99–010

Calendar No. 195

107TH CONGRESS REPORT

1st Session " ! SENATE 107–87

VETERANS’ COMPENSATION COST-OF-LIVING ADJUSTMENT

ACT OF 2001

OCTOBER 15, 2001.—Ordered to be printed

Mr. ROCKEFELLER, from the Committee on Veterans’ Affairs,

submitted the following

REPORT

[To accompany S. 1090]

The Committee on Veterans’ Affairs, to which was referred the

bill (S. 1090), to increase, effective as of December 1, 2001, the

rates of compensation for veterans with service-connected disabilities and the rates of dependency and indemnity compensation for

the survivors of certain disabled veterans, having considered the

same, reports favorably thereon and recommends that the original

bill do pass.

COMMITTEE BILL

The text of the original bill as reported is as follows:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Veterans’ Compensation Cost-ofLiving Adjustment Act of 2001’’.

SEC. 2. INCREASE IN RATES OF DISABILITY COMPENSATION AND DEPENDENCY AND INDEMNITY COMPENSATION.

(a) RATE ADJUSTMENT.—The Secretary of Veterans Affairs shall,

effective on December 1, 2001, increase the dollar amounts in effect

for the payment of disability compensation and dependency and indemnity compensation by the Secretary, as specified in subsection

(b).

(b) AMOUNTS TO BE INCREASED.—The dollar amounts to be increased pursuant to subsection (a) are the following:

(1) COMPENSATION.—Each of the dollar amounts in effect

under section 1114 of title 38, United States Code.

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(2) ADDITIONAL COMPENSATION FOR DEPENDENTS.—Each of

the dollar amounts in effect under sections 1115(1) of such

title.

(3) CLOTHING ALLOWANCE.—The dollar amount in effect

under section 1162 of such title.

(4) NEW DIC RATES.—The dollar amounts in effect under

paragraphs (1) and (2) of section 1311(a) of such title.

(5) OLD DIC RATES.—Each of the dollar amounts in effect

under section 1311(a)(3) of such title.

(6) ADDITIONAL DIC FOR SURVIVING SPOUSES WITH MINOR

CHILDREN.—The dollar amount in effect under section 1311(b)

of such title.

(7) ADDITIONAL DIC FOR DISABILITY.—The dollar amounts in

effect under sections 1311(c) and 1311(d) of such title.

(8) DIC FOR DEPENDENT CHILDREN.—The dollar amounts in

effect under sections 1313(a) and 1314 of such title.

(c) DETERMINATION OF INCREASE.—(1) The increase under subsection (a) shall be made in the dollar amounts specified in subsection (b) as in effect on November 30, 2001.

(2) Except as provided in paragraph (3), each such amount shall

be increased by the same percentage as the percentage by which

benefit amounts payable under title II of the Social Security Act

(42 U.S.C. 401 et seq.) are increased effective December 1, 2001, as

a result of a determination under section 215(i) of such Act (42

U.S.C. 415(i)).

(3) Each dollar amount increased pursuant to paragraph (2)

shall, if not a whole dollar amount, be rounded down to the next

lower whole dollar amount.

(d) SPECIAL RULE.—The Secretary of Veterans Affairs may adjust

administratively, consistent with the increases made under subsection (a), the rates of disability compensation payable to persons

within the purview of section 10 of Public Law 85–857 (72 Stat.

1263) who are not in receipt of compensation payable pursuant to

chapter 11 of title 38, United States Code.

SEC. 3. PUBLICATION OF ADJUSTED RATES.

At the same time as the matters specified in section 215(i)(2)(D)

of the Social Security Act (42 U.S.C. 415(i)(2)(D)) are required to

be published by reason of a determination made under section

215(i) of such Act during fiscal year 2002, the Secretary of Veterans Affairs shall publish in the Federal Register the amounts

specified in subsection (b) of section 2, as increased pursuant to

that section.

