United States Government Accountability Office

GAO Testimony

Before the Subcommittee on Disability 

Assistance and Memorial Affairs, 

Committee on Veterans' Affairs, House of 

Representatives 

VETERANS’ DISABILITY

BENEFITS 

Improved Transparency 

Needed to Facilitate 

Oversight of VBA’s 

Compensation and Pension 

Staffing Levels 

Statement for the Record by Cynthia A. Bascetta, 

Director, Education, Workforce and Income Security 

For Release on Delivery

Expected at 2:00 p.m. EST 

Thursday, November 3, 2005

 

GAO-06-225T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 3, 2005

VETERANS' DISABILITY BENEFITS

Improved Transparency Needed to 

Facilitate Oversight of VBA's 

Compensation and Pension Staffing 

Levels 

Highlights of GAO-06-225T, a statement 

for the record to Subcommittee on

Disability Assistance and Memorial Affairs,

Committee on Veterans' Affairs, House of 

Representatives 

The Chairman, Subcommittee on 

Disability Assistance and Memorial

Affairs, House Committee on 

Veterans’ Affairs, asked GAO to 

submit a statement for the record

highlighting findings from an 

examination of the Veterans 

Benefit Administration’s (VBA) 

fiscal year 2005 budget

justification. In that review, we

assessed (1) VBA’s determination 

and justification of claims 

processing staffing levels, and the

role of productivity in such

determinations, and (2) VBA’s 

projections of future claims

workload and complexity. 

What GAO Recommends

In our November 2004 report, GAO 

recommended that VBA take steps 

to ensure the Congress has a 

realistic and transparent 

foundation on which to base

funding decisions for disability 

compensation and pension

programs. Specifically, GAO 

recommended that VBA provide 

additional information on (1) the 

impact of claims processing 

improvement initiatives; (2) claims 

processing productivity, and plans 

to improve productivity; and (3) the 

impact of changes in claims 

complexity. VA concurred with this 

recommendation. 

We reported in November 2004 that VBA’s fiscal year 2005 budget 

justification for disability compensation and pension staffing could have 

been more transparent. VBA inadequately explained how it planned to deal 

with a growing workload and meet its performance goals despite a lower 

staffing level. We recommended that to make its budget justification more 

transparent and useful for congressional oversight, VBA provide the 

Congress with the following types of information: 

• Explanation of the expected impact of specific initiatives and changes in 

incoming claims and workload. While the fiscal year 2005 justification 

identified a number of factors that could affect VBA’s staffing 

requirements, VBA did not clearly explain how each of these initiatives 

and projections affected its funding request for fewer employees. 

• Claims processing productivity, including VBA plans to improve 

productivity. The fiscal year 2005 budget justification inadequately 

explained how VBA would achieve productivity improvements needed to 

improve claims processing performance with larger workloads and 

fewer staff. 

• Explanation of how claims complexity is expected to change and the 

impact of these changes on productivity and requested staffing levels. 

VBA stated that claims complexity is increasing, but did not project 

increases in disabilities per claim or explain how complexity changes 

would affect productivity. 

In responding to our report, VBA agreed to work to include this information 

in its future budget justifications for compensation and pension staffing and 

identified more specific steps that it plans to take in its fiscal year 2007 and 

2008 budget cycles. We have observed that, in contrast to last year, the fiscal 

year 2006 justification contains performance goals that VBA believes are 

more achievable and it addresses how it will achieve these goals within 

higher resource levels, due to additional funding from the Congress. 

VBA Compensation and Pension FTEs, Fiscal Years 1998-2006 

www.gao.gov/cgi-bin/getrpt?GAO-06-225T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cynthia A. 

Bascetta at (202) 512-7215 or 

bascettac@gao.gov. 
Dear Mr. Chairman and Members of the Subcommittee: 

I am pleased to have the opportunity to comment on Veterans Benefits 

Administration (VBA) requests for funding to administer its disability 

compensation and pension programs, in particular funding for claims 

processing staffing levels. The Congress relies on VBA’s annual budget

justification as the agency’s statement of how it plans to spend the funds it 

requested and for conducting its oversight of VBA. Therefore, it is 

important that VBA provide the Congress with a reliable and transparent 

analysis to support its funding requests. 

