tHE DEPARTMENT OF VETERANS 

AFFAIRS’ BUDGET REQUEST FOR fy 2007 

FOR THE EDUCATION, VOCATIONAL 

REHABILITATION AND LOAN GUARANTy 

PROGRAMS

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

Subcommittee on 

economic Opportunity

one hundred ninth congress

SECOND session

FEBRUARY 14, 2006

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-31

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26-104.PDF
Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

richard H. baker, Louisiana Michael H. Michaud, Maine

Henry E. Brown, Jr., South Carolina Stephanie Herseth, South 

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio Shelly Berkley, Nevada

John Campbell, California Tom Udall, New Mexico

JAMES M. LARIVIERE, Staff Director

Subcommittee on Economic Opportunity

John Boozman, Arkansas, Chairman Stephanie herseth, South 

Richard H. Baker, Louisiana Dakota, Ranking

Ginny Brown-Waite, Florida, Vice Chairwoman Darlene Hooley, Oregon

 Lane Evans, Illinois

 

Michael F. Brinck, Subcommittee Staff Director

(II)
CONTENTS

February 14, 2006

 Page

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The Department of Veterans Affairs’ Budget for FY 2007 for 

the Education, Vocational Rehabilitation and Loan Guaranty programs ........................................................................

OPENING STATEMENTS

Chairman Boozman .................................................................... 

Prepared statement of Chairman Boozman ..............................

Hon. Stephanie Herseth, Ranking Democratic Member .........

Prepared statement of Ms. Herseth .........................................

Statements for the Record

Hon. Ginny Brown-Waite .........................................................

Hon. Lane Evans ........................................................................

Witnesses

Aument, Ron, Deputy Under Secretary for Benefits

 Department of Veterans Affairs ............................................

Prepared statement of Mr. Aument ..........................................

Ilem, Joy, Assistant National Legislative Director, Disabled 

 American Veterans, On Behalf of the Independent Budget .

Prepared statement of Ms. Ilem ...............................................

Sharpe, Joseph C., Jr., Deputy Director, National Economic 

Commission, The American Legion ......................................

Prepared statement of Mr. Sharpe ...........................................

QUESTIONS FOR THE RECORD

Hon. John Boozman ....................................................................

 

(III)
(1)

Hearing on the department of veterans

affairs’ budget for fy 2007 for the education, 

vocational rehabilitation and loan guaranty 

programs

tuesday, february 14, 2006

U.S. House of Representatives, 

Subcommittee on Economic Opportunity,

Committee on Veterans’ Affairs,

Washington, D.C.

 The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

334, Cannon House Office Building, Hon. John Boozman [Chairman 

of the Subcommittee] Presiding.

 Present: Representatives Boozman, Brown-Waite, Herseth and 

Evans. 

 Mr. Boozman. Meeting will be in order. We appreciate you all coming over. One thing before we really get started, we were a little bit 

concerned that OMB refused to clear some slides addressing some 

additional information that we requested. And I think the information that we requested was certainly not a threat to national security. 

Maybe at some time you can address what the problem is. We would 

be concerned if we felt that you believed we didn’t really have the 

right to have this information on how employees spend their time or 

that we don’t need to know the status of the information technology 

programs, which we are requesting -- and for which you are requesting funding. So we will talk about that in a little bit.

 But we appreciate having you here. Today we will hear from Mr. 

Ron Aument, Deputy Under Secretary for Benefits, regarding the 

President’s budget proposal for VA Voc Rehab and Employment, Education, and Loan Guaranty Programs.

 Mr. Aument -- am I saying that right?

 Mr. Aument. Yes, you are, sir.

 Mr. Boozman. Good. I am Boozman but answer to “Bozeman” and 

whatever.

 Mr. Aument, is accompanied by program directors, Ms. Judy Caden, Mr. Keith Pedigo, Mr. Dennis Douglass and Mr. Scott Denniston from the Office of Small and Disadvantaged Business Utilization. 
2

Mr. Denniston does not work for VBA, but we have jurisdiction over 

veteran-owned small business, so we thought it important to have 

him here. We will also receive testimony from the DAV representing 

the Independent Budget and the American Legion.

 We have asked the Vietnam Veterans of America to submit their 

views for the record, and without objection, their submission will be 

made part of the record.

[The material was unavailable at press time.]

 Mr. Boozman. I thank each of you for coming today. As I said at 

the full Committee hearing last week, I am pleased that the President has significantly increased the overall budget for VA. However, 

it is no secret that VBA faces serious problems in delivering timely 

services to its Voc Rehab and Education beneficiaries. I note that, 

for the week ending 20th of January, the Education Service had a 

backlog of 110,000 claims, or about the same as last year, and that 

processing days are up.

Voc Rehab has 6,400 in application status; Loan Guaranty seems 

to be chugging along. But we absolutely must do a better job in getting the GI Bill checks to the veterans and getting the veterans to 

the evaluation and testing period so that they can get on with their 

rehab.

 I want to hear some ideas from the Department and the VSOs to 

make these programs run smoother. I am also concerned about the 

significant disparity in performance among the various regional offices. For example, the San Diego regional office takes about 18 days 

to determine whether a veteran is eligible for Voc Rehab, and unfortunately, the Washington regional office takes over 180 days. Now I 

know that certainly some variation is inevitable, but a factor of ten is 

totally out of line. The entire system averages about 62 days to determine entitlement. So I guess any way that we look at it, something is 

wrong and needs to be fixed. 

I have to believe that staffing levels play a role in this, therefore 

I request VA provide the Subcommittee with an analysis of the disparity between the best and worst performers in making timely Voc 

Rehab entitlement decisions including the number of Voc Rehab staff 

by position for each RO.

 Mr. Aument, if you would, please provide us with a date when that 

information would be available to the Subcommittee. I am sure all of 

you know that Chairman Buyer has expressed a support for modernizing the GI bill, and I want to, again, state my enthusiastic support 

for that initiative.

 I look forward to working with Ms. Herseth and her staff to craft a 

bill that would affect how today’s military operates. I now recognize 

our Ranking Member, Ms. Herseth.

[The statement of John Boozman appears on p. 36]
3

 Ms. Herseth. Well, good morning, and thank you, Mr. Chairman. 

I am very pleased to be here today to examine the President’s fiscal 

year 2007 budget request as it relates to VA programs that fall within 

the jurisdiction of the Economic Opportunity Subcommittee.

For many years, education benefits, vocational rehabilitation services and VA home loans have been a hallmark for the types of services a grateful nation provides to the men and women who serve and 

sacrifice in defense of the country. These earned benefits are critical to service members, veterans and their families as they attempt 

to successfully transition from military service to civilian life. I am 

particularly interested in hearing about the VA’s efforts to address 

the growing education claims workload, as the Chairman mentioned; 

the progress in implementing the 2003 VR&E Task Force report, including any special efforts to reach out to rural areas; and the Loan 

Guaranty services consolidation efforts while maintaining high quality service to veterans and thorough oversight over property management contractors.

 In recent years, much progress has been made in these programs. 

However, I think we can all agree that we must remain vigilant to 

maintain against any decline in top quality benefits and customer 

service.

 So Mr. Chairman, I look forward to hearing from the witnesses 

today and want to thank you for holding the hearing.

 Mr. Boozman. Thank you very much. Let’s begin with the first 

panel, the Honorable Ron Aument is Deputy Under Secretary for 

Benefits. Ms. Judy Caden is director of the Voc Rehab and Employment Service. Mr. Keith Pedigo is director of the Loan Guaranty Services. Mr. Dennis Douglass, acting director of the Education Service. 

And Mr. Scott Denniston for the Office of Small and Disadvantaged 

Business.

STATEMENT OF HONORABLE RON AUMENT, DEPUTY UN-

 DER SECRETARY FOR BENEFITS, DEPARTMENT OF VET-

 ERANS AFFAIRS; ACCOMPANIED BY DENNIS DOUGLASS,

 ACTING DIRECTOR OF EDUCATION SERVICE, VETERANS

 BENEFITS ADMINISTRATION; JUDITH CADEN, DIRECTOR

 OF VOCATIONAL REHABILITATION AND EMPLOYMENT

 SERVICE, VETERANS BENEFITS ADMINISTRATION; KEITH

 PEDIGO, DIRECTOR OF LOAN GUARANTY SERVICE, VET-

 ERANS BENEFITS ADMINISTRATION; AND SCOTT F. 

 DENNISTON, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF

VETERANS AFFAIRS.

 Mr. Boozman. Before Mr. Aument begins, I think that we need to 
4

note that the Education Service director position has been vacant 

for 7 months, and, this is certainly not any reflection in any way on 

the excellent job that Mr. Douglass has done as acting director, but 

I think it is time that we need to fill that job one way or the other. 

Leadership continuity is important, and lengthy gaps are not a good 

way to run a, certainly, very important program.

 As a matter of fact, one can infer from such gaps that directors do 

not have significant impact on the daily operations, and that should 

not be the case.

 So, again, what I am trying to do is say that we appreciate Mr. 

Douglass’ good work. 

 Now, in a second, Mr. Aument, we want you to start, and really 

what I would like to do today is, I know you are going to give a presentation, and so, I would like to break a little bit with our normal 

way of doing things, and really, Ms. Herseth, whoever is here, I would 

like for them to feel free to break in as you go through. Just feel free, 

Ms. Herseth, if something comes up that we don’t understand, to ask 

a question then rather than continue with the formal presentation. 

The purpose of this hearing is to be of a good educational situation so 

that we can better understand what is going on. And I think that will 

be a little bit easier, if that is okay with you all. 

 Mr. Aument. We would welcome that approach.

 Mr. Boozman. Thank you, go ahead.

