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[Senate Report 107-86]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 194
107th Congress                                                   Report
                                 SENATE
 1st Session                                                     107-86

======================================================================

 
               VETERANS' BENEFITS IMPROVEMENT ACT OF 2001

                                _______
                                

                October 15, 2001.--Ordered to be printed

                                _______
                                

Mr. Rockefeller, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1080]

    The Committee on Veterans' Affairs, to which was referred 
the bill (S. 1088) to amend title 38, United States Code, to 
facilitate the use of educational assistance under the 
Montgomery GI Bill for education leading to employment in high 
technology industry, and for other purposes, having considered 
the same, reports favorably thereon with an amendment in the 
nature of a committee substitute and recommends that the bill, 
as amended, do pass.

                              Introduction

    On June 22, 2001, Committee Chairman John D. Rockefeller IV 
introduced S. 1088, with the cosponsorship of Ranking Committee 
Member Arlen Specter. Committee members Bob Graham and Larry E. 
Craig joined later as cosponsors. S. 1088, as introduced, would 
have amended provisions of title 38, United States Code, 
concerning the Montgomery GI Bill (MGIB), to allow eligible 
veterans to elect to receive accelerated payment of educational 
assistance under the MGIB for education leading to employment 
in high technology industries, and included certain private 
technology entities in the definition of educational 
institution.
    Earlier, on January 22, 2001, S. 131 was introduced by 
Senator Tim Johnson, with the cosponsorship of Senator Susan M. 
Collins. Committee members Graham and Y. Tim Hutchinson later 
became cosponsors. The bill was also cosponsored after 
introduction by Senators Joseph R. Biden, Jr., Jeff Bingaman, 
Max Cleland, Jon Corzine, Thomas A. Daschle, Byron L. Dorgan, 
James M. Inhofe, Edward M. Kennedy, John F. Kerry, Mary L. 
Landrieu, Joseph I. Lieberman, Blanche Lincoln, Trent Lott, 
Olympia J. Snowe, and Robert G. Torricelli. S. 131 would have 
modified the annual determination of the rate of the basic 
benefit of active duty educational assistance under the MGIB.
    On January 31, 2001, S. 228 was introduced by Committee 
member Daniel K. Akaka. Committee member Craig, Senators 
Bingaman and Daniel K. Inouye later cosponsored the bill. S. 
228 would have made permanent the Native American veterans 
housing loan program.
    On February 28, 2001, S. 409 was introduced by Committee 
member Kay Bailey Hutchison and cosponsored by Senator Richard 
J. Durbin. The bill was later cosponsored by Senators George 
Allen, Cleland, Kent Conrad, Ernest F. Hollings, Johnson, 
Barbara Boxer, Collins, Dorgan, Russell D. Feingold, Inouye, 
and Kennedy. S. 409 would have clarified standards for 
compensation for Persian Gulf veterans suffering from certain 
undiagnosed illnesses.
    On March 29, 2001, S. 662 was introduced by Senator 
Christopher J. Dodd and cosponsored by Senators Conrad, 
Feingold, Herb Kohl, Robert C. Byrd, Dorgan, Patrick J. Leahy, 
Rick Santorum, and George Voinovich. The bill was later 
cosponsored by Committee members Craig and Zell Miller, and 
Senators Bingaman, Mike DeWine, Lieberman, Jeff Sessions, Ted 
Stevens, Johnson, Kerry, Lincoln, and Deborah Ann Stabenow. S. 
662 would have authorized the Secretary of the Department of 
Veterans Affairs (VA) to furnish headstones or markers for 
marked graves of, or to otherwise commemorate, certain 
individuals.
    On April 26, 2001, S. 781 was introduced by Committee 
member Akaka and cosponsored by Committee member James M. 
Jeffords. The bill was later cosponsored by Committee member 
Craig and Senators Christopher S. Bond, Conrad, Mark Dayton, 
DeWine, Dorgan, Johnson, Lott, and Sessions. S. 781 would have 
extended authority for housing loans for members of the 
Selected Reserve.
    On May 17, 2001, S. 912 was introduced by Senator Barbara 
A. Mikulski and cosponsored by Committee member Hutchison. The 
bill was later cosponsored by Senator Snowe. S. 912 would have 
increased burial benefits for veterans.
    On May 23, 2001, S. 937 was introduced by Senator Cleland 
and cosponsored by Senators Bingaman, Jean Carnahan, Dayton, 
Kennedy, Landrieu, Lieberman, Jack Reed, and John W. Warner. 
The bill was later cosponsored by Committee members Graham and 
Miller and Senator Carl Levin. S. 937 would have permitted the 
transfer of entitlement to educational assistance under the 
Montgomery GI Bill by members of the Armed Services to their 
dependents.
    On June 19, 2001, the Committee's Chairman, Senator 
Rockefeller, introduced S. 1063, with the cosponsorship of 
Committee member Craig. S. 1063 would have improved the 
administration of the United States Court of Appeals for 
Veterans Claims.
    On June 22, 2001, Chairman Rockefeller introduced S. 1089 
with the cosponsorship of Committee member Craig. S. 1089 would 
have expanded temporarily the United States Court of Appeals 
for Veterans Claims in order to further facilitate staggered 
terms for judges on that court, and for other purposes.
    On June 22, 2001, Chairman Rockefeller introduced S. 1091 
with the cosponsorship of Ranking Committee Member Specter and 
Senator Daschle. Committee member Graham later cosponsored the 
bill. S. 1091 would have modified and extended authorities on 
the presumption of service connection for herbicide-related 
disabilities of Vietnam-era veterans, and for other purposes.
    On June 22, 2001, Chairman Rockefeller introduced S. 1093. 
The bill was later cosponsored by Committee members Craig and 
Graham. S. 1093 would have excluded certain income from annual 
income determinations for pension purposes, limited provision 
of benefits for fugitive and incarcerated veterans, increased 
the home loan guaranty amount for construction and purchase of 
homes, modified and enhanced other authorities relating to 
veterans' benefits, and for other purposes.
    On June 25, 2001, S. 1095 was introduced by Senator Fred 
Thompson and later cosponsored by Senators Chuck Hagel and 
Kerry. S. 1095 would have extended MGIB eligibility to certain 
Vietnam-era veterans.
    On June 27, 2001, Ranking Committee Member Specter 
introduced S. 1114. The bill was later cosponsored by Senators 
Thad Cochran and Snowe. S. 1114 would have increased MGIB 
monthly rates over 3 years by $150 each year.
    On June 28, 2001, the Committee held a hearing, chaired by 
Senator Rockefeller, to receive testimony on S. 131, S. 228, S. 
409, S. 662, S. 781, S. 912, S. 937, S. 1063, S. 1088, S. 1089, 
S. 1091, S. 1093, and S. 1114.
    Testimony was heard from Senator Hutchinson; the Honorable 
Leo S. Mackay, Jr., Ph.D., Deputy Secretary for Veterans 
Affairs; Mr. John Vitikacs, Deputy Director, National Economics 
Commission, The American Legion; Mr. Sid Daniels, Deputy 
Director, National Legislative Service, Veterans of Foreign 
Wars; Rick Surratt, Deputy National Legislative Director, 
Disabled American Veterans; and David Tucker, Senior Associate 
Legislative Director, Paralyzed Veterans of America.
    Testimony was submitted for the record by: Senator Biden; 
Senator Collins; Senator Durbin; Senator Johnson; Senator 
Mikulski; Representative Donald Manzullo; the National Veterans 
Legal Services Program; the United States Court of Appeals for 
Veterans Claims; the National Organization of Veterans 
Advocates; the Vietnam Veterans of America; the Department of 
Veterans Affairs Inspector General's Office; the Tennessee 
Education Association of Veterans Program Administrators; and 
the National Vietnam and Gulf War Veterans Coalition.
    After carefully reviewing the testimony from the foregoing 
hearing, the Committee met in open session on August 2, 2001, 
and voted unanimously to report favorably S. 1088, as amended 
to include provisions from S. 131, S. 228, S. 409, S. 662, S. 
781, S. 912, S. 937, S. 1063, S. 1088, S. 1089, S. 1091, S. 
1093, S. 1095, and S. 1114. Present were Senators Rockefeller, 
Miller, Wellstone, Murray, Nelson, Specter, Thurmond and 
Hutchison. Speakers included Senators Rockefeller, Wellstone, 
Specter, and Hutchison. The vote to pass the Committee's bill 
was unanimous.

               Summary of the Committee Bill as Reported

    S. 1088 as reported (herein referred to as the Committee 
bill) contains various amendments to title 38 of United States 
Code and other freestanding provisions that would:
          (a) increase the rate of the basic Montgomery GI Bill 
        (MGIB) benefit to $700 in FY 2002, $800 in FY 2003, and 
        $950 in FY 2004;
          (b) allow MGIB participants to receive their 
        otherwise monthly payment as an accelerated lump-sum 
        payment at the beginning of a course period;
          (c) allow acceleration for payment of 60 percent of 
        the cost of an approved program that leads to 
        employment in a high technology industry if the program 
        exceeds 200 percent of the monthly MGIB benefit;
          (d) extend eligibility for the MGIB to certain 
        Vietnam-era veterans;
          (e) expand the definition of educational institution 
        for VA purposes to include private entities that offer 
        or contract to offer courses that lead to certification 
        and are generally recognized as necessary to obtain or 
        maintain employment in a high technology occupation;
          (f) restore a presumption, previously eliminated by a 
        court decision, that in-country Vietnam veterans were 
        exposed to Agent Orange;
          (g) expand the definition of ``undiagnosed 
        illnesses'' to include multisymptom illnesses for the 
        purpose of authorizing compensation to Gulf War 
        veterans with such illnesses;
          (h) exclude certain nonrecurring income from 
        countable income for determination of VA non-service-
        connected death pension eligibility;
          (i) modify the time limitation on receipt of claim 
        information;
          (j) modify the requirement for pensioners to report 
        changes in income from the end of the month, to the end 
        of the year;
          (k) prohibit veterans and dependents from receiving 
        VA benefits while fugitives;
          (l) eliminate future compensation for veterans who 
        were incarcerated in 1980 and have remained 
        incarcerated, because veterans incarcerated before 1980 
        were grandfathered out of prior compensation reductions 
        due to now defunct technological barriers;
          (m) repeal the limitation on payment of benefits to 
        incompetent veterans because treatment has changed and 
        incompetent veterans now move between hospitalization 
        and outpatient treatment more frequently;
          (n) extend the effective date of certain Omnibus 
        Budget Reconciliation Act provisions by 3 years, from 
        2008 to 2011;
          (o) increase the home loan guaranty amount from 
        $50,750 to $63,175;
          (p) extend the Native American Veterans Housing Loan 
        Program for 4 years as this benefit continues to be 
        necessary as homes on tribal land fall under different 
        foreclosure and resale rules than general real estate;
          (q) extend authority for housing loan guaranties for 
        members of the Selected Reserve for 4 years in order to 
        advertise the home loan guaranty as a recruiting 
        incentive;
          (r) increase the VA burial benefits for service-
        connected deaths of veterans from $1,500 to $2,000;
          (s) authorize VA to furnish bronze markers for 
        already privately marked graves;
          (t) eliminate the cap on veteran participants in the 
        VA's Vocational Rehabilitation ``Independent Living'' 
        program that assists veterans who are too disabled to 
        retrain for employment to achieve and maintain 
        independent living and reduce reliance on others;
          (u) create a plan to address problems related to the 
        possible retirement of a majority of judges at the 
        United States Court of Appeals for Veterans Claims 
        (CAVC) within a short period of time;
          (v) repeal the requirement for a judge of the CAVC to 
        provide written notice regarding acceptance of 
        reappointment as a precondition to retirement from the 
        court;
          (w) terminate the post-November 17, 1988, Notice of 
        Disagreement as a requirement for jurisdiction in the 
        CAVC;
          (x) impose a periodic registration fee on persons 
        admitted to practice before the CAVC; and
          (y) make available to the CAVC the same management, 
        administrative, and expenditure authorities currently 
        available to Article III courts.

                             Committee Bill

              Sections 101 through 105: Education Matters

    The original ``GI Bill of Rights'' was created at the end 
of World War II to, among other things, give returning 
soldiers, airmen, and seamen compensation for educational 
opportunities lost while serving in the war and to ease their 
transition back into civilian life. The World War II GI Bill 
was succeeded by veterans' education benefits programs for 
Korean conflict veterans and veterans of the Vietnam war. In 
1976, in Public Law 94-502, the Post-Vietnam Era Veterans 
Educational Assistance Program (VEAP) was enacted to provide 
the first veterans' education benefit for peacetime veterans of 
an all-volunteer military. VEAP created an educational matching 
fund account for servicemembers who entered active duty between 
December 31, 1975, and July 1, 1985. Participants could 
contribute up to $2,700 and the Department of Defense (DOD) 
would match the contributions on a 2 to 1 basis. Thus, 
servicemembers could accumulate a college fund worth up to 
$8,100 while in service. Recognizing a need to increase 
educational benefits to assist former servicemembers and 
recruit high quality individuals to the services, Congress 
enacted the Montgomery GI Bill (MGIB), in 1984, in Public Law 
98-525. The MGIB retained the servicemember contribution 
feature of VEAP, though at the reduced level of $1,200. Under 
the MGIB, participating members accept a reduction in their 
base pay of $100 per month for the first 12 months of service. 
In exchange, they become entitled to 36 months of educational 
benefits, which are currently set at $650 per month.
    The Committee is very committed to ensuring that the MGIB 
continues to assist veterans and servicemembers in accessing 
desired educational opportunities so that they may 
realistically compete in today's changing job market. To that 
end, and with the support of Committee members, the Budget 
Resolution for FY 2002 allocates $228 million for MGIB 
enhancements. The Committee bill would increase the rate of the 
basic MGIB benefit and augment the coverage and flexibility of 
the benefit so as to increase use of the benefit, in 
recognition of the fact that, according to VA, only 45 percent 
of eligible beneficiaries who entered active duty after 1988 
have utilized their MGIB benefit.

       Section 101: Increases the rate of the basic MGIB benefit

Background

    Today, one of the best tools for Armed Forces recruiting is 
the MGIB, because it provides higher education opportunities to 
qualified men and women who might not otherwise be able to 
afford post-secondary schooling. However, the effectiveness of 
the MGIB as a recruiting incentive is compromised because 
individuals seeking financial assistance to attend college may 
find funds available from many sources. As an example, a 
preliminary analysis by the Government Accounting Office 
indicates that the total Federal aid available to low income, 
independent nonveterans attending 4-year public universities is 
$9,750 per year; while aid to low income veterans (including 
earned MGIB benefits) is just over $1,500 per year higher. The 
Committee believes that the MGIB, as has been the intent since 
its enactment, should be sufficient to offset the commitment 
and sacrifices that individuals make to serve in our Nation's 
military, thus providing an attractive package that stands out 
among other options and encourages the furtherance of 
education.
    Tuition at the average 4-year public institution went up 
4.4 percent, to $3,510, for the 2000-2001 academic year. 
Tuition and fees at the average 4-year private institution were 
$16,332 up 5.2 percent from the year before. Over a 10-year 
period ending in 1999-2000, tuition and fees rose 49 percent at 
public 4-year universities and 32 percent at private 4-year 
universities. These costs are in addition to room and board, 
books and supplies, transportation, and other miscellaneous 
items.
    According to a program evaluation of the MGIB done by VA in 
2000, MGIB benefits only cover half of the typical out-of-
pocket expenses for a 4-year college education. In fact, 
students who use the MGIB benefit for a bachelors degree tend 
to have a higher debt load than students who pay for college in 
other ways. The same study found that only about 45 percent of 
veterans eligible for MGIB benefits who entered active duty 
after 1988 have taken advantage of MGIB benefits.
    According to the College Board, $1.487 billion in student 
aid was available specifically to veterans in 1999-2000. 
However, in the past 10 years, veterans' educational benefits 
have not kept pace with rising tuition costs. While tuition has 
increased by 50 percent this decade, educational aid to 
veterans has only increased by about 41 percent, after 
adjusting for inflation.
    The Veterans Benefits and Health Care Improvement Act of 
2000, Public Law. 106-419, raised the monthly MGIB benefit from 
$528 to the current $650 for individuals whose original service 
obligation was for 3 years and from $429 to $528 for those with 
a 2-year obligation period of service. Public Law 106-419 also 
provided servicemembers with an opportunity to ``buy up'' their 
MGIB benefit by up to $180 per month by making a $600 
contribution toward that end.

Committee Bill

    Section 101 of the Committee bill, based on S. 131 and S. 
1114, would supplement the recent improvement in the benefit 
rate by increasing the monthly benefit, for veterans whose 
original service obligation was 3 or more years, to $700 in FY 
2002, $800 in FY 2003, and $950 in FY 2004. For veterans whose 
original service obligation was 2 years, the monthly 
educational benefit is increased to $569 in FY 2002, $650 in FY 
2003, and $772 in FY 2004. This provision should aid military 
recruiting, by making the MGIB more competitive with other 
forms of financial aid, and ease a veteran's transition back 
into civilian life. Thus, after full phase-in of the MGIB 
amounts in this section, and together with the ``buy up'' 
benefit, the potential exists for a total monthly benefit of 
$1,100 for servicemembers who serve at least 3 years.
    Cost: The Congressional Budget Office (CBO) estimates the 
total cost of section 101 would be $53 million in 2002, $1.8 
billion over the 5-year period, 2002-2006, and $5.3 billion 
over the 10-year period, 2002-2011.

   Section 102: provides authority for accelerated payments of basic 
                 educational assistance under the MGIB

Background

    Current law provides that the MGIB benefit be disbursed in 
36 equal monthly amounts. However, according to VA's MGIB 
program evaluation, the payments do not arrive at the same time 
every month. Some colleges and universities want students' 
tuition paid at the beginning of the term. Many schools also 
impose substantial up front costs at the beginning of each 
course, term; or semester. Thus, veterans are often forced to 
pay for their tuition, supplies, books, and other educational 
costs out of their own pocket and then recoup those costs with 
the MGIB benefit. Many veterans cannot borrow sufficient funds 
in order to await reimbursement.
    The Committee notes that the 1999 Report of the 
Congressional Commission on Servicemembers and Veterans 
Transition Assistance recommended that the Congress enact 
legislation providing for accelerated payments. An accelerated 
payment benefit would also provide a greater incentive for 
veterans who are eligible for MGIB benefits to actually use the 
benefit. As part of the VA program evaluation, 564 veterans 
were asked to cite the factors which would encourage them to 
use their MGIB entitlement. Twenty six percent responded that 
the ability to receive lump-sum payments would be the primary 
encouraging factor.

Committee Bill

    Section 102 of the Committee Bill, derived from S. 937, 
would allow MGIB participants to receive their otherwise 
monthly payment as an accelerated lump-sum payment for the 
month in which the course begins, plus up to 4 months worth of 
educational assistance allowance, or in the case of a term, 
quarter, or semester, the amount of the aggregate monthly 
educational assistance allowance payable for the entire term, 
quarter, or semester. The remainder of the MGIB entitlement 
would be reduced by the same amount as it would have been 
charged had payments been made on a monthly basis.
    Cost: CBO estimates that this provision would increase 
direct spending by $100 million in 2002, $300 million over the 
5-year period, 2002-2006, and $365 million over the10-year 
period, 2002-2011.

Section 103: accelerates payments of MGIB benefit by 60 percent of the 
    cost of an approved program that leads to employment in a high 
                          technology industry

Background

    The payment structure of the MGIB was designed to provide 
assistance to veterans pursuing traditional 4-year degrees at 
universities by offering benefits, distributed monthly for up 
to 36 months. Last year, in Public Law 106-419, Congress 
extended MGIB benefits to cover the costs of certification 
exams that technical systems training courses prepare veterans 
to take.
    In today's fast-paced, high technology economy, in which 
many students work and support families, traditional degrees 
may not be the chosen option for every veteran. According to 
the VA's 2000 MGIB program evaluation, many eligible 
beneficiaries surveyed said that they are not able to enroll in 
choice programs because they are over burdened with other 
responsibilities. Among all MGIB users who dropped out of a 
college or training program, ``job responsibilities'' was the 
most cited reason. The proportion of women among the active 
duty forces has increased by more than 4 percent between 1985 
and 1998, and there was also an increase in the average number 
of dependents per family of active duty members. Female users 
most often quit because of ``family/personal'' reasons.
    With heightened job, financial, and family 
responsibilities, many veterans wish to pursue training with 
condensed schedules. Also, many veterans could benefit from 
training in the computer and technical skills that are highly 
sought-after in today's high technology marketplace. In these 
fields, certification is often a prerequisite for employment.
    Microsoft, Cisco, and other technical training for 
certification is offered through training centers, private 
contractors to community colleges, or by the companies 
themselves. These courses often last just a few weeks or 
months, and can cost many thousands of dollars. Under current 
law, the MGIB is paid out in monthly disbursements which are 
ill-suited for the payment structure that these sorts of 
courses demand. For example, in the case of a 2 month 
certification course that might cost $10,000, the MGIB would 
pay only $1,300.
    During the Committee's June 28th hearing, Dr. Leo Mackay, 
Deputy Secretary of the Department of Veterans Affairs, 
testified that ``providing educational benefits for pursuit of 
these [technology] courses is fully consonant with MGIB 
purposes.'' David Tucker, Senior Associate Legislative Director 
of the Paralyzed Veterans of America, also testified that, ``If 
the MGIB is to be used not only for recruitment purposes, but 
also as a means of enabling a veteran to make a smooth 
transition back to civilian life, then S. 1088 [allowing 
veterans to use their MGIB benefits in courses leading to 
certification in technical fields] is a vital means to 
accomplish these goals.''

