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[Senate Hearing 109-405]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-405

 
         REBUILDING THE GULF COAST FOLLOWING HURRICANE KATRINA

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS

                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 10, 2005

                               __________

       Printed for the use of the Committee on Veterans' Affairs

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                    U.S. GOVERNMENT PRINTING OFFICE
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                     COMMITTEE ON VETERANS' AFFAIRS

        .........................................................

                    Larry E. Craig, Idaho, Chairman
Arlen Specter, Pennsylvania          Daniel K. Akaka, Hawaii, Ranking 
Kay Bailey Hutchison, Texas              Member
Lindsey O. Graham, South Carolina    John D. Rockefeller IV, West 
Richard Burr, North Carolina             Virginia
John Ensign, Nevada                  James M. Jeffords, (I), Vermont
John Thune, South Dakota             Patty Murray, Washington
Johnny Isakson, Georgia              Barack Obama, Illinois
                                     Ken Salazar, Colorado

                  Lupe Wissel, Majority Staff Director
               D. Noelani Kalipi, Minority Staff Director

                            C O N T E N T S

                              ----------                              

                           November 10, 2005

                                SENATORS

                                                                   Page

Craig, Hon. Larry E., U.S. Senator from Idaho....................     1
Murray, Hon. Patty, U.S. Senator from Washington, prepared 
  statement......................................................     2
Cochran, Hon. Thad, U.S. Senator from Mississippi................     5
    Prepared statement...........................................     6
Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     6
Hutchison, Hon. Kay Bailey, U.S. Senator from Texas..............     7
Salazar, Hon. Ken, U.S. Senator from Colorado, prepared statement     8
Isakson, Hon. Johnny, U.S. Senator from Georgia..................     9
Lott, Hon. Trent, U.S. Senator from Mississippi..................    18
    Prepared statement...........................................    20
Landrieu, Hon. Mary, U.S. Senator from Louisiana, prepared 
  statement......................................................    23

                                WITNESS

Nicholson, Hon. James R., Secretary of Veterans Affairs, 
  accompanied by Jonathan B. Perlin, M.D., Ph.D., Under Secretary 
  for Health; Tim S. McClain, General Counsel; and Robert Lynch, 
  M.D., Director, Veterans Integrated Service Network 16.........     9
    Prepared statement...........................................    12
    Response to written questions submitted by Hon. Daniel K. 
      Akaka......................................................    16

         REBUILDING THE GULF COAST FOLLOWING HURRICANE KATRINA

                              ----------                              

                      THURSDAY, NOVEMBER 10, 2005

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:04 p.m., in 
room SD-138, Dirksen Senate Office Building, Hon. Larry Craig, 
(Chairman of the Committee) presiding.
    Present: Senators Craig, Hutchison, Thune, Isakson, Akaka, 
Murray, and Salazar.
    Also Present: Senators Lott, Cochran, and Landrieu.

           OPENING STATEMENT OF HON. LARRY E. CRAIG, 
                    U.S. SENATOR FROM IDAHO

    Chairman Craig. Good afternoon, ladies and gentlemen. The 
Committee will come to order.
    The Committee meets this afternoon to hear from the 
Secretary of Veterans Affairs and his staff on the efforts VA 
is undertaking to re-establish service and rebuild VA 
facilities along the Gulf Coast in the aftermath of Hurricanes 
Katrina and Rita.
    Before we begin to talk about the future of the VA in the 
region, I would like to spend just a moment to recognize VA's 
past efforts, especially those in the weeks following Hurricane 
Katrina's landfall. As many of you may know, VA was one of the 
few bright lights to shine through the devastation that hit the 
region.
    Advanced planning and a well-known electronic medical 
records system helped ensure that the VA could coordinate and 
move thousands of staff and patients to facilities across the 
United States without a single loss of life attributed to the 
lack of medical attention. In addition, VA staff members, 
volunteering thousands of hours of their time to assist 
veterans and other citizens in the affected communities, 
ensured that the aftermath of this storm went as smoothly as 
possible.
    While more people than I can possibly name are responsible 
for that success, I want to especially recognize the gentlemen 
sitting at our front table today, Secretary Nicholson, Dr. 
Perlin, and Mr. McClain. Your efforts ensured that emergency 
response plans were created in advance of the storm and 
implemented.
    In particular, though, I want to single out our fourth 
member of the panel today, Dr. Lynch. Robert Lynch was VA's man 
in charge on the ground in the Gulf. He and his staff worked 
countless hours for the good of thousands of our veterans. Dr. 
Lynch, I hope you know how proud we are of your efforts and 
those of your staff. You lead a truly remarkable group of 
individuals, and I hope you will pass on our highest 
compliments to all of them.
    Like so many private houses and businesses, the Department 
of Veterans Affairs experienced a significant amount of 
destruction and damage during Hurricane Katrina. The VA's 
medical center in Gulfport, Mississippi, was totally decimated 
by the storm.
    In New Orleans, VA's medical facilities experienced 
significant flooding on the lower floors and wind damage on the 
upper floors. That damage, coupled with a lack of electricity 
and ventilation, raises serious concerns as to whether the 
interior of these buildings is beyond repair.
    In addition, VA has no regional office in New Orleans at 
this time to handle disability compensation payments and other 
benefit matters. The office was located in a postal building in 
downtown New Orleans that sustained water damage and has not 
reopened. Even VA's one working medical facility in the Gulf 
region, the Biloxi VA medical center, sustained some structural 
damage and is in need of repair.
    Putting all of these pieces together, or I should say back 
together again, will be a massive undertaking. It will not be 
easy or inexpensive. VA is confronted with the fact that there 
is no real medical infrastructure at all in New Orleans.
    Both LSU and Tulane medical schools, which were a 
significant source of medical staff for VA facilities in the 
region, are not open. Even many of the veterans who relied on 
facilities along the coast are now living in other areas of 
Mississippi and Louisiana.
    To address the financial considerations facing VA, the 
President recently sent his third hurricane supplemental 
request to Congress. This request identified $1.15 billion to 
help VA rebuild efforts at the facilities I have just 
mentioned. Further, the bill includes $300 million to purchase 
new equipment and replace pharmaceuticals which were lost or 
destroyed during this emergency.
    I look forward to the Secretary's testimony to get some of 
the detailed information about this rebuilding effort and 
perhaps some estimates on timelines and other challenges we 
face.
    With that, I will recognize Secretary Nicholson. Our 
Ranking Member, Senator Akaka, is not here. Let me then turn to 
my colleagues who are now here to see if there are any opening 
comments before we turn to the Secretary.
    Senator Murray. Patty.
    Senator Murray. Mr. Chairman, thank you very much. I 
apologize. I won't be able to stay for the hearing because we 
have a transportation conference that I need to go to in a 
minute.
    But I would like to submit my statement for the record.
    [The prepared statement of Senator Murray follows:]

 Prepared Statement of Hon. Patty Murray, U.S. Senator from Washington

    I want to thank Chairman Craig and Ranking Member Akaka for having 
today's hearing and for the distinguished Members joining us from the 
affected region.
    I also wanted to thank Secretary Nicholson for being here to answer 
our questions on how the VA is moving forward with rebuilding and 
recovering from the destruction caused by Hurricane Katrina.
    Mr. Secretary, we're here today to see that we take care of 
veterans who have been displaced or whose services have been 
interrupted by Hurricane Katrina.
    However, as we do that, I want to make sure that we do not end up 
jeopardizing or in any way compromising the quality of care available 
to other veterans across the Nation.
    The reason I raise this concern is that just this year, we faced a 
situation in which bad planning and budgeting on your part led to a 
massive shortfall in VA healthcare funding.
    If I hadn't insisted on making sure we provided funding to meet 
that shortfall--in spite of your assurances, our veterans would be in 
serious trouble right now.
    Mr. Secretary, I do not want to sit here 8 months from now and hear 
that the VA underestimated the impact of Katrina and had to take money 
away from veterans who need care to compensate for its mistake.
    Now, let me say that I, like everyone in America, was saddened to 
see the devastation in the Gulf region after Hurricane Katrina. The 
families without homes, and the cities in tatters, were tragic. There 
are many steps that need to be taken to rebuild that region.
    But I am worried that Congress will do so by shortchanging programs 
required by other Americans. That would be wrong.
    As a long-time Member of the Senate Veterans Affairs Committee, I 
am very concerned that veterans' medical services are susceptible to be 
sacrificed in the name of reconstruction.
    While we have an obligation to help Hurricane-affected areas 
rebuild, we cannot do so by drawing out precious funding from other 
important programs.
    Unfortunately, Hurricanes Katrina and Rita came at a time when the 
United States Government is running over an 8-trillion dollar deficit.
    Add to this complicated equation, military activity in Afghanistan 
and Iraq costing over 60 billion dollars a year.
    And this number only represents occupation costs, not money for 
rebuilding efforts or funding for soldiers as they return home from the 
battlefront.
     As Congress and this Committee consider how to move forward with 
reconstruction in the devastated region, we must do so without shirking 
other promises we've made, especially to our veterans.
    Tomorrow is Veterans Day, a day to honor the sacrifices our 
soldiers have made when called upon to serve this country.
    When our Government asks them to leave their families and go to 
foreign soil to represent this country, we promise them we will do our 
part to care for them upon their return.
    In times of budget shortfalls, massive deficits, and growing 
pressure to keep costs down--we must remember our promise and fight to 
fulfill it.
    I'm here today to make it clear that Congress must provide the VA 
the funding it needs to rebuild and not use Medical Services funding or 
other VA funding to cover Katrina-related costs.
    Secretary Nicholson, you and I have gone back and forth on the VA 
budget and the budget shortfall.
    I have spent the better part of a year fighting with the 
Administration to get the funding our veterans need.
    What we saw occur during fiscal year 2005 should not be repeated in 
either fiscal year 2006 or in fiscal year 2007.
    I hope Secretary Nicholson has a promising update on VA funding 
both for reconstruction after Katrina and for medical care and 
benefits.
    Mr. Chairman, the VA did not adequately anticipate demand when it 
set its 2005 budget. An increase in usage from veterans returning home 
from war was up and, leading to increased strains on the VA.
    I fought hard to prevent the $1 billion shortfall the VA reported 
in June.
    I asked three times to get additional funds to the VA to prevent 
that shortfall, but you, Mr. Secretary, would not admit there was a 
deficit.
    After it came to light that there was indeed a shortfall.
    Working with my colleagues I was able to secure $1.5 billion 
dollars in supplemental funding to make sure that our veterans could 
get the services promised to them.
    But, as we know, that funding only covered the last fiscal year's 
need.
    I remain concerned that we will end up right back here in trying to 
supplement the 2006 budget next year.
    And I hope to hear from the Administration on how they have changed 
their budget models to adequately prepare--especially in light of the 
increased number of OIF and OEF veterans needing to access VA care.
    Today, we are relying very heavily on Guard members.
    Where traditional active duty members would access military 
healthcare, we now have over 500,000 Guard members who have fought in 
Iraq and Afghanistan, who have returned home, and who are now eligible 
for VA care.
    I have been informed by the VA that to date only $500 million 
dollars of the $1.5 billion supplemental has been spent.
    I have also been told the rest has been rolled over into fiscal 
year 2006.
    As you know Mr. Secretary, this rollover funding has been a 
critical piece of the negotiation on the VA's fiscal year 2006 budget.
    I hope to hear from you today about the nature of that rollover and 
whether or not those funds will be used for medical services or to 
assist in rebuilding in the Gulf.
    I'm worried that the higher level of funding requested by the 
Senate for 2006 will be reduced in conference.
    This will force the entire system to be based on bare minimum 
funding.
    If one thing goes wrong--cost overruns in rebuilding VA facilities 
in the Gulf, increased utilization, or an across the board cut--
veterans access to care will become limited.
    On September 8, 2005, Secretary Nicholson, you told four 
congressional Committees that--and I quote--``We will need additional 
funding for clean up, repairing facilities, providing temporary 
facilities and staffing.'' End quote.
    The VA requested $1.2 billion dollars for reconstruction and $198 
million dollars for medical care at VA hospitals and clinics in the 
gulf coast region as a consequence of the Hurricanes.
    Currently where did you get the funding to pay for bringing these 
facilities back into operation?
    How are CBOCs paying for the replacement supplies and 
pharmaceuticals they need to care for area veterans?
    How are you paying for the added staffing and transportation costs 
right now?
    Mr. Secretary, what are you doing to ensure that reconstruction 
costs are not coming out of the medical services earmarked for our 
veterans?
    I sincerely hope to get answers from you on these important 
questions today, Mr. Secretary--for the sake of our current and future 
veterans.
    Mr. Secretary, we have learned many lessons this past year when it 
comes to VA funding.
    I have learned to doubt your numbers, to question which accounts 
are being used for what, and I am very concerned that when an 
inadequate Katrina request is added in with limited VA funding, that we 
are going to see a shortfall next year.
    One lesson I think you should walk away with, Mr. Secretary, is 
that we need a real VA budget for fiscal year 2007. No budget gimmicks. 
No increased fees that Congress will never endorse.
    A real budget that acknowledges that we have had over 1 million 
Americans serve us in Iraq and Afghanistan since 2001.
    A real budget that acknowledges that our veteran population is 
aging and facing new mental health challenges.
    A real budget that acknowledges that medical costs and utilization 
rates are going up for the VA.
    Mr. Secretary, the bottom line is that 8 months from now I don't 
want to be hearing how shortfalls and ever-expanding Katrina costs are 
hurting our veterans by keeping them from getting the care they 
deserve.
    Thank you for your time here today, Mr. Secretary.
    I look forward to hearing your testimony.