 Mr. Aument. Thank you, Mr. Chairman, Congresswoman Herseth. 

I appreciate the opportunity to appear before you today to discuss the 

VA 2007 budget request for the Education, Vocational Rehabilitation and Employment, and Loan Guaranty Programs. My testimony 

will highlight VA’s commitment to meeting the needs of our Nation’s 

veterans and key initiatives that are included in the 2007 budget 

request for these three programs.

 Programs I will discuss today assist service members in making 

the transition from military to civilian life and provide vital economic 

opportunities that allow veterans and their families to prosper. We 

help veterans and their dependents seek greater education and economic opportunities through the highly successful Montgomery GI

Bill program and other educational programs. We promote home 

ownership through the Loan Guaranty programs. For qualifying veterans with disabilities, our Vocational Rehabilitation and Employment Program provides both rehabilitation and training and assist 

them in re-entering the civilian workforce.

 We are proud of these programs and appreciate your interest in 

them. We are pleased with the 2007 budget request for each of these 

programs. The funding levels for education and VR&E support significant increases in staffing, which will allow us to address the growing workload. Although the Loan Guaranty staffing levels will be 

reduced slightly, the numbers are sufficient in light of the program’s 
5

continued operational improvements.

The budget also includes funding for official initiatives that will ensure we have a trained and skilled workforce with access to systems 

and tools that support service delivery.

VA’s budget will allow these programs to improve overall performance and to continue to fulfill our mission of delivering benefits and 

services in a responsive, timely and compassionate manner in recognition of veterans’ service to their nation.

 With that, I would like to transition to some of the slides that we 

are going to be using to help step us through the budget request for 

these three programs if I could, sir.

[The statement of Ronald Aument appears on p. 40]

 Mr. Boozman. Yes, sir. Thank you. Let me ask one thing real quick 

in regard to your statement.

 When responding to the question regarding a decrease in Compensation and Pension Full Time Employees (CPFT) before the full 

Committee last week, Under Secretary Cooper said he would look at 

moving the proposed additions around. Is that still the VBA position? And if so, what will be the effect on the business lines that we 

are going to be discussing today?

 Mr. Aument. I understand that there was some concern when Admiral Cooper provided that response in the overall full Committee 

hearing. I do believe he was largely referring to moving some of the 

FTE around within the three programs that make up the Compensation and Pension business line. In particular, he was referring to the 

compensation program, pension program and the burial program. I

think if you look at that carefully, you will see that while there was 

some decrease in the FTE, direct FTE supporting the compensation 

business line, there was also a corresponding increase in the pension 

business line.

It will be our expectation that any type of changes in budget execution would be largely within those three particular business lines.

Clearly, the workload and workload conditions as we approach the 

actual budget year would dictate final decisions. But I do believe that 

was what he had in mind largely when he made that statement.

 Mr. Boozman. Thank you.

 Mr. Aument. First slide please. The format that we are going to 

be using today as we go through each of the three programs would be 

pretty much alike, similar in nature. We will be looking at the programs, program highlights within each of the three respective programs, focusing on program highlights, workload, performance and 

initiatives.

 I would like to begin with the education program.

 For the top line, you can see the total obligations that have been estimated for these programs, 2005 actuals, $84 million, arising to $88 
6

million in the current year, 2006, and rising again to $92.3 million for 

the budget year 2007.

Those will support a growing staffing level in the education program, which we divide into direct staffing and indirect staffing. Indirect staffing consists of a variety of management and overhead staff 

that are allocated across VBA programs on a basis that tracks proportionally against the budget and overall staffing levels. So roughly 

around 14 percent of our staffing level is allocated to management 

and oversight. That also includes information technology.

 The information technology, as I am sure you are aware, Mr. Chairman, is a little bit of an unknown today because we are in the process 

now of moving towards the so-called federated model in which the 

information technology staff are going to be divided into operation 

and maintenance staff and development staff. The way the model is 

foreseen is that the operations and maintenance staff would be transferring out of the administrations and will be under the direct control 

of the department’s CIO. So there will be some staffing adjustment 

as we actually move towards implementing that model within the 

department.

 The budgets that you look at for the dollars for 2006 and 2007, 

both years, already reflect the movement of some of the nonpayroll 

-- in fact, all of the nonpayroll dollars have been moved out of the 

administration’s appropriation accounts and into that of the CIO.

So it is very difficult in some cases on a dollar-for-dollar basis trying to compare 2005 to 2006 and 2007.

 Mr. Boozman. With the additional 46 FTE, how many direct service folks are going to come out of that number?

 Mr. Aument. The -- take a look at my -- 

 Mr. Boozman. Educational Service folks.

 Mr. Aument. I believe we have, for 2007, we have I believe 34 FT.

 Mr. Boozman. We have been joined by Mr. Evans, the Ranking 

Member on the full Committee.

 And do you have anything that you would like to open with, Mr. 

Evans.

 Mr. Evans. I just wanted to defer to your judgment on the record 

and look forward to working with you on these matters that we have 

been working hard to obtain. We want to make sure we give the best 

possible to our veterans, again, within the budget. And I just yield 

back my time with it being a complete record, if that can be put in 

place in the record, we appreciate it. 

 Mr. Boozman. Without objection. And we appreciate having you 

here. We appreciate your hard work on behalf of veterans. Do you all 

have any questions about this particular slide?

 Okay.

 Mr. Aument. Move on to the next slide. Discuss briefly the workload we estimate in the upcoming budget year for the Education Pro-
7

gram.

As you can see, first of all, there have been some very, very heavy 

increases in workload that took place between the years 2000 and 

2005. We believe that, in part, that reflects the improvements in the 

benefits program for the education program. The increases recently 

in the Montgomery GI bill program that took place a couple of years 

ago, we believe, are largely responsible for the increase in workload.

 Going into the budget year 2007, we do not foresee the same level 

of increase that we have experienced in years past because we do 

believe that there is some leveling of that change that went along 

with the benefits improvements. Nonetheless, as we continue to have 

more service members making the transition from military to civilian 

status, we continue to see high usage of the educational benefits.

We also expect to see a growing use of the new chapter 1607 benefit 

that we applaud. We believe that this is a vast improvement in the 

benefits that are made available to guardsmen and reservists, really 

reflecting the different role that they have been asked to play in support of our nation.

Again, we do expect to see additional workload increases associated 

with that program.

 Ms. Herseth. If I might interject here because I was going to ask if 

the VA had a position about the effectiveness for the new benefit for 

the guardsmen and reservists, under chapter 1607. And it sounds to 

me that you feel that it is a good program as it’s been implemented 

thus far, very effective in meeting some of the unique needs. 

Can you tell me, of the pending education claims of, I believe, just 

over 100,000, do you know how many come under chapter 1607?

 Mr. Aument. We believe that we probably have around 12,000 of 

those claims pending. It was really only in December of 2005 that we 

actually completed the arrangements necessary with DOD to allow 

us to begin making payments under chapter 1607 and we actually 

began making some payments very late in the month, in December, 

and we have been making them strictly on a manual basis while we 

have been waiting to stand up our automated payment system.

 That will be installed this weekend, this coming weekend, and it 

is our expectation that we should quickly work through the backlog 

of those claims. And Dennis tells me 3 to 4 weeks; I am confident we 

can do it in 2 to 3 weeks.

 Ms. Herseth. I am pleased to hear that. And so just one more 

question to interject as it relates to this slide. You may not have 

been finished with the summary of what you wanted to provide in 

testimony, which we certainly want you to go back to. But in addition to the increases in the FTEs, and I am glad that your response 

to Chairman Boozman’s question about Admiral Cooper’s testimony 

and how the increases in the FTEs in certain areas hopefully won’t 

be juggled in a way that minimizes what we hope to accomplish with 
8

that increase, both in the Education Service and within VR&E, but 

do you have, in addition to the increase in the FTEs as well as the automated payment system for the new program and perhaps improvements in the payments made to other Education Service programs, 

what else, what is the rest of the strategy to deal with the pending 

claims that are -- are there any other aspects to that strategy you 

could describe to us today?

 Mr. Aument. We believe certainly the quickest way to actually 

tackle the backlog, the existing backlog, is through employment, by 

adding new staffing resources to the program. Within the Education 

Program, we believe that, as distinguished from the compensation 

pension business line, we can typically make a new hire productive 

in a 6 to 9 month time frame, so that new staffing, resources come 

into this program, have really measurable effect relatively quickly in 

comparison to the compensation and pension business line.

 For some more midterm initiatives, technology -- typically is a longer-term solution and takes some time to actually bring from concept 

to fielding and actual application in production.

 But in the meantime, you will note that our budget contains an employee certification initiative that we plan to apply to the Education 

Program. We think that this can help ensure a certain level of professionalism among our workforce and, in addition, our commitment 

to invest in training and training tools in support of the educational 

program.

 Mr. Boozman. On the slide, increases as a result of enhanced outreach, what would be an example of that? Just out of curiosity, what 

are we doing in that regard?

 Mr. Aument. Largely, it is. I will turn to Dennis. There are a 

couple of strategies for outreach. There is a direct-contact strategy 

where these are included in many of the transitional type briefings 

that we provide to transitioning service members.

Last year, we conducted nearly 8,200 separate briefings and briefed 

over 325,000 transitioning service members, including members of 

the Guard and Reserve. And Dennis, step in here. But we also have 

some direct mailings that are provided to transitioning service members both before they leave the service and shortly after departing the 

service as well.

