans in need of long-term care.

To award an adequate number of new SECF grants in FY09, the Undersigned Members recommend $200 million in total funding for FY09, a $35 million increase above FY08.

E. Major and Minor Construction

The Administration requested only $472 million for Major Construction in FY09. This amounts to a decrease of $488 million from the FY08 funding level, despite the fact that there are currently nine major projects underway that are only partially funded. The funding shortfall for all nine projects is $2.3 billion. The Undersigned Members believe that VA must ramp up its construction process and complete work on the projects it has already started. Total construction costs are continually increasing, and while much of this is due to normal factors in the contracting industry such as cost of materials, the lack of full funding for certain projects has enabled contractors to renegotiate their prices in certain cases.

In addition, the President's budget includes $5 million for a new land acquisition line item in the Major Construction account. These funds will be used to purchase land as it becomes available in order to quickly take advantage of opportunities to ensure the continuation of a national cemetery presence in areas currently being served. One caveat related to this funding is that all land purchased from this account must be contiguous to an existing national cemetery, within an existing service area, or in a location that will serve the same veteran population center. The Undersigned Members support the National Cemetery Administration's attempt to achieve and maintain its strategic target of serving 90 percent of veterans with a burial option within 75 miles of their homes.

The Undersigned Members recommend that funding for major construction in general be increased by $1.209 billion, and that the line item for new land acquisition be increased by $5 million over the President's request to $10 million in FY09. Therefore, the Undersigned Members recommend a total funding level of $2.277 for the Major Construction account over FY08.

For Minor Construction, the Administration's request proposed to reduce the account from its FY08 level by $301 million. The Consolidated Appropriations Act of 2008 provided a very large increase for this account. As is the case with Major Construction, with the queue of projects that VA must complete, along with a $1.5 billion backlog in Non-Recurring Maintenance projects, funding for Minor Construction must stay at a consistent level. The Undersigned Members recommend a $4.5 million increase over FY08, for a total of $635 million in FY09.

F. Office of the Inspector General

The work of the VA Office of the Inspector General (OIG) has made significant contributions to management effectiveness throughout VA. The OIG conducts vital oversight investigations and audits of various aspects of the Department's operations and budget. One recent example of the OIG's work was uncovering serious quality of care issues in the surgical department at the Marion, Illinois, VA Medical Center after reports of patient deaths. Yet, for the third year in a row, the Administration is proposing a decrease in FTE and funding for the OIG. Reductions in staff would severely impair the OIG's ability to identify fraud, waste, and mismanagement, and would result in a decrease in active oversight and in fewer arrests, indictments, and convictions of individuals who prey on VA and our Nation's veterans.

We recommend an additional $8.4 million above FY08, for a total of $88.9 million. Funding at this level will allow for an additional 48 FTE to support additional auditors, health care inspectors, and criminal investigators to ensure enhanced quality and safety of VA health care and services.

G. Information Technology

The Administration's budget request includes a significant increase for Information Technology (IT) over FY08. Much of this funding reflects the costs associated with VA's transition to centralized IT management, and the costs associated with the migration of VA's legacy IT systems. However, the request does not include any funding to support the IT initiatives required by the NDAA, nor those recommended by the President's Commission on Care for America's Returning Wounded Warriors. VA has not defined its plans to fund the joint VA-DoD Electronic Health Record Office, the creation of an eBenefits web portal to serve as a single information source for servicemembers and veterans, or the development cost of a joint VA-DoD inpatient electronic health record system.

The Undersigned Members recommend a $30 million increase over FY08, for a total of $2.564 billion to support these new initiatives.

H. Compensation, Pension, and Burial Staffing and Training

The Undersigned Members believe the Administration's request for compensation, pension, and burial staffing in FY09 is a step in the right direction. Congress provided funds for significant increases in FTE in both the FY07 emergency supplemental bill and the FY08 appropriation. The President's budget request of $944 million for FY09 represents an increase of $153 million over the FY07 level, and allows VBA to maintain the staffing levels for the Compensation and Pension (C&P) service that were established in FY08. However, while we believe that staffing levels for FY09 are sufficient, we have concerns that the funds available to train the nearly 3,000 new FTE may be insufficient.