    Chairman Craig. Without objection.
    Senator Murray. But let me just make a few comments. First 
of all, obviously, the devastation with the hurricanes is 
something that has impacted the VA immensely, and we all want 
to make sure we have the funds there. They did a great job, and 
we all want to be sure that we have the money there to take 
care of it.
    My concern is that we don't rob the existing funds within 
the VA to do that. I am submitting some questions for the 
record to make sure that is not the case. We had a long, drawn-
out battle about funding for VA. We are still, as Senator 
Hutchison knows, in conference, making sure that we have the 
dollars that were promised to our veterans there.
    I want to make sure that the money that is out there for 
our current veterans services isn't being used for this. That 
we are asking for additional dollars to pay for that because 
those funds are absolutely critical.
    And Mr. Secretary, I particularly want to know about the 
money that is being rolled over, the rollover account. I 
believe $500 million has been rolled over from the 
supplemental. I want to find out if that money is being used 
for Katrina or if it is being used specifically for what we 
were told it was, which was for our medical facilities and our 
veterans across the country. But I will submit those questions 
for the record.
    I do want to take this opportunity, Mr. Chairman, to thank 
you for your announcement today that you are stopping the 
questioning of our soldiers with PTSD. I think that was 
extremely positive. It positively impacted a lot of veterans 
who were very concerned about that kind of interrogation, and I 
do appreciate that.
    And finally, Mr. Chairman, let me just say I hope we have 
all learned our lesson. I hope we get from you real numbers, 
real budget numbers. We have an increasing number of soldiers 
returning home. We have our Guard and Reserve members, who are 
increasingly accessing VA facilities now as they return from 
the war. We have a number of aging veterans. We have, 
obviously, the impacts of Katrina.
    We need, as we go to the 2007 budget, which you will be 
presenting to us fairly soon, we need to have a real number. So 
8 months from now, we are not back in the same situation.
    So, Mr. Secretary, thank you for being here today. Mr. 
Chairman, I apologize for not staying. But I will submit my 
questions for the record and would appreciate a response back 
as quickly as possible.
    Thank you.
    Chairman Craig. Patty, thank you. And of course, those 
questions will be for the record and submitted to the Secretary 
for his response.
    As most of you know, I invited all of the Senators who are 
not Members of this Committee, but certainly Senators of the 
affected States to participate in this hearing today as Members 
of the Committee and ask the questions. And so, Senator Thad 
Cochran is here, who is also, most importantly, beyond being 
senior Senator from Mississippi, the Chairman of the 
Appropriations Committee from which all money flows.
    Senator Cochran. We are out of money.
    [Laughter.]
    Chairman Craig. Senator Cochran.

         STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR 
                        FROM MISSISSIPPI

    Senator Cochran. Unfortunate news. Thank you, Mr. Chairman.
    Let me express our appreciation to you for your leadership 
on the Veterans' Affairs Committee and also as a key advisor on 
needs of the Veterans Administration. When it comes time to 
making decisions about the level of appropriations and where 
the priorities ought to be, we appreciate always the good 
advice and counsel we receive from you and your Committee.
    And today, we are particularly glad to see you looking at 
the issue of damage and what needs to be done and is being done 
to restore facilities to operational levels and repair damage 
that needs to be repaired and what effect it may have long term 
on veterans' interests in this region of our country.
    I have a prepared statement, which I would hope you could 
include in the record, along with some questions to submit to 
Secretary Nicholson and his staff. We appreciate their work. 
Outstanding leadership is being provided to the veterans and to 
our country by these fine gentlemen.
    Thank you.
 Prepared Statement of Hon. Thad Cochran, U.S. Senator from Mississippi
    The Mississippi Veterans Affairs facilities suffered a significant 
amount of damage due to Hurricane Katrina. The Department of Veterans 
Affairs administered two medical hospitals on the coast, one in Biloxi, 
the other in Gulfport and a national cemetery in Biloxi. The Gulfport 
VA Hospital was completely destroyed by the hurricane. Seventy-eight 
patients were evacuated to the Biloxi facility before the hurricane and 
20 patients were transferred to Jackson from Biloxi. The Biloxi VA 
Hospital suffered roof damage, but it is fully operational. The 
Department of Veterans Affairs was in the process of implementing their 
Capital Asset Realignment for Enhanced Services (CARES) Plan before the 
hurricane which would transfer the Gulfport operations to the Biloxi VA 
Medical center and possibly lease the Gulfport property to developers. 
The VA National Cemetery located on the Biloxi campus suffered some 
damage including the uprooting of trees and some damages to roadways 
and headstones.
    The President's supplemental request provides $1.2 billion to 
replace the medical center in New Orleans, LA, and to repair and 
construct a bed tower to the medical center in Biloxi, MS. The request 
also includes $198.3 million for the replacement of medical supplies, 
equipment and pharmaceuticals and $1.8 million has been requested to 
repair roads and other damage that was sustained to the national 
cemetery.

    Chairman Craig. Thank you very much.
    Our Ranking Member has just arrived. I will turn to Senator 
Akaka for any opening statement he would like to make.

          STATEMENT OF HON. DANNY AKAKA, U.S. SENATOR 
                          FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman.
    I want to welcome our panel. I want to welcome the 
distinguished panelists here. I am delighted, and it is so 
great to hear, Mr. Secretary, that the Department of Veterans 
Affairs is suspending its plan to review 72,000 posttraumatic 
stress disorder compensation claims.
    This is great news for all veterans. Make no mistake. This 
review would have put some veterans at risk of losing 
compensation that they had already been awarded by VA. Many 
times, VA compensation is sole source of income for veterans 
and their families.
    During October, Congressman Evans and I wrote to Secretary 
Nicholson, asking that the PTSD review be suspended until VA 
could complete its smaller review of just 22,100 claims. I am 
pleased that upon completion of the smaller review, VA has 
decided that they are not going to put veterans through the 
anxiety that a widespread review of their disability claims 
would create.
    I am certain that veterans in New Orleans who were subject 
to this planned review will be relieved that the benefits that 
they have earned will not be put in jeopardy.
    Mr. Chairman, this hearing on the reconstruction of VA 
facilities along the Gulf Coast highlights our continued focus 
in the aftermath of Hurricane Katrina. As we all know, VA 
performed with distinction in its response to Hurricane 
Katrina, and we are proud of that.
    With no loss of life or injuries reported, the employees in 
the affected area showed tireless dedication in some of the 
most adverse conditions. VA kept its commitment to veterans and 
patients at a time when they were most needed.
    Now we must all follow through with the current task at 
hand--fully restoring accessible health care and benefit 
services to veterans. VA is compelled to make sound decisions 
in a timely manner. VA must be proactive in its rebuilding 
effort. With so many in dire need, we must not rest until we 
finish the job of restoring critical services, such as in-
patient care in New Orleans and assisted living beds in Biloxi 
and to the veterans in the affected region.
    Our Committee is dedicated to assisting VA and helping 
veterans affected by Hurricane Katrina. My goal is to seek 
transparency in the planning process and reconstruction effort. 
We must also ensure the funding for this effort does not come 
at the expense of needed health care dollars for next year. Our 
commitment to oversight as a means for VA, to let our veterans 
know of the tireless effort in restoring quality service and 
care.
    Mr. Secretary, I look forward to taking those first steps 
today and to be with you as we do it.
    Thank you.
    Chairman Craig. Thank you, Danny.
    Senator Hutchison. Kay?
    Senator Hutchison. Thank you, Mr. Chairman.

         STATEMENT OF HON. KAY HUTCHISON, U.S. SENATOR 
                           FROM TEXAS

    Mr. Chairman, I am very pleased to be able to have this 
hearing, and I am sorry I am going to have to leave for the 
same conference as Senator Murray. And I am also chairing 
another conference committee. That is what is happening this 
week. All of the final hearings and conferences seem to be 
coming at the same time.
    But as the Chairman of the Veterans' Affairs Appropriations 
Subcommittee, what you bring to us today is going to come to my 
subcommittee. And I certainly intend to assure that everything 
that was damaged in Hurricane Katrina or Hurricane Rita--and I 
hope that we will not forget that there was another hurricane 
that was very devastating on the Gulf Coast. It wasn't the 
magnitude of Katrina, but it was pretty tough on the western 
part of Louisiana and the eastern part of Texas. But we are 
certainly going to work with you.
    I do want to say how pleased I am that not one veteran lost 
his life or her life in the evacuation from the Katrina 
hurricane, and really, I was amazed at how well the Veterans 
Affairs Department did in making sure that the records were 
available where a veteran went later after evacuation. I think 
it worked a whole lot better than anything in the private 
sector, and I really appreciate that.
    And certainly, we want to rebuild those facilities in a way 
that we will assure that they can withstand a Category 5 
hurricane in the future. But I think the care that was given to 
our veterans is commendable. It is the right thing to do, but 
the important thing is that you did it. And we appreciate that 
kind of service.
    And I also have to say that I appreciate the fact that some 
of the Veterans Administration doctors and health care 
professionals served anyone who walked in the door, not just 
veterans. That is exactly what you ought to do in an emergency. 
And thank heavens, they weren't in any way impeded from serving 
whoever was in need, a citizen of our country.
    So I thank you for the good work that was done, and it was, 
I think, a fine hour for the veterans department. Now we are 
going to have to rebuild and assure that the veterans who are 
still evacuated will get the care they need. And that will be 
the job of my subcommittee, along with Senator Feinstein, as we 
go into the supplemental that will eventually come.
    And I agree with Senator Murray that we want all of the 
estimates to be for the supplemental, not anything that would 
come from the veterans that we are treating in the normal 
course of operations.
    Thank you.
    Chairman Craig. Kay, thank you very much.
    Ken? Senator Salazar, any opening comment?
    Senator Salazar. I have statement that I will just submit 
for the record. But to summarize, I would just echo what my 
colleagues here have said.
    One, great job to the VA in the response. I think you were 
a model of how a Federal agency should act, and I very much 
applaud that. Two, it is important to open the doors in New 
Orleans and other places, and I know that is what we are going 
to hear about today. And three, as you look forward to working 
on this major agenda, I just look forward to a continuing 
success story on the part of VA.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Salazar follows:]

   Prepared Statement of Hon. Ken Salazar, U.S. Senator from Colorado

    Thank you Chairman Craig and Senator Akaka. Thank you Secretary 
Nicholson and your staff for being here today.
    Ever since the day Katrina made landfall I've heard stories about 
the VA's herculean response to this storm and Rita and Wilma that 
followed.
    The more I learn about VA's efforts, the more inspirational the 
story becomes.
    The VA successfully evacuated hundreds of patients, including 10 
patients on respirators. VA successfully transferred thousands of 
patient records. The agency moved quickly to re-establish VHA presence 
in affected areas. It successfully accounted for more than 3,000 
employees. It offered employees temporary housing, mental health care, 
and most importantly, a continued paycheck.
    This is a success story that rightfully should be pointed to as a 
model for disaster recovery. Each and every VA employee has a right to 
be proud. You made us all proud.
    However, we are not out of the woods yet. There is still no major 
VA clinical capacity in New Orleans. VBA has yet to open its doors in 
that city. There are many unknowns about the extent of the damage in 
New Orleans, where evacuated veterans will end up, and what the Gulf 
Coast will look like.
    This hearing is about next steps, and ensuring that the VA's 
response continues to be a success story. The VA has asked for $1.4 
billion to recover from the storm. I hope we can get behind these 
numbers and get a firm idea of when VA's new clinics will come online.
    I also hope we can get a more solid understanding of the VA's 
intentions in New Orleans. The people of New Orleans need to know that 
they will have a world-class VA Medical Center within the city.
    I hope we can all work together to ensure that the VA continues to 
be a shining role model for the rest of the Government in its response 
to Hurricane Katrina.