 Mr. Douglass. Yes, sir. About 12 months after an individual comes 

on active duty, they actually receive the first of a series of mailings 

from VA in partnership with DOD through the Defense Manpower 

Data Center. It basically is an introduction to the Montgomery GI

bill, which the service member has agreed to participate in by having 

his pay reduced. At the 24-month stage, we also send another mailing again merely reminding him or her that they have an important 

benefit that can be used, strictly speaking can be used at that 24-

month stage while they are still on active duty. They tend not to hap-
9

pen that way of course. It tends to wait until they are released from 

service. Then again, about 6 to 9 months before they are scheduled to 

separate -- we have another mailing of a more detailed brochure. It 

gives them a lot more information on eligibility requirements, things 

they need to know to be prepared for that transitioning period.

 We know that many of them will not seek education right away, 

but we want that information to be in their hands as they transition 

so that they can make those important decisions.

 After separation, about 90 days to 6 months afterwards, they get 

another mailout with veteran status that basically reiterates all of 

those things that we have said up to that point.

 Mr. Boozman. Very good. Thank you.

 Ms. Brown-Waite has joined us. Do you have an opening statement 

or anything you would like to -- 

 Ms. Brown-Waite. Mr. Chairman first of all, I want to thank you 

for holding this Committee hearing today, and it is very timely. As 

you know, I have the most number of veterans of any member of Congress, and I like to believe that they moved into the district because I

fight so hard for veterans and for their needs.

 We have great opportunity here with thousands of soldiers returning from Iraq. And I just got back from a visit to Iraq last week, Iraq 

and Afghanistan, where the members of the military are returning 

back from and also other parts of the world.

 And so, I believe that it is essential that Congress assist them in 

making the transition from the front lines to the home front.

 There is no doubt that the VA will see a surge in the number of 

individuals seeking assistance in education, vocational rehabilitation 

and home loans. Given this increased workload, I believe it is essential that we need to continue to direct funds and resources to the 

area of need while we are also bringing greater efficiency and better 

use of our resources.

 I look forward to hearing the information today. And I apologize 

for being late. I had some folks visiting from Florida.

 Once again, I certainly want to thank the Secretary for being here 

today and look forward to the continuation of the comments. I do 

have a question later, but I think I will let you go through some of the 

rest of the presentation.

 Mr. Boozman. Very good. Thank you.

 Again, the way that we are doing this is, as the slides come up, if 

you have a question at that time, feel free to -- this is going to be very 

informal from that respect and a little bit different from perhaps how 

we normally do our hearings. So Mr. Aument -- 

 Mr. Aument. May I move on to the next slide, Mr. Chairman?

This will briefly provide you some of the performance statistics that 

we consider the most critical for the educational program.

 The average days to complete original claims for 2005 was 33 days. 
10

We predict this going down, estimate it going down by the end of 2006 

to an average of 27 days, and with the resources requested in the 

2007 budget, we believe we can bring that down to 25 days.

Currently, we are running at around 39 days this year-to-date. 

The Educational Program is a cyclical program that typically sees 

spikes in the timeliness based upon the peak periods of educational 

enrollment. But we believe that, as we bring more staff on, make 

those staff more productive, we will be able to bring that down to an 

average of 27 days by the end of the year.

 For our supplemental claims that we ended the year 2005 at an average of 19 days. We expect to be able to bring that down to 13 days 

in 2006 and to 12 days in 2007. 

 Mr. Boozman. I am sorry. Now, on the chart, we have targets. I

am not sure if you answered this or not, but what are the, for real, the 

current performance?

 Mr. Aument. I think I mentioned that as of the end of January, the 

original claim timeliness was running at 39 days.

 Mr. Boozman. 39 days?

 Mr. Aument. Yes.

 Dennis, how about supplementals?

 Mr. Douglass. 21.9 days for supplemental claims through the end 

of the month of January.

 Mr. Aument. As we have mentioned, that is clearly not what we are 

hoping for but we do have an annual cycle in the educational claims 

processing, and typically this is the high point of the year.

 Mr. Boozman. How would that compare to a year ago with the -- not 

the target, but the actual -- what was going on a year ago? I am just 

trying to figure out if we are moving in the right direction.

 Mr. Aument. 36.6 a year ago; 19.8 for supplementals.

 Mr. Boozman. And what would you say, again, you mentioned the 

outreach efforts, which I think are great; you know, all of the things 

that you are doing to try and get people aware of their benefits. That 

is so important. But how would we compare -- what is the usage now 

compared to a year ago? Do we have any figures along that line?

 Mr. Aument. Let me clarify the question. You would say the usage 

figures through educational benefit or our outreach figures? 

 Mr. Boozman. Well, again, it looks like we have lost a few days. 

What I am trying to do is figure out, is that due to the fact that we 

have more people trying to access the benefit now than we did a year 

ago?

 Mr. Douglass. Through the end of the first quarter, we are about 

on pace with where we were at the end of the first quarter last year.

 I think the reason that we are seeing the slight bump up in timeliness is because, during October, November and December, not only is 

that generally our highest point, but with the additional staff that we 

got last year, we worked down some of the older cases. Those older 
11

cases will be reflected in a higher average processing time, until they 

are worked through the system.

I believe we’ll see significant declines, improvements in the timeliness through the rest of the year, because we moved a large number 

of those older cases out of the system.

 Ms. Herseth. So the next peak period is going to be June, July, 

August, getting ready for September enrollment.

 Mr. Douglass. Actually, we will probably see a very small spike in 

the April-May time frame for spring and summer enrollments, and 

then it will be very small. And then in the fall, September-October, 

we will see another peak period.

I would expect that peak, however, not to be as daunting as the last 

fall enrollment was because we will have had more staff and more 

proficient staff by that point in time.

Mr. Aument. If I could add. Much of last year, 2005, we were having a hiring freeze in most of our major programs.

 In 2006, we are having, it has turned out, with the help of the Congress and of the department, a much better year than we were predicting this time last year.

 And as such, we really had pretty tight hiring controls throughout 

the year, and it was really not until the summer that we gave the 

education service license to go out and hire.

 Now, with the additional resources this year, we have increased 

their staffing levels yet again, and probably more importantly for the 

directors at our regional processing offices, we have given them a ceiling that they can continue to hire against so that, as opposed to waiting for permission from headquarters to go out and hire, they have 

been given authority to maintain constant staffing levels throughout 

the year. So, as they have people coming off the rolls, they can quickly backfill those individuals.

 Ms. Herseth. I appreciate the kind of recapping where we were 

last year at this time because I remember specifically stating the concern to Admiral Cooper because we had this new program for Guard 

and Reserves, and there was a reduction in FTEs at this time last 

year that was proposed, and we expressed concern about that. So 

I do hope that Mr. Douglass and Mr. Aument, that the trend of the 

numbers at this stage is reflected in part because of the older cases 

that we are working down, but perhaps you could provide to the Subcommittee a comparison from last year to this year in that April and 

May time frame as well as the other spike that we anticipate seeing 

in the fall just to give us a little bit of assurance there.

 Mr. Aument. We will be happy to do that.

[The information is found on p. 91.]

 Ms. Herseth. Thanks.

 Mr. Boozman. Ms. Brown-Waite.
12

 Ms. Brown-Waite. Thank you, Mr. Chairman. I do have a question 

for the Secretary. Back in, I think it was November there was an article in the Miami Herald about the backlog of those some 8,000 who 

have applied for the new funding under chapter 1607, and I also had 

a constituent contact me.

 Where are you in working on that number of backlogged applications? I actually had a constituent who virtually was at the edge of 

bankruptcy because he had proceeded, enrolled in college and just 

obviously did not have that money.

 Where are you in working on that backlog? And you may have already covered it, and I apologize if you did.

 Mr. Aument. I would be happy to clarify that, Congresswoman. 

It was not until mid-December that we actually were in a position 

where we could legally make any payments whatsoever. On December 15th, we signed the memorandum of understanding with the 

Department of Defense that actually positioned us to begin making 

some payments on this new benefit.

 By the end of the month of December, we had made some payments. We are making payments strictly on a manual basis while 

we have been waiting to stand up the automated payment system 

needed to process those claims on a routine basis.

 As of today, we have around 12,000 chapter 1607 payments that 

are pending. We have made payments on something under a thousand. Over this weekend, we have a scheduled system install that 

will allow us to bring up a new payment system for chapter 1607 

payments. And we expect to be able to work down the backlog in its 

entirety in three to four weeks.

 Ms. Brown-Waite. If I may follow up, have you been in touch with 

the veterans to let them know what the problem is, or has it just been 

if they contact you?

 Mr. Aument. It has largely been if they would contact us. As far as 

the individual veterans, the 12,000 veterans we have not been doing 

any targeted outreach that I am aware of.

 Ms. Brown-Waite. Can you turn your microphone on?

 Mr. Douglass. I am sorry. Thank you.

When the reservists filed their first claims with VA, we made an 

initial contact with them basically to let them know that, number 

one, we had their claim; number two, that we were awaiting some of 

the legal issues that Mr. Aument mentioned; and three, as soon as 

those things were cleared, we would begin making the payments.

 We did not contact them routinely after that unless they contacted 

us.

 Ms. Brown-Waite. Thank you. And will you report back to the 

Committee on that, when this weekend is over, so that we know people are being taken care of properly? Mr. Chairman, if you would 

indulge me, I think that would be very appropriate. Every one of, 
13

every member of Congress has people in that cachement group who 

are concerned.

 Mr. Aument. We will be happy to do that.

[The information is found on p. 92.]

May I move on to the next slide?

 Mr. Boozman. Yes, sir. 

 Mr. Aument. Education initiatives. I believe I had already mentioned the first initiative, the skills certification. This was an initiative that we began in the compensation and pension business line 

that we believe is very, very important and that will help us ensure 

a certain level of professionalism. We believe the staff needs to have 

some sort of confidence that they have attained this level of professionalism.

 We are going to be investing in the educational program for skills 

certification for the staff who process claims and staff within the educational business line in the 2007 budget.