Committee Bill

    Section 103 of the Committee bill, derived from S. 1088, 
takes the next logical step after last year's expansion to 
include coverage of certification exam costs by authorizing 
payment for a portion of these courses. This provision would 
allow an accelerated payment of MGIB benefits to accommodate 
the compressed schedule of courses that lead to employment in a 
high technology industry. Veterans would be eligible to receive 
an accelerated payment equal to 60 percent of the costs. The 
dollar value of the accelerated payment would be deducted from 
the veteran's remaining MGIB entitlement.
    The Committee bill would not specify which technology 
fields are covered by this section. Instead, it authorizes the 
Secretary to determine which courses are applicable, thus 
ensuring flexibility to keep pace with emerging fields and 
courses.
    Cost: CBO estimates the cost of section 103 would be $4 
million in 2002, $140 million over the 5-year period, 2002-
2006, and $440 million in the 10-year period, 2002-2011.

 Section 104: extends eligibility for the MGIB to certain Vietnam-era 
                                veterans

Background

    Current law provides that, if a Vietnam-era veteran had 
eligibility for Vietnam-era GI Bill benefits as of December 31, 
1989, was on active duty on October 19, 1984, and served 3 
continuous years, the veteran could convert his or her Vietnam-
era benefit to the MGIB educational benefit. There are, 
however, some veterans who served during the Vietnam era and 
left the service in the early 1980's, only to reenlist and 
serve again on active duty after October 19, 1984. Rejoining 
active duty after October 19, 1984, precluded them from 
converting prior benefits to MGIB and effectively eliminated 
their ability to use their Vietnam-era GI Bill. Thus, someone 
who served honorably at least twice is left with no educational 
benefits under current law because they did not reenlist for 
active duty before the October 19, 1984, statutory deadline.

Committee Bill

    Section 104 of the Committee bill, derived from S. 1095, 
would allow a Vietnam-era veteran to convert Vietnam-era GI 
Bill benefits to MGIB benefits if the veteran had eligibility 
for the Vietnam-era GI Bill benefits as of December 31, 1989, 
was not on active duty on October 19, 1984, and served 3 
continuous years in the Armed Forces after July 2, 1985.
    Cost: CBO estimates the cost will be less than $500,000 in 
2002, $9 million over the 5-year period, 2002-2006, and $18 
million over the 10-year period, 2022-2011.

  Section 105: includes high technology entities in the definition of 
                        educational institutions

Background

    Under current law, course providers must be approved for VA 
purposes as an educational institution in the state where the 
course is offered in order for MGIB funds to be released. If a 
provider operates in multiple states, it must be approved 
separately in each state where MGIB beneficiaries are enrolled 
for veterans to receive benefits in each state. Courses offered 
by Novell, Microsoft, and other technology companies are 
offered through some VA-recognized educational institutions as 
well as designated business centers or other private providers. 
When the courses are offered through private providers, they 
often do not undertake the process of becoming a VA-approved 
educational institution. Even if classes are identical, only 
those veterans at a VA-recognized educational institution are 
able to receive educational assistance.

Committee Bill

    Under Section 105 of the Committee bill, derived from S. 
1088, the Secretary of Veterans Affairs would be given 
authority, for MGIB purposes, to establish requirements for 
private entities to qualify for MGIB payments because their 
educational services to veterans fulfill requirements for the 
attainment of a license or certificate generally recognized as 
necessary to obtain, maintain, or advance a veteran's 
employment in a profession or vocation in a high technology 
occupation. This would enable veterans, regardless of where 
they take their high technology classes, to apply for MGIB 
benefits.
    Cost: CBO did not estimate any cost to be associated with 
section 105.

 Section 201: restores the VA presumption of Agent Orange exposure for 
  Vietnam veterans and extends scientific studies into its long-term 
                             health effects

Background

    Questions about the health consequences of exposure to the 
herbicide Agent Orange in Vietnam arose at the inception of its 
use in 1962, and continue long after the return of American 
servicemembers. In 1969, research showed that the herbicide 
component of Agent Orange could cause birth defects in 
laboratory animals. Subsequent studies into the adverse effects 
of dioxin, a contaminant of Agent Orange, heightened public 
fears that diseases manifested by Vietnam veterans and their 
children resulted from wartime exposures. In the absence of 
conclusive evidence for or against specific health effects of 
Agent Orange exposure, many veterans and public interest groups 
expressed frustration with the Federal response to Vietnam 
veterans' concerns.
    In order to address these concerns, Congress passed Public 
Law 102-4, the Agent Orange Act of 1991. This act modified 
title 38, chapter 11, to establish presumptions of service 
connection for diseases associated with exposure to herbicide 
agents of the kind used in the Republic of Vietnam. Section 
1116 of title 38 states that the Secretary of Veterans Affairs 
may determine which diseases warrant presumption of a service 
connection based on an association with exposure to an 
herbicide agent in the case of a veteran who served in Vietnam 
between January 9, 1962, and May 7, 1975.
    Service connection for a disability ``means that the facts, 
shown by evidence, establish that a particular injury or 
disease resulting in disability was incurred coincident with 
service in the Armed Forces, or if preexisting such service, 
was aggravated therein.'' 38 C.F.R. Sec. 3.303(a), 38 U.S.C. 
Sec. 501. Direct service connection is established by showing 
that the disability was ``coincident'' with service. Direct 
service connection can be established by showing a causal 
relationship between the current disability (manifesting after 
service) and some injury or disease during service. Presumptive 
service connection requires no causal relationship, but merely 
relies on the presumption that the disability was present or 
caused by service or some special circumstance during service.
    A 1999 U.S. Court of Appeals for Veterans Claims (CAVC) 
decision, McCartt v. West, 12 Vet. App. 164 (1999), held that a 
presumption of exposure to Agent Orange can only apply when the 
veteran's disease is included in the list of enumerated 
diseases in 38 U.S.C. Sec. 1116(a) or 38 C.F.R. Sec. 3.309(e).
    McCartt had a skin condition which he claimed was 
attributable to his service in Vietnam, but which was not on 
the list of diseases. The CAVC held that, if McCartt had none 
of the enumerated diseases in either 38 U.S.C. Sec. 1116(a) or 
38 C.F.R. Sec. 3.309(e), then he was not entitled to a 
presumption of exposure to Agent Orange under the language of 
the law. Section 1116(a)(3) of title 38 states that a veteran 
who served in Vietnam and has one of the enumerated diseases 
will be presumed to have been exposed.

          [A] veteran who, during active military, naval, or 
        air service, served in the Republic of Vietnam during 
        the period beginning on January 9, 1962, and ending on 
        May 7, 1975, and has [one of the enumerated diseases] 
        shall be presumed to have been exposed during such 
        service to an herbicide agent containing dioxin or 2,4-
        dichlorophenoxyacetic acid (2,4-D), and may be presumed 
        to have been exposed during such service to any other 
        chemical compound in an herbicide agent, unless there 
        is affirmative evidence to establish that the veteran 
        was not exposed to any such agent during that service. 
        38 U.S.C. Sec. 1116(a)(3) (emphasis added).

Therefore, the court held that McCartt had the burden of 
submitting evidence to justify his claim of exposure to 
herbicides.
    VA practice prior to the McCartt decision had been to 
presume exposure for anyone who had served in Vietnam during 
the statutorily defined period of war, that is, from January 9, 
1962, to May 7, 1975, unless there was affirmative evidence to 
the contrary. After McCartt, VA practice was changed to presume 
exposure to herbicide agents only if the veteran had one of the 
presumptive diseases listed in 38 U.S.C. Sec. 1116(a) or 38 
C.F.R. Sec. 3.309(e), unless there was affirmative evidence to 
the contrary.
    Addressing this issue, Rick Surratt, Deputy Legislative 
Director of the Disabled American Veterans, stated before the 
Committee on Veterans' Affairs on June 28, 2001:

          From 1980 to 1999, VA presumed exposure to herbicides 
        in the case of any Vietnam veteran who claimed 
        exposure, in recognition that circumstances make it 
        near impossible to prove or rule out exposure in 
        individual cases and in observance of the benefit-of-
        the-doubt rule. Following [McCartt] in which the court 
        had no cognizance of the presumption and did not 
        recognize it, VA conveniently abandoned the 
        presumption, although no circumstances responsible for 
        this policy and its legal premises had changed. Now, 
        the only veterans entitled to the presumption of 
        exposure to herbicides are those who claim compensation 
        for disabilities subject to the statutory presumption 
        of service connection. Others are left with the often 
        impossible burden of proving exposure even though 
        existing records are insufficient to document 
        individual exposure in most instances.

    In the Agent Orange Act of 1991, Congress sought to address 
skepticism about VA's objectivity by requiring the Secretary to 
rely upon an independent assessment of health effects suspected 
to be linked to herbicide exposures. Section 3 of the Agent 
Orange Act of 1991 required the Secretary to contract with the 
National Academy of Sciences (NAS) to review the scientific and 
clinical evidence regarding the health effects of exposure to 
the components of herbicides used in Vietnam, and to report to 
the Congress and VA every 2 years for 10 years. Section 
1116(c)(1) of title 38 then requires the Secretary to determine 
whether a presumption of service connection is warranted for 
each disease covered in the NAS report, and to propose 
regulations for each disease if necessary. These reviews have 
led to the recent addition of type 2 diabetes as a service-
connected disease, and understanding of the possible long-term 
effects of herbicide and dioxin exposure continues to grow.

Committee Bill

    Section 201 of the Committee bill, derived from S. 1091, 
would restore the VA practice, eliminated by the McCartt 
decision, to presume that veterans who served in Vietnam during 
the time specified in law were exposed to herbicides such as 
Agent Orange regardless of the disease the veteran seeks to 
have service connected. Thus, VA would be mandated to resume 
the practice of presuming exposure for anyone who served on 
active military, naval, or air service, in the Republic of 
Vietnam from January 9, 1962, to May 7, 1975. Claimants will 
still need to submit evidence sufficient to show that a disease 
is related to Agent Orange exposure if the disease is not on 
the list. The Committee bill also directs VA to contract with 
NAS so NAS will continue to review scientific evidence on 
effects of dioxin or herbicide exposure for 10 more years (five 
reports), and extends authority of the Secretary of Veterans 
Affairs to presume service connection for additional diseases 
as based on future NAS reports for 10 more years.
    Cost: CBO estimates that the cost of extending the 
production of the report on Agent Orange and veterans that is 
produced biennially would be $4 million over the 10-year 
period, 2002-2011, assuming appropriation of the necessary 
amounts.

Section 202: expands the definition of service-connected ``undiagnosed 
  illnesses'' and extends the presumptive period for Gulf War veterans

Background

    Following the Gulf War in 1991, returning servicemembers 
began to report a range of unexplained illnesses characterized 
by symptoms such as chronic fatigue, muscle and joint pain, 
loss of concentration and forgetfulness, headaches, and skin 
rashes that many attributed to their service. Subsequent review 
revealed that men and women who served in the war might have 
been exposed to multiple biological and chemical agents, 
including, among others, smoke from oil well fires, pesticides, 
organic solvents, the drug pyridostigmine bromide, numerous 
vaccinations, and sarin nerve gas.
    Efforts to determine what hazards might be linked to 
specific symptoms have been limited by inconclusive data on the 
long-term effects of low-dose exposures, and by poor 
documentation of troop location during the conflict. In 
response to concerns about the health of Gulf War veterans, 
Congress passed Public Law 102-585--authorizing health 
examinations, tasking the NAS to evaluate scientific evidence 
regarding potential Gulf War exposures, and establishing the 
Gulf War Veterans Health Registry--and Public Law 102-310, 
authorizing VA to provide health care services on a priority 
basis to Gulf War veterans. However, the inability of clinical 
and scientific evidence to link the symptoms that have been 
labeled collectively ``Gulf War Syndrome'' directly to specific 
wartime exposures proved a barrier to establishing service 
connection for Gulf War veterans' disabilities.
    In 1994, Congress passed the Persian Gulf War Veterans' 
Benefits Act as title I of Public Law 103-446, to provide 
compensation to Gulf War veterans disabled by illnesses that 
could not be diagnosed or defined at that time, and for which 
no other causes could be identified. Among other things, this 
law amended chapter 11 of title 38 so as to add a new section, 
section 1117, which authorized the Secretary to pay 
compensation to any Gulf War veteran suffering from a chronic 
disability resulting from an undiagnosed illness (or 
combination of undiagnosed illnesses) that became manifest 
during service in the Gulf War theater or to a degree of 10 
percent or more within the presumptive period set by the 
Secretary in regulations.
    VA has interpreted this authority to limit service 
connection only to conditions for which no clinical diagnosis 
can be made. Since the passage of this law, many Gulf War 
veterans have received diagnoses for chronic conditions whose 
causes cannot be identified conclusively, but which preclude 
them from eligibility for benefits under the current law. Over 
the last decade, the medical community has increasingly 
accepted diagnoses such as chronic fatigue syndrome, 
fibromyalgia, and irritable bowel syndrome to describe 
multisymptom chronic illnesses without known cause. Under VA's 
interpretation of its authority, a veteran with a diagnosis of 
``chronic fatigue of unknown etiology'' is eligible for 
benefits under the current law, but a veteran with a diagnosis 
of ``chronic fatigue syndrome'' is not eligible, despite the 
fact that their symptoms may not differ in any significant way. 
This situation results not from advances in understanding the 
causes of symptoms manifested by Gulf War veterans, but from 
changes in medical terminology in the past decade.
    Because current scientific research has not determined the 
etiology of veterans' symptoms or the long-term health 
consequences of Gulf War-era exposures, and because the 
Department of Defense recently released new estimates of the 
number and locations of service personnel exposed to nerve 
agents, extension of this presumptive period beyond the 
scheduled termination date of December 31, 2001, as set forth 
in the Federal Register of April 29, 1997, 62 FR 23138-23139, 
is warranted. Although section 1117 of title 38 authorizes the 
Secretary to extend the period for presumption of service 
connection by regulation, the Secretary has not yet acted on 
this authority.

Committee Bill

    Section 202 of the Committee bill, derived from S. 409, 
would correct this unintended exclusion of veterans with poorly 
defined diagnosed illnesses from the ``undiagnosed illnesses'' 
provisions in section 1117 of title 38 by adding to the list of 
conditions that can be service connected ``poorly defined 
chronic multisymptom illnesses of unknown etiology, regardless 
of diagnosis,'' characterized by the symptoms already listed in 
VA regulations. Section 202 does not define Gulf War Syndrome, 
but authorizes the Secretary to offer compensation to veterans 
with diagnoses such as chronic fatigue syndrome, fibromyalgia, 
and irritable bowel syndrome, which are diagnosed in Gulf War 
veterans more frequently than in age-matched control 
populations. This section also extends the presumptive period 
for health care and benefits for Gulf War veterans for 10 more 
years.
    Cost: Section 202 would take effect on April 1, 2001, and 
because VA takes an average of 6 months to adjudicate reopened 
claims, CBO expects that no payments would be made in 2002. CBO 
estimates that enacting section 202 would increase direct 
spending by $46 million in 2003, $168 million in the 4-year 
period from 2003 through 2006, and $400 million over the 9-year 
period, 2003-2011.

  Section 203: excludes life insurance from countable income for non-
                    service-connected death pension

Background

    Non-service-connected death pension is paid to low income 
surviving dependents, mainly spouses, of wartime veterans. All 
VA pension programs have complex rules relating to effective 
dates and what types of income are not counted in VA's 
determination of the claimant's income.
    Under current law, section 5110(d)(2) of title 38, a claim 
for non-service-connected death pension received within 45 days 
of the veteran's death is effective on the date of death. 
Claims received more than 45 days after the veteran's death are 
effective on the date of the claim. This distinction was 
created in Public Law 98-369, as a cost-cutting measure.
    However, this provision created a loophole that has led to 
unequal treatment for surviving spouses applying for death 
pension. The effect of Public Law 98-369 was to exclude life 
insurance proceeds from countable income for claimants who file 
more than 45 days after the date of the veteran's death. The 
effective dates for those who wait more than 45 days are the 
dates the claims were filed, regardless of their insurance 
proceeds. However, the life insurance of those spouses who file 
within 45 days of death is counted as income for the following 
12 months and may result in making them ineligible for pension 
for a full year.

Committee Bill

    Section 203 of the Committee bill, derived from S. 1093, 
would exclude life insurance proceeds and other nonrecurring 
income from countable income for VA death pension. This income 
will still be accounted for in VA's net worth calculations, 
when appropriate. The Secretary is given authority to set an 
appropriate limit on the amount of insurance and nonrecurring 
income that are to be excluded as income for pension purposes, 
in order to maintain fairness if a survivor were to receive an 
unusually large windfall.
    Cost: CBO estimates that enacting this provision would cost 
$3 million in 2002, $17 million over the 5-year period, 2002-
2006, and $62 million over the 10-year period, 2002-2011.

    Section 204: modifies the time limitation for receipt of claim 
                              information

Background

    On November 9, 2000, the President signed Public Law 106-
475, the Veterans Claims Assistance Act of 2000 (VCAA), which 
reinstated and clarified the VA's duty to assist veterans with 
their claims for benefits. The VCAA's primary purpose was to 
substantially return VA claims assistance practice to what it 
traditionally had been throughout VA's modern history prior to 
the decision of the U.S. Court of Appeals for Veterans Claims 
in Morton v. West, 12 Vet. App. 477 (1999). In Morton, the 
court held that VA does not have the authority to assist 
claimants prior to the submission of a well-grounded claim. As 
a consequence of Morton, VA directed regional offices to 
subject all claims to an initial review to determine whether 
they are well-grounded before proceeding to assist the claimant 
in fully developing the claim. Section 3 of the VCAA defines 
the responsibilities that both VA and claimants have at two 
distinct points of the claims process: submitting information 
to complete an incomplete application for benefits and 
submitting evidence necessary to substantiate a claim for 
benefits based on a complete or substantially complete 
application.
    Prior to the VCAA's enactment, section 5103(a) of title 38, 
United States Code, provided that if a claimant's application 
for benefits was incomplete, the Secretary of Veterans Affairs 
was required to notify the applicant of the evidence needed to 
complete the application. If such evidence was not received 
within 1 year of the Secretary's notification, section 5103(a) 
prohibited benefits from being furnished or paid based on the 
incomplete application. Section 3 of the VCAA created a new 
section 5102(b) that retained the language of prior section 
5103(a) requiring the Secretary to notify an applicant of the 
evidence required to complete an application, but omitted the 
language requiring the evidence to be submitted within 1 year 
of the Secretary's notice. Instead, the VCAA placed the 1 year 
time limitation language in a new section 5103(b), which 
governs the receipt of information and evidence necessary to 
substantiate a claim for benefits based on a complete or 
substantially complete application.
    In testimony submitted to the Committee on June 28, 2001, 
VA Deputy Secretary Leo Mackay testified on behalf of VA 
regarding the effect of the change in law concerning the 1-year 
time limitation, noting that, under the VCAA:

          . . . if a claimant were to submit an application for 
        benefits and receive notification from VA that the 
        application is incomplete, it does not appear that VA 
        would be authorized to close or deny the claim based on 
        an applicant's failure to respond. Further, if the 
        claimant submits the requested information at any time 
        in the future, and if a benefit were granted, VA would 
        be required to establish an effective date for an award 
        of benefits based on the date the incomplete 
        application was filed without regard to whether the 
        applicant responded to VA's request for further 
        information to ``complete'' the application in a timely 
        fashion. We do not believe this result was intended by 
        the Congress.