As the Chairman requested, my statement is based on our November 2004

report on VBA’s fiscal year 2005 staffing request and presents key findings 

and recommendations from that report.1

 To update information in the 

report, we reviewed VBA’s fiscal year 2006 budget submission and 

obtained final fiscal year 2005 data on VBA’s compensation and pension 

claims workload. We did not perform independent verification of VA’s data

for this statement, but are currently assessing the reliability of VBA’s 

workload data. We conducted our review in October 2005, in accordance 

with generally accepted government auditing standards. 

In summary, we reported in November 2004 that VBA’s fiscal year 2005 

budget justification for disability compensation and pension staffing could 

have been more transparent. VBA inadequately explained how it planned 

to deal with a growing workload and meet its performance goals despite a

lower full-time equivalent (FTE) staff level. We recommended that to 

make its budget justification more transparent and useful for 

congressional oversight, VBA provide the Congress with the following 

types of information: 

• Explanation of the expected impact of specific initiatives and changes 

in incoming claims workload. While the fiscal year 2005 justification 

identified a number of factors that could affect VBA’s staffing 

requirements, VBA did not clearly explain how each of these initiatives 

and projections affected its funding request for fewer employees. 

• Claims processing productivity, including VBA plans to improve 

productivity. The fiscal year 2005 budget justification inadequately 

 1

GAO, Veterans’ Benefits: More Transparency Needed to Improve Oversight of VBA’s 

Compensation and Pension Staffing Levels, GAO-05-47 (Washington, D.C.: Nov. 15, 2004).

Page 1 GAO-06-225T
explained how VBA would achieve productivity improvements needed 

to improve claims processing performance with larger workloads and 

fewer staff. 

• Explanation of how claims complexity is expected to change and the 

impact of these changes on productivity and requested staffing levels. 

VBA stated that claims complexity is increasing, but did not project 

increases in disabilities per claim or explain how complexity changes 

would affect productivity. 

In responding to our report, the Department of Veterans Affairs (VA) 

agreed to work with the Office of Management and Budget and 

congressional appropriating and authorizing committees to ensure that 

appropriate supporting information is included in its future budget 

justifications for compensation and pension staffing. VBA also identified

more specific steps that it plans to take in response to our 

recommendation, in the fiscal year 2007 and 2008 budget cycles. 

Meanwhile, we have observed that VBA’s fiscal year 2006 budget 

justification addressed how VBA would use higher resource levels, due to

additional funding from the Congress, to meet what it believes are more 

achievable performance goals. For example, VBA eased its fiscal year 2005 

goal for average days to complete rating-related claims from 100 to 145 

days.2

When a veteran submits a claim for disability benefits to a VBA regional 

office, Veterans Service Center staff process the claim in accordance with 

VBA regulations, policies, procedures, and guidance. A Veterans Service 

Representative (VSR) in a pre-determination team develops the claim; that 

is, assists the claimant in obtaining sufficient evidence to decide the claim. 

The claim then goes to a rating team, where a Rating Veterans Service 

Representative (also known as a Rating Specialist) makes a decision on 

the claim, based on the available evidence and VBA’s criteria for benefit 

entitlement. VSRs also perform a number of other duties, including 

establishing claims files, authorizing payments to beneficiaries and 

generating notification letters to claimants, conducting in-person and 

telephone contacts with veterans and other claimants, and assisting in the 

processing of appeals of claims decisions. 

Background 

 2

Rating-related decisions are primarily decisions on original claims for compensation and 

pension benefits and reopened claims. For example, veterans may file reopened claims if 

they believe their service-connected conditions have worsened. 

Page 2 GAO-06-225T
VBA’s administrative costs, including personnel costs, are funded through 

VA’s General Operating Expenses account. VBA, as part of VA’s annual 

budget justification, asks for specific amounts for each of its programs, 

including compensation and pension programs. Funding is requested to 

support an estimated FTE employment level.3

 In fiscal year 2004, VBA 

spent about $926 million to administer its compensation and pension 

programs, including support for about 9,100 FTEs. 

From fiscal year 1998 through 2003, VBA’s compensation and pension 

staffing levels increased by about 38 percent, from 6,770 to 9,352 FTEs, as

shown in figure 1. Staffing levels increased because VBA hired hundreds of 

new Rating Specialists and VSRs in anticipation of a large number of 

future retirements. Also, these additional staff helped VBA respond to a 

sharp drop in the production of rating-related claims decisions in fiscal 

year 2001, with these decisions increasing from 481,000 to 827,000 in fiscal 

year 2003. After relatively small declines in the FTE level in fiscal years 

2004 and 2005, VBA estimated that its fiscal year 2006 budget request 

would support 9,087 FTEs. 