 The second initiative is one that I regret that I am not able to provide greater information that you had requested. The information 

technology initiative that we call TEES began as the Education Expert System. This is an umbrella program that currently we have 

funding for in 2006 and 2007 to take on a limited component of the 

overall program as it has been envisioned.

 As fully envisioned, we would be incorporating more rules-based 

processing into the educational program that we believe holds great 

potential for efficiencies.

Not only efficiencies, but, you know, qualitative improvements in 

the form of accuracy of payments, as well.

 There are three applications within the education business line 

that we have funding to proceed with for years 2006 and 2007.

 And the, you know, the program as currently envisioned would include fielding each of those three applications before the end of fiscal 

year 2007.

 I could state two other initiatives in the information technology 

area that we are looking at for the education program. I believe that 

Chairman Buyer in the full Committee hearing was talking about issues for funding for code conversion. Our departmental CIO is very 

interested in this program. And this would give initiative to expedite 

or exit off of some of the department legacy systems into a more modern corporate processing environment.

 Ideally, that ideally would position us to make quicker improvements to the programs supporting applications and by positioning us 

in a more modern information technology environment.

 We are looking at a proof-of-concept program that we would be like 

to be able to undertake this year that, if successful, would provide us 

for a pathway to apply to those systems that remain on our legacy 
14

-- on the legacy systems, the benefits delivery network that you may 

have heard of, the BDN network. 

 The program that has the largest number of programs that continue to reside in that environment without an exit strategy is our 

education programs.

 If the code conversion, proof of concept proves successful, we are 

very optimistic that it will help expedite our exit strategy from the 

legacy systems.

 The other component that we are looking at this year is what we 

call TIMS, which is the image management system that supports the 

educational programs.

Currently, the infrastructure issue for TIMS is that there are separate imaging systems and databases that are in place at each of our 

four regional processing offices. The investment that we are looking 

at in this current year would help move those into a single database 

that would enable us to move work around more freely among our regional processing offices so that as any type of regional backlog would 

develop, we would be able to redistribute some of the workload and 

balance the workload amongst those four offices.

 Mr. Boozman. Very good. Before we move out of the education, the 

partnership for veterans, Ed has proposed the total force GI bill concept which Chairman Buyer and I think all of the Committee is very 

interested in looking at.

 I guess, you know, have you all looked at the proposal and had any 

discussions with DOD in regard to that, the concept, and I guess, 

what we would like to know are, besides funding, what other big issues do you see kind of lurking out in that regard?

 Mr. Aument. Yes. As you are aware, the proposal first originated 

from within the Secretary’s Advisory Committee on Education. And 

so we have looked at that. We have actually taken this proposal to 

the Joint Executive Council that forms the deliberating body between 

the Department of Veterans’ Affairs and Department of Defense. We 

have had some presentations before that body. And they have taken 

it on as a work group to try and help develop the concept. There are 

going to be a lot of challenging issues to it in addition to the funding. 

And I am going to ask Dennis to expand upon those somewhat. Probably the challenge that is one of the more formidable challenges to 

this, is the fact that it envisions all of the applicable law being moved 

into Title 38.

 As you are aware, some of the programs today are in Title 10 under 

the jurisdiction of the Department of Defense, so that those proposals 

some will have legislative challenges towards actually effecting that.

 But there are also other types of challenges, too, and we are trying 

to normalize some of those programs where the chapter 30 involves 

a service member’s contribution, whereas the other programs do not 

involve contributions from the reservists. So you have to figure out 
15

some of the steps that would be used to try and bring those into conformity as we move forward.

 We do believe that it is very promising and are pursuing this in all 

sincerity.

 But, Dennis, maybe you could speak to some of the other challenges 

involved there.

 Mr. Douglass. Thank you. I believe the working group is in their 

early deliberations, and they have met five times since the middle 

of October and in fact are scheduled to meet again next week, next 

Thursday.

 But probably the single most daunting challenge is the question, 

can three separate programs with three distinct purposes serving 

three often separate but sometimes similar populations be seamlessly melded into a single program? And that has probably been the 

single largest challenge for the group to work on.

 Another one, and probably related somewhat to that, is should a 

single program offer all of the best features of any one of those other 

programs?

And I will give you one example.

 Several years ago, I guess about 3 years ago, Congress enacted 

what we call buy up, where a service member has an opportunity to 

actually increase his pay reduction by up to $600 and, in return, get 

up to $150 a month added on to his basic benefit. Now that is only 

available under the Montgomery GI bill active duty program, and so 

you raise the question, should that be in a single program that serves 

all of those constituencies?

 Those are really the two largest issues. And we have talked about 

other smaller issues. But those seem to be the two, the two biggest 

ones, other than, where is the funding coming from, and what will a 

program like this actually cost?

 And we haven’t even gotten into those cost estimates yet.

 Mr. Aument. Can we move on to the VR&E program?

 Mr. Boozman. Yes, sir.

 Mr. Aument. I would like to touch on some of the program highlights as we have done with education.

 As you can see, the total obligations are predicted to rise from the 

2005 actuals of $133.5 million to $138.8 in 2006 and $149.3 in 2007.

We are also anticipating some significant staffing increases, particularly in 2007, when the overall staffing level is going to be rising 

by around 130 FTE, between both direct and indirect staffing.

 The positions that we envision will be added during 2007 fall into 

three separate categories. The largest number of them we expect will 

be in the new employment counselor position, that is associated with 

the new five-track model to employment.

 The second most prevalent category would be in counselors. And 

lastly, we would be adding additional contract specialists to manage 
16

the administrative contract work of the VR&E program.

During 2005, this program expended quite a bit on contract dollars. 

We spent over $26 million in 2005 on various contracts.

 In some cases most of those are services, of course, and we employ 

a number of contract counselors. Some of our offices utilize that authority more than others.

 But then there are also additional support services that we purchase that support the vocational rehabilitation programs of the individual enrollees.

 Mr. Boozman. How many rehab counselors do you think would be 

hired out of the 130 FTE?

 Mr. Aument. We would probably be able to give you a better number as we approach the execution cycle. As we said before, the largest 

number of FTE we envision in this hire would be in the employment 

counselor position. And that, again, is in support of the five-track 

model.

Next slide. Workload.

 We are predicting in 2005 a two and three quarter percent increase 

in the workload to just over 100,000 participants. And we are predicting another 2.5 percent increase in 2007 bringing the total to over 

102,000 participants. I believe it almost goes without saying that one 

of the factors driving the workload is outreach. As you are aware, 

we have individuals stationed at each of the MTFs where most of the 

more seriously injured returning service members first go for treatment. We believe that outreach has been very successful in drawing 

new individuals into the program.

 For those of you who watched “60 Minutes” over the weekend, 

there were two very compelling stories of two young women. There 

was one with traumatic brain injury out of the State of Ohio whose 

aspirations are to become a social worker. And the other was an amputee who lost one leg at the hip who hopes to become involved with 

prosthetics, enter into that entire business line.

 I am pleased to say that both of those individuals are participating 

in VR&E program. And it really makes me feel good to be able to 

have programs to help those types of individuals.

 Of course, that brings us to the issue that we do have more seriously injured veterans because of the actions going on today in the war 

against terrorism. So that is contributing to the expected workload 

increase in the VR&E program.

 Ms. Herseth. If I might, at this point, I did see the 60 Minute segment. I was very heartened by it, of course, and even asked a member of my staff to get a hold of Jessica, who is the young woman who 

suffered from the traumatic brain injury, because we have a National 

Guardsman who is receiving care in the same facility that she did in 

Minneapolis. And I want to follow up with her on -- I think she was 

given a 2 percent chance. And she was one of the most articulate 
17

individuals I have seen interviewed for a long time.

 And, I do have a question though about the follow-up. I am glad to 

know that there is this clear attempt to reach early, those veterans 

who are severely disabled in their service.

And I don’t know if you have examples from the folks that were 

interviewed in that segment, but what is the follow-up once they are 

back in their communities, back with their families? Especially in 

my part of the world, how are we getting to some of the folks that may 

be in more rural, more sparsely populated areas where the difficulty 

of travel or at least the infrequency of travel to say Sioux Falls, South 

Dakota, or Minneapolis, Minnesota, poses a particular challenge?

 Mr. Aument. Well, that is a very good question. I would like to ask 

Judy Caden in a moment to follow up on that, but I do know that once 

we have initiated the seamless transition initiative and we are making a better organizational effort, making sure that we have both the 

VBA and VHA staff stationed at the major MTFs. Admiral Cooper 

made a very strong statement to all of our regional office directors 

that it is our goal to try and track these most seriously injured service members as they leave the major MTFs and make a transition 

to their communities, and we are making every effort to try and follow those individuals into the community. And Admiral Cooper has 

charged each of our regional office directors that, when we become 

aware that one of these seriously injured service members is now 

returning back to their community, our regional office directors are 

expected to call them immediately. Because we realize that not all of 

these individuals are actually ready for VR&E services while they are 

at these facilities, and people need some time to come to grips with 

the change in their lives.

And so it is our expectation that we do retain that type of contact, 

whether it is in an urban or in a rural environment.

Judy, maybe you can add to that.

 Ms. Caden. I will add one thing to that part of it. We did put a 

requirement that, when contact is made with a potential VR&E participant, if they don’t express interest in the program at that time, 

because they are still going through their medical rehab and they are 

not ready, that within a year we have required the regional offices to 

go back again to the person. At that point, they are at home; hopefully they have made it through the medical part of their rehab or it 

is not as intense, and we again talk to them about the VR&E program 

and try and draw them into it.

We also, you know, have VR&E staff at the 57 regional offices. And 

we have about 120 outbase sites also because we do require face-toface contact with the veteran. And we also use a lot of contract counselors which would help us in the rural areas especially.