    The Committee concurs with VA's assessment of Congressional 
intent.

Committee Bill

    Section 204 of the Committee bill, derived from S. 1093, 
would, through a technical correction, restore the law on this 
matter as it was prior to the VCAA by making the 1-year time 
limitation applicable to evidence necessary to complete an 
application and not applicable to evidence necessary to 
substantiate a claim based on a complete or substantially 
complete application.
    Cost: CBO estimates that this provision would have little 
or no net effect on direct spending.

Section 205: modifies the requirement for pensioners to report changes 
       in income from the end of the month to the end of the year

Background

    VA pension is a needs-based program payable to low income 
wartime veterans who cannot work due to permanent and total 
disability. Death pension is payable to low income surviving 
dependents of wartime veterans. Pension amounts are offset 
dollar-for-dollar with income from other sources (unless 
specifically excluded by statute).
    Under current law, section 5112(b)(4)(A) of title 38 (the 
``end of the month rule'') requires VA pension to be reduced or 
discontinued effective the first day of the month following the 
month in which the pensioner's net income is increased, even if 
it is a one-time increase. This can lead to multiple 
adjustments per year and an increased probability of errors.
    These reporting requirements are burdensome for pensioners 
and call for very exacting income matching and accounting 
procedures by VA, which in turn leads to a disproportionate 
percentage of time being spent by VA on pension as compared 
with the number of people receiving pension, and is one of the 
greatest sources of errors in claims processing. In fiscal year 
2000, VA's quality review program, STAR, showed that effective 
date errors were made roughly one out of nine times when 
effective date issues were reviewed. Of those, 54 percent were 
related to pension income calculations. VA states that the 
errors occur most often in the end-of-the-month adjustments.
    These adjustments also affect the basic security of the 
pensioners, who by definition have low incomes. When VA creates 
a debt through overpayments, until the adjustment is processed 
(which occurred 107,000 times in fiscal year 2000), the 
pensioner frequently seeks a waiver of the debt under section 
5302 of title 38 and is often successful because of their 
limited means. In FY 2000, 15,730 requests for waiver of 
pension debt were received and 10,027 of those were granted.

Committee Bill

    Section 205 of the Committee bill, derived from S. 1093, 
would modify the requirement for pensioners to report changes 
in income from the end of the month to the end of the year. 
This would reduce the number of times that VA has to adjust 
pension, reducing administrative overhead and opportunities for 
mistakes.
    Cost: CBO estimates that this provision would have little 
or no net effect on direct spending.

   Section 206: bars veterans from receiving benefits while fugitives

Background

    In 1996, Congress enacted Public Law 104-193. This law was 
designed to cut off the means of support that allows fugitive 
felons to continue to flee. It barred fugitive felons from 
receiving Supplemental Security Insurance from the Social 
Security Administration and food stamps from the Department of 
Agriculture. However, under current law, there is no bar to 
prevent veterans who are fugitives from justice from receiving 
VA benefits.

Committee Bill

    Section 206 of the Committee bill, derived from S. 1093, 
would bar veterans and eligible dependents from receiving 
veterans benefits while fugitive, which is defined as fleeing 
to avoid prosecution, or custody or confinement after 
conviction, for an offense, or an attempt to commit an offense, 
which is a felony under the laws of the place from which the 
veteran flees. The benefits which would be barred include those 
for service-connected disabilities; dependency and indemnity 
compensation for service-connected deaths; non-service-
connected disability/death pension; hospital, nursing home, 
domiciliary and medical care; insurance; educational 
entitlements; training and rehabilitation benefits for veterans 
with service-connected disabilities; post-Vietnam era veterans' 
educational assistance; survivors' and dependents' educational 
assistance; and, housing and small business loans.
    Cost: CBO estimates that this provision would have little 
or no net effect on direct spending.

Section 207: eliminates compensation for veterans who were incarcerated 
              prior to 1980 and have remained incarcerated

Background

    One of the purposes of VA benefits is to help disabled 
veterans who have a service-connected disability maintain a 
standard of living, determined by lost average earnings 
capacity, that has been compromised by the service-connected 
disability. If a veteran is incarcerated, then the government 
provides a minimum standard of living.
    In 1980, Congress enacted legislation to reduce 
compensation to incarcerated veterans to the equivalent to the 
rate of compensation paid for a 10-percent disability (or, if 
they only receive ten percent, to the equivalent dollar amount 
of 5 percent). The policy underlying this provision is that 
many of the veteran's basic needs, such as food, clothing, and 
shelter, are already being met by the entity which is 
incarcerating the veteran. The remainder of the veteran's 
compensation can be apportioned and sent to the veteran's 
dependents (if any).
    Veterans who were already incarcerated in 1980 were not 
covered by this change in law. One reason was that VA did not 
believe that it would be able to identify those veterans. 
However, technological changes now make this possible and VA 
has indicated that is only a small number of veterans who were 
incarcerated in 1980 who have remained continuously 
incarcerated.

Committee Bill

    Section 207 of the Committee bill, derived from S. 1093, 
would eliminate compensation for veterans who were incarcerated 
in 1980 and have remained incarcerated, by stopping their 
future payments. It would not affect any payments they have 
received between 1980 and enactment of this provision. Further, 
this provision would not impede these veterans' ability to 
apportion their benefits to any dependents they may have. The 
provision furthers VA's program integrity by treating similarly 
situated veterans alike now that technology provides the 
ability to do so.
    Cost: CBO estimates that this provision would result in an 
annual savings of about $2 million.

     Section 208: repeals the limitation on payment of benefits to 
                          incompetent veterans

Background

    A reduction of benefits to incompetent veterans dates back 
to 1933, when incompetent people would be institutionalized for 
years. The ``$1,500'' rule prohibited compensation and pension 
benefits from being paid to incompetent veterans with assets of 
$1,500 or more and no dependants, if the veteran was being 
provided institutional health care by the government. The rule 
was created by Congress to prevent the accumulation of large 
estates of Federal benefits which would be inherited by persons 
who had no original entitlement to those benefits during the 
veteran's lifetime. It was also felt that a large estate based 
on the veteran's benefits should not be allowed to build up 
just to escheat to the state upon the veteran's death.
    In addition, this provision was intended to guard against 
misuse of accumulated benefits for long-term hospitalized 
incompetent veterans. An unintended result was that veterans 
with financial obligations (e.g. a home mortgage) lost the 
income to meet their debts. Now, treatment for the mentally ill 
has changed and veterans do not generally remain hospitalized 
for years at a time. Instead, they are more likely to cycle in 
and out of treatment, resulting in virtually constant 
suspension and reinstatement of their benefits.
    In 2000, Congress addressed this prohibition against paying 
compensation and pension benefits to an incompetent veteran who 
had no dependents and who had assets of $1,500 or more, if the 
veteran was being provided institutional health care by the 
government. Although the Committee sought to fully eliminate 
this disparate and discriminatory treatment of incompetent 
veterans, because of funding restraints it was only able, in 
Public Law 106-419, to raise the dollar amount of the cutoff 
from $1,500 to five times the 100 percent compensation rate.

Committee Bill

    Section 208 of the Committee bill would fully repeal the 
limitation on payment of benefits to incompetent 
institutionalized veterans who have no dependents, treating 
these veterans the same as any other veteran receiving 
disability compensation.
    Cost: CBO estimates that the cost of Section 208 would be 
about $4 million in 2002, $22 million over the 5-year period, 
2002-2006, and $47 million over the 10-year period, 2002-2011.

    Section 209: extends certain Omnibus Budget Reconciliation Act 
                               provisions

Background

    In 1990, Public Law 101-508 authorized VA to use income 
information received from other agencies, such as the 
Department of Health and Human Services and the Department of 
the Treasury, to determine the level of a VA beneficiary's 
income. VA may use this information as part of its process to 
determine continuing eligibility for receipt of VA means-tested 
benefits. This authority expired on September 30, 1992, and has 
since been extended through 1997 in Public Law 102-568, through 
1998 in Public Law 103-66, through 2002 in Public Law 105-33, 
and through 2008 in Public Law 106-419.
    Public Law 101-508 also reduced the VA pension amount for 
certain veterans receiving Medicaid-covered nursing home care 
to no more than $90 per month, for any period after the month 
of admission to the nursing care facility. This authority 
expired on September 30, 1992, and was extended through 1997 in 
Public Law 102-568, through 1998 in Public Law 103-66, through 
2002 in Public Law 105-33, and through 2008 in Public Law 106-
419.

Committee Bill

    Section 209(a) of the Committee bill, extends the income 
information verification from September 30, 2008 to September 
30, 2011.
    Section 209(b) of the bill extends the authority for 
limitation of VA pension to $90 per month for certain veterans 
receiving Medicaid-covered nursing home care from September 30, 
2008 and inserting September 30, 2011.
    Cost: CBO estimates that 209(a) would lower direct spending 
by $5 million over the 3-year period, 2009-2011, and that 
209(b) would result in a net spending reduction of $631 million 
over the same period.

 Section 301: increases the home loan guaranty amount from $50,750 to 
                                $63,175

Background

    VA does not generally provide a direct home loan for 
servicemembers and veterans. Instead, it provides a guaranty to 
mortgage lenders should the borrower veteran be unable to meet 
the payments and go into foreclosure. A VA guaranty allows a 
veteran to buy a home for up to four times the guaranty amount, 
with a current maximum of $203,000. In 2000, VA guaranteed 
175,000 housing loans. While a popular benefit, its value has 
decreased in recent years as the price of homes in major 
metropolitan areas has increased significantly, while the VA 
guaranty amount has not increased since 1994. Rick Surratt, 
Deputy Legislative Director of the Disabled American Veterans, 
stated before the Committee on June 28, 2001:
    A recent survey by the Federal Housing Finance Board showed 
average home prices [are] higher than $203,000 in several areas 
of the Nation. Several years have passed without any adjustment 
in the maximum home loan guaranty, and the erosion of the 
benefit in the face of increasing housing costs has put housing 
beyond the reach of veterans living in these several areas of 
the Nation.

Committee Bill

    Section 301 of the Committee bill, derived from S. 1093, 
would increase the home loan guaranty to $63,175 to keep pace 
with the FHA home loan guaranties supporting a loan of up to 
$252,700.
    Cost: CBO estimates this provision would increase direct 
spending by $6 million in 2002, $33 million over the 5-year 
period, 2002-2006, and $87 million over the 10-year period, 
2002-2011.

Section 302: extends the Native American veterans housing loan program 
                              for 4 years

Background

    Public Law 102-547 authorized the Secretary of VA to 
establish and implement a pilot program under which VA could 
make direct housing loans to Native American veterans. The 
purpose of such loans was to permit Native American veterans to 
purchase, construct, or improve dwellings on trust land. The 
pilot program was established after it was brought to the 
Committee's attention that there was no documented case of a 
Native American veteran using the VA home loan guaranty 
program. This was attributed to the Native American veteran's 
inability to use trust lands as collateral, poor economic 
conditions on reservations, and private lenders discriminatory 
attitudes toward Native Americans.
    VA undertook a study on the use of the VA home loan 
guaranty program by Native American veterans living on trust 
lands. The study, completed in 1991, calculated that 21,204 
Native American veterans lived on Federal reservations and 
trust lands. The study found that only 15 Native Americans 
living on trust land had used VA home loan benefits of any 
kind. Their participation rate was 0.07 percent compared with 
an overall veteran participation rate of 0.67 percent almost 10 
times greater than the participation rate of Native Americans. 
The 15 home loan guaranties made were for specific adapted 
housing renovations for totally disabled veterans with certain 
mobility impairments, and none of the loans were VA-guaranteed 
home loans. The Committee concluded that the VA home loan 
programs were not responsive to the needs of those veterans who 
reside on trust lands and passed Public Law 102-547. In 1997, 
in Public Law 105-114, the program was extended through 
December 31, 2001.

Committee Bill

    Section 302 of the Committee bill, derived from S. 228, 
would extend the Native American veterans housing loan program, 
set to expire on December 31, 2001, by 4 years to December 31, 
2005.
    Cost: CBO estimates that this provision would result in an 
annual direct spending cost of $250,000 and that VA's 
administrative expenses, a discretionary cost, would be roughly 
$500,000 annually.

    Section 303: extends for 4 years the authority for housing loan 
   guaranties for members of the Selected Reserve and other expiring 
                              authorities

Background

    When members of the Selected Reserve were extended 
eligibility for home loans in 1992, Congress recognized the 
expanded responsibilities of reservists in this Nation's 
defense. Congress acknowledged that reservists responded 
willingly to the call of duty during the Gulf War, but also 
that the call up disrupted lives and caused economic hardship. 
It was felt that whether or not reservists continued to serve 
depended partially on the benefits that were made available to 
them. With the reduction of the active duty military force, 
reservists will be increasingly relied upon to provide an 
adequate portion of the total military force. Incentives to 
recruit will become increasingly important, especially in light 
of the personal sacrifices required of recently recalled 
reservists.
    In 1992, in Public Law 102-291, Congress granted the 
Secretary of Veterans Affairs enhanced loan asset sale 
authority that was set to expire in December 31, 2002. This 
authority was extended several times, most recently through 
December 31, 2008, in Public Law 106-419.
    In 1982, Congress required VA to charge a loan fee for VA 
home loan guaranties in Public Law 97-253. This authority and 
the amount of the fee have been modified and extended numerous 
times, until section 3729 of title 38 of the United States Code 
was completely rewritten to clarify the various loan fees and 
combine them into one table in Public Law 106-419. At that 
time, the authority of VA to charge loan fees was extended 
through October 1, 2008.
    Section 3732 of title 38 defines the procedures for a 
liquidation sale in the event of a default on a VA-guaranteed 
home loan. The authority for these procedures is currently set 
to expire on October 1, 2008.

Committee Bill

    Section 303(a) of the Committee bill, derived from S. 778, 
would extend for 4 years the authority for housing loan 
guaranties for members of the Selected Reserve. Reservists must 
serve 6 years in order to become eligible for a VA-guaranteed 
loan. In order for the home loan to be advertised as a 
recruiting incentive now, the benefit must be authorized beyond 
6 years.
    Section 303(b) of the bill would extend VA's loan asset 
sale authority through December 31, 2011.
    Section 303(c) would extend the VA's home loan fee 
authorities through October 1, 2011.
    Section 303(d) would extend the effectiveness of the 
procedures applicable to liquidation sales on defaulted home 
loans guaranteed by VA through October 1, 2011.
    Cost: CBO estimates that loan fees charged for extended 
home loan benefits for reservists would lower net spending by 
$2 million annually over the 4-year period, 2008-2011. CBO 
estimates that the subsections of section 303 that extend 
provisions affecting housing would reduce direct spending by 
$778 million over the 3-year period, 2009-2011.

Section 401: increased VA burial benefits for service-connected deaths 
                   of veterans from $1,500 to $2,000

Background

    Efforts to ensure veterans a proper burial have along 
history in our country. In 1862, President Lincoln signed 
legislation that authorized national cemeteries to ensure a 
proper burial for soldiers who died in the service of the 
country. Congress expanded burial benefits with the War Risk 
Insurance Act Amendments of 1917, so as to avoid a potter's 
field burial for war veterans. That act provided a cash 
payment, of no more than $100, to pay for funeral and burial 
expenses for deaths occurring prior to separation from military 
service.
    In 1923, the burial allowance was extended to veterans who 
died without sufficient assets to pay for burial. The asset 
limitation requirement was removed in 1936. In addition, 
eligibility for cash payments was extended to veterans who 
served during a war or died in the line of duty. The 1940's and 
1950's represented a period of increase in the burial 
allowances to veterans. The increases were justified by the 
rise in cost of burial expenses and a rise in the cost of 
living. Opponents of the increases said that a large proportion 
of veterans had other resources sufficient to meet burial 
costs, such as Social Security old-age lump sum benefits, or in 
some cases, private resources.
    In 1973, Congress set the amount of service-connected and 
non-service-connected burial expenses at $800 (covering 72 
percent of an average adult funeral) and $250 (22 percent of 
the total cost) respectively. Congress intended to make 
veterans' burial benefits in line with the then existent-system 
of Federal civilian employees burial benefits. The increase 
also showed a clear recognition by the Federal Government of 
its responsibility to veterans who suffered a service-connected 
death. In 1978, the burial allowance for a service-connected 
death was raised to $1,100 (80 percent of the total cost). The 
non-service-connected death allowance rose from $250 to $300.
    In 1981, non-service-connected burial benefits were 
restricted to veterans who were in receipt of or entitled to 
compensation or pension at the time of death to impose some 
limitation on who was entitled to non-service-connected 
benefits. By restricting the burial benefit, Congress attempted 
to return to the original purpose of the benefit and make 
certain that only the neediest of veterans were entitled to 
burial aid. In 1982, the non-service-connected burial allowance 
was extended to wartime veterans (1) who were discharged for a 
service-incurred or aggravated injury, (2) whose bodies were 
held by the state unclaimed, (3) who had no next of kin, or (4) 
when there were insufficient resources to cover burial and 
funeral expenses.
    VA currently pays up to $1,500 for burial and funeral 
expenses for a service-connected death and $300 for burial and 
funeral expenses for a non-service-connected death.
    In addition, VA provides a $150 plot allowance for purchase 
of a burial plot and internment for veterans not buried in 
national cemeteries. To be eligible, the veteran must have: (1) 
been discharged due to a disability incurred or aggravated in 
the line of duty; (2) been eligible for compensation or pension 
at the time of death; (3) died in a VA facility; or (4) been a 
reservist discharged or released under circumstances other than 
dishonorable.
    Legislation on this issue was spurred by the issuance of a 
VA report in December 2000, which showed the effect of 
inflation on the burial benefit. In 1973, the average cost of 
an adult funeral was $1,116. In 1999, the average cost for an 
adult funeral was $5,157. Funeral costs have risen faster than 
the cost of inflation.

Committee Bill

    Section 401 of the Committee bill, based on S. 912, would 
raise the burial allowance to $2,000 for service-connected 
deaths, covering 39 percent of the cost for the average adult 
funeral.
    Cost: CBO estimates that this provision would cost $5 
million in 2002, $25 million over the 5-year period, 2002-2006, 
and $49 million over the 10-year period, 2002-2011.

Section 402: authorizes VA to furnish bronze markers for already marked 
                                 graves

Background

    VA is restricted by statute from providing a headstone or 
marker for an already marked grave. VA policy on headstones is 
based on the principle that the Nation wants to ensure than no 
veteran lies in an unmarked grave. Section 2306(a) of title 38 
requires VA to furnish, upon request, markers or headstones for 
the unmarked graves of veterans eligible to buried in national 
and post cemeteries. An exception to this policy exists in 
section 2306(b)(1) of title 38 which authorizes VA to furnish a 
headstone or marker for an individual whose remains are 
unavailable for internment. Once VA provides a marker, a 
veteran's family can get a private marker later. However, 
because of existing law, if a veteran's family obtains a 
private marker first, VA may not furnish a headstone or marker.
    The Committee recognized the inequity of this situation and 
the need to permanently commemorate a veteran's service.

Committee Bill

    Section 402 of the Committee bill, derived from S. 662, 
would allow the Secretary of VA to furnish bronze markers for 
already privately marked graves in order to more permanently 
commemorate a veteran's military service. It does not authorize 
a second marker if the veteran already received a VA marker or 
headstone. The marker must be put in an appropriate place, 
determined by the cemetery concerned, within the grounds of the 
cemetery. Eligibility for these grave markers will apply to 
deaths occurring after the date of enactment of the Act. This 
provision will also apply to a death before the enactment, but 
after November 1, 1990, so long as the request for the marker 
is made within 4 years after the date of the enactment of this 
measure.
    Cost: CBO estimates that enacting this provision would 
result in an increase in spending for burial benefits of $2 
million in 2002, $13 million over the 5-year period, 2002-2006, 
and $20 million over the 10-year period, 2002-2011.

   Section 501: repeals the fiscal year limitation on the number of 
 veterans in VA's program of independent living services and assistance

Background

    VA's Vocation Rehabilitation and Employment Service 
maintains an independent living program. The goal of the 
program is to assist service-disabled veterans who are too 
disabled to retrain for employment to achieve and maintain 
defined independent living outcomes and reduce reliance on 
others.
    The Independent Living program was initially developed as a 
pilot program in 1986 in Public Law 96-466. The program was to 
run through fiscal years 1982 to1985 and have no more than 500 
veteran participants. The authority for the program was 
extended through 1989, and in Public Law 101-237, the program 
was made permanent. However, the cap on the number of 
participants has never been modified. While VA has not turned 
away any veteran seeking services, it has exceeded the 
statutory cap over the last several years. VA projects that 
demand for the program will continue to rise as the large 
Vietnam-era veteran population ages.