Staffing. The President requests 9,886 FTE for direct compensation staffing in FY09. The total number of compensation, pension, and burial FTE in FY09 will be 10,998, a 36 percent increase over the FTE level at the end of FY06. VA anticipates that the productivity of the additional staff will increase throughout 2008, 2009, and subsequent years as the new staff gain experience. For example, VA projects that with the additional FTE it is hiring, it will be able to reduce the pending rating inventory, which stood at 391,593 at the end of FY07, to 368,292 in FY08 and 297,587 in FY09.

Workload. The disability claims workload from returning war veterans, as well as from veterans of earlier periods, has continuously increased since 2000. Annual claims grew 45 percent from 578,773 in 2000 to 838,141 in 2007.

In recent years, VA has consistently underestimated its workload. In FY07 and FY08, VA projected that the trend of increasing claims receipts would cease and the number of new receipts would level off at approximately 800,000 per year. However, 838,141 new claims receipts were recorded in FY07 and VA's projected estimate for FY08 is 854,094 new receipts. VA's projection for FY09, 872,002 claims receipts, appears to be more consistent with current trends than its estimates in recent years. The Undersigned Members continue to urge VA to make accurate projections of its workload so that Congress can provide appropriate staffing to the Department.

Studies have shown that the size of the active duty force is the best predictor of new claims activity. As of September 2007, more than 1.62 million servicemembers had deployed in support of the Global War on Terror, including 451,792 National Guard and Reserve members. In addition, VA's outreach efforts to active duty personnel have resulted in significantly higher claim rates. Original claims received in 2007 were almost four percent higher than the original claims received in 2006.

In addition, veterans from the Vietnam and Gulf War eras are aging and filing reopened claims in greater numbers. In 2007, reopened claims comprised slightly more than 54 percent of disability claims. Additionally, many veterans receiving compensation have chronic, progressive diseases such as diabetes, mental illness, and musculoskeletal or cardiovascular illnesses. As these veterans age, it can be predicted that they will file additional claims.

Claims received by VA are increasingly complex, and require more time invested in development and rating. In 2007, 26 percent of the compensation workload (58,532 of the 225,173 original claims received) contained eight or more issues. This is an increase of 168 percent since 2000. On a monthly basis, in 2007, VA received an average of 606 claims with eight or more issues cited.

VA estimates that its expanded C&P workforce of 10,998 direct FTE will complete an average of 85.7 claims per FTE in FY 09. This number is down considerably from the average of 98.7 claims per FTE in FY07. We are cautiously optimistic that the quality of claims adjudication will improve as FTE are expected to complete fewer claims per year.

The Undersigned Members will continue to monitor VBA's staffing requirements and output in FY09.

Training. The President's FY09 budget submission indicates that additional staffing will enable VA to improve claims processing timeliness, reduce appeals workload, improve appeals processing timeliness, and enhance services to veterans returning from the Global War on Terror. VA indicates that it plans to accomplish all of this without sacrificing the accuracy and consistency of claims adjudication. This will require an intensive training effort.

VBA has established a broad spectrum of training programs and educational resources, both at VA's Regional Offices and at the Veterans Benefits Academy in Baltimore, Maryland. Veterans Service Representatives (VSRs) and Rating Veterans Service Representatives (RVSRs) are provided three weeks of centralized basic training at the Veterans Benefits Academy. The Veterans Benefits Academy also offers a range of advanced training courses in leadership and management development, as well as computer-based learning tools and satellite broadcasts that bring the Academy's expertise directly to staff desktops.

An important VBA workload reduction initiative for FY08 entails putting new hires through a modified version of the centralized Challenge VSR training program. The modified training would prepare new hires to immediately contribute to burial and dependency claims processing, resulting in an estimated additional 4,000 completed claims in 2008. Throughout FY09, these new hires will complete VBA's Challenge training, introducing them to the more complicated process of compensation claims adjudication. The President requests a total of $17.2 million for the training of compensation, pension, and burial claims adjudicators in FY09.

The Undersigned Members recommend an increase of $5 million above the President's request, for a total of $22.2 million in FY09, to support Departmental training initiatives for claims adjudicators. The Undersigned Members believe that quality should not suffer as timeliness improves.

I. Vocational Rehabilitation and Employment

The Vocational Rehabilitation and Employment (VR&E) Program provides training, education, and other services to enable veterans to obtain and maintain employment after sustaining service-connected disabilities.