INTRODUCTION

The Committee on Veterans’ Affairs (hereinafter, the ‘‘Committee’’) hereby reports a bill to increase, effective as of December

1, 2001, the rates of compensation for veterans with service-connected disabilities and the rates of dependency and indemnity compensation (hereinafter, ‘‘DIC’’) for the survivors of certain disabled

veterans.

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COMMITTEE HEARING

On June 28, 2001, the Committee held a hearing on legislation

pending before the Committee. Among the measures on which the

Committee received testimony was S. 1090, a bill to increase, effective as of December 1, 2001, the rates of compensation for veterans

with service-connected disabilities and the rates of DIC for the survivors of certain disabled veterans. The Committee received testimony from, among others, representatives of the Department of

Veterans Affairs (hereinafter, ‘‘VA’’), and from representatives of

The American Legion, the Veterans of Foreign Wars, the Disabled

American Veterans, and the Paralyzed Veterans of America. The

Committee also received written statements for the record from the

Vietnam Veterans of America.

COMMITTEE MEETING

On August 2, 2001, the Committee met in open session to consider legislation pending before the Committee. Among the measures so considered was S. 1090, a bill to increase, effective as of December 1, 2001, the rates of compensation for veterans with service-connected disabilities and the rates of DIC for the survivors of

certain disabled veterans. The Committee voted by unanimous

voice vote to report S. 1090, as introduced, favorably to the Senate.

SUMMARY OF S. 1090 AS REPORTED

The Committee bill contains freestanding provisions that would

require the Secretary of Veterans Affairs to increase, effective December 1, 2001, the rates of and limitations on certain benefits

paid by VA by the same percentage as the cost-of-living adjustment

(hereinafter, ‘‘COLA’’) provided to Social Security recipients and VA

pension beneficiaries that become effective on the same date. The

COLA would apply to:

1. basic compensation rates for veterans with service-connected disabilities and the rates payable for certain severe disabilities;

2. the allowance for spouses, children, and dependent parents paid to service-connected disabled veterans rated 30 percent or more disabled;

3. the annual clothing allowance paid to veterans whose compensable disability requires the use of a prosthetic or orthopedic appliance (including a wheelchair) that tends to tear or

wear out clothing, or requires the use of a medication prescribed by a physician for a service-connected skin condition if

the medication causes irreparable damage to the veteran’s

outer garments; and

4. the dependency and indemnity compensation rates paid to:

(a) surviving spouses of veterans whose deaths were

service connected;

(b) surviving spouses for dependent children;

(c) surviving spouses who are so disabled that they need

aid and attendance or are permanently housebound; and

(d) the children of veterans whose deaths were service

connected if no surviving spouse is entitled to DIC, the

child is age 18 through 22 and attending an approved eduVerDate 11-MAY-2000 21:56 Oct 15, 2001 Jkt 099010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR087.XXX pfrm07 PsN: SR087
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cational institution, or the child is age 18 or over and became permanently incapable of self-support prior to reaching age 18.

The Congressional Budget Office (hereinafter, ‘‘CBO’’) currently

estimates that the COLA to be provided to Social Security recipients will be 2.7 percent.

BACKGROUND

Disability Compensation

The service-connected disability compensation program under

chapter 11 of title 38, United States Code, provides monthly cash

benefits to veterans who have disabilities incurred or aggravated

during active duty in the Armed Forces.

The amount of compensation paid depends on the nature of the

veteran’s disability or combination of disabilities and the extent to

which the disability impairs earning capacity. VA rates compensable disabilities according to its Schedule for Rating Disabilities

on a graduated scale ranging from 0 to 100 percent, in 10-percent

increments. VA pays higher monthly rates (known as ‘‘special

monthly compensation’’) to totally disabled veterans with certain

specific, very severe disabilities or combinations of disabilities.

As of March 31, 2001, VA was providing disability compensation

to 2,324,225 veterans with service-connected disabilities. Among

the veterans receiving such compensation were 39 World War I veterans; 484,7355 World War II veterans; 168,217 Korean-conflict

veterans; 747,699 Vietnam-era veterans; and 349,184 veterans of

the Persian Gulf War era.