Committee Bill

    Section 501 of the Committee bill, derived from S. 1093, 
would eliminate the 500-veteran cap for participants of the 
independent living program, and would retain first priority to 
veterans for whom there is a reasonable feasibility of 
achieving a vocational goal but for their service-connected 
condition.
    Cost: CBO expects the cost of section 501 would be $6 
million in 2002, about $60 million over the 5-year period, 
2002-2006, and $230 million over the 10-year period, 2002-2011.

Section 601: creates a succession plan to address judges retiring from 
         the United States Court of Appeals for Veterans Claims

Background

    The U.S. Court of Appeals for Veterans Claims, originally 
named the U.S. Court of Veterans Appeals, was created in 1988 
in the Veterans' Judicial Review Act to provide judicial review 
of veterans' claims for benefits from the Department of 
Veterans Affairs.
    At the court's inception, the terms for judges were not 
staggered by Congress. The original chief judge and six 
associate judges were appointed to 15-year terms within 16 
months of one another in 1989-1991. A new judge was appointed 
in 1997 to fill a vacancy created by the death of one of the 
originally appointed judges. The chief judge retired in 2000, 
and his seat has not yet been filled. By 2005, the terms of 
five of the remaining judges will have ended.
    Because the judges' terms were not staggered, it is very 
likely that there will be at least four simultaneous vacant 
seats. Recognizing this, in Public Law 105-368, Congress 
attempted to avoid the crisis preemptively that would be 
created if the court had only two or three sitting judges and 
the resulting enormous backlog of cases, by offering some of 
the original judges early retirement. However, no judges 
accepted early retirement and the likelihood of multiple, 
simultaneous vacancies persists.

Committee Bill

    Section 601 of the Committee bill, derived from S. 1089, 
would address the problem by allowing two additional judges to 
be appointed, in order to bridge the retirement of the original 
judges. Specifically, this bill would temporarily expand the 
membership of the court by two seats until August 2005, when 
the last of the seven original judges' terms will expire. Under 
the Committee bill, by that time, two seats would be eliminated 
to restore the court to seven judges. The Committee believes 
that this temporary expansion will give ample time for the 
President to nominate, and the Senate to confirm, judges for 
the court, and avoid the potentially damaging effects of a 
court with only two or three judges.
    Cost: CBO estimates that an extra judge in 2004 would 
result in an increase in discretionary spending of $1 million 
for 2004, assuming the availability of appropriated funds.

  Section 602: repeals the requirement for a judge to provide written 
   notice regarding acceptance of reappointment as a precondition to 
 retirement from the United States Court of Appeals for Veterans Claims

Background

    Currently there are three ways for a judge to retire from 
the United States Court of Appeals for Veterans Claims. First, 
under section 7296(b)(1) of title 38 of the United States Code, 
if the age of the judge and the years served on the United 
States Court of Appeals for Veterans Claims add up to 80, then 
the judge may retire (the so-called Rule of 80). For example, a 
judge who has served on the court for 12 years and has attained 
the age of 68 could retire from the court. Second, under 
section 7296(b)(2), a judge who has not been reappointed 
following the expiration of the term for which the judge was 
appointed must advise the President, in writing, that the judge 
is willing to accept reappointment, and if not reappointed, the 
judge may retire. Last, under section 7296(b)(3), a judge who 
becomes permanently disabled may retire.

Committee Bill

    Section 602 of the Committee bill would repeal the 
requirement set forth in section 7296(b)(2) that a judge 
provide written notice regarding acceptance of reappointment, 
as a precondition to retirement from the United States Court of 
Appeals for Veterans Claims, in order to provide a smooth 
transition of judges under section 601 of the Committee bill.
    Cost: CBO did not estimate a cost to be associated with 
section 602.

     Section 603: terminates the post-November 17, 1988, Notice of 
 Disagreement as a prerequisite to jurisdiction for the United States 
Court of Appeals for Veterans Claims and for charging attorney fees for 
                       representation of veterans

Background

    The Notice of Disagreement (NOD) begins the appellate 
process within the Department of Veterans Affairs. The veteran 
submits an NOD to a regional office of the Department of 
Veterans Affairs, indicating disagreement with the regional 
office's original decision, in whole or part. When Congress 
created the United States Court of Veterans Appeals in 1988, 
the law required claims to have an NOD filed on or after 
November 18, 1988--the date of enactment of the Veterans' 
Judicial Review Act (VJRA)--in order to be reviewed by the 
court. This provision was enacted so as to prevent the new 
court from becoming overwhelmed with appeals.
    However, many difficulties have arisen with this 
jurisdictional requirement, due to the complexity of the VA 
appellate process. Problems arose in determining what is the 
applicable NOD when there were multiple agency decisions and 
extensive correspondence by the claimants. Also, many cases 
originated before November 18, 1988, adding to the difficulty 
of determining which NOD conferred jurisdiction to the court. 
In addition, much litigation has occurred to determine what 
type of writing constitutes an NOD and the type of language 
that must be used to construe disagreement over the VA's 
decision. Then-Chief Judge Frank Q. Nebeker commented, 
``[T]here appear to be countless possible permutations of the 
NOD issues.'' Frank Q. Nebeker, Jurisdiction of the United 
States Court of Appeals: Searching Out the Limits, 46 Me. L. 
Rev. 5 (1994).
    While many veterans have brought appeals to the court, the 
flood of appeals that was anticipated when the court was 
created has not occurred, nor does the Committee anticipate 
that repealing the NOD will create a significant increase in 
cases before the court. The Committee notes that, last year, 
the court decided 1,556 claims out of 2,442 cases filed. Ten 
percent of these cases were dismissed for lack of jurisdiction, 
although no data is available on what portion of these cases 
received NOD-related dismissal.

Committee Bill

    Subsection (a) of section 603 of the Committee bill would 
eliminate the post-November 17, 1988, NOD as a prerequisite to 
jurisdiction at the U.S. Court of Appeals for Veterans Claims 
set out in section 402 of the VJRA. It would not affect the 
requirement of an NOD to trigger agency appeal of a decision. 
It would not eliminate other requirements for a case to be 
heard by the court, such as a timely Notice of Appeal. It is 
the intent of the Committee to free up the court to determine 
appeals on their merits. The appellate process for veterans' 
claims is long enough without a veteran being additionally 
burdened to argue over NODs. It is also important to note that 
this provision would not confer jurisdiction upon the court on 
any matter not currently within its jurisdiction.
    Subsection (b) of this provision would repeal section 403 
of the VJRA that limits payment of attorney fees to cases with 
a post-November 17, 1988, NOD, as a conforming change to 
subsection (a) of the Committee bill. This would ensure that 
veterans can secure representation for any appeal previously 
barred by section 403 of the VJRA that may be filed once 
section 603 of the Committee bill becomes effective. It would 
not modify any other requirement for a veteran to hire or pay 
an attorney.
    Cost: CBO did not estimate a cost to be associated with 
section 603.

Section 604: permits expanded use of the periodic registration fee paid 
   by persons admitted to practice before the United States Court of 
                      Appeals for Veterans Claims

Background

    Currently, the U.S. Court of Appeals for Veterans Claims 
collects a $30 practice fee that may be imposed periodically on 
those admitted to practice before the court. In addition, the 
court collects registration fees that are paid at the court's 
periodic Judicial Conference that is carried out under section 
7286 of title 38. The court has amassed approximately $55,000 
from registration fees at the periodic conferences. It has 
expended a small amount on hiring an ethics speaker for the 
last four Judicial Conferences. Currently, under section 
7285(b), the court is authorized to make expenditures 
``implementing standards of proficiency for practice before the 
court'' only.

Committee Bill

    Section 604 of the Committee bill, derived from S. 1063 and 
requested by the court in a May 24, 2001, letter by Chief Judge 
Kenneth Kramer to then-Committee Chair Specter, would amend 
section 7286 of title 38 of the United States Code so that 
registration fees paid to the court may be used for purposes in 
addition to ``implementing standards of proficiency for 
practice before the court,'' including expanded disciplinary 
proceeding activities and employing independent counsel. The 
provision would also make funds available for support 
activities, such as the preparation, procurement, use, display, 
or dissemination of appropriate court materials. The 
legislation also would allow the use of registration funds to 
foster and support bench and bar activities or the study, 
understanding, commemoration, or improvement of veterans law or 
the work of the court.
    Cost: CBO did not estimate a cost to be associated with 
section 604.

Section 605: makes available to the United States Court of Appeals for 
 Veterans Claims the same management, administrative, and expenditure 
              authorities available to Article III courts

Background

    The U.S. Court of Appeals for Veterans Claims, established 
by the Congress under Article I of the Constitution to exercise 
judicial power, has unusual status as an independent tribunal 
that is not subject to the control of the President or the 
executive branch. Pursuant to section 7282 of title 38, the 
court submits its budget directly to and receives its 
appropriations directly from Congress. Because of its 
standalone status, the court does not have available to it the 
same general management, administrative, and expenditure 
authorities that are available to Article III courts of the 
United States (under the Administrative Office of the U.S. 
Courts), or to other courts that are part of other 
administrative structures, such as the U.S. Court of Appeals 
for the Armed Forces (under the Department of Defense).
    Over the years since its establishment, the court has 
requested the enactment of various gap-filling statutory 
provisions, which are described by Chief Judge Kramer in a May 
24, 2001, letter to then-Committee Chairman Specter:

          . . . for example, in 1990, the Congress specifically 
        added to title 5 U.S.C. App. Sec. Sec. 109(8) and 
        109(10) a reference to this Court so that financial 
        disclosure reports by its judges and certain 
        nonjudicial personnel would be filed with and reviewed 
        by the [Administrative Office] (Pub. L. No. 101-280, 
        Sec. 3, 104 Stat. 152, 155 (1990) (amendments to Ethics 
        in Government Act of 1978, as amended by Ethics Reform 
        Act of 1989)); in 1991, the Congress added subsection 
        (g) to 38 U.S.C. Sec. 7253 to provide that a process 
        comparable to that prescribed by 28 U.S.C. Sec. 372(c) 
        for consideration of complaints of judicial conduct 
        would apply to the Court's judges (Pub. L. No. 102-82. 
        Sec. 3, 105 Stat. 375 (1991)); in 1991, the Congress 
        added subsection (c) to 38 U.S.C. Sec. 7264 to make 
        applicable to the Court's judges 28 U.S.C. Sec. 455 
        relating to the disqualification of judges (Pub. L. No. 
        102-82, Sec. 4, 105 Stat. 375, 376 (1991)); also in 
        1991, the Congress added subsection (i) to 38 U.S.C. 
        Sec. 7281 to give the Court specific authority to 
        accept and utilize voluntary services (Pub. L. No. 102-
        82, Sec. 7, 105 Stat. 375, 377 (1991)).

    The court's special standalone nature is also reflected in 
the provisions of section 7281(a) through (g) of title 38, 
United States Code, which permit it to develop its own 
personnel and job classification system for its judicial and 
nonjudicial personnel.

Committee Bill

    Section 605 of the Committee bill, derived from S. 1063 and 
as requested by the court, would provide a generic authority 
for it to use court-related management, administrative, and 
fund-expenditure authorities that are appropriate for its 
efficient operation. This would preclude the need for gap-
filling provisions. For example, there are two recently enacted 
authorities that the court is lacking, but that seem to be 
generally available to the rest of the Federal Government, to 
reduce the risk of personal liability for official actions (5 
U.S.C. subchapter IV note found preceding 5 U.S.C. Sec. 5941; 
28 U.S.C. Sec. 613; 31 U.S.C. Sec. 3529). Under the proposed 
new section, the court would have these types of authorities 
available to it. However, the court would not have available 
any provision of law that is inconsistent with any provision of 
chapter 72 of title 38. Moreover, the court would have to 
exercise the new authority in accordance with all limitations 
with respect to the underlying authorities themselves, subject, 
as with all authorities, to the availability of appropriations 
provided for its operation.
    Cost: CBO did not estimate a cost to be associated with 
section 605.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 23, 2001.
Hon. John D. Rockefeller IV,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1088, the Veterans' 
Benefits Improvement Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
            Sincerely,
                                          Dan L. Crippen, Director.
    Enclosure.

    S. 1088--Veterans' Benefits Improvement Act of 2001 (As ordered 
  reported by the Senate Committee on Veterans' Affairs on August 2, 
                                 2001)

                                SUMMARY

    S. 1088 would affect several veterans' programs, including 
education, compensation, pensions, burial benefits, and 
housing. CBO estimates that enacting this legislation would 
raise direct spending by $180 million in 2002, $2.6 billion 
over the 2002-2006 period, and almost $5.6 billion over the 
2002-2011 period. Because the bill would affect direct 
spending, pay-as-you-go procedures would apply.
    In addition, CBO estimates that implementing S. 1088 would 
increase spending subject to appropriation by $1 million in 
2002 and $6 million over the 2002-2006 period, assuming 
appropriation of the necessary amounts.
    S. 1088 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of S. 1088 is shown in Table 
1. This estimate assumes the legislation will be enacted near 
the start of fiscal year 2002. The costs of this legislation 
fall within budget functions 550 (health) and 700 (veterans 
benefits and services).

             Table 1.--Estimated Budgetary Impact of S. 1088
                  [By Fiscal Year, in Millions Dollars]
------------------------------------------------------------------------
                                   2002    2003    2004    2005    2006
------------------------------------------------------------------------

CHANGES IN DIRECT SPENDING

Estimated Budget Authority......     180     407     631     656     723
Estimated Outlays...............     180     407     631     656     723

CHANGES IN SPENDING SUBJECT TO
 APPROPRIATION

Estimated Authorization Level...       1       1       2       1       1
Estimated Outlays...............       1       1       2       1       1
------------------------------------------------------------------------

                           BASIS OF ESTIMATE

Direct Spending

    The legislation would affect direct spending in veterans' 
programs for education, compensation, pensions, burial 
benefits, and housing. Table 2 summarizes those effects, and 
individual provisions that would affect direct spending are 
described below.
    Veterans' Readjustment Benefits. Several sections of the 
bill would affect veterans' education and rehabilitation 
benefits. In total, these provisions would increase direct 
spending by $161 million in 2002, by $2.3 billion over the 
2002-2006 period, and by $6.3 billion over the 2002-2011 period 
(see Table 3).
    Basic Benefit. Under current law, participants in the 
Montgomery GI Bill (MGIB) program who serve at least three 
years on active duty are entitled to receive $650 a month if 
they are full-time students. That stipend is available for a 
total of 36 months. For part-time students, the monthly benefit 
is reduced proportionately, but can be spread over a larger 
number of months up to the equivalent of 36 months of full-time 
training. Similarly, individuals who serve two years on active 
duty are entitled to a monthly stipend of $528 for 36 months. 
In all cases, the benefits increase by an annual cost-of-living 
allowance (COLA) and expire 10 years after the end of military 
service.

                                Table 2.--Estimated Direct Spending Under S. 1088
                                [By Fiscal Year, Outlays in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                              2001     2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------

VETERANS' READJUSTMENT BENEFITS

Spending Under Current Law................................    1,693    1,880    2,000    2,107    2,238    2,341
Proposed Changes..........................................        0      161      341      574      594      659
Spending Under S. 1088....................................    1,693    2,041    2,341    2,681    2,832    3,000

COMPENSATION, PENSIONS, AND BURIAL BENEFITS a

Spending Under Current Law................................   21,173   24,501   25,562   26,698   29,736   28,357
Proposed Changes..........................................        0       13       60       51       55       56
Spending Under S. 1088....................................    1,173    4,514    5,622    6,749    9,791   28,413

HOUSING

Spending Under Current Law................................     -991      262      275      283      288      294
Proposed Changes..........................................        0        6        6        6        7        8
Spending Under S. 1088....................................     -991      268      281      289      295      302
----------------------------------------------------------------------------------------------------------------
a One provision affecting veterans benefits would also increase spending under the federal Medicaid program, but
  those costs would not begin to occur until 2009.

    Section 101 would increase the monthly stipend of 
participating veterans who served at least three years on 
active duty to $700 in 2002, $800 in 2003, and $950 in 2004. 
Participating veterans with at least two years of active duty 
would be eligible for a maximum monthly benefit of $560 in 
2002, $650 in 2003, and $772 in 2004. The COLAs scheduled for 
the 2002-2004 period would not occur. Thus, the monthly benefit 
would increase by 5 percent in 2002, 17 percent in 2003, and 35 
percent in 2004.

     Table 3.--Estimated Changes in Education Benefits Under S. 1088
            [By Fiscal Year, Outlays in Millions of Dollars]
------------------------------------------------------------------------
   2*1Description of provision     2002    2003    2004    2005    2006
------------------------------------------------------------------------
Basic Benefit...................      53     205     472     518     568
Accelerated Payments............      98     107      61      19      18
Training for Technological             4      18      27      39      51
 Occupations....................
Independent Living Services.....       6      10      12      15      19
Enrollment of Vietnam-Era             a        1       2       3       3
 Veterans.......................
Total Changes in Education           161     341     574     594     659
 Benefits.......................
------------------------------------------------------------------------
a Less than $500,000.