Ms. Herseth. I appreciate the information. Just one suggestion, 

and perhaps it is being done at some of the regional offices, if there is 
18

that requirement for additional contact within the year, to certainly 

try to bring in some of those service members who have participated, 

have decided to participate in the VR&E program to make more sort 

of a peer-to-peer contact about the benefits of the program.

Ms. Caden. We will look at that. Thank you.

Ms. Herseth. Thank you.

Mr. Boozman. I just have another question that is related to the 

workload. When you look at the San Diego office, as far as determining entitlement benefits, the range there is 18 days in San Diego; 25 

in Pittsburgh; 183 days in the Washington regional office. Are we -- I 

guess the data seems to indicate that perhaps the resources aren’t 

being spread, you know, evenly to kind of balance that out.

 The IB suggests giving the VBA program directors line authority 

over VA field office directors. I would like to know, what do you think 

about that? When we see those discrepancies, you kind of wonder 

what the deal is, and you know, what is the solution to the problem?

Mr. Aument. First of all, sometimes the numbers don’t really tell 

the whole story just on face value. The Washington regional office, 

for example, I believe is an exception. As you may be aware, one of 

the missions of the Washington regional office had always been to 

process all of VBA’s foreign work, and that applied to compensation 

and pension claims as well as VR& E claims.

 Since then we have moved the compensation and pension workload. That workload has been reassigned out of the Washington Regional Office to our Pittsburgh Regional Office. But they still retain 

responsibility for managing all of the VR&E foreign work out of the 

Washington office. And that poses a lot of unusual challenges. So I 

don’t know that the Washington Regional Office is probably the best 

example when we’re trying to make those one to one comparisons on 

a performance basis. 

Mr. Boozman. Lincoln, Nebraska, is 144 days.

Mr. Aument. Going on to say, we do realize that there are some 

disparities in staffing. VR&E, as I mentioned earlier, that the education workload had been challenged over the past year, too, with some 

hiring ceilings. I don’t agree that the solution to this is having sort 

of a stovepipe arrangement from the program office down to the field. 

Our VR&E program director, as does the education program director 

and loan guaranty director, have considerable input into staffing issues and staffing decisions, but I do believe that there is a real benefit 

in having a local director to be held accountable for the success of the 

program. I believe that by having that type of a stovepipe arrangement where you have five separate stovepipes going out to the field 

creates a situation where you have got a director who is sort of a 

building manager that has little or no accountability for the success 

of those programs and has no ability to make any type of local decisions based upon local workload requirements and local conditions.
19

 So I do believe that the model we have today where we have an 

operations component with considerable input coming in from the 

immediate programs and with the programs focusing on policy and 

procedures is the model that we believe is the best model.

Mr. Boozman. Thank you. We can go ahead.

Mr. Aument. VR&E performance, we have some discussion on the 

later slide on the rehabilitation rate, but this is one of the key performance measures for this program.

 One of the things I am going to ask Ms. Caden to discuss -- and 

you will see we take a jump-up in our targets for 2006 and 2007; we 

have got some adjustment there to the baseline that we are measuring from and, in the interest of full disclosure, we will talk about 

that so that there is no confusion about what the numbers actually 

represent.

 But, again, we have been seeing more people rehabilitated through 

the program, we are seeing more veterans that are entering into independent living status, so I will ask Judy to talk about that in further detail.

 We are taking a look at the speed of entitlement decisions. Again, 

we are predicting improvement both in 2006 and in 2007 in this area, 

as we are expecting and predicting improvement in the accuracy of 

our decision-making.

Ms. Caden. First, let me address the rehabilitation rate.

 We have redone the formula for how we are going to calculate the 

rehab rate, and we have added into the calculation something called 

the maximum rehabilitation gains. These are categories of veterans 

that have been participating in the VR&E program, but for several 

reasons have discontinued their participation.

 Many times they will accept an employment position that the counselor did not believe was consistent with their disability limitations, 

but through the work we have done with them, through the training 

they have gotten, some of the job services, they have accepted a position and they are happy with it and they have dropped out of the 

program.

 There is another category of those who are employable, but they 

have, for whatever reason, informed us that they are not going to 

seek employment. Things change in their personal life and employment no longer is their goal at that time and so they discontinue the 

program.

 And then there are others who have worked through the program, 

they are not employed, and they are really not employable but are in 

independent living programs. And they may not finish the program, 

and usually that is because their medical disabilities interfere and 

for physical reasons they no longer participate in our program, but 

we have contributed to increasing their independent living.

 So what we have done with those three categories is neutralize 
20

them, if you will, from the calculation. We are not going to take the 

hit as a discontinue, we are not going to take the credit as a full rehabilitation achieved, but we will neutralize them; and that has caused 

the rate to jump to the current 69 percent. We just think that is a 

more fair view of the work that is being done.

Mr. Aument. Retrospectively, if we were to apply that same formulation to 2005, just for an apples-to-apples comparison, you would 

have seen -- the rehabilitation rate would have been 68.6 percent.

 This provides some of the timeliness statistics as well as to give you 

an idea of the order of magnitude of the program participation.

 First of all, let me state that what you are seeing here is a snapshot 

in time that is giving you the views of the status as of February the 

1st of this year, and that applies both to the average days that have 

been in that status as well as the number of veterans and service 

persons in those various areas.

 Are there any questions on that?

 This is something I know that there has been great interest amongst 

the Congress in our status in implementing the VR&E task force recommendations. First of all, we have actually completed over half of 

the recommendations of the VR&E task force. There will be a few of 

those that at this point, we would not propose to implement, but we 

believe that we are making great progress on the remaining ones. 

 The recommendation that we believe probably rises to the top is 

the implementation of the five-track employment model. That has 

successfully completed, along with the jobs lab, some of the pilot aspects, and we are in the process of nationwide implementation this 

year. We are very pleased and we believe that this is going to have 

a really positive impact upon the program operations on a national 

level.

 There is a study of veterans receiving independent living that our 

staff has undertaken. We are also looking at new employment coordinator positions to have national training for a particular position. 

In the budget request, we have nearly three-quarters of a million that 

has been requested for initiatives to support the program.

 If we can move on to the loan guaranty program. Loan guaranty 

highlights. This is one of the Department’s success stories. We don’t 

always measure success by increasing resources. In this particular 

case, I believe that we can measure some success in the way that the 

program has been able to do more with less year after year. They 

have been making some great programmatic improvements.

 I also believe that this is an area that has been a model for us 

to look at for successful consolidation as well as for some successful 

integration of technology into their operations, and they continue to 

make great strides in that regard.

We can take a look at staffing. As you can see, staffing for this program is relatively flat, actually with a slight decline going into each 
21

year. We do not foresee any type of degradation of the key performance measures in the loan guaranty program through these types 

of adjustments.

Ms. Herseth. If I might, before you go on: So in justifying the 

reduction of the FTE for this program -- and you make reference, I

think in your written testimony and I think you just did in terms of 

operational efficiencies that have been gained through information 

technology -- I guess my first question is, how do you know that the 

quality of service has remained high? And perhaps some of these 

other slides will show us that.

 Second, could you describe in a little bit more detail the technological advances the program has implemented to leverage such efficiencies?

Mr. Aument. I would be happy to. In fact, I am going to ask Mr. 

Pedigo to respond more directly to you.

But I can say right now, much of the staffing of the loan guaranty 

program is devoted in one form or another to oversight. And because 

we are so intimately involved with the commercial sector in our dealings with lenders and realtors, truly much of the staffing there is involved in overseeing the performance of those particular programs.

 But, with that, I will pass it along to Mr. Pedigo.

Mr. Pedigo. Yes, Congresswoman, we have done a number of things 

to ensure that we have a quality control system that provides a high 

level of oversight over the activities that are performed in the loan 

guaranty program.

 We have delegated a considerable amount of processing authority 

to the private sector. We have given lenders the authority to improve 

veterans’ loans, we have given them the authority to make appraisal 

value determinations on VA’s behalf, and, in order to ensure that 

they are properly carrying out our policies, we have several things 

in place.

 Internally, we have a statistical quality control system that measures every aspect of the work that our own staff performs and, for the 

last 3 years running, the overall quality index has been very high.

 We also have a lender monitoring unit, a staff of 13 auditors who go 

around primarily to the large

lenders and perform on-site audits to make sure that they are properly carrying out VA’s policies.

And then, finally, we have what we call a systematic analysis of 

operations, which is required to be performed once a year by each of 

our nine regional loan centers. They have to comprehensively review 

every aspect of their operations and submit a written report to the 

field station director as well as to central office. Those are the main 

mechanisms that we have in place to make sure that the quality remains at a high level.

 You also asked me to talk about some of the information technol-
22

ogy improvements that we have made that have enabled us to get 

the job done with fewer staff. We have made a concerted effort to try 

to provide as many self-service automated systems as we can. The 

first effort in this area was in 2003 when we developed an automated 

certificate of eligibility system which enabled a lending institution, 

whenever they had a veteran come in and apply for a loan, to go 

on the Internet, access this system and, by putting in the veteran’s 

name, Social Security number, and date of birth, in most cases get an 

instantaneous certificate of eligibility. That essentially has replaced 

a manual system that sometimes required 2 to 3 weeks for a veteran 

to get a certificate of eligibility.

 We also have a new automated appraisal system that does a number of things for us. Number one, it allows lending institutions to 

electronically order an appraisal report. Instead of having to send 

in paper documentation, as was previously the case, they can go on 

the Internet, access the system, get the appraisal ordered and, at the 

same time, get a case assignment number.

 This system also permits the appraisal report, once it is completed 

by the private sector appraiser, to be electronically sent to the lending institution and to the VA, eliminating anywhere from 3 to 5 days 

of mail time.