    Chairman Craig. Ken, thank you.
    Senator Isakson.

        STATEMENT OF HON. JOHNNY ISAKSON, U.S. SENATOR 
                          FROM GEORGIA

    Senator Isakson. In the interest of time, I only have one 
comment. There have been many questions raised about the 
performance of a number of agencies. But it is appropriate to 
note two agencies, the Coast Guard and the Veterans 
Administration's performance in the Gulf in the tragedy.
    And Dr. Lynch, a lot of that is to your credit. It has just 
been exemplary and outstanding. And I thank the Secretary and 
the entire department for what they did and yield back the rest 
of my time.
    Chairman Craig. Thank you.
    Mr. Secretary, we will now turn to you and the staff you 
have brought with you, and we will give you such time as you 
may need to present to the committee. Please proceed.

      STATEMENT OF HON. R. JAMES NICHOLSON, SECRETARY OF 
  VETERANS AFFAIRS, ACCOMPANIED BY JONATHAN B. PERLIN, M.D., 
  Ph.D., UNDER SECRETARY FOR HEALTH; TIM S. McCLAIN, GENERAL 
COUNSEL; AND ROBERT LYNCH, M.D., DIRECTOR, VETERANS INTEGRATED 
                       SERVICE NETWORK 16

    Secretary Nicholson. Thank you, Mr. Chairman and Members of 
the Committee.
    I would like to submit a written statement for the record 
as well.
    Chairman Craig. Without objection, it will become part of 
the record.
    Secretary Nicholson. I am joined here today by Dr. Jonathan 
Perlin, who is the Under Secretary for Health by Tim McClain, 
who is the general counsel of the VA and has, for many months, 
been the acting Under Secretary for Management, and on my right 
is Dr. Robert Lynch, who is the Director of the VA South-
Central Health Care Network, VISN 16.
    And I would like also, Mr. Chairman, to thank you for your 
recognition of Dr. Lynch and his team, his heroic team down 
there in the Gulf Coast region. And if time permits, it would 
be a real privilege for me to recite the heroics of some of 
those people who, for days, stayed in the hospitals, moved with 
their patients to places they did not know where they were 
going to end up, while their own homes were inundated, their 
families, their locations were unknown to them. But they stayed 
with their patients.
    But Dr. Lynch provided the leadership there. And I know at 
one period of time, he was up for 40 consecutive hours because 
I would go to our crisis response center in the building, and I 
went there at different random times throughout that period, 
and Bob Lynch was always on duty, moving people, planning, he 
just did an heroic job.
    Thank you for providing us with this opportunity to discuss 
the Department of Veterans Affairs ongoing repair and recovery 
efforts now in the wake of Hurricanes Katrina and Rita. Mr. 
Chairman, I want to thank you and, indeed, all of the Senate 
for your resolution recognizing and commending the heroic 
efforts of our employees through Hurricane Katrina.
    In this brief testimony, I will speak first to the property 
damage and plans for New Orleans, Gulfport, and other Veterans 
Health Administration facilities, as well as the impact on VHA 
employees at those facilities. Next, I will address the 
recovery efforts of the Veterans Benefits Administration and 
the National Cemetery Administration. And finally, I will 
discuss a few of the lessons learned.
    Before I begin, I want to assure the Committee and its 
guests today that the VA continues serving and supporting 
veterans affected by Hurricane Rita. Planning has been key to 
our responsiveness. In early September, I directed senior 
management to establish a Gulf Coast Planning Group as a result 
of the extensive damage to VA facilities.
    The group will coordinate VA infrastructure planning in the 
region for the near, mid, and long term. The group, which is 
chaired by Tim McClain, will also serve as a plans clearing 
house, with particular sensitivity to previous CARES planning.
    Addressing first the New Orleans experience and our plans 
there for recovery. The New Orleans VA facility initially 
weathered Hurricane Katrina with minimal damage. But then water 
from the breached levies flooded the medical center, 
compromising the facility's major electrical, mechanical, and 
dietetics equipment.
    The facility has been without electrical power or air 
conditioning now for weeks, resulting in damage to equipment 
and interior finishes by the effects of very high humidity over 
a long period of time. And with so many structures inundated by 
flood waters, mold and mildew are pervasive and have already 
begun to take their toll on the medical center.
    To address the immediate health care needs of veterans in 
the greater New Orleans area, the VA plans to open several 
clinics and expand operations in Baton Rouge, where we operate 
a large and relatively new community-based clinic. We will 
accelerate our plans for new CBOCs proposed under CARES, and we 
have proposed those for Slidell, Hammond, and LaPlace, with a 
goal of opening them early in 2006.
    An ambulatory care clinic is being established at the New 
Orleans medical center. We anticipate opening that clinic next 
month. The VA is exploring all of our long-term options to re-
establish in-patient and tertiary care services for our 
veterans in the New Orleans area.
    Our affiliates down there, Louisiana State University and 
Tulane Medical School, both plan to return to the New Orleans 
area. But their major teaching hospitals, Charity and 
University Hospitals, will require extensive repair or, indeed, 
may have to be rebuilt.
    The Mississippi experience. The VA medical center at Biloxi 
weathered the hurricane quite well and remained fully 
operational throughout the hurricane. Damage was mostly 
cosmetic, with some broken windows and damage to building 
exteriors.
    Just 8 miles away, however, the Gulfport VA medical center 
campus was essentially destroyed by Katrina's tidal surge. 
Gulfport's workload and VA employees have been transferred to 
Biloxi, which is 8 miles away.
    Looking longer term, VA's CARES plan called for the closure 
of Gulfport, with design funds provided for Biloxi in fiscal 
year 2006 and full completion scheduled in 2010. We now propose 
to accelerate this plan with the goal of replacing clinical 
functions within 2 or 3 years. We are currently discussing 
collaborative opportunities with Keesler Air Force Base, which, 
as you know, was extensively damaged by the hurricane and which 
is 2 miles away from our hospital in Biloxi.
    The impact on employees. In New Orleans, all but 2 of VHA's 
1,819 employees have been accounted for. A preliminary survey 
suggests that approximately 40 percent of our New Orleans 
medical center staff lost their homes. We have placed VHA 
personnel in temporary positions at other VA medical centers, 
and we will soon begin offering permanent positions via a 
priority placement program for displaced New Orleans employees.
    Already some of our employees have accepted positions at 
other medical centers, while other employees have chosen to 
take this opportunity for retiring from our workforce. Housing 
for VA employees remains a concern.
    In Biloxi-Gulfport, all 1,590 VHA employees have been 
accounted for. Twenty-eight percent of them report that their 
homes have been either totally destroyed or are uninhabitable. 
Here, we are working with FEMA to establish temporary housing 
for VA employees on our Gulfport campus. We have signed an MOU, 
memorandum of understanding, with FEMA for more than 200 mobile 
homes, with priority for VA employees and disabled veterans who 
travel frequently to utilize VHA's health care services, which 
would be there at Biloxi.
    Recovery efforts of the Veterans Benefits Administration. 
The New Orleans regional office, home to 197 VBA employees, was 
housed in a General Services Administration building, where we 
leased space, and its prime tenant was the New Orleans postal 
office system, which sustained considerable flood damage and 
utility outages.
    VBA has transferred all pending compensation, that is 
active claims and appeals, to the Muskogee and St. Louis 
regional offices, and all pension claims to the Milwaukee 
Pension Maintenance Center. For now, the VBA has acquired 
leased space in nearby Gretna, and we expect to move into the 
facility early next month.
    Recovery efforts of the National Cemetery Administration. 
The National Cemetery Administration's Biloxi staff of 11 
people has restored a normal schedule at Biloxi National 
Cemetery. The cemetery covers 57 acres, with more than 15,000 
grave sites.
    The cemetery sustained damage to its administrative 
building, maintenance shop and compound, and the cemetery 
grounds themselves. Clean-up continues, and disturbed grave 
markers will be raised and realigned over time.
    What were some lessons that we learned from this? One, we 
learned, of course, the benefit of being prepared and 
practicing and drilling our emergency response system, which we 
did and has made me so proud.
    Our VA employees throughout that area acted heroically in 
every one of the many crises or sub crises that they faced. And 
I am very proud of their abilities to have done that and to 
confront the many challenges that nature put in front of them. 
And as I said, I am very heartened by the effectiveness of our 
preparation.
    Of note is how our electronic medical records systems 
continued to operate until after New Orleans was evacuated. 
Backup copies of these records were transferred away from 
danger and made available nationwide to treat Katrina evacuees. 
I contend that VA's operations during and after the storms is 
one of the really positive stories to emerge from the disaster.
    In the wake of the storms, we know where we still need to 
improve our response to future disasters. We know that we need 
to harden our telecommunications infrastructure. Individual 
systems may survive a storm, but maintaining both voice and 
data transmission capabilities will facilitate our response to 
future disasters.
    We are considering expanding the use of fully equipped 
mobile clinics as a ready response to future disasters, and we 
are examining the logistics of having in place larger 
inventories of pharmaceuticals that can be deployed and 
dispensed directly to veterans as soon as the crisis has 
passed.
    In conclusion, Mr. Chairman, the administration is 
demonstrating its continuing commitment to veterans affected by 
the hurricanes by including $1.38 billion for VA recovery and 
rebuilding in the recent request for supplemental 
appropriations transmitted to the Congress. That request 
includes funding to re-establish a full VA medical center 
presence in New Orleans and accelerate the expansion of the 
Biloxi facility because of the destruction of the Gulfport 
complex.
    It also includes funding for essential VBA and NCA needs 
throughout these areas. In addition, the VA also is looking at 
resources in terms of funding and employees to respond to the 
move of veteran patients to the Houston medical center.
    We look forward to working closely with this Committee and 
with the Senate Appropriations Committee and Senators 
representing the Gulf States regarding the important resource 
issues created by Hurricanes Katrina and Rita.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Nicholson follows:]

 Prepared Statement of Hon. R. James Nicholson, Secretary of Veterans 
                Affairs, Department of Veterans Affairs

    Mr. Chairman, Members of the Committee and those Members visiting 
the Committee from the States of Mississippi and Louisiana, I want to 
start by thanking you, and indeed all of the Senate, for your 
Resolution recognizing and commending the heroic efforts of our 
employees through Hurricane Katrina. Our VA family was gratified by 
your words, as well as the outpouring of support from our committees of 
jurisdiction and the entire Congress.
    Thank you for providing the Department of Veterans Affairs (VA) 
this opportunity to discuss our ongoing repair and recovery efforts in 
the wake of Hurricanes Katrina and Rita. These hurricanes challenged 
our country with two of its greatest natural disasters. I am pleased to 
report that all of VA rose to the enormous challenges these storms 
created. From the time of preparation through evacuation to relief and 
recovery efforts VA employees stepped up to meet the challenge.
    Mr. Chairman, appended to my written statement is a 2-page graphic 
timeline of our response efforts to Hurricane Katrina. I believe the 
Committee will find it quite useful in reviewing VA's actions 
throughout the disaster. Through long hours, considerable personal risk 
and sacrifice, coupled with incredible resourcefulness and a total 
sense of mission, thousands of VA professionals demonstrated what is 
right about this country. They have made us all proud to be members of 
the VA family.
    Now we must look forward. The aftermath of these storms will test 
how we meet our mission for years to come. While Hurricane Rita 
produced significant disruptions, it did little permanent damage to 
VA's infrastructure. Hurricane Katrina, on the other hand, produced 
unprecedented damage to our facilities along the Mississippi Gulf Coast 
and in New Orleans. Our facilities, the communities we serve, and the 
homes of veterans and employees sustained destruction on an 
unprecedented scale.
    As a result of extensive damage to VA facilities caused by 
Hurricane Katrina, the Deputy Secretary established a ``Gulf Coast 
Planning Group'' in early September 2005 to assist in coordinating VA 
infrastructure planning in the region. The group's mission is to assist 
in describing and coordinating VA plans for the near, mid, and long-
term timeframes. An important role is to act as a ``clearinghouse'' for 
VA plans by ensuring that the plans make sense, consider previous 
Capital Assessment Realignment to Enhance Services (CARES) planning, 
and pass a ``one-VA test.''
    In my brief testimony, I will speak first to the property damage 
and the plans for New Orleans, Gulfport, and other Veterans Health 
Administration (VHA) facilities, as well as the impact on VHA employees 
at those facilities. Next, I will address the recovery efforts of the 
Veterans Benefits Administration (VBA) and the National Cemetery 
Administration (NCA). And finally, I will discuss a few of our valuable 
``lessons learned.''