The President's FY09 budget request calls for a reduction of 6 FTE for VR&E. The VR&E workload is expected to increase by 2.5 percent in 2008 to 89,672, and by another 2.25 percent in 2009 to 91,690. VR&E anticipates that the impact of service in Iraq and Afghanistan will result in more seriously injured veterans who will likely qualify for the VR&E Program.

The President's request also stipulates that the additional FTE will be allocated toward implementation of the 2004 VR&E Task Force Recommendations, staff for the Coming Home to Work and Process Consolidation initiatives, and contract oversight. VA maintains that implementation of the Task Force recommendations and removing the burden of contract oversight from case managers will allow it to handle the growing caseload. However, it is clear that a reduction in FTE will not aid in handling the increased VR&E workload. Therefore, we believe that an additional 250 FTE -- 50 of whom are contract oversight specialists -- are required.

The Undersigned Members recommend $32 million above the President's FY09 staffing budget request of $152 million. This would provide an additional 250 FTE above the President's request, for VR&E to absorb increasing workload and meet additional objectives.

In addition, the Undersigned Members note that the President's FY09 budget indicates that VR&E will continue to grow in the area of increasing partnerships with other agencies and organizations. The resources and energies of many organizations contribute to the reintegration and rehabilitation process, especially those in community-based organizations within close proximity of veterans' homes. We recommend an additional $25 million above the President's request be made available for these types of partnerships.

J. Education

The VBA's Education Service provides veterans, servicemembers, Reservists, and certain family members with educational resources. Recent legislative changes in the education program for Reservists have increased the complexity of education claims and the resources needed to process them.

The President's FY09 budget request calls for an additional 20 direct FTE for the Education Service over the FY08 level of 971. The Education Service workload is expected to increase by 4.3 percent in both FY08 and FY09. VA expects that this level of direct FTE will allow it to not only process claims in a timely and accurate manner, but also address some of the deterioration in timeliness experienced in prior fiscal years.

While the President's request for an additional 20 FTE for VA's Education Service is a step in the right direction, we are concerned that this increase will not be sufficient to support the workload associated with the projected increase in education claims, together with the need to improve the timeliness and accuracy of education claims processing. We recommend an additional $4.8 million, which would support a total of 1,045 FTE for the Education Service, which is 63 FTE over the President's request.

K. Board of Veterans' Appeals

The Board of Veterans' Appeals (BVA) is responsible for making final Departmental decisions on behalf of the Secretary for the thousands of benefits claims presented for appellate review annually.

The President's FY09 request for BVA is for $64.7 million, which would support 487 FTE, an increase of 21 FTE and $2.48 million over the current estimate. The Undersigned Members are concerned that the appeals resolution time and BVA cycle time are rising despite an increase in appeals decisions per veteran law judge. Further, these two measures are not expected to improve in 2009.

The Undersigned Members recommend that BVA be provided with $1.62 million above the President's request, which would provide 13 more FTE to reduce the backlog at BVA, decrease the average days pending, and further improve quality.

L. State Cemetery Grant Program

The State Cemetery Grants Program (SCGP) complements the National Cemetery Administration's (NCA) mission to establish gravesites for veterans in areas where NCA cannot fully meet veterans' burial needs.

We recommend that the SCGP be funded at a level of $42 million, or $10 million above the President's request. This increased funding will enable states to establish, expand, and improve their veterans' cemeteries.

M. Department of Labor, Veterans' Employment and Training Service

The Undersigned Members believe that the Department of Labor's Veterans' Employment and Training Service (VETS) should receive an additional $10 million for its Recovery & Employment Assistance Lifelines (REALifelines) and Vocational Rehabilitation and Employment (VR&E) initiatives. REALifelines provides injured servicemembers and veterans with one-on-one employment assistance to help them transition into the civilian labor force. In FY07, assistance was provided to more than 1,000 individuals including servicemembers, veterans and their families. The VR&E initiative provides employment assistance and counseling at Department of Veterans Affairs' facilities and through the Transition Assistance Program. We believe that with additional funding, this program can substantially be expanded and extended to meet the very pressing needs of those returning from combat with serious injuries. It should be noted that VETS has never had a line item appropriation for this activity and has funded it from appropriations in Grants to States.