    Based on current and past usage rates provided by the 
Department of Veterans Affairs (VA), CBO estimates that this 
substantial increase in the MGIB benefit would increase not 
only the number of veterans who use the program, but also the 
number of veterans who will choose to attend school on a full-
time rather than part-time basis. In 2000, 266,000 veterans 
received an average annual MGIB benefit of $3,200. Under 
current law, CBO predicts that in 2011, 335,000 veterans will 
receive an average annual benefit that will have grown by 
annual cost-of-living increases to $4,615.
    Under section 101, CBO estimates that the number of 
veterans training under MGIB would rise only slightly in the 
first couple years, but the number of participants would 
eventually grow to about 360,000 in 2011, an 8 percent increase 
over the current-law (or baseline) estimate. CBO estimates 
that, over the next 10 years, the average annual benefit paid 
by VA would increase by about 3 percent because more veterans 
would choose to attend school full time, and by 35 percent 
because of the benefit increase. CBO estimates the average 
annual benefit in 2011 would be about $6,400.
    MGIB benefits are also available to active-duty members of 
the armed forces who have completed two years of service. When 
these servicemembers use MGIB benefits, they receive an amount 
no greater than the cost of tuition. In many cases, therefore, 
servicemembers do not receive the full MGIB benefit, and would 
not be affected by an increase in the benefit levels. Over the 
last few years, the number of active-duty servicemembers using 
MGIB has been gradually declining, down to about 14,000 in 
2000. Under current law, CBO expects the number to continue to 
decline to about 11,800 by 2011. CBO estimates that this 
provision would partially stem the decline, so that by 2011 
there would be about 12,000 servicemember trainees, an increase 
of 2 percent above the baseline estimate. In 2000, these 
servicemember trainees received an average annual benefit of 
$2,200. Under section 101, we estimate the average benefit 
these trainees would receive would increase to $3,500 in 2011, 
almost 35 percent above the current projection.
    CBO estimates the total cost of section 101 would be $53 
million in 2002, about $1.8 billion over the 2002-2006 period, 
and $5.3 billion over the 2002-2011 period.
    Accelerated Payments. Section 102 would permit veterans to 
receive a lump-sum payment for benefits they would normally 
receive monthly over a term of their training--for example, a 
semester in college or, for other forms of training, the period 
of a course's instruction. CBO estimates that this provision 
would increase direct spending by about $100 million in 2002, 
$300 million over the 2002-2006 period, and $365 million over 
the 2002-2011 period. Increased costs would occur initially as 
payments from one fiscal year are made instead in the preceding 
year. The effect would be much smaller in later years when 
benefit rates would increase mostly from COLAs, because 
payments shifted to the preceding year would be largely offset 
by payments shifted from the following year. CBO estimates that 
about 30 percent of MGIB beneficiaries would elect to receive 
an accelerated payment in 2002 and that a total of 60 percent 
would make that election in 2004 and subsequent years.
    Training for Technological Occupations. Section 105 would 
expand education allowed under MGIB to include training 
required for certification in technological occupations. 
Section 103 would allow payment of 60 percent of the tuition 
and fees for such training, when the total cost of the training 
was more than double the amount that could otherwise be paid 
under MGIB. The payment would be made in a lump sum and the 
trainee's remaining months of MGIB entitlement would be reduced 
accordingly. Based on information from a number of technical 
training schools about the number of individuals in the general 
population who undergo training for technological occupations, 
CBO estimates that about 25,000 veterans a year would 
eventually participate in such training. Assuming that half of 
these veterans would have used MGIB benefits even in the 
absence of this provision, CBO estimates the cost of section 
103 would be $4 million in 2002, about $140 million over the 
2002-2006 period, and $440 million in the 2002-2011 period.
    Independent Living Services. Section 501 would repeal the 
annual limit on the number of veterans in programs of 
independent living services and assistance. Although the 
current annual limit on veterans in these programs is 500, VA 
reports that 1,987 veterans were enrolled in independent living 
programs last year, at an average cost of $4,000. VA expects 
sharp growth in the eligible population, due to the aging of 
the Vietnam-era veteran population and new rules regarding 
presumptive disabilities. Absent this provision, CBO assumes 
that VA will reduce their caseload to come into compliance with 
the current limitation by 2003. Under section 501, we estimate 
the caseload for these programs would be about 2,400 in 2002 
and would grow to about 8,700 in 2011. CBO estimates the 
average cost would be about $4,250 in 2002 and would grow to 
over $5,300 in 2011. Based on these projections, CBO expects 
the cost of section 501 would be $6 million in 2002, about $60 
million over the 2002-2006 period, and $230 million over the 
2002-2011 period.
    Enrollment of Vietnam-Era Veterans. Section 104 would grant 
MGIB eligibility to certain Vietnam-era veterans who were not 
on active duty during the 1985 conversion to MGIB, but later 
rejoined the armed forces. Based on information from the 
Department of Defense, CBO estimates that almost 9,000 
servicemembers and veterans would qualify. Because this is an 
older population and many of these veterans have been out of 
the service for some time, we assume that only 25 percent would 
become trainees and that they would, on average, train at one-
quarter time over a period of four years. Assuming individuals 
would initiate training over a period of years, as they leave 
the military or hear about their new eligibility, CBO estimates 
the cost will be less that $500,000 in 2002, $9 million over 
the 2002-2006 period, and $18 million over the 2002-2011 
period.
    Compensation, Pensions, and Burial Benefits. Several 
sections of the bill would affect spending for veterans' 
disability compensation, pensions, and burial benefits (see 
Table 4). In total, the bill would increase spending for these 
programs by $13 million in 2002 and $235 million over the 2002-
2006 period. Over the 2002-2011 period, the bill would reduce 
net direct spending by $78 million because of the extension of 
provisions affecting pensions and Medicaid.
    Compensation Related to Undiagnosed Illnesses. Section 202 
would expand the definition of undiagnosed illness for the 
purpose of granting service-connected disability compensation 
to more Persian Gulf War veterans. It also would extend until 
the end of 2011 the time during which a veteran must exhibit 
and document signs of an undiagnosed illness. Under current 
law, veterans who served in the Persian Gulf anytime between 
August 2, 1990, and the present can be presumed to have a 
compensable disability if they exhibit symptoms that cannot be 
attributed to any diagnosable illness before December 31, 2001. 
This section would expand eligibility to those Gulf War 
veterans who are diagnosed with any chronic multisymptom 
illness that cannot be clearly defined and is characterized by 
two or more of certain signs or symptoms, which include joint 
pain, headaches, sleep disorders, and respiratory problems. For 
the purpose of this estimate, CBO assumes that diseases for 
which veterans could receive service-connected disability 
include chronic fatigue syndrome (CFS), fibromyalgia, irritable 
bowel syndrome, multiple chemical sensitivity (MCS), and 
autoimmune disorder since these diseases are regularly 
identified in articles and reports regarding ``Persian Gulf War 
Syndrome.''
    CBO obtained data from the VA on the number of Gulf War 
veterans who have been diagnosed with ill-defined illnesses 
like CFS and fibromyalgia and have had their claims for 
compensation denied. VA was unable to provide similar data for 
MCS or chronic multisymptom illness because it does not have 
diagnostic codes for these illnesses. CBO used data from a 
comprehensive study of Gulf War veterans' health to estimate 
the incidence of MCS within that population. Because chronic 
multisymptom illness often exhibits similar symptoms as CFS or 
fibromyalgia, CBO assumed that most veterans with this illness 
are likely to have already been diagnosed as having these other 
diseases. From the data provided by VA, CBO could not estimate 
the prevalence of autoimmune disorders that might be attributed 
to service in the Gulf War. VA does not have a single 
diagnostic code for this illness but, instead, classifies over 
a dozen widely varying diseases as autoimmune disorders.

    Table 4.--Estimated Changes in Compensation, Pensions, and Burial
                         Benefits Under S. 1088
                [By Fiscal Year, in Millions of Dollars]
------------------------------------------------------------------------
    Description of Provision       2002    2003    2004    2005    2006
------------------------------------------------------------------------
Compensation Related to                0      46      38      41      43
 Undiagnosed Illnesses..........
Extension of Provisions                0       0       0       0       0
 Affecting Pensions and Medicaid
 a .............................
Burial Allowance................       5       5       5       5       5
Incompetent Institutionalized          4       4       4       5       5
 Veterans.......................
Excluded Income for Pension            3       3       3       4       4
 Purposes.......................
Grave Markers...................       3       4       3       2       1
Limited Compensation for              -2      -2      -2      -2      -2
 Incarcerated Veterans..........
Other Provisions................      bbbbb
Total Changes in Compensation,        13      60      51      55      56
 Pensions, and Burial Benefits..
------------------------------------------------------------------------
a The extensions of provisions affecting veterans' pensions and Medicaid
  would have no budgetary impact until 2009.
b Less than $500,000.

    Assuming that some of the diagnoses are overlapping and 
that some previously denied cases would likely be resubmitted, 
CBO estimates that enacting this bill would result in about 
3,000 additional veterans being granted compensation for a 
service-connected disability in the first year. CBO estimates 
that extending this deadline for another 10 years would allow 
an additional 3,700 claims to be granted over that time. This 
number is based on recent historical data on the rate of 
undiagnosed illness claims that have been granted by VA.
    Because this section of the bill would take effect on April 
1, 2002, and since VA takes an average of six months to 
adjudicate reopened claims, CBO expects that no payments would 
be made in 2002. Based on payment data from VA for approved 
claims for CFS, fibromyalgia, and similar illnesses, CBO 
estimates the average annual benefit for such illnesses would 
be about $8,000 in 2003. As a result, CBO estimates that 
enacting section 202 would increase direct spending by $46 
million in 2003, $168 million from 2003 through 2006, and $400 
million over the 2003-2011 period. (Under current law, we 
estimate that disability compensation payments to veterans will 
total $254 billion over the 10-year period.)
    Extension of Provisions Affecting Pensions and Medicaid. 
Section 209 would extend through 2011 the sunset dates on 
provisions affecting pensions and Medicaid. One of these 
provisions would reduce direct spending for veterans' pensions 
and increase spending for Medicaid, resulting in a net spending 
reduction of $631 million over the 2009-2011 period. The other 
provision would lower direct spending by $5 million over the 
same time period.

          Veterans in Medicaid nursing homes. Subsection 209(b) 
        would extend from September 30, 2008, to September 30, 
        2011, the expiration date on a provision of law that 
        sets a $90 per month limit on pensions for any veteran 
        without a spouse or child, or for any survivor of a 
        veteran, who is receiving Medicaid coverage in a 
        Medicaid-approved nursing home. There are currently 
        about 19,000 veterans and 27,000 survivors who are 
        affected by this provision of law. The average savings 
        is $14,000 per veteran and $9,000 per survivor. Based 
        on these numbers, CBO estimates there would be gross 
        savings for VA of $1.6 billion over the 2009-2011 
        period. Higher Medicaid payments to nursing homes would 
        offset some of the savings credited to VA. CBO 
        estimates that those costs would total $969 million 
        over the 2009-2011 period, resulting in a net savings 
        of $631 million over the same period.
          Income verification. Current law authorizes VA to 
        acquire information on income reported to the Internal 
        Revenue Service (IRS) to verify income reported by 
        recipients of VA pension benefits. This authorization 
        will expire on September 30, 2008. Subsection 209(a) 
        would extend the expiration date to September 30, 2011. 
        CBO's estimate is based on VA's recent experience, 
        which has shown that about $9 million in new savings is 
        achieved annually through this income match. However, 
        the provision of law that allows the IRS to provide the 
        information to VA will expire on September 30, 2003. 
        Because the act does not extend both provisions, 
        savings would be limited to the continuing effects of 
        the current program. Thus, CBO projects a $5 million 
        savings over the 2009-2011 period.

    Burial Allowance. Section 401 would increase the allowance 
to help cover burial and funeral expenses for veterans whose 
deaths are attributed to a service-connected disability. This 
benefit would increase from the current rate of $1,500 to 
$2,000. Based on information from the VA, CBO estimates that 
this provision would apply to about 9,700 burials per year and 
would cost $5 million in 2002, $25 million over the 2002-2006 
period, and $49 million over the 2002-2011 period.
    Incompetent Institutionalized Veterans. Section 208 would 
eliminate the requirement that VA withhold benefit payments 
from certain incompetent veterans who are institutionalized at 
the government's expense and whose estates are valued above 
$10,180. These veterans cannot have their benefits reinstated 
until the value of their estates falls to no more than $5,090. 
Data from VA indicates that about 1,900 veterans covered by 
this provision have estates valued over $10,180 and would thus 
begin receiving benefits under this provision. In 1999, the 
average length of time for which veterans lost their benefit 
payments was 45 days. Data from VA indicates these veterans 
have neither a spouse nor a child and receive an average 
monthly benefit of $1,604. CBO estimates that the annual added 
costs for veterans' entitlements would be about $4 million in 
2002, $22 million over the 2002-2006 period, and $47 million 
over the 2002-2011 period.
    Excluded Income for Pension Purposes. Section 203 would 
exclude life insurance proceeds and other nonrecurring income 
from determination of eligibility for a survivors' pension. 
Under current law, VA considers various forms of income to 
determine if a surviving spouse of a wartime veteran is 
eligible to collect a pension, including any life insurance 
funds. Based on information provided by VA, CBO estimates that 
an additional 700 survivors would be eligible for a pension in 
2002. By 2011, that number would grow to about 2,000 survivors. 
In addition, survivors who are currently counseled by veterans 
service organizations to delay applying for a pension to avoid 
having insurance proceeds considered would be able to collect 
benefits sooner following the veteran's death. This would 
result in an additional half a month's benefit. CBO estimates 
there will be about 14,000 survivors who collect this extra 
benefit in 2002, with the number growing to about 40,000 in 
2011. With an average annual benefit of $3,600 in 2001, CBO 
estimates that enacting this provision would cost $3 million in 
2002, $17 million over the 2002-2006 period, and $62 million 
over the 2002-2011 period.
    Grave Markers. Section 402 would allow VA to provide a 
bronze marker to be placed on the grave or other appropriate 
location in a cemetery to commemorate a veteran's military 
service. Under current law, veterans buried in a private 
cemetery may only receive a commemorative headstone or marker 
from VA if the gravesite is not marked. Veterans buried in 
national or state veterans' cemeteries automatically receive a 
commemorative headstone or marker. This bill would allow 
families of deceased veterans who have already provided their 
own headstone or marker to request a second marker from VA. For 
those veterans who died before enactment of this bill but after 
November 1, 1990, (the date when the law was changed to 
prohibit a second marker), the families have four years from 
enactment in which to request the marker. Based on information 
provided by VA about the number of veterans who have already 
died, projections about future deaths, and the number of 
headstones and markers already provided, CBO estimates that 
about 365,000 requests for bronze markers would be made over 
the next 10 years. The estimate reflects information from a VA 
study that showed only 27 percent of private cemeteries allow 
second markers and an assumption that only half of those 
eligible will participate in this program. With an average cost 
of about $50 for each marker, CBO estimates that enacting this 
provision would result in an increase in spending for burial 
benefits of $3 million in 2002, $13 million over the 2002-2006 
period, and $20 million over the 2002-2011 period.
    Limited Compensation for Incarcerated Veterans. Section 207 
would reduce compensation payments to veterans who were 
incarcerated on October 7, 1980, for a felony committed before 
that date and remain incarcerated for conviction of that 
felony. Current law allows for reduced payments to veterans who 
were convicted and incarcerated after October 7, 1980. 
Incarcerated veterans who have a service-connected disability 
rating of 20 percent or more are paid at the 10 percent rate. 
Incarcerated veterans who are rated at 10 percent receive 
payments of half that amount. VA has identified 230 veterans 
who were incarcerated prior to enactment of the legislation 
that provided for these reductions and who meet the criteria 
stipulated in section 207. Based on information provided by VA 
on the average annual payment to incarcerated veterans, CBO 
estimates that this provision would result in an annual savings 
of about $2 million.
    Other Provisions. CBO estimates that the following 
provisions would have little or no net effect on direct 
spending: Claims Handling. Section 204 would modify legislation 
enacted last year that directed VA to assist veterans in 
establishing their claims for benefits. This section would 
allow VA to close claims after a year if the veterans has not 
cooperated in providing needed information.

          Income Reporting for Pensions. Section 205 would 
        change the requirement that veterans and survivors 
        receiving pensions report changes to their income from 
        once a month to once a year. This provision would 
        simplify the administrative process for VA but would 
        have no real savings effects.
          Eliminate Benefits for Fugitives. Section 206 would 
        add VA benefits to the list of federal benefits for 
        which fugitive felons are prohibited from receiving. 
        Based on information provided by VA, CBO estimates that 
        any savings that result from this provision would be 
        negligible. Housing. Title III of the bill would affect 
        direct spending on veterans housing programs; in total 
        these provisions would increase direct spending by $6 
        million in 2002 and by $34 million over the 2002-2006 
        period (see Table 5). Over the 2002-2011 period, 
        however, the bill would reduce direct spending by $698 
        million.

          Table 5.--Estimated Changes in Housing Under S. 1088
            [By Fiscal Year, Outlays in Millions of Dollars]
------------------------------------------------------------------------
    Description of Provision       2002    2003    2004    2005    2006
------------------------------------------------------------------------
Extension of Provisions                0       0       0       0       0
 Affecting Housing a ...........
Increase in Loan Guarantee             6       6       6       7       8
 Amount.........................
Housing for Members of the             0       0       0       0       0
 Selected Reserves a ...........
Housing for Native American           bbbbb
 Veterans.......................
Total Changes in Housing........       6       6       6       7       8
------------------------------------------------------------------------
a These provisions would have budgetary effects for 2009 through 2011.
b Less than $500,000.

    Extension of Provisions Affecting Housing. Section 303 
would extend through 2011 three provisions that affect housing 
programs for veterans, thus reducing direct spending by $778 
million over the 2009-2011 period.
          Loan fees. Subsection 303(c) would reduce the VA loan 
        subsidy by charging veterans a fee surcharge of 0.75 
        percent of the loan amount at the time the loan is 
        made. CBO estimates this provision would affect 170,000 
        new loans a year and raise collections by an average of 
        $182 million a year. Under current law, veterans can 
        reuse their home loan guarantee benefit if their 
        previous debt has been paid in full. Subsection 303(c) 
        would require VA to collect a fee of 3 percent of the 
        total loan amount from veterans who reuse their 
        benefit. CBO estimates this provision would affect 
        roughly 22,800 new loans a year and raise collections 
        by an average of $59 million a year for 2009 through 
        2011.
          Resale losses. Subsection 303(d) would extend a 
        provision of law that requires VA to consider losses it 
        might incur when selling a property acquired through 
        foreclosure. Under current law, VA follows a formula 
        defined in statute to decide whether to acquire the 
        property or pay off the loan guarantee instead. The 
        formula requires appraisals that might be valid at the 
        time they are made, but does not account for changes in 
        market conditions that might occur while VA prepares to 
        dispose of the property. The bill would require VA to 
        take account of losses from changes in housing prices 
        that the appraisal does not capture. Losses of this 
        type might be prevalent when housing prices are 
        particularly volatile or if appraisals are biased for 
        other reasons. Based on information from VA, CBO 
        estimates this provision would save $10 million a year 
        over the 2009 through 2011 period.
          Loan sales. Subsection 303(b) would extend VA's 
        authority to guarantee the real estate mortgage 
        conduits that are used to sell certain direct loans on 
        the secondary mortgage market. Without this authority, 
        VA could market direct loans under other provisions of 
        current law, but by guaranteeing the certificates 
        issued on a pool of loans, VA obtains a better price 
        for the loans sold. CBO estimates this provision would 
        save VA $8 million a year for 2009 through 2011.
    Increase in Loan Guarantee Amount. Section 301 would 
increase the maximum loan guarantee amount on VA home loans 
from $50,750 to $63,175, thereby raising the maximum loan 
amount from $203,000 to $252,700. (For large loan amounts, VA 
can guarantee no more than 25 percent of the loan amount.) CBO 
estimates this provision would increase direct spending by $6 
million in 2002, $33 million over the 2002-2006 period, and $87 
million over the 2002-2011 period.
    Based on information from VA, CBO estimates that the bill 
would result in 8,000 new loans a year over the 2002-2011 
period. In addition, roughly 3,000 loans each year would now be 
made with higher loan amounts--these would not be new 
borrowers, but veterans who would no longer need a downpayment 
(or as large a downpayment) to qualify for the VA loan 
guarantee. By boosting participation in the VA home loan 
program, the bill would increase direct spending in three 
different ways. First, added subsidy costs for 11,000 
guaranteed loans a year (8,000 new loans and 3,000 loans with 
larger loan amounts) would average $6.5 million a year over the 
2002-2011 period. Second, some of those 11,000 loans will 
become delinquent and go to foreclosure. When a guaranteed loan 
goes into foreclosure, VA often acquires the property and 
issues a new direct loan (called a vendee loan) when the 
property is sold. CBO estimates that the subsidy cost of these 
vendee loans would be less than $500,000 each year until 2011. 
Finally, VA sells most vendee loans on the secondary mortgage 
market and guarantees their timely repayment. Based on 
information from VA, CBO estimates the subsidy cost of such 
guarantees would be less than $500,000 each year until 2005, 
but would eventually reach $4 million a year by 2011.
    Housing for Members of the Selected Reserves. Section 303 
would extend home loan benefits for reservists and raise fees 
charged for this benefit through 2011. Under current law, the 
benefit expires in 2007, and the fees expire in 2008. CBO 
estimates that enacting this provision would result in VA 
guaranteeing an additional 7,000 loans a year over the 2008-
2011 period, with an average loan amount of $140,000. Because 
loan fees would more than offset the subsidy cost of additional 
loan guarantees, CBO estimates that the provision would lower 
net spending by $2 million annually over the 2008-2011 period.
    Housing for Native American Veterans. Section 302 would 
extend the Native American Veteran Housing Loan Pilot Program 
through December 31, 2005. Under the program, VA makes direct 
loans to veterans living on trust lands for the purchase, 
construction, or improvement of a home. In 1993, Public Law 
102-389 provided appropriations of $4.5 million for the subsidy 
cost of these loans. Since the program's inception, VA has made 
about 200 loans at a subsidy cost of $2 million. CBO estimates 
that under the bill, VA would subsidize about 30 loans a year 
at an annual cost of about $250,000. Because the bill would 
affect outlays from funds already appropriated and would not 
depend on future appropriation action, these additional outlays 
are considered direct spending for scorekeeping purposes. In 
addition, CBO estimates that VA's administrative expenses, a 
discretionary cost, would be roughly $500,000 each year.

Spending Subject to Appropriation

    Table 6 shows the estimated effects of S. 1088 on 
discretionary spending for veterans' programs, assuming that 
appropriations are provided in the amount of the estimated 
authorizations.
    Extension of National Academy of Sciences Reports. Section 
201(b) would extend for another 10 years the biennial report on 
Agent Orange and veterans that is produced by the National 
Academy of Sciences. This comprehensive literature review and 
analysis of current laboratory studies categorizes specific 
diseases as to whether they could be caused by herbicide 
exposure. VA uses this information to establish an automatic 
presumption of service connection, thereby making all Vietnam 
veterans with these diseases eligible for compensation 
benefits. Based on information about the current costs for 
producing this report, CBO estimates that implementing this 
section would cost $4 million over the 2002-2011 period, 
assuming appropriation of the necessary amounts.
    Housing for Native American Veterans. Section 302 would 
extend the Native American Veteran Housing Loan Pilot Program 
through December 31, 2005. As discussed above, this provision 
would increase VA's administrative expenses by roughly $500,000 
each year.
    Court of Appeals for Veterans Claims. Section 601 would 
allow two extra judges to be appointed to the Court of Appeals 
for Veterans Claims to compensate for the upcoming retirements 
of most of the sitting judges. In 2004 and 2005, five of the 
seven judges on the Court will retire. To ensure that the Court 
would have enough judges to fill a three-person panel, this 
section would authorize the appointment of two judges to the 
Court before September 30, 2004. CBO assumes that one judge 
will be nominated in 2002 and another in 2003. Since the last 
appointment of a judge to the Court took 18 months, CBO assumes 
that 2004 would be the only year in which an extra judge would 
be on the Court. CBO estimates this would result in an increase 
in discretionary spending of $1 million for 2004, assuming the 
availability of appropriated funds. This estimate includes 
salaries and benefits for the judge, a secretary, and three 
clerks, plus some modifications to the current offices to 
create additional office space.