           THE NEW ORLEANS EXPERIENCE AND PLANS FOR RECOVERY

    Forty-eight hours following Hurricane Katrina's landfall, as 
quickly as weather conditions permitted, a VA damage assessment team 
was dispatched to the Gulf region to survey VA facilities at New 
Orleans, Biloxi, and Gulfport. At New Orleans, the VA facility 
initially weathered the hurricane with minimal damage. Following the 
hurricane, water from the breached levees flooded the entire area 
around the medical center, including the basement and sub-basement of 
the main building. These areas house the facility's major electrical, 
mechanical, and dietetics equipment. The costs associated with 
replacing this equipment are still under review. VA is still assessing 
the total effects of having no electrical power and no air-conditioning 
in the medical center for a prolonged period. A major cost of restoring 
the facility to operational status will include those costs incurred 
from damage to equipment and interior finishes. VA is continuing to 
monitor the situation and estimating the costs of damage and repairs.
    We are taking steps to mitigate the damage caused by flooding, 
humidity, heat, mold and mildew. Efforts are underway to restore power, 
water, limited climate control systems, elevators, and safety systems. 
Some of these repairs are temporary and do not allow us to use the 
building in its entirety. Through these interim measures, we will be 
able to protect the medical center and its $85 million worth of 
equipment from further moisture damage. Additionally, the measures will 
allow us to more fully assess the functional capabilities of the 
equipment and damage to the building. We are exploring all our long-
term options to re-establish inpatient and tertiary care services for 
our veterans in New Orleans. We are in discussions with our affiliates, 
Louisiana State University (LSU) and Tulane Medical Schools. Both of 
these schools plan to return to New Orleans area. The major teaching 
hospitals for these medical schools, Charity and University Hospitals, 
will require extensive repair and, indeed, they may have to be rebuilt.
    Our plans for New Orleans hinge in part on recovery efforts taken 
by both the State of Louisiana and other Federal agencies. As the 
United States' largest port in terms of gross tonnage and a critical 
transportation lifeline for our Nation's heartland, New Orleans remains 
one of America's great cities. VA is committed to continuing to serve 
the veterans who live there.
    To address the healthcare of veterans in the greater New Orleans 
area, VA is planning to open several clinics and expand operations in 
Baton Rouge. The city of Baton Rouge continues to be doubled in 
population due to hurricane evacuees. This growth is similarly 
reflected in the number of veterans seeking care at our clinic there. 
Baton Rouge is the site of a large and relatively new Community Based 
Outpatient Clinic (CBOC). VA will lease the old CBOC building to house 
administrative and clinical support functions for the rest of the New 
Orleans area clinics. Plans for new CBOCs proposed under CARES in 
Slidell, Hammond, and LaPlace will be accelerated with a goal of 
opening them early in 2006.
    On the site of the New Orleans medical center, an ambulatory clinic 
is being established. Space that suffered minimal damage is available 
on the ninth and tenth floors of the medical center. It was previously 
occupied by a 60-bed Nursing Home Care Unit. VA is restoring 
electricity, water, fire safety systems, and elevator service to the 
entire building which will support this clinic. We anticipate opening 
the clinic in December 2005.

           THE MISSISSIPPI EXPERIENCE AND PLANS FOR RECOVERY

    Overall, the VA Medical Center at Biloxi remained operational both 
during and after Hurricane Katrina. All building systems, with the 
exception of emergency communications, continued to function normally 
during this time. Damage at Biloxi included the asphalt shingle roofs 
on several buildings, windows panes, seals and gaskets, doors and 
interior finishes, and some damage to electrical and mechanical 
systems. External to the medical center, significant damage occurred to 
facility signage and to a large number of trees on the campus.
    At Biloxi, in addition to repairing storm damage, temporary 
buildings are being acquired to accommodate functions lost in Gulfport. 
We are exploring with the Federal Emergency Management Administration 
(FEMA) the option of placing approximately 200 trailers on 25 
unimproved acres at the back of the Gulfport campus. We are asking FEMA 
for priority use of these trailers for displaced VA staff and disabled 
veterans who are patients of the VA Medical Center.
    Damage at the Gulfport VA Medical Center, only 8 miles away, was 
much more severe, to the point of catastrophic. The tidal surge from 
Hurricane Katrina destroyed or made irreparable most buildings on the 
campus. While the boiler plant and laundry survived, both would need 
significant repair to resume operations. Other than recovery efforts, 
no operations are active at Gulfport. Prior to the storm, Gulfport 
employed 440 people. These employees are now working at the Biloxi 
facility.
    VA's CARES plan called for the closure of Gulfport and new 
construction at Biloxi to house services displaced from Gulfport. 
Design was scheduled to begin this fiscal year with full completion to 
occur in 2010. VA now proposes to accelerate this plan with the goal of 
replacing clinical functions within 2 or 3 years. As part of this 
process, we are in discussions to determine if there are opportunities 
to collaborate with Keesler Air Force Base in Biloxi as the military 
replaces their bed tower as part of the Base Realignment and Closure 
(BRAC) process.
    While the Mississippi gulf coast has been set back, its long-term 
prospects are positive. The State of Mississippi is taking steps to 
help the economy in the region. It is likely that the population of the 
Mississippi gulf coast will return to its pre-storm levels. VA must be 
prepared to support the veteran population of this gulf region.

                        THE IMPACT ON EMPLOYEES

    In Biloxi-Gulfport, all 1,590 VHA employees have been accounted 
for. All have been able to inspect their houses and 28 percent report 
that their homes have been either totally destroyed or are 
uninhabitable. In New Orleans, all but 6 of 1,819 employees have been 
accounted for. While not all employees have been able to assess the 
habitability of their residences, a preliminary survey suggests that 
approximately 40 percent of our New Orleans employees are without their 
homes.
    We confirmed that one employee perished at home during the 
flooding. All VA personnel have been placed in temporary positions at 
other VA medical centers.
    The CBOC expansions in and around New Orleans will help address the 
utilization of our displaced New Orleans employees. Many employees, 
though not all, will be able to return to the area to staff these 
clinics and related functions. A significant number of our staff may 
choose not to return to New Orleans. Already some have accepted 
positions at other VAMCs or have taken steps to retire. Shortly, we 
will begin a priority placement program for displaced New Orleans 
employees. This will give New Orleans employees priority for any 
opening in VHA for which they are qualified. VA already has voluntary 
early retirement authority and is exploring the use of buyouts as well.

        RECOVERY EFFORTS OF THE VETERANS BENEFITS ADMINISTRATION

    The New Orleans Regional Office is housed in General Services 
Administration (GSA)-leased space in the New Orleans Postal Office 
Tower Building. Access to this facility has been restricted due to 
flood damage and utility outages, and VBA has no definitive information 
as to when the building can again be occupied. Due to this uncertainty, 
VBA has implemented an interim strategy to address the pending claims 
workload and to re-establish a regional office presence in Louisiana.
    In order to resume the processing of disability benefits claims, 
VBA has transferred all pending compensation claims and appeals to the 
Muskogee and St. Louis Regional Offices, and all pension claims to the 
Milwaukee Pension Maintenance Center. Our dedicated New Orleans 
employees have been working under very adverse conditions in the New 
Orleans Regional Office facility to box and to ship more than 11,000 
claims files to these offices. A special post office box was 
established in Muskogee to receive claims information and other mail 
from Louisiana veterans. Louisiana veterans participating in the 
Vocational Rehabilitation and Employment Program are currently being 
served through VBA's out-based office in Shreveport and our regional 
offices in Houston and Little Rock.
    To re-establish a presence in Louisiana, VBA has acquired leased 
space in Gretna, Louisiana, approximately 10 miles from the regional 
office location in New Orleans. Efforts are underway to prepare the 
building for occupancy. The facility will accommodate up to 105 
employees. VBA expects to move into the Gretna facility in December 
2005.
    Regional office operations will be resumed on a reduced scale in 
Gretna pending more definitive information on the occupancy status and 
expectations for the regional office building in New Orleans. VBA's 
priority is to re-establish public contact and vocational 
rehabilitation program activities, including benefits, counseling, and 
assistance, outreach, fiduciary management services, and rehabilitation 
and employment services.

        RECOVERY EFFORTS OF THE NATIONAL CEMETERY ADMINISTRATION

    NCA has no burial or memorial facilities in New Orleans. NCA staff 
has worked to restore Biloxi National Cemetery. The cemetery is now 
operating on a normal schedule. While substantial progress has been 
made, cleanup will continue and disturbed grave markers will be raised 
and realigned. The cemetery's storage, maintenance, and administrative 
buildings were damaged and will require additional repairs. Telephone 
service was disrupted and IT data connections continue to be 
intermittent. NCA staff responded to the loss of access to the 
centralized interment data base by manually entering information so 
that no burial schedules are affected and accurate records are 
maintained.
    NCA employees in the region responded quickly to minimize 
disruptions and hardships for veterans and their families during these 
difficult times. Their resourcefulness and dedication have permitted 
operations to resume, often despite their own personal adversity.

                            LESSONS LEARNED

    VA is also using this opportunity to examine how to improve its 
response in future disasters. I am including an abbreviated list of 
lessons learned, to illustrate how this review will assist VA in 
defining its response plans.

Telecommunications
    Lessons learned during Hurricane Katrina regarding 
telecommunications were already in place for Hurricanes Rita and Wilma. 
Hardening our telecommunications infrastructure will be a priority as 
we plan for future disasters.

Mobile Clinics
    VA staged a total of 12 mobile clinics to support veterans affected 
by Hurricanes Katrina and Rita. Four mobile clinics were sent to south 
Florida in response to Hurricane Wilma. VA needs to examine the role of 
such clinics, how they are staffed and equipped, and how they are 
supported.

Pharmacy Issues
    Massive power failures, destruction of homes and post offices and 
mass evacuations made mail-based pharmaceutical delivery impractical. 
VA is examining mobile caches of pharmaceuticals that can be deployed 
to affected areas and be dispensed directly to veterans--even before 
commercial operations are able to resume.