A veteran with a disability rated at 30 percent or more may receive additional compensation on behalf of the veteran’s spouse,

children, and dependent parents. These dependents’ allowances are

prorated according to the percentage of disability. As of September

2000, 741,148 veterans received additional compensation for dependents, with an average of 1.51 dependents per case, or

1,119,133 total dependents.

Dependency and Indemnity Compensation

Under chapter 13 of title 38, VA pays dependency and indemnity

compensation to the survivors of servicemembers or veterans who

died on or after January 1, 1957, from a disease or injury incurred

or aggravated during military service. Survivors eligible for DIC include surviving spouses, unmarried children under the age of 18,

children age 18 or older who are permanently incapable of self-support, children between the ages of 18 and 22 who are enrolled in

school, and certain needy parents. Under section 5312 of title 38,

parents’ DIC rates are adjusted automatically at the same time

and by the same percentage as Social Security and VA pension

benefits. Surviving spouses, children, and parents who are receiving death compensation based on deaths before January 1, 1957,

may elect to receive DIC instead of death compensation.

For deaths prior to January 1, 1993, surviving spouses received

DIC at rates determined by the pay grade (service rank) of the deceased veteran. For deaths on or after January 1, 1993, surviving

spouses currently receive $881 per month and, if the deceased veteran was totally disabled for 8 years prior to death, an additional

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$191 per month. Surviving spouses who had been receiving benefits

under the prior DIC program are paid under whichever program

will pay the higher benefit.

A surviving spouse who is so disabled as to be housebound or in

need of regular aid and attendance is eligible to receive an additional amount. A surviving spouse also may receive additional allowances on behalf of the veteran’s surviving children.

Children are entitled to DIC if there is no surviving spouse, if

they are 18 years or older and became permanently incapable of

self-support before reaching age 18, or if they are 18 to 22 years

old and pursuing an approved course of education.

As of March 31, 2001, VA was paying DIC benefits to, or on behalf of, 288,157 surviving spouses, 30,820 children, and 10,487

needy surviving parents.

Under section 1318(b) of title 38, VA pays benefits at DIC rates

to the surviving spouses and children of veterans whose deaths are

not service connected if the veteran, immediately prior to his or her

death, had been receiving (or had been entitled to receive) compensation at the 100-percent rate continuously for 10 or more years

or for at least 5 years from the date of discharge or release from

active duty.

History of Cost-of-Living Increases

The Committee periodically reviews the service-connected disability compensation and DIC programs to ensure that the benefits

provide reasonable and adequate compensation for disabled veterans and their families. Based on this review, the Congress acts

periodically to provide a cost-of-living adjustment in compensation

and DIC benefits. In fact, the Congress has provided annual increases in these rates for every fiscal year since 1976. The following table shows the percentage increases since 1975.

History of Service-Connected Disability Compensation Increases, 1975 to Present

Fiscal Year Effective Date Increase

(percent)

Cumulative

(1969 = $100)

1976 August 1975 ............................................................................................... 11.8 158.55

1977 October 1976 .............................................................................................. 8.0 171.23

1978 October 1977 .............................................................................................. 6.6 182.53

1979 October 1978 .............................................................................................. 7.3 195.86

1980 October 1979 .............................................................................................. 9.9 215.25

1981 October 1980 .............................................................................................. 14.3 246.03

1982 October 1981 .............................................................................................. 11.2 273.58

1983 October 1982 .............................................................................................. 7.4 293.82

1984 April 1983 ................................................................................................... 3.5 304.11

1985 December 1984 ........................................................................................... 3.2 313.84

1986 December 1985 ........................................................................................... 3.1 323.57

1987 December 1986 ........................................................................................... 1.5 328.42

1988 December 1987 ........................................................................................... 4.2 342.22