                        Table 6.--Estimated Spending Subject to Appropriation for S. 1088
                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                                   2001    2002    2003    2004    2005    2006
----------------------------------------------------------------------------------------------------------------

Spending Under Current Law

Estimated Authorization Level a ................................   1,093   1,143   1,182   1,223   1,264   1,305
Estimated Outlays...............................................   1,079   1,138   1,178   1,219   1,260   1,301

Proposed Changes

Estimated Authorization Level...................................       0       1       1       2       1       1
Estimated Outlays...............................................       0       1       1       2       1       1

Spending Under S. 1088

Estimated Authorization Level a ................................   1,093   1,144   1,183   1,225   1,265   1,306
Estimated Outlays...............................................   1,079   1,139   1,179   1,221   1,261   1,302
----------------------------------------------------------------------------------------------------------------
a The 2001 level is the amount appropriated for that year for General Operating Expenses, the Court of Appeals
  for Veterans Claims, and administrative expenses for the Native American Veteran Housing Loan Pilot Program.
  Both the current program and the proposed changes for the Native American Veteran Hosing Loan Pilot program
  are more than $500,000 but less than $1 million.

    The other provisions relating to the Court of Appeals for 
Veterans Claims would have no net impact on discretionary 
spending.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. The net changes in outlays that are 
subject to pay-as-you-go procedures are shown in the following 
table. For the purposes of enforcing pay-as-you-go procedures, 
only the effects in the current year, the budget year, and the 
succeeding four years are counted.

                      Table 7.--Estimated Impact of S. 1088 on Direct Spending and Receipts
                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                      2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0    180    407    631    656    723    783    829    425    470    464
Changes in receipts *
----------------------------------------------------------------------------------------------------------------
* Not applicable.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    S. 1088 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.

                         PREVIOUS CBO ESTIMATES

    On July 20, 2001, CBO prepared a cost estimate for H.R. 
2540, the Veterans Benefits Act of 2001, as ordered reported by 
the House Committee on Veterans' Affairs on July 19, 2001. 
Section 202 of S. 1088 is similar to section 202 of H.R. 2540, 
though the Senate version extends for another 10 years the time 
in which a Gulf War veteran can make a claim for undiagnosed 
illnesses. As a result, the Senate version has a higher 
estimated cost over the 2003-2011 period.
    On July 5, 2001, CBO prepared a cost estimate for H.R. 
1929, the Native American Veterans Home Loan Act of 2001, as 
introduced in the House on May 21, 2001. Section 302 of S. 1088 
is similar to H.R. 1929, and its costs are identical through 
2008; other provisions of S. 1088 would lower costs over the 
2009-2011 period.
    On June 22, 2001, CBO prepared a cost estimate for H.R. 
442, a bill to amend title 38, United States Code, to increase 
the maximum amount of a home loan guarantee available to a 
veteran, as introduced in the House on February 6, 2001. 
Section 301 of S. 1088 is similar to H.R. 442, and its costs 
are identical through 2008; other provisions of S. 1088 would 
lower costs over the 2009-2011 period.
    On June 15, 2001, CBO prepared a cost estimate for H.R. 
1291, the 21st Century Montgomery GI Bill Enhancement Act, as 
introduced in the House on March 29, 2001. Section 101 of S. 
1088 is similar to H.R. 1291, but H.R. 1291 would provide a 
larger increase in the MGIB benefit, and thus has a higher cost 
over the 2002-2011 period.
    Estimate prepared by: Federal Costs: (Readjustment 
Benefits) Sarah Jennings; (Housing) Sunita D'Monte. 
Compensation, Pensions, and Other Programs: Michelle Patterson. 
Impact on State, Local, and Tribal Governments: Elyse Goldman. 
Impact on the Private Sector: Allison Percy.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis, Congressional Budget Office.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its August 2, 2001, meeting. On that date, 
the Committee, by unanimous voice vote, ordered S. 1088, with 
the original purpose to facilitate the use of educational 
assistance under the Montgomery GI Bill for education leading 
to employment in high technology industry, and for other 
purposes, reported favorably to the Senate.

                             Agency Report

    On June 29, 2001, the Honorable Leo S. Mackay, Jr., Ph.D., 
Deputy Secretary for Veterans Affairs, appeared before the 
Committee and submitted testimony on, among other things, 
certain provisions of S. 1088, as amended. His statement is 
reprinted below:

  STATEMENT OF THE HONORABLE LEO S. MACKAY, JR., PHD, DEPUTY 
                 SECRETARY OF VETERANS AFFAIRS

    Good Morning, Mr. Chairman and Members of the Committee. I 
am pleased to appear before you today to provide the 
Department's views on a number of pieces of legislation 
currently before the Committee. With me this morning are the 
Under Secretary for Benefits, Mr. Joseph Thompson, his 
Assistant Deputy Under Secretary for Program and Management, 
Mr. Robert Epley, and our Deputy General Counsel, Mr. John 
Thompson.
    In the short time that I have available to me I would like 
to provide highlights of the Administration's views on these 
bills and would ask that my entire written statement be 
submitted for the record.
    We commend the Committee for holding this hearing and I 
thank you and your staffs for the cooperation shown the 
Department to include a number of provisions that will clarify 
existing law and help improve the benefits that we provide to 
our veterans and their dependents.
    The Committee has before it, S. 1090, the ``Veterans' 
Compensation Cost-of-Living Adjustment Act of 2001.'' This bill 
would authorize a cost-of-living adjustment in VA compensation 
and dependency and indemnity compensation rates. The 
Administration strongly supports this legislation and urges its 
speedy adoption. This proposed increase is necessary and 
appropriate to protect the benefits of affected veterans and 
dependents from the eroding effects of inflation.
    The Committee is also considering two pieces of legislation 
that primarily impact the Court of Appeals for Veterans Claims. 
VA defers to the Court with regard to S. 1063, which deals with 
administrative matters affecting the Court. S. 1089 would 
expand temporarily the Court so as to facilitate staggered 
terms for judges on that Court. VA defers to the Court with 
respect to the merits of this change. S. 1089 would also 
eliminate the requirement that appeals to the Board of 
Veterans' Appeals must have been initiated before November 18, 
1988, in order for there to be judicial review of the Board's 
decisions. VA is assessing the impact of the provision and will 
notify the Committee of our views once that assessment is 
complete.
    S. 1091 would modify current law regarding presumption of 
service-connection for Vietnam veterans. VA is currently 
studying the scientific merits of removing the 30-year 
respiratory cancer presumption and we defer taking a position 
pending the outcome of that review. We support the extension of 
the National Academy of Sciences for providing biennial reports 
to the Secretary on herbicide exposure.
    S. 1088 would permit accelerated Montgomery GI Bill 
payments for veterans training in high-tech courses. VA 
supports the concept of acceleration of benefits for high cost/
short-term courses but we do not believe this should be limited 
to veterans in high-tech courses.
    S. 1093, the ``Veterans' Benefits Programs Modification Act 
of 2001,'' contains a number of provisions that VA is pleased 
to support. It would restrict compensation payments to 
prisoners and fugitives. It would make needed clarifying 
changes to the Veterans Claims Assistance Amendments of 2000. 
It would remove the current 500-veteran cap on the number of 
vocational rehabilitation participants in a program of 
independent living. S. 1093 would also raise the maximum home 
loan guaranty from $50,750 to $63,175. Finally, it would make 
needed changes to the law regarding VA's need-based pension 
program.
    S. 131 would index monthly Montgomery GI Bill rates to the 
average monthly cost of tuition and fees for commuter students 
at 4-year colleges with annual adjustments. Mr. Chairman, VA 
acknowledges that the monthly benefits need to be increased. We 
prefer, however, the stepped increases found in H.R. 1291, 
which recently was passed by the House of Representatives.
    S. 228 would make permanent the Native American Home Loan 
Program. This program is slated to expire at the end of this 
year. We support an extension of the program through FY 2005.
    S. 781 would extend through FY 2015 the authority to 
guaranty home loans for members of the Selected Reserve. VA 
supports this bill. Extending the benefit recognizes the role 
the Reserves play in our National Defense and would provide 
assurance to those entering reserve service today that this 
benefit will be there for them when they need it.
    S. 912 would increase various burial and plot allowances. 
However, this bill would increase expenditures for this program 
by more than three-fold and consequently we cannot support the 
bill in its proposed form. We can, however, support an increase 
from $1,500 to $2,000 for the burial allowance for service-
connected deaths.
    S. 937 would amend the Montgomery GI Bill to permit 
servicemembers to transfer their entitlement to their 
dependents, permit a limited form of accelerated benefits, make 
benefits available for technological occupations, and permit 
separated reservists to use Montgomery GI Bill benefits. Since 
the Department of Defense would pay for the transfer of 
benefits and for reservists, we would defer to DoD on those two 
issues. As I stated earlier, we support the concept of 
accelerated benefits and it should not be limited to just the 
payment for semester.
    Mr. Chairman, there are three bills before the Committee 
today that VA is unable to support.
    S. 409 would statutorily extend until December 31, 2011, 
the presumptive period for undiagnosed illnesses suffered by 
Gulf War veterans. VA currently has the authority to extend 
this period administratively and that is the preferred method. 
This bill would also redefine ``undiagnosed illnesses'' to 
include poorly defined illnesses such as fibromyalgia, and 
chronic fatigue syndrome, among others. VA has adequate 
authority under existing law to establish presumptions for 
these conditions should scientific and medical evidence support 
such action.
    S. 457 would establish a presumption of service-connection 
for hepatitis C for seven different categories of veterans. VA 
opposes this because the presumption would be overly broad and 
necessarily result in compensating many veterans whose 
hepatitis is due to illegal intravenous drug use.
    S. 662. would authorize VA to provide headstones or markers 
for previously marked graves of veterans. VA opposes this 
proposal. We believe that the purpose of providing a headstone 
or a marker is to ensure that no veteran's grave goes unmarked. 
And we are particularly concerned with the concept of placing a 
marker at an ``area appropriate for the purpose of 
commemorating'' an individual. This bill represents a departure 
from the longstanding policy of providing headstones and 
markers for ``graves'' of veterans.
    Mr. Chairman, this completes my opening statement. We will 
be happy to answer any questions the Committee may have.

    Changes in Existing Law Made by the Committee Bill, As Reported

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *

CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

           *       *       *       *       *       *       *

SUBCHAPTER II--WARTIME DISABILITY COMPENSATION

           *       *       *       *       *       *       *

   CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

                         subchapter i--general

Sec.

1101.  * * *

           *       *       *       *       *       *       *

subchapter ii--wartime disability compensation

           *       *       *       *       *       *       *

[1116. PRESUMPTIONS OF SERVICE CONNECTION FOR DISEASES ASSOCIATED WITH 
                    EXPOSURE TO CERTAIN HERBICIDE AGENTS]

1116. PRESUMPTIONS OF SERVICE CONNECTION FOR DISEASES ASSOCIATED WITH 
                    EXPOSURE TO CERTAIN HERBICIDE AGENTS; PRESUMPTION 
                    OF EXPOSURE.

           *       *       *       *       *       *       *

Sec. 1114. Rates of wartime disability compensation

  For the purposes of section 1110 of this title--

           *       *       *       *       *       *       *

          (r) Subject to section [5503(e)] 5503(c) of this 
        title, if any veteran, otherwise entitled to 
        compensation authorized under subsection (o) of this 
        section, at the maximum rate authorized under 
        subsection (p) of this section, or at the intermediate 
        rate authorized between the rates authorized under 
        subsections (n) and (o) of this section and at the rate 
        authorized under subsection (k) of this section, is in 
        need of regular aid and attendance, then, in addition 
        to such compensation--

           *       *       *       *       *       *       *

[Sec. 1116. Presumptions of service connection for diseases associated 
                    with exposure to certain herbicide agents]

Sec. 1116. Presumptions of service connection for diseases associated 
                    with exposure to certain herbicide agents; 
                    presumption of exposure

  (a)(1) * * *

           *       *       *       *       *       *       *

  [(4)] (3) For purposes of this section, the term ``herbicide 
agent'' means a chemical in an herbicide used in support of the 
United States and allied military operations in the Republic of 
Vietnam during the period beginning on January 9, 1962, and 
ending on May 7, 1975.

           *       *       *       *       *       *       *

  (e) Subsections (b) through (d) shall cease to be effective 
[10 years] 20 years after the first day of the fiscal year in 
which the National Academy of Sciences transmits to the 
Secretary the first report under section 3 of the Agent Orange 
Act of 1991.
  [(a)(3)] (f) [For the purposes of this subsection, a veteran] 
For purposes of establishing service connection for a 
disability or death resulting from exposure to a herbicide 
agent, including a presumption of service-connection under this 
section, a veterans who, during active military, naval, or air 
service, served in the Republic of Vietnam during the period 
beginning on January 9, 1962, and ending on May 7, 1975, [and 
has a disease referred to in paragraph (1)(B) of this 
subsection] shall be presumed to have been exposed during such 
service to an herbicide agent containing dioxin or 2,4-
dichlorophenoxyacetic acid, and may be presumed to have been 
exposed during such service to any other chemical compound in 
an herbicide agent, unless there is affirmative evidence to 
establish that the veteran was not exposed to any such agent 
during that service.

Sec. 1117. Compensation for disabilities occurring in Persian Gulf War 
                    veterans

  (a) The Secretary may pay compensation under this subchapter 
to any Persian Gulf veteran suffering from a chronic disability 
resulting from an undiagnosed illness (or combination of 
undiagnosed illnesses) or any poorly defined chronic 
multisymptom illness of unknown etiology, regardless of 
diagnosis, characterized by two or more of the signs or 
symptoms listed in subsection (f) that--

           *       *       *       *       *       *       *

          (2) became manifest to a degree of 10 percent or more 
        [within the presumptive period prescribed under 
        subsection (b)] before December 31, 2011, or such later 
        date as the Secretary may prescribe by regulation.
  [(b) The Secretary shall prescribe by regulation the period 
of time following service in the Southwest Asia theater of 
operations during the Persian Gulf War that the Secretary 
determines is appropriate for presumption of service connection 
for purposes of this section. The Secretary's determination of 
such period of time shall be made following a review of any 
available credible medical or scientific evidence and the 
historical treatment afforded disabilities for which 
manifestation periods have been established and shall take into 
account other pertinent circumstances regarding the experiences 
of veterans of the Persian Gulf War.]
  [(c)](b)(1) Whenever the Secretary determines under section 
1118(c) of this title that a presumption of service connection 
for an undiagnosed illness (or combination of undiagnosed 
illnesses) previously established under this section is no 
longer warranted--

           *       *       *       *       *       *       *

  [(d)](c)(1) The Secretary shall prescribe regulations to 
carry out this section.

           *       *       *       *       *       *       *

  [(e)] (d) A disability for which compensation under this 
subchapter is payable shall be considered to be service 
connected for purposes of all other laws of the United States.
  [(f)] (e) For purposes of this section, the term ``Persian 
Gulf veteran'' means a veteran who served on active duty in the 
Armed Forces in the Southwest Asia theater of operations during 
the Persian Gulf War.
  (f) For purposes of this section, signs or symptoms that may 
be a manifestation of an undiagnosed illness include the 
following:
          (1) Fatigue.
          (2) Unexplained rashes or other dermatological signs 
        or symptoms.
          (3) Headache.
          (4) Muscle pain.
          (5) Joint pain.
          (6) Neurologic signs or symptoms.
          (7) Neuropsychological signs or symptoms.
          (8) Signs or symptoms involving the respiratory 
        system (upper or lower).
          (9) Sleep disturbances.
          (10) Gastrointestinal signs or symptoms.
          (11) Cardiovascular signs or symptoms.
          (12) Abnormal weight loss.
          (13) Menstrual disorders.

Sec. 1118. Presumptions of service connection for illnesses associated 
                    with service in the Persian Gulf during the Persian 
                    Gulf War

  (a)(1) * * *

           *       *       *       *       *       *       *

  (4) For purposes of this section, signs or symptoms that may 
be a manifestation of an undiagnosed illness include the signs 
and symptoms listed in section 1117(f) of this title.

           *       *       *       *       *       *       *

Sec. 1503. Determinations with respect to annual income

  (a) In determining annual income under this chapter, all 
payments of any kind or from any source (including salary, 
retirement or annuity payments, or similar income, which has 
been waived, irrespective of whether the waiver was made 
pursuant to statute, contract, or otherwise) shall be included 
except--
          (1) * * *
          (9) in the case of a veteran or surviving spouse 
        pursuing a course of education or vocational 
        rehabilitation or training, amounts equal to amounts 
        paid by such veteran or surviving spouse for such 
        course of education or vocational rehabilitation or 
        training, including (A) amounts paid for tuition, fees, 
        books, and materials, and (B) in the case of such a 
        veteran or surviving spouse in need of regular aid and 
        attendance, unreimbursed amounts paid for unusual 
        transportation expenses in connection with the pursuit 
        of such course of education or vocational 
        rehabilitation or training, to the extent that such 
        amounts exceed the reasonable expenses which would have 
        been incurred by a nondisabled person using an 
        appropriate means of transportation (public 
        transportation, if reasonably available); [and]
          (10) in the case of a child, any current-work income 
        received during the year, to the extent that the total 
        amount of such income does not exceed an amount equal 
        to the sum of--
                  (A) * * *
                  (B) if the child is pursuing a course of 
                postsecondary education or vocational 
                rehabilitation or training, the amount paid by 
                such child for such course of education or 
                vocational rehabilitation or training, 
                including the amount paid for tuition, fees, 
                books, and materials[.];
          (11) proceeds (in an amount equal to or less than the 
        amount prescribed by the Secretary for purposes of this 
        paragraph, subject to subsection (c)) of any life 
        insurance policy of a veteran; and
          (12) (12) any other non-recurring income (in an 
        amount equal to or less than the amount prescribed by 
        the Secretary for purposes of this paragraph, subject 
        to subsection (c)) from any source.

           *       *       *       *       *       *       *

  (c) In prescribing amounts for purposes of paragraph (11) or 
(12) of subsection (a), the Secretary shall take into 
consideration the amount of income from insurance proceeds or 
other non-recurring income, as the case may be, that is 
reasonable for individuals eligible for pension to consume for 
their maintenance.

           *       *       *       *       *       *       *

Sec. 2306. Headstones, markers, and burial receptacles

           *       *       *       *       *       *       *

  (c) A headstone or marker furnished under subsection (a) or 
(b) [of this section] may be of any material, including but not 
limited to marble, granite, bronze, or slate, requested by the 
person entitled to request such headstone or marker if the 
material requested is determined by the Secretary (1) to be 
cost effective, and (2) in a case in which the headstone or 
marker is to be placed in a national cemetery, to be 
aesthetically compatible with the area of the cemetery in which 
it is to be placed.

           *       *       *       *       *       *       *

  (f) In the case of the grave of an individual described in 
subsection (a) that has been marked by a privately-furnished 
headstone or marker, the Secretary may furnish, when requested, 
a bronze marker to commemorate the individual's military 
service. The bronze marker may be placed at the gravesite or at 
another location designated by the cemetery concerned as a 
location for the commemoration of the individual's military 
service.

Sec. 2307. Death from service-connected disability

  In any case in which a veteran dies as the result of a 
service-connected disability or disabilities, the Secretary, 
upon the request of the survivors of such veteran, shall pay 
the burial and funeral expenses incurred in connection with the 
death of the veteran in an amount not exceeding the greater of 
(1) [$1,500] $2,000, or (2) the amount authorized to be paid 
under section 8134(a) of title 5 in the case of a Federal 
employee whose death occurs as the result of an injury 
sustained in the performance of duty. Funeral and burial 
benefits provided under this section shall be in lieu of any 
benefits authorized under sections 2302 and 2303(a)(1) and (b) 
of this title.

           *       *       *       *       *       *       *

     CHAPTER 30--ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM

                  subchapter i--purposes; definitions

Sec.