                               CONCLUSION

    Mr. Chairman, we know the Committee and the Louisiana and 
Mississippi delegations are true partners with VA in seeing that Gulf 
area veterans, despite these disasters, continue to receive the 
excellent health care, benefits, and other services VA provides.
    The Administration is demonstrating its continuing commitment to 
veterans affected by the hurricanes. The Administration has included 
$1.38 billion dollars for VA recovery and rebuilding in its request to 
Congress for supplemental appropriations. The request includes $1.15 
billion to rebuild the New Orleans Medical Center and to repair and add 
a bed tower to the medical center in Biloxi following the destruction 
of the Gulfport complex. It also includes $25 million for two essential 
VBA needs. One, VBA will furnish and activate a replacement regional 
office in New Orleans. Two, VBA will be able to pay contracting costs 
for benefits-related health examinations ensuring that veterans' 
benefits processing continues as quickly as possible.Thank you for the 
opportunity to be here today. I and my colleagues will be pleased to 
answer any questions you may have.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Daniel K. Akaka 
                           to James Nicholson

    Question 1. Dr. Robert Lynch, Director of VISN 16, has stated that 
with regard to the Biloxi VAMC, ``a definitive solution will take 
Congressional approval and years to complete.'' Yet, he has also 
indicated that there is an immediate need for interim space to 
compensate for the loss of services at Gulfport VAMC. Please detail 
both the interim and longer term timelines for patient accommodation 
and continuity of services at the Biloxi campus. Since returning to the 
standard of providing inpatient care is considered a long-term project, 
what is the short-term plan for veterans who require inpatient services 
at Biloxi?
    Answer. All clinical services provided at the Gulfport campus have 
been moved to the Biloxi campus, which remained fully operational 
during Hurricane Katrina. Patients in the domiciliary, located on the 
Biloxi campus, were moved to the Department of Veterans Affairs (VA) 
Medical Center in Tuscaloosa, AL prior to Hurricane Katrina. The 
vacated domiciliary building on the Biloxi campus is being used to 
house the inpatient psychiatry program from the Gulfport campus. 
Renovation of the domiciliary building is needed as an interim solution 
and will be accomplished via the minor construction program.
    The major construction project described in the response to 
Question 5 is the long-term solution to the consolidation of all 
Gulfport services on the Biloxi campus. Until the major construction 
project can be completed (in 3-5 years) and construction of the 
permanent warehouse space via the minor construction program is 
accomplished, modular buildings will be used to house the 
administrative and warehouse functions displaced from the Gulfport 
campus.
    A modular clinic is also planned for the Gulfport campus to provide 
a clinical presence until a decision regarding the future reuse of the 
campus is determined. Additionally, the Federal Emergency Management 
Agency (FEMA) has requested the use of 25 unimproved acres at the back 
of the Gulfport campus for the placement of approximately 200 trailers. 
We are asking for priority use of these trailers for homeless VA staff 
and disabled veterans who are patients of the VA Medical Center.
    Question 2. Will any funding provided by Congress for the purposes 
of rebuilding facilities in the region go directly into the general 
construction account?
    Answer. Yes. The construction funds provided by Congress will go 
into the VA construction appropriation. Most of the funds required 
would be appropriated into VA's construction accounts. However, these 
funds would be provided for the specific purposes of rebuilding VA 
facilities damaged by the recent hurricanes.
    Question 3. With regard to the New Orleans VAMC, Dr. Lynch stated 
that he does ``believe it is safe to say the VA will return to the 
Crescent City.'' Please explain the factors in the decision to restore/
return services to New Orleans.
    Answer. There are 57,485 veterans enrolled for care in the New 
Orleans VA Medical Center. It is expected that the Tulane and LSU 
Medical Schools will return to New Orleans. As the United States' 
largest port, a major hub for our country's energy infrastructure, and 
a critical transportation lifeline for the Nation's heartland, New 
Orleans will remain one of the Nation's greatest cities. The VA must 
have a clinical presence in the city and maintain its commitment to 
serve the veterans who live there.
    Question 4. VISN 16 has announced plans to open new clinics in La 
Place, Hammond, Slidell, and New Orleans. I believe VA should establish 
and operate these new clinics in the most expeditious and cost-
effective manner to provide the needed medical care to the area's 
veteran population. Existing CBOCs in Louisiana and other areas in VISN 
16 continue to provide cost-effective and high-quality outpatient 
medical care to the area's veteran population. Please provide an 
analysis of the projected costs and timing associated with the 
establishment of these new CBOCs.
    Answer. To address the health care of veterans in the greater New 
Orleans area we are planning to accelerate opening of three clinics, 
Hammond, LaPlace, and Slidell, proposed under the Capital Asset 
Realignment for Enhanced Services (CARES) plan. Mobile clinics are 
being used to provide care at this time in these locations. Our goal is 
to open clinics by January 2006 contingent upon the availability of 
leased space or modular clinics.
    Due to the impact of Hurricanes Katrina and Rita, leased space and 
modular clinics are in short supply and have increased significantly in 
cost. For example, in Hammond, there is no adequate leased space 
available; therefore, purchase of a modular building is planned. 
LaPlace may also require a modular building while adequate leased space 
may be available in Slidell.
    Current cost for a turnkey 9,500 square feet clinical modular 
building is approximately $1.8 million, which includes the modular 
building, site prep, ground cover, and utilities. Build-out and the 
cost of leasing the land will add another $200,000. The cost of leased 
space in Slidell has not been determined.
    Question 5. Since the damage caused by Hurricane Katrina leaves the 
door open for accelerating the CARES plan in the region, how 
comprehensive will the transfer of services from the Gulfport campus to 
the Biloxi campus be? Are there any services that are unavailable or 
non-transferable? Has there been an exact determination of how the 
timeline will shift? And if so, what is the new timeline?
    Answer. With the exception of the laundry, VA will consolidate all 
services provided at the Gulfport campus to the Biloxi campus as part 
of the CARES plan. A final analysis regarding laundry function has not 
been completed. The consolidation will be accomplished through major 
construction that will modernize patient care facilities at the Biloxi 
campus and provide area veterans with health care in newly renovated 
facilities. The project will consolidate and co-locate all clinical and 
administrative functions of the two-division medical center at the 
Biloxi campus and construct a new Blind Rehabilitation Center, also a 
part of the CARES plan. Barring any significant delays the timeline for 
award and construction of new clinical facilities is January of 2009. 
Some administrative functions may lag until 2010.
    Question 6. What are VA's short-term and long-term plans for 
addressing the needs of its employees affected by Hurricane Katrina? 
How does VA plan on compensating staff for temporarily relocating? Will 
they be given TDY? What is being done to address the personal needs of 
affected VA employees in the region?
    Answer. All employees from the Gulfport facility have been absorbed 
in the Biloxi facility. All employees displaced from the New Orleans 
facility who want to work at this time have been placed in VA 
facilities throughout the country. These New Orleans employees have 
been detailed for a 120 days, and are paid temporary duty travel. They 
were assisted in finding housing in the locations of their detail.
    The proposed clinics and related functions in the greater New 
Orleans area will not accommodate all of New Orleans current employees. 
It will be several years until employment levels will return to pre-
storm levels. In an effort to reconcile our interim needs with current 
employment levels, voluntary early retirements are being offered to New 
Orleans' employees and buy-out authority is being explored through the 
Office of Personnel Management (OPM). Negotiations with national labor 
partners have begun in an effort to establish a Special Placement 
Program in the Veterans Health Administration (VHA). The Special 
Placement Program would give New Orleans employees displaced by the 
hurricane first consideration for vacant positions anywhere in VHA for 
which they qualify.
    Employees placed as a result of this program would be eligible for 
Permanent Change of Station travel funding. It may be necessary to 
extend details of these employees to allow this process to occur.
    Teams of mental health practitioners were assigned to work with 
employees who are experiencing difficulties because of the hurricane. 
The contact information for these mental health professionals has been 
communicated through various means and published in the ``After the 
Storm'' newsletter. Assistance has also been provided with accessing 
support from FEMA, Red Cross, and other entities.
    A needs survey has been distributed to Biloxi and New Orleans 
employees. The intent of the survey is to determine the extent of 
damage the employees sustained to their property and to identify their 
needs. VA, through Veterans Canteen Service and Leadership VA Alumni 
Association, established funds for donations to employees affected by 
the hurricane. Over $600,000 has been donated in the two funds to date. 
Distribution of these funds using information obtained from the needs 
surveys will start shortly. Additionally, the Veterans Canteen Service 
has allowed employees to establish credit of up to $1,000 at 0 percent 
interest to allow those who lost household goods, etc. the ability to 
replace those items.
    Question 7. On October 14th, the Joint Field Officer in Baton 
Rouge, Louisiana, was advised to notify VA to cease the provision of 
housing because of the lack of interagency agreement with FEMA, or to 
continue working on preparing their properties for housing evacuees at 
their own financial risk. Please explain VA response to this situation. 
Has VA formulated a plan for requesting reimbursement for making their 
properties available to FEMA for the purposes of housing evacuees of 
Hurricane Katrina?
    Answer. VA removed properties from the sales market on September 9, 
2005, in anticipation of FEMA using them as temporary housing for 
evacuees of Hurricane Katrina. VA has not incurred any costs on these 
properties other than normal management expenses. VA has spent no funds 
with the expectation of being reimbursed by FEMA. VA and FEMA are in 
the process of negotiating an updated agreement (existing agreement was 
entered into in 1988) to facilitate the use of VA properties by 
evacuees.
    Question 8. What are the daily operating costs for both VHA and VBA 
of each interim/temporary facility?
    Answer. At present, the only interim facilities/operations that 
currently exist are mobile clinics in Hammond, LA, Slidell, LA, and La 
Place, LA, in addition to the expansion of the Baton Rouge Outpatient 
Clinic operations.

    Chairman Craig. Mr. Secretary, thank you very much for you 
and your staff being here.
    We have just been joined by Senator Lott of Mississippi, of 
course. And Trent, do you have any opening comments before we 
go to a round of questions of the Secretary and his staff?
    Senator Lott. That would be appropriate, Mr. Chairman. And 
let me ask consent that I have my prepared remarks put in the 
record.
    Chairman Craig. Without objection.

          STATEMENT OF HON. TRENT LOTT, U.S. SENATOR 
                        FROM MISSISSIPPI

    Senator Lott. I want to thank you and your Ranking Member 
Akaka for allowing me to testify or to make a statement here 
and for your interest in our veterans and our veterans 
facilities that were damaged by Hurricanes Katrina and Rita.
    I want to thank the administrator for his leadership and 
his concern for our veterans and for his service. And also the 
fact that after he came to the office, we had to address some 
tough issues, and working with Senator Craig and Senator Akaka, 
we were able to provide some additional funds for our veterans.
    We do have a chart there that shows you what we are up 
against. You will note the lower part of the photograph there, 
that was Highway 90, a 4-lane road that runs the length of the 
coast in Harrison County, Biloxi-Gulfport, Pass Christian, and 
Long Beach. And you will see that that road is washed out. But 
you know, we very quickly got Highway 90 back in operation. And 
then, beyond that, you see the protective barrier, and then the 
red-topped buildings is the Gulfport VA facility.
    One interesting thing to note about this is we did have 
damage there this time, significant damage. But it had never 
been damaged seriously by hurricanes before, even though it is 
not in a high area. It had some damage, but not like we had 
this time, that amount of damage. And this time, though, the 
wood-frame buildings are gone, and there is significant damage 
to the other buildings.
    Now I know that questions have been raised about what do we 
do with this? And can we move those veterans that were there, 
incorporate them into the Biloxi facility? I believe it was the 
CARES Commission had already recommended that the Gulfport 
facility be closed. Obviously, I wasn't that happy about it. 
But my main goal, like all of us, is to have the best service 
for our veterans and make sure the facilities are repaired, and 
they are available.
    Part of the problem we have now along the Gulf Coast that I 
want the group to think about--and I know that you are working 
on--how do we deal with this particular piece of property? And 
I understand that if the VA doesn't keep it, it reverts back to 
the city of Gulfport, Mississippi. And they are having to think 
about what they would want to do with that, and then in what 
condition would it be returned?
    And then, if we are going to have these veterans that were 
at Gulfport at the Biloxi facility, what repairs are going to 
have to be made there, and what would we do to make sure that 
they receive the medical care that they need?
    The plot thickens by the fact that Air Force officials had 
recommended that the BRAC Commission close the Keesler in-
patient services and the hospital there. The plan to help the 
veterans was that what we were going to be losing at Gulfport 
would be picked up by Keesler Air Force Base hospital. Never 
taking into consideration, frankly, that they didn't have the 
capability to do that.
    And even though that facility was taken off the BRAC list, 
the Air Force still is resisting doing what is necessary to 
make sure that we have surgery for residents, and in the out-
years, we have not been able to get something worked out 
between the VA and DoD as to what we are going to do. And so, I 
would urge you to look at what we need to do in servicing our 
veterans in Louisiana and Mississippi and in Texas and Alabama. 
And by the way, that facility in Mississippi, we do have some 
services that we provide for our veterans in south Alabama and 
the panhandle of Florida, as you well know.
    So this is a multi-pronged thing that we need to have help. 
What are we going to do with Gulfport? What condition is it 
going to be in if it is returned to the city? What are we going 
to do to make sure that Biloxi has the facilities that it 
needs?
    Now somebody has said, well, to accommodate these 
additional veterans, you are going to have a bed tower. Now I 
don't know what a bed tower is. It doesn't sound too enticing 
to me. But it will only include a fraction of the medical 
services that were originally available at this facility in 
Gulfport.
    So I would like to work with you on the Gulfport facility, 
what we need to do at Biloxi, and how we come to terms with the 
Air Force and the Pentagon about these veterans being able to 
get access to the care they need and the surgery they need, for 
instance, at the Keesler Air Force Base hospital.
    One other thing, I don't begrudge anybody getting help. 
Louisiana is desperate. They need a lot of help. But the 
hurricane pounded Mississippi. When a hurricane goes ashore, it 
doesn't stop at the coastline, No. 1. Number 2, the worst part 
to be in is the Northeast quadrant. That is what we got.
    The hurricane went in on the Pearl River, which means right 
on the border between Louisiana and Mississippi. So the hardest 
damage, the most wind damage and the most tidal surge damage, 
came to Mississippi.
    Now the problem in Louisiana was that they had hurricane 
damage, but then their problem got worse. It was worse for them 
on Friday, after the hurricane on Monday, than the day of the 
hurricane because they had the levies break and the rising 
water.
    But the point I am trying to make is when you are looking 
at $1.2 billion, I believe you mentioned that figure, didn't 
you, Mr. Administrator? As I look at that, it looks to me like 
the lion's share of that would be going to Louisiana. And for 
instance, the supplemental included $1.2 billion to re-
establish medical care on the Gulf Coast, with most of that 
money designated to replace the VA hospital in New Orleans, 
which was flooded on the first floor, just like the Keesler 
hospital.
    My plea is make sure there is equity here. You can't put a 
billion dollars on that one facility in New Orleans and not 
deal with the needs we have in Mississippi. Now having said 
that, thank you for what you have already done. I know you have 
been there. I know you have met with our veterans. Same thing 
to the leaders of this Committee.
    Our veterans have not been forgotten in the aftermath of 
the hurricane, But we have got a good piece to go, and we have 
got some sticky problems that we need to address. And I hope 
that you will allow me to work with you on that and have 
impact.
    Thank you, Mr. Chairman. That is basically the points I 
wanted to make anyway.
    [The prepared statement of Mr. Lott follows:]