1989 December 1988 ........................................................................................... 4.1 356.25

1990 December 1989 ........................................................................................... 4.7 372.99

1991 January 1991 1 ............................................................................................ 5.4 393.13

1992 December 1991 ........................................................................................... 3.7 407.68

1993 December 1992 ........................................................................................... 3.0 419.91

1994 December 1993 ........................................................................................... 2.6 430.83

1995 December 1994 2 ........................................................................................ 2.8 442.89

1996 December 1995 2 ........................................................................................ 2.6 454.41

1997 December 1996 ........................................................................................... 2.9 467.59

1998 December 1997 2 ........................................................................................ 2.1 477.41

1999 December 1998 2 ........................................................................................ 1.3 483.62

2000 December 1999 2 ........................................................................................ 2.4 495.23

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History of Service-Connected Disability Compensation Increases, 1975 to Present—Continued

Fiscal Year Effective Date Increase

(percent)

Cumulative

(1969 = $100)

2001 December 2000 2 ........................................................................................ 3.5 512.56

2002 December 2001 2 ........................................................................................ 3 2.7 526.40

1 Payment of the December 1990 increase was delayed until January 1991 by section 7 of Public Law 102–3.

2 December 1994, 1995, 1997, 1998, 1999, 2000, 2001, and 2002 increases are rounded to the next lower dollar amount pursuant to sections 2(c)(2) of Public Law 103–418 and Public Law 104–57, and section 8031 of Public Law 105–33. 3 Estimate.

COMMITTEE BILL

The Committee bill would direct VA to compute and provide increases in the monthly rates of compensation and DIC, effective

December 1, 2001. The rates would be increased by the same percentage as the Social Security and VA pension COLA that will take

effect on that date. In accordance with section 8031 of the Balanced

Budget Act of 1997 (Public Law 105–33), amounts of compensation so computed that are not even multiples of $1 will be rounded

down to the next lower whole dollar amount.

The increases in DIC automatically would result in identical percentage increases in benefits paid at DIC rates under section 1318

of title 38 to the surviving spouses and children of veterans who

had a service-connected disability at the time of death for which

they continuously were rated totally disabled for at least either (1)

10 years, or (2) 5 years from the date of discharge from active duty.

Under section 156(e)(1)(A) of Public Law 97–377, the DIC increases also automatically would result in the same percentage increases in Social Security benefits that were terminated by section

2205 of the Omnibus Budget Reconciliation Act of 1981 (hereinafter, ‘‘OBRA 1981’’) (Public Law 97–35). Prior to OBRA 1981,

those benefits had been paid to certain surviving spouses of those

who died on active duty or from a service-connected disability on

behalf of their children under 18 and children over age 19 who

were secondary-school students; OBRA 1981 reduced the eligibility

cutoff age from 18 to 16 years old.

Section 314 of Public Law 100–322 amended section 156(a)(1) of

Public Law 97–377 to restore the benefits eliminated by the OBRA

1981. The DIC increase also would apply to these restored benefits,

effective December 1, 2000.

CBO, in its most recent baseline, estimated that the FY 2002 Social Security COLA, and thus the COLA provided for by the Committee bill, will be 2.7 percent. The actual Social Security COLA

could differ from this estimate. Rather than selecting any particular percentage adjustment at the time the Committee ordered

the bill reported, the Committee followed its prior practice of setting the COLA by reference to the Social Security increase. The

Committee believes this is the most equitable means of providing

increases in these important service-connected benefits.

COST ESTIMATE

In compliance with paragraph 11(a) of rule XXVI of the Standing

Rules of the Senate, the Committee, based on information supplied

by the Congressional Budget Office (CBO), estimates that, compared to the CBO baseline, there would be no costs or savings resulting from enactment of the Committee bill.

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The cost estimate provided by CBO follows:

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, August 14, 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. 1090, the Veterans’ Compensation Cost-of-Living Adjustment Act of 2001.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Michelle S. Patterson.