3001.  * * *

3014A. ACCELERATED PAYMENT OF BASIC EDUCATIONAL ASSISTANCE FOR 
                    EDUCATION LEADING TO EMPLOYMENT IN HIGH TECHNOLOGY 
                    INDUSTRY.

           *       *       *       *       *       *       *

Sec. 3011. Basic educational assistance entitlement for service on 
                    active duty

  (a) Except as provided in subsection (c) of this section, 
each individual--
          (1) who--
                  (A) after June 30, 1985, first becomes a 
                member of the Armed Forces or first enters on 
                active duty as a member of the Armed Forces 
                and--
                          (i) *  *  *
                          (ii) who serves in the Armed Forces 
                        and is discharged or released from 
                        active duty (I) for a service-connected 
                        disability, for a medical condition 
                        which preexisted such service on active 
                        duty and which the Secretary determines 
                        is not service connected, for hardship, 
                        or for a physical or mental condition 
                        that was not characterized as a 
                        disability and did not result from the 
                        individual's own willful misconduct but 
                        did interfere with the individual's 
                        performance of duty, as determined by 
                        the Secretary of each military 
                        department in accordance with 
                        regulations prescribed by the Secretary 
                        of Defense or by the Secretary of 
                        Transportation with respect to the 
                        Coast Guard when it is not operating as 
                        a service in the Navy; (II) for the 
                        convenience of the Government, if, in 
                        the case of an individual with an 
                        obligated period of service of two 
                        years, the individual completes not 
                        less than 20 months of continuous 
                        active duty under that period of 
                        obligated service, or, in the case of 
                        an individual with an obligated period 
                        of service of at least three years, the 
                        individual completes not less than 30 
                        months of continuous active duty under 
                        that period of obligated service; or 
                        (III) involuntarily for the convenience 
                        of the Government as a result of a 
                        reduction in force, as determined by 
                        the Secretary of the military 
                        department concerned in accordance with 
                        regulations prescribed by the Secretary 
                        of Defense or by the Secretary of 
                        Transportation with respect to the 
                        Coast Guard when it is not operating as 
                        a service in the Navy; [or]
                  (B) as of December 31, 1989, is eligible for 
                educational assistance benefits under chapter 
                34 of this title and was on active duty at any 
                time during the period beginning on October 19, 
                1984, and ending on July 1, 1985, continued on 
                active duty without a break in service and--
                          (i) * * *
                          (ii) after June 30, 1985, is 
                        discharged or released from active duty 
                        (I) for a service-connected disability, 
                        for a medical condition which 
                        preexisted such service on active duty 
                        and which the Secretary determines is 
                        not service connected, for hardship, or 
                        for a physical or mental condition that 
                        was not characterized as a disability, 
                        as described in subparagraph (A)(ii)(I) 
                        of this paragraph; (II) for the 
                        convenience of the Government, if the 
                        individual completed not less than 30 
                        months of continuous active duty after 
                        that date, or (III) involuntarily for 
                        the convenience of the Government as a 
                        result of a reduction in force, as 
                        determined by the Secretary of the 
                        military department concerned in 
                        accordance with regulations prescribed 
                        by the Secretary of Defense or by the 
                        Secretary of Transportation with 
                        respect to the Coast Guard when it is 
                        not operating as a service in the Navy; 
                        or
                  (C) as of December 31, 1989, is eligible for 
                educational assistance benefits under chapter 
                34 of this title and--
                          (i) was not on active duty on October 
                        19, 1984;
                          (ii) reenlists or reenters on a 
                        period of active duty after the date 
                        specified in clause (i); and
                          (iii) after July 1, 1985, either--
                                  (I) serves at least three 
                                years of continuous active duty 
                                in the Armed Forces; or
                                  (II) is discharged or 
                                released from active duty (aa) 
                                for a service-connected 
                                disability, for a medical 
                                condition which preexisted such 
                                service on active duty and 
                                which the Secretary determines 
                                is not service connected, for 
                                hardship, or for a physical or 
                                mental condition that was not 
                                characterized as a disability, 
                                as described in subparagraph 
                                (A)(ii)(I) of this paragraph, 
                                (bb) for the convenience of the 
                                Government, if the individual 
                                completed not less than 30 
                                months of continuous active 
                                duty after that date, or (cc) 
                                involuntarily for the 
                                convenience of the Government 
                                as a result of a reduction in 
                                force, as determined by the 
                                Secretary of the military 
                                department concerned in 
                                accordance with regulations 
                                prescribed by the Secretary of 
                                Defense or by the Secretary of 
                                Transportation with respect to 
                                the Coast Guard when it is not 
                                operating as a service in the 
                                Navy;

           *       *       *       *       *       *       *

Sec. 3012. Basic educational assistance entitlement for service in the 
                    Selected Reserve

  (a) Except as provided in subsection (d) of this section, 
each individual--
          (1) who--
                  (A) after June 30, 1985, first becomes a 
                member of the Armed Forces or first enters on 
                active duty as a member of the Armed Forces 
                and--
                          (i) * * *
                          (ii) subject to subsection (b) of 
                        this section and beginning within one 
                        year after completion of the service on 
                        active duty described in subclause (i) 
                        of this clause, serves at least four 
                        years of continuous duty in the 
                        Selected Reserve during which the 
                        individual participates satisfactorily 
                        in training as required by the 
                        Secretary concerned; [or]
                  (B) as of December 31, 1989, is eligible for 
                educational assistance under chapter 34 of this 
                title and was on active duty at any time during 
                the period beginning on October 19, 1984, and 
                ending on July 1, 1985, continued on active 
                duty without a break in service and--
                          (i) * * *
                          (ii) after June 30, 1985, subject to 
                        subsection (b) of this section and 
                        beginning within one year after 
                        completion of such two years of 
                        service, serves at least four 
                        continuous years in the Selected 
                        Reserve during which the individual 
                        participates satisfactorily in training 
                        as prescribed by the Secretary 
                        concerned; or
                  (C) as of December 31, 1989, is eligible for 
                educational assistance under chapter 34 of this 
                title and--
                          (i) was not on active duty on October 
                        19, 1984;
                          (ii) reenlists or reenters on a 
                        period of active duty after the date 
                        specified in clause (i); and
                          (iii) after July 1, 1985--
                                  (I) serves at least two years 
                                of continuous active duty in 
                                the Armed Forces, subject to 
                                subsection (b) of this section, 
                                characterized by the Secretary 
                                concerned as honorable service; 
                                and
                                  (II) subject to subsection 
                                (b) of this section and 
                                beginning within one year after 
                                completion of such two years of 
                                service, serves at least four 
                                continuous years in the 
                                Selected Reserve during which 
                                the individual participates 
                                satisfactorily in training as 
                                prescribed by the Secretary 
                                concerned;

           *       *       *       *       *       *       *

Sec. 3014. Payment of basic educational assistance

           *       *       *       *       *       *       *

  (c)(1)(A) Notwithstanding any other provision of this chapter 
and subject to subparagraph (B), an individual entitled to 
basic educational assistance under this subchapter may elect to 
receive an accelerated payment of the basic educational 
assistance allowance.
  (B) The Secretary may not make an accelerated payment under 
this subsection for a course to an individual who has received 
an advance payment under section 3014A or 3680(d) of this title 
for the same enrollment period.
  (2)(A) Pursuant to an election under paragraph (1), the 
Secretary shall make an accelerated payment to an individual 
for a course in a lump-sum amount equal to the lesser of--
          (i) the amount of the educational assistance 
        allowance for the month, or fraction thereof, in which 
        the course begins plus the educational assistance 
        allowance for each of the succeeding four months; or
          (ii)(I) in the case of a course offered on a quarter, 
        semester, or term basis, the amount of aggregate 
        monthly educational assistance allowance otherwise 
        payable under this subchapter for the course for the 
        entire quarter, semester, or term; or
          (II) in the case of a course that is not offered on a 
        quarter, semester, or term basis, the amount of 
        aggregate monthly educational assistance allowance 
        otherwise payable under this subchapter for the entire 
        course.
  (B) In the case of an adjustment under section 3015(h) of 
this title in the monthly rate of basic educational assistance 
that occurs during a period for which an accelerated payment is 
made under this subsection, the Secretary shall pay--
          (i) on an accelerated basis the amount of the 
        allowance otherwise payable under this subchapter for 
        the period without regard to the adjustment under that 
        section; and
          (ii) on the date of the adjustment any additional 
        amount of the allowance that is payable for the period 
        as a result of the adjustment.
  (3) For each accelerated payment made to an individual under 
this subsection, the individual's entitlement under this 
subchapter shall be charged at the same rate at which the 
entitlement would be charged if the individual had received a 
monthly educational assistance allowance for the period of 
educational pursuit covered by the accelerated payment.
  (4) The Secretary shall prescribe regulations to carry out 
this subsection. The regulations shall include the 
requirements, conditions, and methods for the request, 
issuance, delivery, certification of receipt and use, and 
recovery of overpayment of an accelerated payment under this 
subsection.

           *       *       *       *       *       *       *

Sec. 3014A. Accelerated payment of basic educational assistance for 
                    education leading to employment in high technology 
                    industry

  (a) An individual described in subsection (b) who is entitled 
to basic educational assistance under this subchapter may elect 
to receive an accelerated payment of the basic educational 
assistance allowance otherwise payable to the individual under 
section 3015 of this title.
  (b) An individual described in this subsection is an 
individual who is--
          (1) enrolled in an approved program of education that 
        leads to employment in a high technology industry (as 
        determined pursuant to regulations prescribed by the 
        Secretary); and
          (2) charged tuition and fees for the program of 
        education that, when divided by the number of months 
        (and fractions thereof) in the enrollment period, 
        exceeds the amount equal to 200 percent of the monthly 
        rate of basic educational assistance allowance 
        otherwise payable to the individual under section 3015 
        of this title.
  (c)(1) The amount of the accelerated payment of basic 
educational assistance made to an individual making an election 
under subsection (a) for a program of education shall be the 
lesser of--
          (A) the amount equal to 60 percent of the established 
        charges for the program of education; or
          (B) the aggregate amount of basic educational 
        assistance to which the individual remains entitled 
        under this chapter at the time of the payment.
  (2) In this subsection, the term ``established charges'', in 
the case of a program of education, means the actual charges 
(as determined pursuant to regulations prescribed by the 
Secretary) for tuition and fees which similarly circumstanced 
nonveterans enrolled in the program of education would be 
required to pay. Established charges shall be determined on the 
following basis:
          (A) In the case of an individual enrolled in a 
        program of education offered on a term, quarter, or 
        semester basis, the tuition and fees charged the 
        individual for the term, quarter, or semester.
          (B) In the case of an individual enrolled in a 
        program of education not offered on a term, quarter, or 
        semester basis, the tuition and fees charged the 
        individual for the entire program of education.
  (3) The educational institution providing the program of 
education for which an accelerated payment of basic educational 
assistance allowance is elected by an individual under 
subsection (a) shall certify to the Secretary the amount of the 
established charges for the program of education.
  (d) An accelerated payment of basic educational assistance 
made to an individual under this section for a program of 
education shall be made not later than the last day of the 
month immediately following the month in which the Secretary 
receives a certification from the educational institution 
regarding--
          (1) the individual's enrollment in and pursuit of the 
        program of education; and
          (2) the amount of the established charges for the 
        program of education.
  (e)(1) Except as provided in paragraph (2), for each 
accelerated payment of basic educational assistance made to an 
individual under this section, the individual's entitlement to 
basic educational assistance under this chapter shall be 
charged the number of months (and any fraction thereof) 
determined by dividing the amount of the accelerated payment by 
the full-time monthly rate of basic educational assistance 
allowance otherwise payable to the individual under section 
3015 of this title as of the beginning date of the enrollment 
period for the program of education for which the accelerated 
payment is made.
  (2) If the monthly rate of basic educational assistance 
allowance otherwise payable to an individual under section 3015 
of this title increases during the enrollment period of a 
program of education for which an accelerated payment of basic 
educational assistance is made under this section, the charge 
to the individual's entitlement to basic educational assistance 
under this chapter shall be determined by prorating the 
entitlement chargeable, in the matter provided for under 
paragraph (1), for the periods covered by the initial rate and 
increased rate, respectively, in accordance with regulations 
prescribed by the Secretary.
  (f) The Secretary may not make an accelerated payment under 
this section for a program of education to an individual who 
has received an advance payment under section 3014(c) or 
3680(d) of this title for the same enrollment period.
  (g) The Secretary shall prescribe regulations to carry out 
this section. The regulations shall include requirements, 
conditions, and methods for the request, issuance, delivery, 
certification of receipt and use, and recovery of overpayment 
of an accelerated payment under this section.''.

Sec. 3015. Amount of basic educational assistance

  (a) * * *
          (1) at the monthly rate of [$650 (as increased from 
        time to time under subsection (h))] $700, for months 
        beginning after September 30, 2001, but before 
        September 30, 2002, $800 for months beginning after 
        September 30, 2002, but before September 30, 2003, and 
        $950 for months beginning after September 30, 2003, but 
        before September 30, 2004, and as increased from time 
        to time under subsection (h) after September 30, 2004, 
        for an approved program of education pursued on a full-
        time basis; or

           *       *       *       *       *       *       *

  (b) In the case of an individual entitled to an educational 
assistance allowance under section 3011 or 3018 of this title 
whose obligated period of active duty on which such entitlement 
is based is two years, a basic educational assistance allowance 
under this chapter shall (except as provided in the succeeding 
subsections of this section) be paid--
          (1) at the monthly rate of [$528 (as increased from 
        time to time under subsection (h))] $569, for months 
        beginning after September 30, 2001, but before 
        September 30, 2002, $650 for months beginning after 
        September 30, 2002, but before September 30, 2003, and 
        $772 for months beginning after September 30, 2003, but 
        before September 30, 2004, and as increased from time 
        to time under subsection (h) after September 30, 2004, 
        for an approved program of education pursued on a full-
        time basis; or

           *       *       *       *       *       *       *

Sec. 3031. Time limitation for use of eligibility and entitlement

  (a) Except as provided in subsections (b) through (g), and 
subject to subsection (h), of this section, the period during 
which an individual entitled to educational assistance under 
this chapter may use such individual's entitlement expires at 
the end of the 10-year period beginning on the date of such 
individual's last discharge or release from active duty, except 
that such 10-year period shall begin--
          (1) in the case of an individual who becomes entitled 
        to such assistance under clause (A) or (B) of section 
        3012(a)(1) of this title, on the later of the date of 
        such individual's last discharge or release from active 
        duty or the date on which the four-year requirement 
        described in clause (A)(ii) or (B)(ii), respectively, 
        of such section 3012(a)(1) is met; [and]
          (2) in the case of an individual who becomes entitled 
        to such assistance under section 3011(a)(1)(B), on the 
        later of the date of such individual's last discharge 
        or release from active duty or January 1, 1990[.];and
          (3) in the case of an individual who becomes entitled 
        to such assistance under section 3011(a)(1)(C) or 
        3012(a)(1)(C) of this title, on the date of the 
        enactment of this paragraph.

           *       *       *       *       *       *       *

  (e)(1) Except as provided in paragraph (2) of this 
subsection, in the case of an individual described in [section 
3011(a)(1)(B) or 3012(a)(1)(B)] section 3011(a)(1)(B), 
3011(a)(1)(C), 3012(a)(1)(B), or 3012(a)(1)(C) of this title 
who is entitled to basic educational assistance under this 
chapter, the 10-year period prescribed in subsection (a) of 
this section shall be reduced by an amount of time equal to the 
amount of time that such individual was not serving on active 
duty during the period beginning on January 1, 1977, and ending 
on June 30, 1985.

           *       *       *       *       *       *       *

Sec. 3120. Program of independent living services and assistance

           *       *       *       *       *       *       *

  (e) [Programs of independent living services and assistance 
shall be initiated for no more than five hundred veterans in 
each fiscal year, and the first priority in the provision of 
such programs] First priority in the provision of programs of 
independent living services and assistance under this section 
shall be afforded to veterans for whom the reasonable 
feasibility of achieving a vocational goal is precluded solely 
as a result of a service-connected disability.

           *       *       *       *       *       *       *

Sec. 3452. Definitions

  For the purposes of this chapter and chapter 36 of this 
title--

           *       *       *       *       *       *       *

  (c) The term ``educational institution'' means any public or 
private elementary school, secondary school, vocational school, 
correspondence school, business school, junior college, 
teachers' college, college, normal school, professional school, 
university, or scientific or technical institution, or other 
institution furnishing education for adults. For the period 
ending on September 30, 1996, such term includes any entity 
that provides training required for completion of any State-
approved alternative teacher certification program (as 
determined by the Secretary). Such term also includes any 
private entity (that meets such requirements as the Secretary 
may establish) that offers, either directly or under an 
agreement with another entity (that meets such requirements), a 
course or courses to fulfill requirements for the attainment of 
a license or certificate generally recognized as necessary to 
obtain, maintain, or advance in employment in a profession or 
vocation in a high technology occupation (as determined by the 
Secretary).

           *       *       *       *       *       *       *

Sec. 3501. Definitions

  (a) For the purposes of this chapter and chapter 36 of this 
title--

           *       *       *       *       *       *       *

          (6) The term ``educational institution'' means any 
        public or private secondary school, vocational school, 
        correspondence school, business school, junior college, 
        teachers' college, college, normal school, professional 
        school, university, or scientific or technical 
        institution, or any other institution if it furnishes 
        education at the secondary school level or above. Such 
        term also includes any private entity (that meets such 
        requirements as the Secretary may establish) that 
        offers, either directly or under an agreement with 
        another entity (that meets such requirements), a course 
        or courses to fulfill requirements for the attainment 
        of a license or certificate generally recognized as 
        necessary to obtain, maintain, or advance in employment 
        in a profession or vocation in a high technology 
        occupation (as determined by the Secretary).

           *       *       *       *       *       *       *

Sec. 3680. Payment of educational assistance or subsistence allowances

           *       *       *       *       *       *       *

          Determination of Enrollment, Pursuit, and Attendance

  [(g) The Secretary may, pursuant to regulations which the 
Secretary shall prescribe, determine and define enrollment in, 
pursuit of, and attendance at, any program of education or 
training or course by an eligible veteran or eligible person 
for any period for which the veteran or person receives an 
educational assistance or subsistence allowance under this 
chapter for pursuing such program or course. Subject to such 
reports and proof as the Secretary may require to show an 
eligible veteran's or eligible person's enrollment in and 
satisfactory pursuit of such person's program, the Secretary 
may withhold payment of benefits to such eligible veteran or 
eligible person until the required proof is received and the 
amount of the payment is approximately adjusted. The Secretary 
may accept such veteran's or person's monthly certification of 
enrollment in and satisfactory pursuit of such veteran's or 
person's program as sufficient proof of the certified matters.]
  (g)(1) The Secretary may, pursuant to regulations which the 
Secretary shall prescribe, determine and define with respect to 
an eligible veteran and eligible person the following:
          (A) Enrollment in a course or a program of education 
        or training.
          (B) Pursuit of a course or program of education or 
        training.
          (C) Attendance at a course or program of education 
        and training.
  (2) The Secretary may withhold payment of benefits to an 
eligible veteran or eligible person until the Secretary 
receives such proof as the Secretary may require of enrollment 
in and satisfactory pursuit of a program of education by the 
eligible veteran or eligible person. The Secretary shall adjust 
the payment withheld, when necessary, on the basis of the proof 
the Secretary receives.
  (3) In the case of an individual other than an individual 
described in paragraph (4), the Secretary may accept the 
individual's monthly certification of enrollment in and 
satisfactory pursuit of a program of education as sufficient 
proof of the certified matters.
  (4) In the case of an individual who has received an 
accelerated payment of basic educational assistance under 
section 3014A of this title during an enrollment period for a 
program of education, the Secretary may accept the individual's 
certification of enrollment in and satisfactory pursuit of the 
program of education as sufficient proof of the certified 
matters if the certification is submitted after the enrollment 
period has ended.

           *       *       *       *       *       *       *

Sec. 3702. Basic entitlement

  (a)(1) * * *

           *       *       *       *       *       *       *

  (2) The veterans referred to in the first sentence of 
paragraph (1) of this subsection are the following:
          (E) For the period beginning on October 28, 1992, and 
        ending on [September 30, 2007] September 30, 2011, each 
        veteran described in section 3701(b)(5) of this title.