  Prepared Statement of Hon. Trent Lott, U.S. Senator from Mississippi

    I would like to thank Chairman Craig and Ranking Member Akaka for 
allowing me to testify regarding the repair and recovery effort to VA 
facilities on the Gulf Coast.
    Prior to hurricane Katrina, the Gulf Coast Veterans Health Care 
System was a five-division system with major hospitals at Gulfport and 
Biloxi, Mississippi, and three Community Based Outpatient Clinics 
located in Alabama and Florida.
    Approximately 242,000 veterans live in Mississippi today, and 
almost 40,000 of those veterans received medical care last year from 
the VA. In fiscal year 2003 alone, VA facilities in Mississippi had 
8,966 inpatient admissions and provided 633,758 outpatient visits. Even 
in the wake of Hurricane Katrina, the number of veterans in my State is 
projected to significantly increase, not decrease.
    The Biloxi VA hospital serves as the general medical facility, 
providing outpatient and specialty care, and inpatient surgical 
services. Prior to the storm, the Gulfport hospital provided inpatient 
and outpatient mental health services, and also housed an Alzheimer's 
dementia unit. Gulfport also included a psychology unit, rehabilitation 
medicine including a therapeutic pool, primary care, and audiology.
    This is a picture of the Gulfport VA today. Obviously, the Gulfport 
facility sustained major damage in the hurricane.
    Wooden buildings were largely destroyed, and patient buildings were 
flooded on the first floor.
    Thankfully, all patients were safely evacuated before the storm 
hit; and only a few VA employees remain at Gulfport.
    Given the extent of damage to the Gulfport VA, I understand that 
the Veteran's Administration would like to permanently close the 
facility, and transfer all Gulfport health care services to the Biloxi 
VA or Keesler medical center.
    The Committee may recall that the CARES Commission proposed in 2004 
to transfer all Gulfport health care services to the Biloxi VA or 
Keesler hospital; renovate the nursing home in Biloxi; and establish a 
36-bed blind rehabilitation center at Biloxi.
    As part of the consolidation, the VA also planned to open 
outpatient clinics in Columbus, McComb, Pontotoc County, Tunica and 
Grenada, Mississippi.
    Although I was never enthused with the VA's decision to close the 
Gulfport facility, I do appreciate that the CARES Commission made site 
visits to the VA facilities and to Keesler, and held open hearings.
    The Commission's recommendation regarding the Gulfport VA was based 
on contingent assurances that patients would be treated at Keesler 
hospital. Unfortunately, to date, I am not aware of any such commitment 
by the Air Force to treat VA patients.
    To the contrary, the Air Force medical community recommended during 
the BRAC process to eliminate all outpatient capability from Keesler 
Hospital--at the same time they were talking with the VA about the 
possibility of absorbing patients.
    And, even though the BRAC Commission rejected the Air Force's 
recommendation to convert Keesler Hospital to an outpatient clinic, I 
understand that the Air Force medical community continues unabated in 
their desire to eliminate surgery residents by 2007.
    Obviously, I strongly oppose the Air Force's continuing position 
regarding elimination of any medical capability at Keesler hospital--
and will work to convince them otherwise.
    Consequently, I believe it is ill-advised to assume that the Air 
Force has agreed to takeover ANY of the medical services previously 
performed by the VA in Gulfport.
    Mr. Chairman, I'm not here today to throw water on the notion of 
having our military and VA hospitals share capability and patients--I 
believe the concept has merit.
    However, the concept will only work if the VA and DoD formally 
agree on the distribution of capability between Keesler Medical Center 
and the Biloxi VA, and budget for the infrastructure that will be 
required to achieve that goal, and maintain it.
    Thus far, the recent Katrina supplemental request includes $1.2 
billion to reestablish VA medical care on the Gulf Coast, with most of 
that money designated to replace the VA hospital in New Orleans (which 
was flooded on the 1st floor, just like Keesler hospital).
    Of that $1.2 billion, I understand that less than 20 percent of 
that money is available re-establish VA healthcare for Mississippians, 
by building a new ``bed tower'' at the Biloxi VA.
    While I'm not certain what a ``bed tower'' may be, or even how many 
``beds'' it may hold, I'm fairly confident that it will only include a 
fraction of the medical services that were originally available on the 
50-acre campus of the Gulfport VA (reference the aerial picture).
    Also, there is no money in the Katrina Supplemental for the Air 
Force to absorb additional patients from the VA. And, again, I'll 
emphasize that the Air Force would like to eliminate the surgery 
program at Keesler Hospital.
    Mr. Chairman, as the Committee does its important work of 
considering how best to renew, recover, and rebuild VA facilities on 
the Gulf Coast, I urge you to support the following:
    (1) Commit to re-establishing the full-level of medical capability 
that was available to Mississippi veterans prior to Hurricane Katrina;
    (2) If veterans' medical care will be provided through a 
partnership between the VA and Keesler hospital, the Air Force and the 
VA must make long-term commitments regarding the budget and scope of 
medical service that BOTH organizations intend to provide; and
    (3) If those commitments and budgets are not forthcoming, the VA 
should be prepared to go-it-alone and build all required infrastructure 
on the Biloxi VA campus that is necessary to provide the full spectrum 
of medical services that were previously available at the Gulfport VA.
    Mr. Chairman, thank you again for the opportunity to testify 
regarding this important matter.

    Chairman Craig. Well, Trent, you have asked some to-the-
point questions that, in part, were addressed by the Secretary 
in his opening comments.
    We have Robert Lynch with us, who is the coordinator for 
the region. Let me set the first question somewhat in the 
context of what Senator Lott has spoken to, and why don't you 
attempt to broaden on that?
    You appointed a Gulf Coast Planning Group, which will 
coordinate VA's plans, as you said, in the near-, mid-, and 
long-term future timeframes. Last week, the President appointed 
FDIC chairman Don Powell to coordinate all of the Federal 
support for recovery and rebuilding efforts.
    So I think my question, specific to some of what Trent has 
asked, coupled with this coordinated planning effort, is the 
right hand and the left hand communicating now? Is the 
coordinating or the Gulf Coast planning council that is 
coordinating VA's plans working with Chairman Powell and that 
coordinated effort in concert with how we deal with Gulfport, 
Biloxi, and all of that combination of events?
    And you had mentioned, as we had talked about earlier, and 
Dr. Perlin, you and I talked about what they might be able to 
do to offset some of these needs. In that context, focus in on 
that and respond to those questions, if you would, please.
    Secretary Nicholson. Yes, sir, Mr. Chairman.
    First of all, our Gulf Coast Planning Group is interior to 
the VA because we want to make sure that our left hands know 
what our right hands are doing, both in Washington and out 
there in the VISN on the ground, what the needs are. That is 
their charge to assess that, evaluate it, and then look at the 
needs and develop a position that we, as an agency will 
advocate. And we do anticipate working closely with Mr. Powell 
and that sort of overarching Federal coordinating effort. So, 
indeed, we will do that.
    And as to your question, Senator Lott, we are very 
sensitive, I think, to the respective situations in Mississippi 
and Louisiana. And we are, as we are here speaking, seeking to 
establish a collaborative endeavor with the Air Force in 
Keesler because it just seems to me to make eminently good 
sense for us to examine sharing some facilities and sharing 
some services.
    And we have now created some good models for that in some 
other locations with DoD inside the United States. So we 
wouldn't be doing something out of whole cloth there. There are 
some models now for that. We have just initiated one in Chicago 
with the Navy, and so we agree, and think that that makes good 
sense.
    Senator Lott. If I could just build on that?
    Chairman Craig. Yes.
    Senator Lott.
    Senator Lott. The theory is good. We have got to make sure 
that it is actually going to be there. I mean, the theory of 
using Keesler Air Force Base hospital for these veterans that 
were being served at Gulfport is good. But the question is, are 
they going to have the facilities? So I hope that you will 
collaborate with them on that.
    Secretary Nicholson. One thing, if I might, Mr. Chairman, 
to respond to bed tower?
    Senator Lott. Yes, what is a bed tower?
    Secretary Nicholson. A bed tower is the rubric used to 
describe a multi-storied hospital building that has in-patient 
beds in it. It is not an outpatient clinic facility. It has in-
patients, people who have to come and spend time in a hospital. 
And that is efficient use of space because with elevators, you 
don't have to build out linearly. You can stack utilities and 
stack the construction of the building.
    Senator Lott. While I am at it, Mr. Chairman, could I ask a 
couple more questions?
    Chairman Craig. Please proceed.
    Senator Lott. I know there is a little squirm and stirring 
around when I mentioned if we are going to close the Gulfport 
facility. And you will note I didn't say we shouldn't do it. I 
have discussed this with the Chairman. We are aware of what is 
going on there, what the case may be.
    But it is my understanding that if that happens, it would 
revert to the city of Gulfport, Mississippi. If that is not the 
case, I would like to know.
    Secretary Nicholson. I will have to get back to you on that 
because if that is the case, I am not aware of it. There could 
be a covenant in that conveyance, and we will have to look at 
that.
    I will tell you the conversation that we are having 
currently with FEMA and with the Governor and others is to put 
some temporary housing in there. And we would enter into, and I 
think, actually consummated a memorandum of understanding with 
FEMA to put 200 units of temporary housing in there, with a 
priority to patients that need care in nearby Biloxi hospital 
and disabled veterans.
    Senator Lott. Thank you, Mr. Chairman.
    Chairman Craig. Thank you, Trent.
    We have been joined by Senator Landrieu. Mary, thank you 
for joining us. We will treat you as a full Member of this 
Committee.
    The Secretary has outlined, in large part, by his testimony 
what their current plans are as we evolve out of Katrina and 
Rita. So if you have an opening comment, please feel free to 
make it, and then we will resume questioning.
    Senator Landrieu. Thank you, Mr. Chairman. I will be brief 
and wait my turn for questions. But I thank you and the Ranking 
Member for including me.
    Of course, this is a very important part of our recovery 
effort and a very important part of our health care delivery 
system for New Orleans, Louisiana, and the Gulf Coast region. 
And as Senator Lott knows so well, we do try to work in 
partnership, caring for the veterans that are in our area and 
their families and between the Gulf Coast and New Orleans.
    So I am going to submit my statement for the record. 
Obviously, we have some strong views on how we can rebuild and 
provide good services to our veterans, and I may have a few 
questions. But I will wait my turn, Mr. Chairman, and I am 
sorry that I couldn't get here earlier.
    Thank you.
    [The prepared statement of Ms. Landrieu follows:]