 Those are just some of the systems we have put in place recently.

Mr. Boozman. Ms. Brown-Waite.

Ms. Brown-Waite. Thank you, Mr. Chairman.

 About a year ago I had some complaints from realtors about the 

fact that they steer clients away from the VA loan guaranty because 

there was a problem with the appraisers; and now, if I understood 

you correctly, you are saying you allow the lenders to use their own 

appraisers. But don’t they have to be on an approved list by you all; 

is that accurate?

Mr. Pedigo. Yes, that is accurate. The change that we made with 

the automated system does not alter the requirement that VA controls 

who the appraiser will be on a veteran’s real estate transaction.

 Lenders are now, however, able to access our automated system, 

and that automated system selects the appraiser based on a rotational selection process. So the lending institution has no control 

at all over who the appraiser will be. This is one of our oversight 

mechanisms.

Ms. Brown-Waite. If I may follow up, Mr. Chairman, one of the 

problems has been that in some areas the, quote, “approved appraisers” are limited; and so that is why the realtors have told me that 

they steer people away from the VA loans.

 Have you remedied that? Have you increased the list? Obviously, 

we want to make sure that they are not fly-by-night appraisers, but 

you also may need to look at the number that are available in certain 

areas.
23

Mr. Pedigo. Yes. We have taken some action in the last couple of 

years to address that problem.

 In October of 2003 we embarked upon a 2-year marketing effort to 

increase the size of our appraisal roster by 40 percent, and when we 

completed this in October of 2005, we had accomplished our goal. So 

we now have roughly 1,600 more appraisers on our roster than we did 

back in October of 2003. So we believe that we have substantially addressed the problem where, in some areas, there were not sufficient 

appraisers.

 That doesn’t mean that there aren’t pockets where we still need 

some appraisers, and so we have directed our regional loan centers 

to continue seeking out new appraisers who would be interested in 

doing veterans’ appraisals.

Ms. Brown-Waite. Mr. Chairman, I want to thank the gentleman 

for taking the initiative to increase the number of appraisers, but I

believe I am still told that there are areas where there is a shortfall; 

and I think you need to work toward that. Because I will tell you, I

think veterans need to take advantage of this opportunity, especially 

now that we have increased the loan amount to be more reflective of 

real market values out there. And continuing to make sure that you 

have a good geographic representation -- not that a bank will give you 

a 30-day loan commitment, but if you can’t get an appraiser who is 

approved by the VA, that is why there has been a reluctance to use 

this great program out there.

 And I just simply commend you for taking this initiative and encourage you to continue to look at areas where there is a shortfall.

Mr. Pedigo. We will definitely do that, Congresswoman.

Ms. Brown-Waite. Thank you, Mr. Chairman. Yield back.

Mr. Boozman. Can you all comment on the cost of the Ocwen contract, and I guess there was some concern about them outsourcing, 

off-shoring their cost center.

Mr. Aument. Let me start off, and I will pass along to my colleague 

Mr. Pedigo.

 The Ocwen contract for property management, the outsourcing of 

that operation has certainly been a challenge to our organization, and 

I believe that we are seeing improvements in the business relationship that we have had with Ocwen. Admiral Cooper and I are very 

pleased with the way Mr. Pedigo has managed that. He has been 

holding their feet to the fire where we have been seeing any sorts of 

performance shortcomings on Ocwen’s part, and I think there has 

been some fairly skillful contracting at work there that has the ability to impose penalties where we are not seeing performance, and we 

commend him for the business practices that are employed there.

 As far as the offshore thing, there is a little notoriety that was 

gained there on this offshore component. It is true that Ocwen, we 

understand, does have some back office functions where they employ 
24

services from India. We understand they are largely in the accounting area.

 But as far as the call center goes, let me make it clear that no 

veteran is going to be placing a call that is referred to any offshore 

call center. This is largely within the industry. And I will defer to 

Mr. Pedigo on that issue, too, but I do believe that there should be no 

mistaking that no veterans’ calls are being directed for any purpose 

to any offshore call center.

Mr. Pedigo. I would just expand a little bit on the cost issues.

 As Mr. Aument said, we do have a pretty aggressive oversight program in place. We set up a unit that is located in Nashville, Tennessee, where we have 19 auditors whose only job is to monitor the 

contract that we have with Ocwen Loan Servicing, and they review 

every payment voucher that is submitted by Ocwen. And there are 

thousands that are submitted each month. 

They also do field inspections of properties that Ocwen’s property 

managers have inspected for us to make sure that they are doing adequate inspections. They also conduct quarterly audits of the Ocwen 

financial records to make sure that Ocwen is dealing with us in an 

even-handed manner.

 We do believe that we have a very good feel for how they are operating. At the present time we are in the process of trying to put 

pressure on them to improve in certain areas that we are not totally 

satisfied with, and we will continue to do that as we move forward.

Mr. Boozman. You mentioned -- and, again, this is kind of off a little 

bit, but you mentioned the fact that through contracting and things, 

you are trying to hold their feet to the fire. And I am not suggesting 

that they have done anything wrong. We do have instances where 

people do things wrong in just the size and scope of the agency.

Do we need to -- do you feel like there is sufficient law in place to 

give you the tools that you need in dealing -- and again, this doesn’t 

have anything to do with them, but when you run into situations, do 

you have all the tools in the toolbox that you need to deal with people 

that you are having a tough time with or people that blatantly aren’t 

doing what they are supposed to do?

Mr. Aument. I believe that we do. I believe that there has been 

some skillful contracting involved in establishing the Ocwen contract 

on that, and I believe that there are plenty of tools there, and arrows 

in our quiver, I believe, to deal with this. Which is not to say that 

we have not learned how the contracting in another iteration can be 

strengthened, because this was all rather novel to us. We had gone 

into this for the first time, so I think we found areas where we can 

have even tighter contracting in the future. But I believe the current 

repertoire of tools and remedies is probably adequate for our needs.

 Keith.

Mr. Pedigo. I would agree with that.
25

Mr. Boozman. Thank you.

 Go ahead.

Mr. Aument. Over 150,000 loans guaranteed in 2005, let me reiterate that this was something that was a little bit of an eye-opener to 

me when joining the Veterans Benefits Administration. And, really, 

the real workload of our loan guaranty office, it is difficult to measure 

in the number of loans that are guaranteed because that actually is 

something that is largely conducted within the private sector, so that 

is probably not the best measure of workload for us.

 Our workload is really more in the oversight area, and the more 

direct services aspects of our workload consists of the staff that are 

out there helping veterans who eventually find themselves in loan 

situations that potentially are going badly. I believe that the direct 

services aspect of our work is better measured in the assistance that 

we provide veterans who are having financial difficulties in meeting 

their mortgages.

 In loan volume, we are predicting an uptick in 2006 and 2007. This 

is somewhat based upon the economic conditions, but Mr. Pedigo believes that, while we had seen some increase in the past couple of 

years in some of the unusual financing type of loans, interest-only 

types of loans, that there are going to be more and more veterans in 

the future who are going to be looking at some of the benefits of the 

more conventional type of loan offered by VA.

 Again, we are also looking at some of the workloads that are predicted and we have had some near-historic lows in 2005 on the loans 

that are actually going into default. Mr. Pedigo can go into greater 

detail, but as he has described to me, both VA and the industry in 

general tend to see that the 3 to 6-year period that follows the placement of a new loan is the area that many loans actually start to experience problems and, because we had the spike in some of our loan 

business that corresponded with the historic lows in interest rates, 

we have more of our loans that are now entering into that riskier 

period of time.

So it is our expectation that there could be some workload increase 

to be expected in 2006 and 2007 because of that.

 Our loan guaranty performance factor that we have relied upon for 

the last several years, the so-called FATS ratio, which is the Foreclosure Avoidance Through Servicing, is a measure of the loans that 

we are able to help salvage and repair in making sure that we keep 

veterans from going fully into foreclosure.

 We are predicting a little bit of a downtick in that for 2006 and 

2007 for the very reason I was describing and that there is some expectation that there will be a higher percentage of loans encountering 

difficulties during that period of time.

Statistical quality index, I believe Mr. Pedigo addressed that earlier when he was discussing some of the oversight and quality control 
26

measures that we have in place.

 One of the things I would like to discuss before we move on to the 

next slide, that is sort of in anticipation of the next slide, is that we 

have a new system that is going to be going in place, a new initiative 

called the VA Loan Electronic Reporting Interface. The acronym is 

VALERI.

 We believe that some of the new capability that sort of a system 

is going to allow us to move towards some new types of performance 

measures in future years. We don’t have those just yet, but I know 

many of us internally have been dissatisfied with the FATS ratio as 

our sole measure of performance for the loan guaranty program.

 The loan guaranty program employees themselves feel that way 

and we believe that, when this new system is in place, we will have 

greater options for developing what we believe are going to be very 

meaningful performance measures for the program, and we are very 

much looking forward to that.

 Lastly, the one initiative that we have on the table today for the 

loan guaranty program is this VA Loan Electronic Reporting Interface, which is not strictly a technology initiative as much as it is a 

business initiative: I am going to allow Mr. Pedigo to go into greater 

detail on it. This is part of our overall loan application redesign process that involved some rule-making that was completed last year. 

This is the system that helps complement some of the changes made 

through the rule-making procedure.

 Mr. Pedigo. We have been assisting veterans who encounter financial difficulty for many years, and this is the part of the loan guaranty 

program that requires the most hands-on treatment of veterans. For 

example, last year we made 301,000 phone calls to veterans whose 

loans were seriously delinquent, and during those calls we offered financial counseling. We gathered information on the veteran’s financial situation, and in many cases interceded on the veteran’s behalf 

with the lender. We set up repayment plans last year that resulted in 

almost 9,000 loans that were destined for foreclosure, being brought 

current.