           *       *       *       *       *       *       *

Sec. 3703. Basic provisions relating to loan guaranty and insurance

  (a)(1)(A) Any loan to a veteran eligible for benefits under 
this chapter, if made for any of the purposes specified in 
section 3710 of this title and in compliance with the 
provisions of this chapter, is automatically guaranteed by the 
United States in an amount not to exceed the lesser of--
          (i)(I) in the case of any loan of not more than 
        $45,000, 50 percent of the loan;

           *       *       *       *       *       *       *

          (IV) in the case of any loan of more than $144,000 
        for a purpose specified in clause (1), (2), (3), (6), 
        or (8) of section 3710(a) of this title, the lesser of 
        [$50,750] $63,175 or 25 percent of the loan; or

           *       *       *       *       *       *       *

  (B) The maximum amount of guaranty entitlement available to a 
veteran for purposes specified in section 3710 of this title 
shall be $36,000, or in the case of a loan described in 
subparagraph (A)(i)(IV) of this paragraph, [$50,750] $63,175, 
reduced by the amount of entitlement previously used by the 
veteran under this chapter and not restored as a result of the 
exclusion in section 3702(b) of this title.

           *       *       *       *       *       *       *

Sec. 3720. Powers of Secretary

           *       *       *       *       *       *       *

  (h)(1) * * *
  (2) The Secretary may not under this subsection guarantee the 
payment of principal and interest on certificates or other 
securities issued or approved after [December 31, 2008] 
December 31, 2011.

           *       *       *       *       *       *       *

Sec. 3729. Loan fee

           *       *       *       *       *       *       *

  (b) Determination of Fee.--(1) * * *
  (2) * * *

                             LOAN FEE TABLE
------------------------------------------------------------------------
                                 Active duty                    Other
         Type of loan              veteran      Reservist      obligor
------------------------------------------------------------------------
(A)(i) Initial loan described          2.00          2.75            NA
 in section 3710(a) to
 purchase or construct a
 dwelling with 0-down, or any
 other initial loan described
 in section 3710(a) other than
 with 5-down or 10-down
 (closed before [October 1,
 2008] October 1, 2011).......
------------------------------------------------------------------------
(A)(ii) Initial loan described         1.25          2.00            NA
 in section 3710(a) to
 purchase or construct a
 dwelling with 0-down, or any
 other initial loan described
 in section 3710(a) other than
 with 5-down or 10-down
 (closed on or after [October
 1, 2008] October 1, 2011)....
------------------------------------------------------------------------
(B)(i) Subsequent loan                 3.00          3.00            NA
 described in section 3710(a)
 to purchase or construct a
 dwelling with 0-down, or any
 other subsequent loan
 described in section 3710(a)
 (closed before [October 1,
 2008] October 1, 2011).......
------------------------------------------------------------------------
(B)(ii) Subsequent loan                1.25          2.00            NA
 described in section 3710(a)
 to purchase or construct a
 dwelling with 0-down, or any
 other subsequent loan
 described in section 3710(a)
 (closed on or after [October
 1, 2008] October 1, 2011)....
------------------------------------------------------------------------
(C)(i) Loan described in               1.50          2.25            NA
 section 3710(a) to purchase
 or construct a dwelling with
 5-down (closed before
 [October 1, 2008] October 1,
 2011)........................
------------------------------------------------------------------------
(C)(ii) Loan described in              0.75          1.50            NA
 section 3710(a) to purchase
 or construct a dwelling with
 5-down (closed on or after
 [October 1, 2008] October 1,
 2011)........................
------------------------------------------------------------------------
(D)(i) Initial loan described          1.25          2.00            NA
 in section 3710(a) to
 purchase or construct a
 dwelling with 10-down (closed
 before [October 1, 2008]
 October 1, 2011).............
------------------------------------------------------------------------
(D)(ii) Initial loan described         0.50          1.25            NA
 in section 3710(a) to
 purchase or construct a
 dwelling with 10-down (closed
 on or after [October 1, 2008]
 October 1, 2011).............
------------------------------------------------------------------------

                                                            

           *       *       *       *       *       *       *
Sec. 3732. Procedure on default

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (11) This subsection shall apply to loans closed before 
[October 1, 2008] October 1, 2011.

           *       *       *       *       *       *       *

Sec. 3761. Pilot program

           *       *       *       *       *       *       *

  (c) No loans may be made under this subchapter after 
[December 31, 2001] December 31, 2005.

           *       *       *       *       *       *       *

Sec. 3762. Direct housing loans to Native American veterans

           *       *       *       *       *       *       *

  (j) Not later than February 1 of each year through [2002] 
2006, the Secretary shall transmit to the Committees on 
Veterans' Affairs of the Senate and House of Representatives a 
report relating to the implementation of the pilot program 
under this subchapter during the fiscal year preceding the date 
of the report. Each such report shall include the following:

           *       *       *       *       *       *       *

Sec. 5102. Application forms furnished upon request; notice to 
                    claimants of incomplete applications

           *       *       *       *       *       *       *

  (c) Time Limitation.--(1) If information that a claimant and 
the claimant's representative, if any, are notified under 
subsection (b) is necessary to complete an application is not 
received by the Secretary within one year from the date of such 
notification, no benefit may be paid or furnished by reason of 
the claimant's application.
  (2) This subsection shall not apply to any application or 
claim for Government life insurance benefits.

Sec. 5103. Notice to claimants of required information and evidence

  [(a) Required Information and Evidence.--]Upon receipt of a 
complete or substantially complete application, the Secretary 
shall notify the claimant and the claimant's representative, if 
any, of any information, and any medical or lay evidence, not 
previously provided to the Secretary that is necessary to 
substantiate the claim. As part of that notice, the Secretary 
shall indicate which portion of that information and evidence, 
if any, is to be provided by the claimant and which portion, if 
any, the Secretary, in accordance with section 5103A of this 
title and any other applicable provisions of law, will attempt 
to obtain on behalf of the claimant.
  [(b) Time Limitation.--(1) In the case of information or 
evidence that the claimant is notified under subsection (a) is 
to be provided by the claimant, if such information or evidence 
is not received by the Secretary within 1 year from the date of 
such notification, no benefit may be paid or furnished by 
reason of the claimant's application.
  [(2) This subsection shall not apply to any application or 
claim for Government life insurance benefits.]

           *       *       *       *       *       *       *

           CHAPTER 51--CLAIMS, EFFECTIVE DATES, AND PAYMENTS

                          subchapter i--claims

Sec.

5100. DEFINITION OF ``CLAIMANT''.

subchapter ii--effective dates

           *       *       *       *       *       *       *

5313B. PROHIBITION ON PROVIDING CERTAIN BENEFITS WITH RESPECT TO 
                    VETERANS WHO ARE FUGITIVE FELONS.

           *       *       *       *       *       *       *

Sec. 5112. Effective dates of reductions and discontinuances

           *       *       *       *       *       *       *

  (b) The effective date of a reduction or discontinuance of 
compensation, dependency and indemnity compensation, or 
pension--

           *       *       *       *       *       *       *

          (4) by reason of--
                  [(A) change in income shall (except as 
                provided in section 5312 of this title) be the 
                last day of the month in which the change 
                occurred; and]
                  (A) change in recurring income will be the 
                last day of the calendar year in which the 
                change occurred (with the pension rate for the 
                following calendar year based on all 
                anticipated countable income);

           *       *       *       *       *       *       *

  [(c) The effective date of a discontinuance under section 
5503(b)(1)(A) of this title of pension, compensation, or 
emergency officers' retirement pay by reason of hospital 
treatment or institutional or domiciliary care shall be the 
last day of the first month of such treatment or care during 
which the value of the veteran's estate, as determined under 
such section, equals or exceeds $1,500.]

           *       *       *       *       *       *       *

Sec. 5313B. Prohibition on providing certain benefits with respect to 
                    veterans who are fugitive felons

  (a) A veteran described in subsection (b), or dependent of 
the veteran, who is otherwise eligible for a benefit described 
in subsection (c) may not be paid or otherwise provided such 
benefit during any period in which the veteran is a fugitive as 
described in subsection (b).
  (b)(1) A veteran described in this subsection is a veteran 
who is a fugitive by reason of--
          (A) fleeing to avoid prosecution, or custody or 
        confinement after conviction, for an offense, or an 
        attempt to commit an offense, which is a felony under 
        the laws of the place from which the veteran flees; or
          (B) violating a condition of probation or parole 
        imposed under Federal or State law.
  (2) For purposes of this subsection, the term ``felony'' 
includes a high misdemeanor under the laws of a State which 
characterizes as high misdemeanors offenses that would be 
felony offenses under Federal law.
  (c) A benefit described in this subsection is any benefit 
under the following:
          (1) Chapter 11 of this title.
          (2) Chapter 13 of this title.
          (3) Chapter 15 of this title.
          (4) Chapter 17 of this title.
          (5) Chapter 19 of this title.
          (6) Chapters 30, 31, 32, 34, and 35 of this title.
          (7) Chapter 37 of this title.
  (d)(1) The Secretary shall furnish to any Federal, State, or 
local law enforcement official, upon the written request of 
such official, the most current address maintained by the 
Secretary of a veteran who is eligible for a benefit described 
in subsection (c) if such official--
          (A) provides the Secretary such information as the 
        Secretary may require to fully identify the veteran;
          (B) identifies the veteran as being a fugitive 
        described in subsection (b); and
          (C) certifies to the Secretary that the location and 
        apprehension of the veteran is within the official 
        duties of such official.
  (2) The Secretary shall enter into memoranda of understanding 
with Federal law enforcement agencies, and may enter into 
agreements with State and local law enforcement agencies, for 
purposes of furnishing information to such agencies under 
paragraph (1).

           *       *       *       *       *       *       *

Sec. 5317. Use of income information from other agencies: notice and 
                    verification

           *       *       *       *       *       *       *

  (g) The authority of the Secretary to obtain information from 
the Secretary of the Treasury or the Secretary of Health and 
Human Services under section 6103(l)(7)(D)(viii) of the 
Internal Revenue Code of 1986 expires on [September 30, 2008] 
September 30, 2011.

           *       *       *       *       *       *       *

Sec. 5503. Hospitalized veterans and estates of incompetent 
                    institutionalized veterans

           *       *       *       *       *       *       *

  [(b)(1)(A) In any case in which a veteran having neither 
spouse nor child is being furnished hospital treatment or 
institutional or domiciliary care without charge or otherwise 
by the United States, or any political subdivision thereof, is 
rated by the Secretary in accordance with regulations as being 
incompetent, and the veteran's estate (excluding the value of 
the veteran's home unless there is no reasonable likelihood 
that the veteran will again reside in such home), from any 
source equals or exceeds the amount equal to five times the 
section 1114(j) rate, further payments of pension, 
compensation, or emergency officers' retirement pay shall not 
be made until the estate is reduced to one-half that amount.
  [(B) The amount which would be payable but for this paragraph 
shall be paid to the veteran in a lump sum; however, no payment 
of a lump sum herein authorized shall be made to the veteran 
until after the expiration of six months following a finding of 
competency and in the event of the veteran's death before 
payment of such lump sum no part thereof shall be payable.
  [(C) The Secretary may waive the discontinuance under this 
paragraph of payments to a veteran with respect to not more 
than 60 days of care of the veteran during any calendar year if 
the Secretary determines that the waiver is necessary in order 
to avoid a hardship for the veteran. Any such waiver shall be 
made pursuant to regulations which the Secretary shall 
prescribe.
  [(D) For purposes of this paragraph, the term ``section 
1114(j) rate'' means the monthly rate of compensation in effect 
under section 1114(j) of this title for a veteran with a 
service-connected disability rated as total.
  [(2) Where any benefit is discontinued by reason of paragraph 
(1) of this subsection the Secretary may nevertheless apportion 
and pay to the dependent parents of the veteran on the basis of 
need all or any part of the benefit which would otherwise be 
payable to or for such incompetent veteran. Paragraph (1) of 
this subsection shall not prevent the payment, out of any 
remaining amounts discontinued under that paragraph, on account 
of any veteran of so much of the veteran's pension, 
compensation, or retirement pay as equals the amount charged to 
the veteran for the veteran's current care and maintenance in 
the institution in which treatment or care is furnished the 
veteran, but not more than the amount determined by the 
Secretary to be the proper charge as fixed by any applicable 
statute or valid administrative regulation.
  [(3) All or any part of the pension, compensation, or 
retirement pay payable on account of any incompetent veteran 
who is being furnished hospital treatment, institutional or 
domiciliary care may, in the discretion of the Secretary, be 
paid to the chief officer of the institution wherein the 
veteran is being furnished such treatment or care, to be 
properly accounted for by such chief officer and to be used for 
the benefit of the veteran.
  [(c) Any veteran subject to the provisions of subsection (b) 
shall be deemed to be single and without dependents in the 
absence of satisfactory evidence to the contrary. In no event 
shall increased compensation, pension, or retirement pay of 
such veteran be granted for any period more than one year 
before receipt of satisfactory evidence showing such veteran 
has a spouse, child, or dependent parent.]
  [(d)] (b) Notwithstanding any other provision of this section 
or any other provision of law, no reduction shall be made in 
the pension of any veteran for any part of the period during 
which the veteran is furnished hospital treatment, or 
institutional or domiciliary care, for Hansen's disease, by the 
United States or any political subdivision thereof.
  [(e)] (c) Where any veteran in receipt of an aid and 
attendance allowance described in section 1114(r) of this title 
is hospitalized at Government expense, such allowance shall be 
discontinued from the first day of the second calendar month 
which begins after the date of the veteran's admission for such 
hospitalization for so long as such hospitalization continues. 
Any discontinuance required by administrative regulation, 
during hospitalization of a veteran by the Department, of 
increased pension based on need of regular aid and attendance 
or additional compensation based on need of regular aid and 
attendance as described in subsection (l) or (m) of section 
1114 of this title, shall not be effective earlier than the 
first day of the second calendar month which begins after the 
date of the veterans' admission for hospitalization. In case a 
veteran affected by this subsection leaves a hospital against 
medical advice and is thereafter admitted to hospitalization 
within six months from the date of such departure, such 
allowance, increased pension, or additional compensation, as 
the case may be, shall be discontinued from the date of such 
readmission for so long as such hospitalization continues.
  [(f)](d)(1) For the purposes of this subsection--

           *       *       *       *       *       *       *

  (7) This subsection expires on [September 30, 2008] September 
30, 2011.

           *       *       *       *       *       *       *

     CHAPTER 72--UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

              subchapter i--organization and jurisdiction

Sec.

7251.  * * *

           *       *       *       *       *       *       *

subchapter iii--miscellaneous provisions

           *       *       *       *       *       *       *

[7285. PRACTICE FEE.]

7285. REGISTRATION FEES.

           *       *       *       *       *       *       *

7287. ADMINISTRATION.

Sec. 7253. Composition

           *       *       *       *       *       *       *

  (b) Appointment.--The judges of the Court shall be appointed 
by the President, by and with the advice and consent of the 
Senate, solely on the grounds of fitness to perform the duties 
of the office. A person may not be appointed to the Court who 
is not a member in good standing of the bar of a Federal court 
or of the highest court of a State. Not more than the number 
equal to the next whole number greater than one-half of the 
number of judges of the Court may be members of the same 
political party.
  (c) Term of Office.--The term of office of the judges of the 
Court of Appeals for Veterans Claims shall be 15 years. A judge 
who is nominated by the President for appointment to an 
additional term on the Court without a break in service and 
whose term of office expires while that nomination is pending 
before the Senate may continue in office for up to 1 year while 
that nomination is pending.

           *       *       *       *       *       *       *

  [(f)(1)] (f) Removal.--(1) A judge of the Court may be 
removed from office by the President on grounds of misconduct, 
neglect of duty, or engaging in the practice of law. A judge of 
the Court may not be removed from office by the President on 
any other ground.

           *       *       *       *       *       *       *

  (g)(1) Rules.--The Court shall prescribe rules, consistent 
with the provisions of section 372(c) of title 28, establishing 
procedures for the filing of complaints with respect to the 
conduct of any judge of the Court and for the investigation and 
resolution of such complaints. In investigating and taking 
action with respect to any such complaint, the Court shall have 
the powers granted to a judicial council under such section.

           *       *       *       *       *       *       *

  (h) Temporary Expansion of Court.--(1) Notwithstanding 
subsection (a) and subject to the provisions of this 
subsection, the authorized number of judges of the Court from 
the date of the enactment of this subsection until August 15, 
2005, is nine judges.
  (2) Of the two additional judges authorized by this 
subsection--
          (A) only one judge may be appointed pursuant to a 
        nomination made in 2001 or 2002;
          (B) only one judge may be appointed pursuant to a 
        nomination made in 2003; and
          (C) if no judge is appointed pursuant to a nomination 
        covered by subparagraph (A), a nomination covered by 
        subparagraph (B), or neither a nomination covered by 
        subparagraph (A) nor a nomination covered by 
        subparagraph (B), the number of judges authorized by 
        this subsection but not appointed as described in 
        subparagraph (A), (B), or both, as the case may be, may 
        be appointed pursuant to a nomination or nominations 
        made in 2004, but only if such nomination or 
        nominations, as the case may be, are made before 
        September 30, 2004.
  (3) The term of office and eligibility for retirement of a 
judge appointed under this subsection, other than a judge 
described in paragraph (4), shall be governed by the provisions 
of section 1012 of the Court of Appeals for Veterans Claims 
Amendments of 1999 (title X of Public Law 106-117; 113 Stat. 
1590; 38 U.S.C. 7296 note) if the judge is one of the first two 
judges appointed to the Court after November 30, 1999.
  (4) A judge of the Court as of the date of the enactment of 
this subsection who was appointed before 1991 may accept 
appointment as a judge of the Court under this subsection 
notwithstanding that the term of office of the judge on the 
Court has not yet expired under this section.

           *       *       *       *       *       *       *

[Sec. 7285. Practice fee]

Sec. 7285. Registration fees

  [(a) The Court of Appeals for Veterans Claims may impose a 
periodic registration fee on persons admitted to practice 
before the Court. The frequency and amount of such fee shall be 
determined by the Court, except that such amount may not exceed 
$30 per year.]
  (a) The Count of Appeals for Veterans Claims may impose 
registration fees as follows:
          (1) Periodic registration fees on persons admitted to 
        practice before the Court, in such frequency and amount 
        (not to exceed $30 per year) as the Court may provide.
          (2) Registration fees on persons (other than judges 
        of the Court) participating at judicial conferences 
        convened pursuant to section 7286 of this title, and at 
        other Court-sponsored activities.
  (b) Amounts received by the Court under subsection (a) of 
this section shall be available to the Court for the purposes 
of (1) [employing independent counsel] conducting 
investigations and proceedings, including the employment of 
independent counsel, to pursue disciplinary matters, and (2) 
defraying [administrative costs for the implementation of the 
standards of proficiency prescribed for practice before the 
Court] the expenses of judicial conferences convened pursuant 
to section 7286 of this title, and of other Court-sponsored 
activities covered by paragraph (2) of that subsection, and the 
expenses of other activities and programs of the Court intended 
to support and foster communications and relationships between 
the Court and persons practicing before the Court, or the 
study, understanding, public commemoration, or improvement of 
veterans law or of the work of the Court.

           *       *       *       *       *       *       *

Sec. 7287. Administration

  Notwithstanding any other provision of law, the Court of 
Appeals for Veterans Claims may exercise, for purposes of 
management, administration, and expenditure of funds of the 
Court, the authorities provided for such purposes by any 
provision of law (including any limitation with respect to such 
provision of law) applicable to a court of the United States 
(as that term is defined in section 451 of title 28), except to 
the extent that such provision of law is inconsistent with a 
provision of this chapter.

           *       *       *       *       *       *       *

Sec. 7296. Retirement of judges

           *       *       *       *       *       *       *

  (b)(1) * * *

           *       *       *       *       *       *       *

  (2) A judge who is not reappointed following the expiration 
of the term for which appointed may retire upon the completion 
of that term if the judge has served as a judge of the Court 
for 15 years or more. [In order to retire under this paragraph, 
a judge must, not earlier than 9 months preceding the date of 
the expiration of the judge's term of office and not later than 
6 months preceding such date, advise the President in writing 
that the judge is willing to accept reappointment to the 
Court.]

           *       *       *       *       *       *       *

AGENT ORANGE ACT OF 1991

           *       *       *       *       *       *       *

SEC. 3. AGREEMENT WITH NATIONAL ACADEMY OF SCIENCES.

           *       *       *       *       *       *       *

(i) Sunset.--This section shall cease to be effective [10 
years] 20 years after the last day of the fiscal year in which 
the National Academy of Sciences transmits to the Secretary the 
first report under subsection (g).

           *       *       *       *       *       *       *

VETERANS' JUDICIAL REVIEW ACT

           *       *       *       *       *       *       *

  [Sections 402 and 403 are repealed.]

           *       *       *       *       *       *       *

                                
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