 3

Full-time equivalent employment is the basic measure of levels of employment used in the 

budget. It is the total number of hours worked divided by the total number of compensable 

hours in a fiscal year. For example, in fiscal year 2003 an FTE represented 2,088 hours (8

hours per day for 261 days).

Page 3 GAO-06-225T
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2006 

In fiscal year 2005, VBA’s 57 regional offices received about 788,000 ratingrelated claims from veterans and their families for disability benefits. This

included about 211,000 original claims for compensation of serviceconnected disabilities (injuries or diseases incurred or aggravated while 

on active military duty) and about 439,000 reopened compensation claims.4

In addition, about 85,000 original and reopened claims were filed for 

pensions for wartime veterans who have low incomes and are 

permanently and totally disabled for reasons not service-connected and 

for their survivors.5

 In addition, VBA received about 28,000 original claims

for dependency and indemnity compensation by deceased veterans’ 

spouses, children, and parents and to survivors of service members who

died on active duty. VBA’s rating-related claims received increased by 

about 17,000 from fiscal year 2004 to fiscal year 2005, continuing a trend 

 4

For example, a reopened compensation claim could be filed by a veteran seeking an 

increase in disability rating based on the worsening of a service-connected disability or by 

a veteran seeking compensation for a previously unclaimed disability. 

5

Veterans aged 65 or older do not have to be permanently and totally disabled to become 

eligible for pension benefits, as long as they meet the other requirements for income and 

military service. VBA also pays pensions to surviving spouses and unmarried children of

deceased wartime veterans. 

Page 4 GAO-06-225T
that has seen an increase of more than 200,000 claims (about one-third) 

since fiscal year 2000. 

VBA officials stated that productivity improvements, workload changes, 

and attrition of experienced claims processing staff are considered 

throughout the annual budget process. However, VBA’s fiscal year 2005 

budget justification did not clearly explain how these factors affected its 

request. Early in this process, the Compensation and Pension Service 

makes a budget request that is reviewed by VBA’s Office of Resource 

Management, under the direction of VBA’s Chief Financial Officer, and 

becomes part of VBA’s total request. VBA’s request eventually becomes 

part of VA’s overall budget request, which is submitted to the Office of 

Management and Budget (OMB) for review.6

VBA’s Budget 

Justifications Could 

More Clearly Explain 

the Basis for Its 

Compensation and 

Pension Staffing 

Estimates 

VBA’s fiscal year 2005 budget justification identified a number of 

initiatives and projections that could affect its staffing levels. For example, 

implementing specialized claims processing teams in VBA’s regional 

offices and consolidating pension maintenance work at three regional 

offices could affect staffing levels. Also, VBA projected it would receive

more disability compensation claims than in previous years, based on such 

factors as the enactment of concurrent receipt legislation in 2003—which 

allows military retirees with service-connected disabilities rated at 50 

percent or higher to receive both VA disability compensation and military 

retirement pay. VBA estimated that it would receive about 65,000 claims 

due to this legislation. VBA officials said that this estimate was included in

their negotiations with OMB. Further, VBA noted that it expects many 

experienced claims processing staff to leave VBA over the next several 

years. 

Despite identifying these factors in its 2005 budget justification, VBA did 

not specify how such initiatives and projections would affect the number 

of employees it needed to meet its claims processing performance goals.

For example, VBA projected that in fiscal year 2005, the number of original 

and reopened compensation claims receipts would increase by about 15 

and 10 percent, respectively, from its fiscal year 2004 estimates, and that 

original and reopened pension receipts would decrease by about 2 

percent. However, VBA did not specifically identify how these anticipated 

workload trends had affected its requested staffing levels or its expected 

 6

Under OMB guidance (Circular A-11), agency FTE employment estimates should consider

productivity improvements and workload assumptions. 

Page 5 GAO-06-225T
improvements in productivity. VBA’s reduced staffing request was 

consistent with OMB guidance to agencies to assume increased 

productivity in their budget requests—for example, to do the same amount 

of work with fewer employees. However, the budget justification does not 

describe how its FTE staffing requirements are linked to the specific 

initiatives and projections that could affect these needs. We recommended 

that VBA provide the Congress with an explanation of the expected impact 

of specific initiatives and changes in incoming claims workload on 

requested staffing levels. VBA concurred, stating that, beginning with the 

fiscal year 2007 budget cycle, VBA will provide detailed analyses of 

instituted or planned initiatives and process changes, and their anticipated

impact on productivity. 