 We have been using the same policies and the same system for the 

last 8 years to administer this part of the program. Four years ago 

we decided it was time to take a comprehensive look at this process 

to see if there were ways that we could do things better, and so we 

embarked on a formal business process reengineering initiative that 

resulted in a totally new way of doing business. That new way of 

doing business is included in the 96-page set of regulations that we 

expect to finalize very shortly.

 When we developed these new policies, we also decided that we 

needed to develop a new automated system to overlay the new policies, a system that would enable us to do a better job of serving veterans who encounter financial difficulty. That is the VALERI system 
27

that Mr. Aument referred to.

 At the present time we are working with Fidelity National Financial, which is a very large company headquartered in Jacksonville, 

Florida. This company has an automated system that serves over 50 

percent of the private sector servicing industry; and we have asked 

them to take their present servicing platform, build some VA-specific 

interfaces, and then allow us to pay them a service fee once that system is completed, in order to utilize this system.

 The system will give us the ability to get involved with a delinquent 

borrower’s loan at the 31st day of delinquency; presently, we do not 

get involved until the 90th day of the delinquency. It will also permit 

us to move electronically the workload that we have at any one of our 

nine regional loan centers to another regional loan center, virtually 

overnight. It will give us the ability to have almost real-time access 

to private servicers’ databases; presently, we have no access. The 

only information we get on how the servicer has handled a veteran’s 

loan is when they send in a paper copy record of how they have serviced that loan.

 So with this new system, we will be able to go in when we know 

a veteran’s loan is delinquent, look at how the servicer has handled 

that loan, and then determine whether we need to get involved to 

supplement the servicing on that veteran’s loan. Our expectation is 

that in March of 2007 we will have the finalized regulations, we will 

have the system ready to roll out, and we will be able to begin operating in this new and better environment. 

Ms. Herseth. If I may, Mr. Chairman, just to wrap this section 

up. I appreciate the overview, as well as, Mr. Pedigo, what you just 

explained that will allow all of you to get involved earlier to again 

advocate on behalf of the veterans and proactively find ways to bring 

those loans current by getting involved much earlier in the process.

 My last question just relates to the ongoing challenges we face in 

the Gulf region. Can you provide an update for us on VA’s efforts 

to support the Federal Government providing housing assistance 

to folks in Louisiana, the whole gulf coast who may have lost their 

homes due to Hurricane Katrina, who may be eligible as veterans for 

these programs?

Mr. Aument. I will be happy to start that off and pass it along to 

Mr. Pedigo.

 As you are probably aware, we have become involved very early 

in the process, when the Federal Government was trying to work its 

way through how we could help provide housing to displaced persons 

in the gulf region. We at VA were part of a group that had been 

formed by the White House and included FEMA and the three Federal agencies involved in housing: HUD, Department of Agriculture, 

and VA. We had to quickly take inventories of some of our available 

housing stocks, and we reported on those immediately to the groups 
28

that were spearheading this effort. 

 I guess we were very sympathetic to FEMA. At this time we realize 

that, when we had taken a look at what type of housing we had available that was considered to be habitable housing -- that would mean 

that it is, ready and in move-in condition for families -- in some cases, 

some of the housing that we have that we actually own still have 

veterans or other borrowers residing in the housing under adverse 

possession. They have not yet been moved.

 But we had probably under 1,000 single-family dwelling housing 

units that were available in the 11-state area that constituted the 

area of demarcation.

We know FEMA was confronted with the challenge of finding housing for hundreds of thousands of people while we had housing for 

maybe hundreds. So I think that initially they were looking at larger-scale housing solutions.

Since then, we have actually finalized a memorandum of agreement with FEMA. We had a memorandum of agreement that went 

back into the 1980s that we have been operating under that had really grown very stale and was not really reflective of today’s conditions. That was refreshed and signed back in December.

 And in the meantime, we continue to work with Ocwen, the property management contractor, to look at ways that we could make the 

housing available, and trying to look at some of the back-office processes and procedures that we would need to actually execute following a decision to start placing people in housing.

 We are happy to be able to report that just over the past couple of 

weeks, I believe last week, we had signed the first lease with someone 

for a VA property. That was actually in the San Antonio, Texas, area 

where we had a 100 percent disabled female veteran that we were 

actually able to place in one of the VA’s properties in San Antonio. In 

fact, we have been able to assist her with some of the minor adaptations to the housing through the program -- I believe it is the HISSA

program that is managed under the VA’s prosthetics program -- to 

provide some minor adaptations.

 I was just asking Keith on the ride over here this morning about 

other ones. How many additional? Around 61 additional leases have 

been signed.

 So we may be a little bit slow starting on this, but we are happy to 

report that we are being able to put excess housing to good use, leasing to these individuals who are in need of housing.

 One of the things that we have insisted upon that was to be able 

to provide some level of veterans’ preference here so that if you had 

certainly more than a single interested evacuee in any particular VA

property, we would try to provide preference to any one of those who 

was either a veteran or had a veteran family member.

Mr. Boozman. Just a couple things real quickly, and then we will 
29

get you guys out of here.

 How much does the VA collect in loan guaranty funding fees? If 

you don’t have it, you can send it over.

Mr. Pedigo. Over the last 4 full fiscal years we have collected just 

a bit over 2 billion. That is a billion with a “B”, dollars.

Mr. Boozman. Very good.

 One other thing, and this goes back to the voc rehab. The Legion 

and others have recommended training the voc rehab staff at the National Veterans Training Institute. Can you comment on that? Do 

you have a comment about that. Do you think that is something that 

would be beneficial?

Mr. Aument. I am going to ask Ms. Caden to remark on that. We 

do use that as a training source for certain targeted staff members in 

our VR&E program.

Ms. Caden. Thank you.

 We have been using NVTI, the National Veterans Training Institute, in a couple of different ways. In fact, we just completed our own 

training session using their facility last week for the employment coordinators and in helping us roll out the five-track training. And as 

Mr. Aument mentioned, we do accept employment coordinators or, in 

the past, employment specialists and counselors to NVTI for specific 

training in job placement and, also, case management. And we also, 

under our new memorandum of agreement with DOL, have a work 

group that is specifically looking at joint training and how we can 

make that better, using that facility.

Mr. Boozman. Thank you very much.

 Scott, we don’t want you to get out of here. One last thing: The 

budget shows the VA met its statutory 3 percent goal for disabled veterans on small business in fiscal year 2005. That differs from some 

of that data we have heard over the past several months. Can you 

comment on that?

Mr. Denniston. Be happy to.

 Actually, that was a typo; that was an error. Our trends, though, I

am happy to report, are going upward. In 2003 we had 0.4 percent to 

service disabled vets -- I am sorry, that was in 2003.

 In 2004, we were at 1.2; and last year, in 2005, 2.1 percent towards 

the 3 percent statutory goal. So we are going in the right direction.

 We have what we believe is a very strategic plan, required by the 

executive order, and we fully expect to be able to report to you that we 

will make the 3 percent goal in 2006.

Mr. Boozman. Do you have any other things?

 I want to thank the panel. I think that has been very informative 

and I have learned a lot.

 And so, again, we really do appreciate you and appreciate you being so forthcoming, and we look forward to working with you this 

year to -- we have got lots of challenges, but I think the good news is, 
30

we are moving in the right direction. So, again, thank you for your 

hard work.

Mr. Aument. Thank you, Mr. Chairman, Congresswoman.

Mr. Boozman. Okay. Let us have our next panel, if you would.

 Today, we are very pleased to have as our second panel Mr. Joe 

Sharpe, Deputy Director of Economics for the American Legion; and 

Ms. Joy Ilem, Assistant National Legislative Director, who will represent the authors of the Independent Budget.

STATEMENTS OF JOY ILEM, ASSISTANT NATIONAL LEGIS-

 LATIVE DIRECTOR, DISABLED AMERICAN VETERANS, ON

 BEHALF OF THE INDEPENDENT BUDGET; AND JOSEPH

C. SHARPE, JR., DEPUTY DIRECTOR, NATIONAL ECONOMIC

COMMISSION

Mr. Boozman. Welcome, and let us begin with Ms. Ilem.

STATEMENT OF JOY ILEM

Ms. Ilem. Thank you, Mr. Chairman. Good afternoon to you and 

members of the Subcommittee.

 I am pleased to appear before you on behalf of the Disabled American Veterans to comment on the recommendations of the 2007 Independent Budget and the President’s proposed fiscal year 2007 budget 

for the programs under consideration today.

 My statement highlights some of our recommendations for ways to 

improve education, vocational rehabilitation, home loan, and specially adapted housing grant programs. Along with recommendations, 

we include staffing levels, recommended staffing levels to administer 

the respective programs.

Education benefits provided to veterans have served them well 

throughout generations. History illustrates that when our veterans 

have educational opportunities, the entire Nation benefits. Following World War II, veterans using the GI Bill became a catalyst in the 

economic and social development of our country. Today’s veterans 

carry the same potential, and we should grant them the highest level 

of resources possible to reward them for their service and to ensure 

our Nation’s economic vitality.

To improve education benefits, the IB makes the following recommendations to Congress. Remove the restriction on eligibility for the 

Montgomery GI Bill for those who first entered the service after June 

30, 1985; change the law to permit refund of an individual’s Montgomery GI bill contributions when his or her discharge was characterized as general or under honorable conditions because of minor 

infractions; and make education benefits more equitable for National 

Guard and Reservists.
31

 The vocational rehabilitation and education program is responsible for services and assistance to service-connected disabled veterans 

that will enable them to obtain and maintain stable, gainful employment. By helping disabled veterans help themselves, we not only 

serve them, we serve the Nation as a whole.