 Prepared Statement of Hon. Mary Landrieu, U.S. Senator from Louisiana

    Mr. Chairman: Thank you for calling this hearing to discuss 
rebuilding the Veterans Affairs system in the Gulf region after 
Hurricanes Katrina and Rita. I would like to start by again thanking 
the VA for their immediate and heroic response to Hurricane Katrina. I 
believe it speaks volumes about the Veterans Administration when over 
1,000 patients, employees, and their families were evacuated, and all 
without the loss of any life. That truly was a feat within itself.
    Our country has never witnessed the destruction and devastation 
seen in the Gulf Coast region following Hurricanes Katrina and Rita. 
Lives have been lost; dreams and hopes shattered; buildings destroyed; 
and parishes and part of a major city were under water. We are saddened 
by the loss of life. We will never bring those people back, but we can 
restore and rebuild cities and parishes, and once built, we can restore 
dreams and hopes. It is my belief, that the Veterans Administrations is 
a key to the revitalizing the entire Gulf region.
    Before the storms, the State of Louisiana had an estimated 400,000 
veterans, 37,000 throughout the Southeast region, 3 Veterans Medical 
Centers (VAMC), 2 Out-Patient Clinics, and a few Community Based 
Outpatient Clinics (CBOC) and Vet Centers. However, the unprecedented 
events of Hurricanes Katrina and Rita have left the integrity of the 
Louisiana VA system in jeopardy. Many of our veterans have evacuated, 
structural damage has been sustained, and our other facilities are 
becoming over-crowded.
    The New Orleans VAMC is a 450-acute care bed facility that delivers 
primary, secondary, and tertiary care. It provides state-of-the-art 
outpatient and inpatient services for 57,485 veterans in a 23-parish 
region and parts of Mississippi and the Florida panhandle. As you know, 
this state-of-the-art facility sustained extensive flood and structural 
damage and has been temporarily shut down. We are counting on VA 
leadership to rebuild a great medical center.
    It has been suggested by the Administration that we re-allocate 
$1.4 billion of idle FEMA funds for emergency needs in the affected 
areas of Hurricanes Katrina and Rita. In this request, it was suggested 
that the VA receive $1.4 billion dollars. Of that $1.4 billion, $1.155 
billion was allocated to ``replace the medical center in New Orleans, 
Louisiana, and repair and add a bed tower to the medical center in 
Biloxi, Mississippi, destroyed as a consequence of Hurricane Katrina.'' 
Of the $1.155 billion, $845 million has been identified for New Orleans 
replacement and land acquisition only.
    With some coordination with our State medical schools and other 
partners, I believe we will rebuild a stronger facility. It is crucial 
that in-patient services return to New Orleans, not only for the 
veterans of Louisiana, but for those in the surrounding Gulf region.
    In addition to my concerns regarding the rebuilding of our VA 
system in the Gulf region, many issues surrounding Priority 7 and 8 
veterans weigh heavily on my mind. Due to their surplus in income, 
compared to other veterans, they are not eligible for healthcare from 
the VA and they also pay additional co-payments others are not forced 
to pay. I would like to know how the VA plans to tackle these issues 
concerning this very important group of veterans.
    In closing, I thank you for the work you have done so far. The 
people of Louisiana truly appreciate your efforts. But, we are far from 
finished with this enormous task. What I need from you is a detailed 
plan laying out how you are going to restore the Louisiana VAMC, 
complete with timelines, milestones, and funding details. With that, I 
would like to proceed to a few questions.