We further believe that an additional $10 million in Grants to States funding should be available to provide additional services and assistance to the spouses of deployed servicemembers. These funds should also support specific categories of veterans in need of employment and training assistance, such as recently separated veterans, veterans with service-connected disabilities, and homeless veterans. These funds should be used for a combination of additional Disabled Veterans' Outreach Program Specialists (DVOPS) and Local Veterans' Employment Representatives (LVERs), as well as targeted grant programs.

An additional $5 million should be provided for Federal Administration of VETS for the conduct of a "Hire Heroes" Public Service Announcement (PSA) campaign, as outlined in the Democratic Policy Committee's New Ideas Project report, entitled "The 2007 Fresh 50: Fifty New Policy Ideas for Senate Democrats." This amount would not only provide for the PSA campaign itself, but would also provide resources for additional enforcement activities.

Finally, we recommend that $750,000 in Federal Administration funds be included for the conduct of a national conference to train VETS employees. VETS has not been able to convene such a meeting since 2004. We believe that this meeting would be an opportunity to improve operational performance within the agency.

The Undersigned Members recommend a total of $264 million for VETS, an increase of $25.8 million over the President's budget request.

N. Court of Appeals for Veterans Claims

The United States Court of Appeals for Veterans Claims (CAVC), a legal body independent of the Department of Veterans Affairs and the executive branch, is vested with the authority to review decisions of the Board of Veterans' Appeals (BVA) regarding a veteran's entitlement to benefits offered by VA. The court is empowered to affirm, vacate, reverse or remand decisions made by BVA, as well as compel actions of the Secretary where such action is necessary to bring VA into accordance with the law.

The court's budget request of nearly $24 million for FY09 is $1.26 million more than the FY08 level. This increase is attributable to personnel costs for additional staff to meet the challenges in processing an increased workload. During FY06, the court received more case filings that any other year in the court's nearly 20-year history. From FY98 to FY04, the court received approximately 200 case filings per month. In FY05, the number of case filings increased to 289 per month, and in FY06 the average increased to more than 300 per month. This increase continued in FY07 with case filing averaging 387 per month for a fiscal year total of 4,644. This total exceeds, by over 1,100 cases, the highest in court history. This trend is expected to continue throughout FY09.

In FY08, Congress added funding to the President's request to pay for additional court personnel. The FY09 request is consistent with this staffing increase. The court requests ongoing funding for these seven additional law clerks and secretaries, to support recalled judges, possible Magistrates, and any administrative positions to support the electronic case filing initiative, and other operations.

The Undersigned Members support the court's use of retired judges and therefore recommend that the court's requested funding be provided.

The Veterans Consortium Pro Bono Program requests $1.7 million, an increase of $288,156 over the Program's FY08 request. The need for the Program has increased in the past few years, as more veterans seek judicial review. The demand for the Program's assistance has increased steadily: the Program received 742 requests for assistance in 2007 (compared to 696, 545,318 and 313 in 2006, 2005, 2004, and 2003, respectively). Of those 742 evaluated cases, 209 cases were accepted into the Program, with the remainder being rejected for a variety of reasons.

The Undersigned Members agree with the Program's assessment that the need for their free legal assistance, as a result of increased Board of Veterans' Appeals decisions and the continuing wars in Iraq and Afghanistan, will increase demand for services in 2009 and beyond.

O. State Approving Agencies

For purposes of establishing institutional eligibility for the payment of VA education and training benefits, State Approving Agencies (SAAs) are responsible for the evaluation and approval of programs of education and training within their respective states, including: institutional programs, on-job training, and licensing and certification programs. At a time when the number of veterans enrolled in programs of education is expected to increase, we believe it does not make sense to decrease SAAs' funding in FY09, as proposed in the President's budget, due to the expiration of a statutory ceiling on the amount of mandatory funds available for the program.

We further note that legislation restoring the funding ceiling to $19 million is contained in S. 1315, the proposed "Veterans' Benefits Enhancement Act of 2007," which has been reported from the Committee and is pending action by the Senate. During the second session of this Congress, we hope to pursue legislation to stabilize funding for SAAs, by funding them through the General Operating Expenses account.

The Undersigned Members recommend a total of $22 million in FY09 for SAAs, an increase of $9 million over the amount recommended in the President's Budget.


III. MANDATORY ACCOUNT SPENDING

The Undersigned Members support the budget request of $46.4 billion, an increase of $848 million for entitlement programs over the 2008 level. However, there are several areas within this account that require funding of $218 million beyond what the President has requested.