 Like the Montgomery GI Bill, vocational rehabilitation and education services also have a direct impact on the country’s economic and 

social development. To improve these benefits, the IB makes the following recommendations:

VR&E should develop plans and partnerships to enhance entrepreneurial opportunities for disabled veterans, monitor the progress of 

disabled veterans to ensure rehabilitation is successful;

 Reduce the caseload for managers from the current 145 to 100 cases per counselor to allow closer monitoring of progress; and

 Employ results-based criteria to evaluate and improve services. 

Reviewing adequate staffing levels is essential to an efficient benefits delivery system that is necessary for VA to actual fill its mission. 

We recommend an increase of 149 FTE for education service than 

authorized for fiscal year 2006, for a total of 133 FTE. We recommend an increase of 250 FTE for voc rehab over last year, for a total 

of 1,375 FTE.

 Another recommendation by the IB concerns the specially adapted 

housing program. Veterans who are entitled to compensation for certain permanent and total service-connected disabilities are eligible 

for a grant to adapt their homes for fixtures made necessary by the 

nature of their disabilities. The specially adapted housing program 

provides 50 percent of the cost of an adapted home. Veterans who 

have sacrificed so dearly in the name of freedom have earned any 

measure we can provide to make their lives as normal as possible. 

This program is intended for this purpose.

To improve the specially adapted housing benefits, the IB makes 

the following recommendations:

Congress should increase specially adapted housing grants and 

provide for future automatic adjustments indexed to the rise in the 

cost of living. Additionally, Congress should establish a grant to cover 

the cost of home adaptation for veterans who replace their specially 

adapted homes with new housing.

 With regard to loan guaranty, the IB has just one recommendation: 

Congress should refrain from increasing home loan fees and should, 

as soon as possible, repeal such fees entirely.

 Mr. Chairman, that concludes my statement. I am happy to answer any questions you or members of the Subcommittee may have. 

Thank you.

Mr. Boozman. Thank you.

[The statement of Ms. Ilem appears on p. 68]
32

Mr. Boozman. Mr. Sharpe.

STATEMENT OF JOSEPH C. SHARPE, JR. 

Mr. Sharpe. Mr. Chairman and members of the Subcommittee, 

we appreciate this opportunity to share the views of the American 

Legion on the VA’s fiscal year 2007 budget request for the education, 

loan guaranty and the Vocational Rehabilitation and Employment 

programs. The mission of the VR&E program is to help qualified 

service-disabled veterans achieve independence in daily living and to 

maximize and, to the maximum extent feasible, obtain and maintain 

suitable employment.

 The American Legion fully supports these goals. Therefore, the 

American Legion supports the Veterans Benefit Administration’s recommendations that 149 million is needed to fund the discretionary 

portion of the Vocational Rehabilitation and Employment program in 

2007. Additional FTE requirements, along with an expected 2.5 increased workload of veterans expected to use the program’s services, 

thus requiring additional funding.

 The veterans Home Loan Guaranty program has been in effect 

since 1944 and has afforded approximately 17 million veterans the 

opportunity to purchase homes. The home loan program has been so 

successful over the past few years that it is one of the only Federal 

programs turning a profit. Therefore, the American Legion recommends that the cost savings should be passed on to the veterans in 

the form of a reduction in funding fees, which can add approximately 

8,000 to 13,000 for a first- or second-time buyer.

 The American Legion strongly recommends that the VA funding 

fee on home loans be reduced or eliminated for all veterans, whether 

active duty, reservists or National Guard. The American Legion recommends a discretionary funding level of 127.2 million for the VA

home loan program.

 In the 20 years since the Montgomery GI Bill went into effect on 

June 30, 1985, the Nation’s security has changed radically from a 

fixed cold war to a dynamic global war on terror. In 1991, the ActiveDuty Force of the military stood at 2.1 million; today, it stands at 1.4 

million. Between 1915 and 1990, the Reserve Force was involuntarily mobilized only nine times. Since 9/11 more than 480,000 members 

of the 860,000-member Select Reserves have been activated.

Today, approximately 40 percent of troops in Iraq are guardsmen 

and reservists.

 As the distinctions between the active and reserve forces continues to diminish, the difference between the active and reserve forces 

of the GI Bill should decline accordingly. Therefore, the American 

Legion recommends updating the GI Bill to accept the new security 

realities of the open-ended global war on terror, the recruiting reten-
33

tion issues which arise from it, and the expanded role the Reserve 

Forces play in the modern era.

 The American Legion supports and has a history of advocating increasing education benefits to members of our Armed Forces. The 

American Legion supports recommendations of the Veterans Benefit 

Administration for a funding level of 92.3 million to fund a discretionary program of the education program of 2007.

 Mr. Chairman, this concludes my testimony. I appreciate the opportunity to present the American Legion’s views on these important 

and timely topics.

Mr. Boozman. Thank you.

[The statement of Mr. Sharpe appears on p. 71]

Mr. Boozman. Ms. Herseth.

Ms. Herseth. Thank you, Mr. Chairman. I don’t have any questions, just a couple of comments, and certainly appreciate both of you 

being here today and your testimony in support of the Independent 

Budget, the work that your organizations do that you are here to represent today on behalf of our Nation’s veterans.

Just a couple of comments with regard to the housing adaptation 

grants. I do intend to introduce legislation in the upcoming weeks 

to do precisely what you have recommended as a representative of 

the DAV, that reflects sort of the increased amounts to make these 

adaptations to various homes for our veterans; and certainly we hope 

to get good bipartisan support for that bill.

 Then, Mr. Sharpe, I do appreciate -- I like this idea

of -- a number of us have commented in the past, as I did even, with 

making permanent a pilot program for Native American veterans 

and their housing, that this is an area where it is paying for itself. 

And so I find your idea interesting, to take that and meet the objective that Ms. Ilem mentioned of reducing these fees to veterans over 

time within that program.

 It is also a recognition of the importance of the education programs, 

the timeliness and effectiveness of those benefits to our veterans as a 

recruitment and retention tool in our Armed Forces -- active duty as 

well as guard and reserve.

 So thank you again very much for the work that you have put into 

the Independent Budget.

Mr. Boozman. Yes. I would like to join Ms. Herseth in again complimenting you on the great deal of work that was put into the budget. We do appreciate your testimony, and as you know, the next few 

days are going to be really very busy; we have got our views and estimates for the Budget Committee that we are going to have to have 

the next couple of days.

 I think the Chairman will present his views and estimates to the 

full Committee at a business meeting following Thursday’s hearing, 
34

and the final document will go to the Budget Committee not later 

than the 23rd.

 So what we have heard from you, what we have heard from the 

administration really is very, very helpful, so thank you for your testimony.

 Let me just ask you a couple of things. We have talked about the 

total force GI bill. Would you explain the concept behind revamping 

veterans education benefits in that regard, as you see it?

Ms. Ilem. I would just -- we did do a section in the Independent 

Budget on the GI bill and the revamping of that program, entitled 

Matching Education Benefits to the Service Performed, 21st Century 

Montgomery GI Bill; and basically it offers a three-tier approach to 

the program, with the first being to those similar occurring under the 

Montgomery GI Bill for active duty 3-year rate and addressing those 

folks in the active Armed Forces.

 The second tier recommended would be for nonprior service, direct 

entry into the Select Reserves, and the benefit being more proportional to the Active-Duty rate.

 Then a third tier would be for members of the Ready Reserves who 

are activated for at least 90 days, and they would receive -- the recommendation was that they receive 1 month of benefits for each month 

of activation up to a total of 36 months at the Active-Duty rate.

 And the overall recommendation was just that Congress should 

combine all the Active-Duty and Reserve, Montgomery GI Bill programs and tier benefits according to the service performed just to 

make it a more equitable benefit.

Mr. Sharpe. The Legion feels that, again, with the new realities, 

that it is a better program, and it would help retention if we did something to enhance the education benefits not only for the Reserves but 

also Active-Duty.

 As you know, for a reservist that is activated, they are generally 

paid $297 months, regardless of whether they go to Iraq or not. We 

feel that those individuals who are on active duty, who are in Iraq 

and Afghanistan, who are also paying the price the same as the Active-Duty individual, that they should get some sort of increase in the 

educational benefit. We just think it is a fairer thing to do.

 Also, with the total force bill, with everything put under one house, 

probably the VA, we just think it is much more efficient. Right now, 

it takes 2 or 3 months for an individual to get their education benefits, and as was mentioned earlier, my own reserve unit, we have individuals waiting 3 and 4 months to get their check from the VA; and 

of course, this causes a great deal of hardship on these individuals. 

They are usually young, they are usually married, they have families, 

and to be forced to try and pay this bill out of pocket and then wait for 

payment later is just not the right thing to do.

 And I know the VA has been trying to augment their services with 
35

additional FTE, trying to automate. It is still a time-consuming situation, and I think the total force GI Bill would go a long way to help 

reduce the current situation.

Mr. Boozman. Very good. Thank you.

One final thing: Would you explain the Independent Budget’s position on empowering the business line directors?

Ms. Ilem. Empowering the business line directors. I am sorry, I am 

not going to be able to answer that. I certainly can ask someone that 

has expertise on the subject matter to relay the question. 

Mr. Boozman. Yes, ma’am, that will be fine. We will do that for the 

record then and that would be great.

 Again, that is all I have got.

 Have you got any other things, Ms. Herseth?

 Well, thank you all again very much for your help. We certainly 

appreciate the input, the hard work that goes into the Independent 

Budget; and we thank you for your service and all that you represent.

 The meeting stands adjourned.

[Whereupon, at 11:54 a.m., the Subcommittee was adjourned.]

 
(36)

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