Also, VBA’s fiscal year 2005 budget justification provided no specific 

information on its compensation and pension claims processing 

productivity or on its planned improvements in productivity. VBA 

expressed confidence that it could improve productivity enough to meet 

its claims processing goals for fiscal year 2005 with fewer employees, 

despite a projected increase in the workload of compensation claims. 

However, the budget justification included no measurement of 

productivity nor did it identify how it planned to achieve the needed 

productivity improvements. We recommended that VBA provide the 

Congress with additional information on claims processing productivity,

including how it plans to improve productivity. VBA concurred, stating 

that it would investigate ways to incorporate more information on 

productivity in the formulation of its fiscal year 2007 budget justification.

Further, VBA did not project the complexity of its rating-related claims in 

its fiscal year 2005 budget submission and did not explain the impact of 

complexity on productivity and requested staffing levels. VBA has noted 

that disability compensation claims have become more complex because 

veterans are claiming more service-connected disabilities per claim, and 

VBA must make a decision whether each disability is service-connected. 

Meanwhile, the Congress and VA have established presumptions of 

compensation and pension eligibility that can make some claims less 

complex. For example, the Congress and VA have identified several types 

of disabilities (such as type II diabetes) as service-connected based on the 

presumption that veterans who served in Vietnam were exposed to Agent 

Orange. Claims based on these disabilities can be simpler to decide 

because less evidence is needed to prove service connection. VBA did not 

specifically explain the impact of claims complexity on productivity and 

staff requirements. Further, VBA’s discussion of complexity in its fiscal 

year 2006 budget justification was limited to a statement that complexity is 

Page 6 GAO-06-225T
increasing. We recommended that VBA prepare an explanation of how 

claims complexity is expected to change and the impact of these changes 

on productivity and requested staffing levels. VBA concurred, stating that 

modifications were being made to its information systems that would 

enable VBA to use data from its Rating Board Automation 2000 system to 

measure complexity in terms of numbers of issues adjudicated. VBA 

anticipates having sufficient baseline data by the end of calendar 2005 to

support its fiscal year 2008 budget projections. 

VBA’s fiscal year 2006 budget justification proposed to fund more FTEs 

than it originally proposed for fiscal year 2005 and set more achievable 

performance goals. Specifically, VBA estimated that it would have 7,703 

direct compensation and pension FTEs in fiscal year 2005, primarily for 

the processing of compensation and pension claims.7

 This was 290 FTEs 

more than VBA originally requested. VBA requested the same direct FTE 

level for fiscal year 2006. This increased staffing level was funded through 

a transfer of $119 million from VA’s Medical Services account, as 

authorized by the Congress. At the same time, VBA adjusted key fiscal year 

2005 performance goals to make them less ambitious. For example, the 

new goal for average days to complete a rating-related decision was 145 

days, up from 100 days. Also, VBA’s new timeliness goal for pending 

rating-related compensation claims was an average of 119 days, up from 96 

days. While VBA met neither goal, it came closer to the revised goals.8

Also, VBA provided information on claims decision productivity, in terms 

of rating-related claims decided per direct FTE. 

We concluded in our November 2004 report that it was difficult to 

determine whether VBA’s confidence that it could meet its key fiscal year 

2005 claims processing goals was well-founded because its budget 

justification lacked sufficient information to make such an assessment. 

VBA agreed, recognizing that it had not provided the Congress with the 

information needed to determine whether it could meet its compensation 

and pension claims processing performance goals despite increasing 

workload and a lower staffing level. VBA has adjusted its performance 

goals to make them more achievable, in particular its goals to provide 

Concluding 

Observations 

 7

VBA’s budget justification also included requests for funding of management direction and 

support and information technology FTEs. 

8

VBA completed rating-related decisions in an average of 167 days in fiscal year 2005, and 

its end of fiscal year rating-related compensation inventory’s average age was 122 days. 

Page 7 GAO-06-225T
more timely claims decisions to veterans and their families. Meanwhile, 

the Congress provided additional funding to support a higher staffing level. 

VBA has identified steps it plans to take to provide additional information 

in support of its annual budget requests. It is important to do so to make 

its budget requests more transparent and more useful for congressional 

budgetary decisionmaking and oversight. 

For further information, please contact Cynthia A. Bascetta at (202) 512-

7215. Also contributing to this statement were Cristina Chaplain, Irene 

Chu, Martin Scire, and Greg Whitney.

Page 8 GAO-06-225T

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