    Chairman Craig. Well, Mary, let me cut to the chase on a 
specific question that I am sure you will want to chime in on 
because I think it is reasonable in light of what is being 
asked at the moment and the circumstances as they are evolving 
in New Orleans, with the infrastructure and the support coming 
out of those two medical schools that facilitated in large part 
VA's capabilities in the New Orleans area.
    So let me ask two questions together. And this is to get to 
the point of where we go because Senator Lott has mentioned the 
$1.2 billion and a substantial amount of that going to 
Louisiana and New Orleans. So, in your testimony, you noted 
that approximately 40 percent of the New Orleans employees have 
lost their homes and that a significant number of your staff 
may choose not to return, and some have retired and all of that 
circumstance.
    So the first question in the context of dealing with the 
Louisiana issue and New Orleans would be, given the reality, 
are you at all concerned about the ability to staff the new 
infrastructure that you are seeking to build in New Orleans?
    Now having said that, the President's supplemental 
appropriation request identifies $845 million as needed for the 
construction of a new VA medical center in New Orleans, and I 
was one that looked at that number and went ``wow.'' At the 
same time, I know how costly hospitals are to build as it 
relates to modern infrastructure and all that comes to a 
hospital room now, let alone all that is tied to the broader 
infrastructure of a hospital.
    What is driving the significant costs of the project? What 
is the overall reality of what you are looking at, Mr. 
Secretary, Dr. Lynch, as it relates to bringing these services 
back versus remodeling the old facility, versus relocating to 
have the infrastructure available to meet the services of the 
veterans of the Louisiana area? Broaden on that, if you could, 
please.
    Secretary Nicholson. I will, Mr. Chairman, and then I will 
ask my colleagues to join in, if they care to.
    Starting out, the real determination on these things will 
be driven by what is best for the veterans and those respective 
veteran populations. And I am confident in saying that we will 
end up with a new veterans hospital in New Orleans.
    I cannot tell you what the resultant population of New 
Orleans is going to be. We know from our sort of microcosmic 
experience that some of our employees who have been temporarily 
redistributed throughout the system are choosing to stay where 
they have been put. We don't know what our partners in that 
area are going to do. What is Tulane going to do? LSU, Charity? 
Those are right now unanswered questions.
    But we know that, in some configuration, we need a new 
hospital. We need a hospital in New Orleans. And it appears to 
us that we are going to have to build a new hospital, based on 
our current evaluations of that structure. And ``where'' is the 
question, and whether we would be able to be co-located with 
other academic medical facilities, which we desire, which gives 
that synergy of services and academic opportunities that good 
staff doctors want.
    And the same is true in Biloxi. I mean, we know that we 
need the capacity to serve there, and we have lost capacity 
because of the fact that the Gulfport hospital has been 
obliterated. As Senator Lott said, there was a plan to expand 
Biloxi, which is 8 miles away, to facilitate that before the 
hurricane happened. We are going to try to accelerate that 
planning to make that happen.
    Meanwhile, we have temporary clinic facilities and modular 
buildings that we are going to site at Biloxi to give that care 
that is lost at Gulfport.
    Chairman Craig. Recognizing that Senator Thune is here, I 
just wanted to recognize him as I turn to Senator Landrieu.
    And that is why I went to the heart of this question, Mary, 
because obviously you are intimately involved in it, and it is 
critical to you and your constituents. So you had asked a 
question coming off from those comments?
    Senator Landrieu. Well, I just wanted to maybe comment for 
the record. I mean, this is a work in progress, and each day, 
we learn something more. But just for the record, it is the 
intention of Tulane and LSU, those medical schools, to reopen 
and to function up to capacity.
    They, of course, are quite challenged with the devastation 
that has occurred. But our State has every intention of holding 
those medical schools there, and it looks like we are going to 
have to reorder the way the Charity Hospital system--and I 
think Senator Lott is more familiar with this than others--but 
it is a complex of medical hospitals all in the same area, 
which brings a lot of synergy and efficiency and sharing and 
opportunity.
    So the veterans actually receive a tremendous amount of 
care because you have two great medical schools right there. 
And of course, New Orleans being a city, it is convenient for 
people to get to from East and West, North. Nobody comes too 
much from the South. A few people out of the water, but mostly 
East and West and from the North.
    But having said that, Mr. Chairman, this is a real 
interesting opportunity for the VA to lead the rebuilding of a 
great medical complex and to do it in a way that serves the 
whole Gulf Coast, Senator Lott, in a way that is very helpful. 
Because while we serve a great region, it is important to have 
some activities in the Biloxi-Gulfport area and some to the 
west of us in Texas to serve that great region of veterans.
    So maybe we could visit a bit and perhaps make a 
presentation. But I can assure you the LSU medical center and 
Tulane medical center will be open and want to serve the 
veterans. And perhaps the State would be willing, Mr. Chairman, 
to put up some kind of proposal because we have got to 
reconfigure the Charity Hospital building. That building is so 
old, I don't think that our State will be able to rebuild 
Charity.
    So there is a new opportunity. And perhaps a hospital that 
can be purchased for less than the $850 million that is 
outlined and do the right thing by our veterans and do some 
kind of regional approach now that we have the opportunity.
    I am sorry I didn't come with all of the specific plans, 
but I do want to assure you those medical schools are preparing 
to reopen and are counting on you all to be a part of that.
    Chairman Craig. Trent, do you have any additional comments 
or questions?
    Senator Lott. What if the Air Force and DOD continues to 
resist or they don't do what we would hope that you could work 
out with the Keesler Air Force Base hospital? What are you 
going to do then about the medical services that you would be 
losing at Gulfport if that facility, in fact, is not continued 
to be used? How would you accommodate those veterans?
    And with regard to Senator Landrieu, I think that probably 
now, we do have, if you have a veteran that is needing heart 
surgery, I think they have gone to New Orleans to get that 
probably. So there is that sort of thing. The specialties, you 
know, we have gone back and forth. We have veterans come from 
the panhandle of Florida to Biloxi.
    But we have got to work this problem out with Keesler, or 
we have got to come up with an alternative plan. And we are 
restricted in what the medical community can accommodate there 
along the coast. We were in that bind before the hurricane. 
That is one of the reasons why the BRAC Commission took Keesler 
Air Force Base hospital, surgery and all, off the list because 
there was no place for them to go. So what is going on with the 
Air Force?
    Secretary Nicholson. Well, we are having some conversation 
with them, Senator Lott. I can't tell you that I am optimistic 
it is going to end up in a collaboration that I think it 
should. But we are working on it. And as I said, we have done 
this now in some other areas. We just consummated one on the 
north side of Chicago with the Navy, and it is a really, really 
good arrangement for everybody.
    If this doesn't come to pass, we will have to size the 
Biloxi facility to meet the needs of the veterans in the 
region.
    Senator Lott. Thank you, Mr. Chairman.
    Chairman Craig. Thank you.
    Senator Akaka, questions of the Secretary?
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Secretary, in a response to my prehearing questions 
concerning the fate of New Orleans hospital, it was stated that 
VA would maintain some, and I am quoting, ``clinical presence 
in the city.'' Can you explain what that means? Does that mean 
hospital beds, clinics, or some combination of the two?
    Secretary Nicholson. Yes, sir. What that means is that we 
will be there, that we are there in a clinical way for people 
to come and do outpatient visits. So that we are taking care of 
if they have a problem, we diagnose it and treat it in those 
clinics. We can't put them in a bed right there, but we can 
refer them to one of our facilities if they need more acute 
care.
    Senator Akaka. As you know, Mr. Secretary, the White House 
reallocation package includes funding for restoration of 
medical services, possibly new hospitals and bed towers, and 
restoring burial sites, as you have indicated in your 
statement. I must ask, however, where will funds come from to 
shore up personnel accounts to pay all the per diem costs that 
are being expended on a daily basis for displaced personnel?
    Secretary Nicholson. We are accounting for that, Senator 
Akaka, and we have put that in our supplemental request for 
reimbursement.
    Senator Akaka. I was asking that because you haven't asked 
for a supplemental, and I was wondering.
    Secretary Nicholson. Some of it we expect to be reimbursed 
by FEMA because of the emergency.
    Senator Akaka. Mr. Secretary, this is more of a statement 
than a question. At a meeting held last week, VA's chief 
counsel stated that you and I, and I quote, and here is the 
quote, ``are committed to giving Congress quarterly 
briefings.''
    I just want to say that in the aftermath of Hurricane 
Katrina and with so much at stake, transparency and oversight 
are essential to ensuring a successfully accomplished mission. 
And I want you to know that I look forward to working with you 
and the Chairman on these meetings.
    Dr. Lynch, I am delighted to have you with us today. It is 
my understanding that VA has decided that January 2009 is a 
target for award and construction of new clinical facilities in 
Biloxi, with some administrative functions lagging until 2010.
    With so many veterans having been displaced and their care 
put on hold, Dr. Lynch, is this an appropriate timetable, or 
what can and cannot be expedited?
    Dr. Lynch. That is an expedited schedule, Senator. The 
original construction timelines for Biloxi, and we are 
fortunate there because of the CARES process. Literally, the 
week before the storm hit, we already had a design firm 
developing concept drawings for what we might do in Biloxi. So 
we were ahead of the game before the storm even hit.
    The timelines, original timelines had us completing 
clinical functions in 2010, probably mid to late 2010. If 
things go well, we believe we can move that up to early 2009. 
Obviously, we have to bridge between now and then.
    Part of that is helped by the fact that I think our 
employees' home losses mirror the community. Our staff live 
around the area and are very representative, and that is 
probably true of about most of the home stock. About a third of 
it is gone, which means that people aren't living in those 
homes now and will be trickling back in over the next couple of 
years as they are rebuilt. So we have a little bit of a 
breather in terms of the workload.
    We are also able to support some of that workload right now 
by shifting workload to Jackson for some of the functions. What 
we largely lost at Gulfport was some outpatient clinic space, 
where we had primary care, things like that. But mainly in 
terms of in-patient functions was long-term care. About a third 
of our in-patient long-term care capacity was at Gulfport. And 
all of our psychiatric in-patient care was at Gulfport. That is 
the part we are going to try to put back together.
    We have a proposal, we are acquiring 30,000 square feet of 
temporary buildings, which will help us offset some of this, 
not all of it. We have also moved. We are using the 
domiciliary, which was at Biloxi, after a construction project 
to make it safe for psychiatric patients. That will be our 
psychiatric in-patient center very shortly.
    So we are putting together some interim plans. But I think 
long term for the community, it is important for us to be able 
to deal with all of the needs there. CARES said, and I think 
this is still going to be true 20 years out, that we needed to 
increase services across the board there, and that is what 
those projects are designed to do. And we just need to get 
there as fast as possible.
    Senator Akaka. Thank you, Mr. Chairman. My time has 
expired.
    Chairman Craig. A follow-up question to what Senator Akaka 
just asked. So you are telling me that the plans and the 
timeline for the plans, because I would have to agree 2009 
sounds like a long way off, are also a part of the growth? I 
mean, it is an expansion. It is an expansion of existing to 
meet, to accommodate what CARES saw as a future need along with 
the present need. Is that correct?
    Dr. Lynch. That is correct, sir. And just if there is any 
fortune in this, we had those plans on the board before the 
storm hit.
    Chairman Craig. OK. Jim, Secretary Nicholson, I recently 
visited the armed services retirement home here in Washington, 
DC. As you know, there are more than 400 residents of the 
Gulfport facility that were relocated due to the hurricane 
damage.
    The President's supplemental request includes $21 million 
to cover the accommodations and living costs of the dislocated 
residents. Although the homes are considered DoD civil 
programs, they are a unique anomaly in the Federal system. I 
think that is a better way of saying it, but they are part of 
that civil program.
    VA provides health care services to many of the residents 
of both the Washington and the Gulfport facilities. Given this 
fact and the fact that VA has experiences in delivering the 
long-term care services that DoD does not, are you involved or 
do you plan to be involved with DoD in future planning for the 
Gulfport facility?
    Secretary Nicholson. I am going to ask Dr. Perlin if he 
wants to expand on my response. Senator, to my knowledge, we 
haven't had a conversation with DoD specifically about the 
Gulfport relocatees. But we have addressed it ourselves because 
it is a matter of concern to us.
    And I ask Dr. Perlin, do you have anything to add?
    Dr. Perlin. Mr. Secretary, thanks. We have not had specific 
conversations about any sort of new relationship there. But as 
you know, we are providing a good deal of support to the 
veterans from the Armed Forces Retirement Home in Gulfport who 
are now here in Washington. Just as a note, many of those 
veterans had previously used VA for care, and it has been 
pretty easy for us to care for them because their electronic 
health records were automatically available.
    Chairman Craig. OK. Mary, additional questions?
    Senator Landrieu. Can I just ask a few more questions? And 
I am sorry, this may be in your testimony. But before the 
hurricane, what were the general plans for the New Orleans 
veterans hospital, basically to stay and grow?
    And the facility, I have been there many times, is in 
fairly decent shape. But tell me, Mr. Secretary, what were your 
plans before the hurricane for that facility?
    Secretary Nicholson. Well, we were very pleased with that 
hospital. It was busy and doing a fine job and had planned for 
it to continue on in that mode.
    Senator Landrieu. And I understand, because I am familiar 
with the general flooding, that it was just flooding through 
the first floor of that area, basically. Electric systems and 
such, some mold concern?
    Secretary Nicholson. Yes, it has a sub-basement and a 
basement, and those two sort of below-grade levels got most of 
the water. But it damaged, it wiped out the elevator service, 
the electrical service to the building. Some of the dietetics 
were affected there, and the generators, so that our emergency 
electricity system was jeopardized but never fully taken out.
    Senator Landrieu. Now you know that has been true of many 
buildings in New Orleans and the region. Have you had a rough 
estimate of what it would be just to repair and fix and get the 
hospital open? Do you have an estimate of that cost?
    Secretary Nicholson. Well, we have plans to use as a clinic 
part of that building right now. I will ask Dr. Lynch, because 
he is working on that on a daily basis, to give you more 
detail.
    Senator Landrieu. But like, Doctor, if you had to open the 
hospital and forget the fact that you don't have housing and 
all of that. I am familiar with it. But if you had to open that 
hospital like within 30 or 60 days, have you estimated what it 
would cost to just get it back open and functioning up to the 
level it was before the storm?
    Dr. Lynch. We don't have a final estimate.
    Senator Landrieu. Do you have a rough estimate? Is it a 
portion of this $800 million for total replacement cost?
    Dr. Lynch. It would be less than $800 million.
    Senator Landrieu. Do you think it would be 50 percent of 
the new cost estimate or less, or you don't know?
    Dr. Lynch. I would just be guessing, but probably somewhere 
in that ballpark. Regarding the Secretary's comments, our plans 
to move back into the building in December with a clinic, the 
building is really a series of constructions. The oldest part 
of the building is early 1950s where the beds are, the bed 
tower, if you will.
    An addition, which includes the parking garage, and on top 
of the parking garage sits a two-story nursing home. It 
weathered both the storm and the effects of the flooding very 
well, and we were able to lift air conditioning onto the roof 
of that and plumb it down into the building.
    After we restore electricity and once we restore the 
elevators, people will be able to park in the garage and have 
direct access to the nursing home without having going into the 
building, where we could continue to do repairs, construction 
as necessary. Which it just works out that will enable us and 
the space lends itself to being converted to a clinic fairly 
easily. It is ample space.
    So we will actually be able to get that part of the 
building online by December. But just getting the fire safety 
systems, elevators, the air conditioning, beginning to drop the 
humidity in the rest of the building and what have you before 
you repair any of the other damage is going to cost us close to 
$25 million just to do that.
    Senator Landrieu. My question is are all of you happy with 
the building and the location? I mean, there is ample land 
around there and ample medical partners that a new facility 
could be constructed in partnership with the city or the State.
    Have you all had any conversations with the State of 
Louisiana Recovery Authority, and if you could just brief me? I 
don't want to take too much of the time. But a minute of 
briefing on at least the initial conversations with the LRA?
    Secretary Nicholson. I will take the first response, 
Senator, and say, yes, we're very interested because we think 
it is critical to be appropriately co-located with Tulane and 
LSU. So part of our decision, I think, will be driven by what 
they decide to do, and whether or not they stay in the area, 
and would then be persuasive to us to justify spending the kind 
of money that will be required to restore that rather old 
facility that we have there.
    Senator Landrieu. Well, Mr. Chairman, with that, I am going 
to leave it there and just commit to work with you. And perhaps 
because of this very strong and longstanding partnership 
between Tulane and LSU and the veterans center, and I mean they 
are literally right next to each other and have been for 
decades, that perhaps we could facilitate a meeting with the 
LSU and Tulane because they are making decisions now.
    And I am led to believe that they are going to stay right 
where they are and rebuild. Of course, they have got financial 
challenges like we all do. But perhaps we could do that, and I 
could include the Chairman and the Ranking Member in those 
informal discussions, or your staff.
    Chairman Craig. I appreciate that comment. I think those 
are very legitimate discussions, whether you remodel an old 
facility and bring it back online, or if you build something 
new.
    And of course, the partnerships VA has with private medical 
schools and facilities is fundamental. It is valuable to both 
sides of that equation in a very real way. For the students 
themselves, for the services that are rendered, for the costs 
of operation at the VA center, for the quality of health care, 
all of that fits nicely. And it appears to me that the New 
Orleans facility was really a regional facility of some 
magnitude, and we see, of course, that kind of partnering going 
on.
    So, no, I think you are absolutely right. Those kinds of 
conversations for final decisionmaking, either way we cut it, a 
lot of money is going to get spent and needs to be spent. And 
it needs to be spent, clearly, with an eye toward the future 
and future services along with current services. So we 
appreciate that greatly.
    Let me ask this question, and maybe Dr. Lynch could respond 
to it. We are going to do accelerated CBOCs you mentioned in 
Slidell and Hammond and, let us see, one other one. Anyway, the 
Slidell one appears to be almost on the border, is it not?
    Dr. Lynch. It is pretty close to the border, sir. But it is 
only 20 miles from downtown New Orleans. It is really a suburb 
of the city of New Orleans.
    Chairman Craig. Well, I guess it is, isn't it? I was just 
wondering how much service you get cross border. Does it serve 
a portion of Mississippi or Mississippi patients?
    Dr. Lynch. It will probably draw some patients from 
Mississippi. It is not open yet, but it almost certainly will 
when it is open.
    Chairman Craig. What is the timeline on that, do you know?
    Dr. Lynch. We are hoping to have them opened in the first 
part of 2006.
    Chairman Craig. 2006.
    Dr. Lynch. Subject to contracting and things like that. 
That is sometimes out of our control.
    Chairman Craig. OK. Danny, additional questions?
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    My questions have been answered. I just want to say that I 
am proud of what our VA administration is doing there. You are 
meeting the challenges, and you are working on it. It appears 
to be something that we can work on together, and it seems as 
though we will.
    Again, proud to mention that I am looking forward to 
quality briefings, and we can also talk as well there. But 
thank you for what you are doing. And I want to wish you well, 
and you can feel that we want to work with you to help the 
cause.
    Thank you.
    Chairman Craig. Mr. Secretary, this may well be my last 
question because part of the dialog that we had going on with 
both of the S enators from Louisiana and Mississippi I think 
answered some of our questions and some that I had prepared or 
staff had prepared.
    VA briefed my Committee about a new Office of Strategic 
Initiatives, which is tasked with forecasting demand, market 
delineation, cost estimates for the use in CARES 
implementation. It seems to me that this is the same kind of 
analysis that is needed along the Gulf Coast before we begin 
building.
    Have you considered using this new Office of Strategic 
Initiatives to assist VA's internal Gulf Coast Planning Group 
with its work?
    Secretary Nicholson. Yes, we have, Mr. Chairman. As has 
been touched on here at least, there are a lot of variables in 
these things. For example, when we consider whether or not to 
try to rehabilitate the New Orleans hospital versus 
reconstructing one, a very big piece of that is life-cycle 
costs.
    What is the maintenance and operation cost of a 
rehabilitated old hospital versus building a new one? And what 
is the return on that investment in the new one because, 
obviously, it would be run much more efficiently. And that is 
part of what we are doing in this whole process.
    Chairman Craig. Well, let me thank all of you for the work 
that is under way. And I agree with Senator Akaka. Being kept 
abreast of all of this will, in the long term, result in a good 
deal less frustration or problems that arise by the uninformed 
legislator, who may hear one thing coming from a constituent, 
when, in fact, the plan is quite the opposite.
    And here we have a very unique opportunity to not only 
rebuild, but build a first-class service. I shouldn't say build 
a first-class service. Build a new service that continues a 
first-class service across a region that obviously will need 
service.
    Tragically enough, these kinds of opportunities don't come 
along very often, thank goodness. But when they do, we ought to 
look far enough out into the future that we are not just simply 
replastering over old plaster when, in fact, a different 
approach can do as you suggest, with life cycle, services, and 
our needs and all of that.
    So we thank you very much. That was part of the reason that 
I wanted to initiate this hearing and begin this dialog as you 
are planning and working so that we keep everybody well abreast 
of it.
    And also, as it relates to dealing with the retirement 
center facility, that is an anomaly. It is a unique situation 
that exists in part because of history, and I am not sure that 
this may not be an opportunity in time to readjust its 
relationships that would continue to serve that particular type 
of retiree within our military services.
    So, gentlemen, thank you very much for being with us today.
    Secretary Nicholson. Thank you, Mr. Chairman.
    [Whereupon, at 3:19 p.m., the Committee adjourned.]
  

                                  
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