Sincerely,

DAN L. CRIPPEN, Director.

Enclosure.

S. 1090, Veterans’ Compensation Cost-of-Living Adjustment Act of

2001 (As ordered reported by the Senate Committee on Veterans’

Affairs on August 2, 2001)

S. 1090 would increase the amounts paid to veterans for disability compensation and to their survivors for dependency and indemnity compensation by the same cost-of-living adjustment

(COLA) payable to Social Security recipients. The increase would

take effect on December 1, 2001, and the results of the adjustment

would be rounded to the next lower dollar.

The COLA that would be authorized by this bill is assumed in

the budget resolution baseline, pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act, and savings from

rounding it down were achieved by the Balanced Budget Act of

1997 (Public Law 105–33). As a result, the bill would have no

budgetary effect relative to the baseline. Relative to current law,

CBO estimates that enacting this bill would increase spending for

these programs by about $407 million in 2002. (The 2002 cost on

an annualized basis would be about $543 million, which would be

the approximate cost in subsequent years.) This estimate assumes

that the COLA effective on December 1, 2001, would be 2.7 percent.

S. 1090 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would

impose no costs on state, local, or tribal governments.

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

101 of H.R. 2540 would provide the same COLA as this bill would.

The estimated costs of this bill and section 101 of H.R. 2540 are

the same.

The CBO staff contact is Michelle S. Patterson. This estimate

was approved by Robert A. Sunshine, 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

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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. 1090, a bill to increase, effective as of December 1, 2001, the rates of compensation for veterans

with service-connected disabilities and the rates of dependency and

indemnity compensation for the survivors of certain disabled veterans reported favorably to the Senate.

AGENCY REPORT

On June 28, 2001, the Honorable Leo S. Mackay, Jr., Ph.D., Deputy Secretary for the Department of Veterans Affairs, appeared before the Committee and submitted testimony on, among other

things, S. 1090, a bill to increase, effective as of December 1, 2001,

the rates of compensation for veterans with service-connected disabilities and the rates of dependency and indemnity compensation

for the survivors of certain disabled veterans. Excerpts from this

statement are reprinted below:

STATEMENT OF LEO S. MACKAY, JR., PH.D., DEPUTY

SECRETARY, DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and Members of the Committee, thank you for the

opportunity to testify today on several legislative items of great interest to veterans.

* * * * * * *

COMPENSATION COLA

The ‘‘Veterans’ Compensation Cost-of-Living Adjustment Act of

2001,’’ S. 1090, would authorize a cost-of-living adjustment (COLA)

for fiscal year (FY) 2002 in the rates of disability compensation and

dependency and indemnity compensation (DIC). Section 2 of the

draft bill would direct the Secretary of Veterans Affairs to increase

administratively the rates of compensation for service-disabled veterans and of DIC for the survivors of veterans whose deaths are

service related, effective December 1, 2001. As provided in the

President’s FY 2002 budget request, the rate of increase would be

the same as the COLA that will be provided under current law to

veterans’ pension and Social Security recipients, which is currently

estimated to be 2.5 percent. We estimate that enactment of this

section would cost $376 million during FY 2002, $7.1 billion over

the period FY’s 2002–2006 and $28.5 billion over the period FY’s

2002–2011. Although this section is subject to the PAYGO requirement of the Omnibus Budget Reconciliation act of 1990 (OBRA),

the PAYGO effect would be zero because OBRA requires that the

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full compensation COLA be assumed in the baseline. We believe

this proposed COLA is necessary and appropriate in order to protect the benefits of affected veterans and their survivors from the

eroding effects of inflation. These worthy beneficiaries deserve no

less.

* * * * * * *

CHANGES IN EXISTING LAW MADE BY THE COMMITTEE BILL, AS

REPORTED

Since the Committee bill would not repeal or amend any provisions of current law, this report does not contain the material described in clauses (a) and (b) of paragraph 12 of Rule XXVI of the

Standing Rules of the Senate.

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