A. Filipino Veterans

In the sixty-two years since the end of the Second World War, Filipino veterans have worked tirelessly to secure the veteran status they were promised when they agreed to fight under U.S. command during World War II. They were considered United States veterans until that status was taken from them by an Act of Congress in 1946.

Under current law, Filipino veterans are not eligible for pensions, and their surviving spouses are not eligible for death pensions. The Undersigned Members recommend that Filipino veterans and their survivors receive those benefits at specified annual rates: single veterans, $3,600; married veterans, $4,500; and surviving spouses, $2,400. The Undersigned Members recommend that $26 million be provided to meet this end in FY09.

B. Cost-of-Living Adjustment

The Administration's requested increase in mandatory funds provides for a projected 2.5 percent cost-of-living adjustment in VA compensation benefits in FY09. A 2.5 percent increase is the expected increase estimated in the Consumer Price Index, and is the same as the increase expected for Social Security benefits. Under current law, this COLA is rounded down to the next lowest whole dollar.

VA compensation is sometimes the sole source of income for a veteran and his or her family. We owe it to our veterans to provide them with appropriate compensation, the value of which does not decrease with inflation. The Undersigned Members thus recommend that $20 million be provided to end the COLA round-down.

C. Burial Benefits

The Federal government has provided varying forms of burial benefits since the Civil War. We are concerned that the continued erosion of the value of monetary burial benefits has resulted in the benefit covering just a small fraction of what was covered in 1973, when VA first provided monetary burial benefits for our veterans.

The Undersigned Members recommend that $150 million be provided to bring the value of this benefit closer to that established in 1973. Specifically, we recommend an increase in the plot allowance from $300 to $745; an increase in the service-connected burial benefit from $2,000 to $4,100; and, finally, an increase in the non-service connected burial benefit from $300 to $1,200.


D. Specially Adapted Housing Grants

VA provides specially adapted housing grants of up to $50,000 to severely disabled veterans with service-connected disabilities. Unfortunately, increases to this program have been infrequent, while real estate and construction costs have continued to rise. We recommend an additional $5 million to increase the amount of these grants to $60,000.

E. Automobile Grants and Adaptive Equipment

VA provides certain severely disabled veterans and servicemembers grants for the purchase of automobiles. This grant also provides for adaptive equipment necessary for safe operation of those vehicles. When this grant was first established in 1946, it covered approximately 85 percent of the average cost of a new automobile. Over time, Congress adjusted the amount provided to 80 percent of a new automobile. However, lack of further adjustments to this grant have gradually eroded the benefit so that today, the current allowance of $11,000 represents approximately 39 percent of the average cost of an automobile.

The Undersigned Members recommend that $17 million be provided in FY09 to increase the allowance to $22,500, which is 80 percent of the average cost of a new automobile.

F. Educational Assistance Benefits

The Undersigned Members view the educational assistance benefits available to active duty servicemembers, members of the Guard and Reserve, and veterans as having exceptional value to individuals as a readjustment benefit. We also recognize that individuals have earned these benefits not only by serving honorably in defense of our Nation, but in some cases, by also making their own contributions through payroll deductions. We also believe that these benefits play a vital role in helping the Armed Forces recruit and retain quality young men and women in the All-Volunteer Force, particularly those serving in the Guard and Reserve.

We anticipate the need for increases in funding available for educational assistance benefits, especially since it appears likely that programs now funded under title 10, United States Code, may be transferred to title 38. In addition, we may seek enactment of legislation that would make a number of overall improvements and enhancements to educational assistance benefits, and that would necessitate an increase in funding for these programs. While we do not, at this time, have any estimate of the cost of such a proposal, we believe that the associated costs are likely to be substantial, and we request that the Budget Committee reflect that potential in the resolution that you bring forward to the Senate for consideration.

IV. CLOSING

We thank the Budget Committee for its attention to the Undersigned Members' views and estimates on the Fiscal Year 2009 budget. We look forward to working with the Budget Committee in crafting a budget for veterans' programs that truly meets the needs of those who have served our country.

Sincerely,
DANIEL K. AKAKA
Chairman

PATTY MURRAY

BERNARD SANDERS

JIM WEBB

JOHN D. ROCKEFELLER IV

BARACK OBAMA

SHERROD BROWN

JON TESTER

-------------------------

posted by Larry Scott
Founder and Editor
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