Department of Veterans Affairs 

Office of Inspector General 

Audit of the Impact of

the Veterans Benefits Administration's

Special Hiring Initiative

Report No. 08-01559-193 September 5, 2008

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Call the OIG Hotline – (800) 488-8244 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Contents

Page

Executive Summary ..............................................................................................i

Introduction ..........................................................................................................1

Purpose........................................................................................................................... 1

Background.................................................................................................................... 1

Scope and Methodology................................................................................................. 6

Results and Conclusions ....................................................................................7

Issue 1: VBA’s Hiring Process is Effective and Timely ............................................... 8

Issue 2: VBA Implemented an Effective Process To Ensure Training, but

Reviewing New Employees’ Work is a Challenge...................................................... 11

Issue 3: Integrating New Employees into VBA’s Workforce Can Help To Reduce

the Claims Inventory.................................................................................................... 14

Appendixes 

A. All VAROs Receiving C&P FTE as of May 2, 2008............................................. 21

B. Claims Inventory Estimates Methodology............................................................. 22

C. Acting Under Secretary for Benefits Comments.................................................... 26

D. OIG Contact and Staff Acknowledgments............................................................. 29

E. Report Distribution................................................................................................. 30

VA Office of Inspector General 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Executive Summary 

Introduction 

In 2007, with supplemental funding from Congress, the Veterans Benefits Administration 

(VBA) initiated an ambitious plan to increase its claims processing workforce by about 

30 percent. The VA Office of Inspector General (OIG) conducted this audit to determine 

the impact of VBA’s hiring initiative on reducing the claims backlog. During the audit, 

we assessed the effectiveness and timeliness of VBA’s hiring process, VBA’s process for 

ensuring new employees are trained and supervised, and VBA’s overall progress at 

integrating new employees into the claims processing workforce. 

Ensuring sufficient staffing to meet the growth in the number and complexity of veterans’ 

benefits claims has been a significant challenge for VBA. Over the past 5 years, the 

number of claims received each year has generally exceeded the number of claims 

processed each year. As a result, the number of claims carried over at the end of the 

fiscal year (FY) has increased by about 66 percent during this period (from 

338,896 claims at the end of FY 2003 to 564,145 claims at the end of FY 2007). 

Recognizing this challenge, Congress passed legislation in FYs 2007 and 2008 giving 

VBA $185 million to hire additional claims processing personnel. Congress also gave 

VBA $2 million to lease space and $39.7 million to provide information technology (IT) 

resources for the new employees. 

In his February 2008 testimony before the House Committee on Veterans’ Affairs, 

Subcommittee on Disability Assistance and Memorial Affairs, VBA’s Deputy Under 

Secretary for Benefits reported that VBA planned to hire 3,100 new full-time equivalent 

employees (FTE) by the end of FY 2008 and that VBA was also conducting ongoing 

recruitment to replace losses due to attrition. VBA allocated the 3,100 new FTE 

primarily to 4 VBA business lines—compensation and pension (C&P), education, 

vocational rehabilitation and employment (VR&E), and loan guaranty. 

The C&P business line received 2,834 FTE (or 91 percent) of the total allocation because 

C&P operations represent the largest portion of VBA’s workload. VBA also allocated 

some positions to other business lines because, according to VBA officials, when C&P 

workload increases, the workload in these other areas typically increases. From the 

beginning of FY 2007 to May 10, 2008, VBA had hired 2,456 C&P FTE, achieving about 

87 percent of its goal of 2,834 FTE, and appeared to be on track for hiring the remaining 

378 FTE by the end of FY 2008. 

Claims processing is the most significant portion of C&P business line’s workload, and 

C&P employees process two major types of claims: rating claims and non-rating claims. 

Disability compensation claims—commonly referred to as rating claims by VBA— 

require a trained rating specialist to evaluate medical evidence. Rating claims include 

VA Office of Inspector General 

i 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

original and re-opened disability compensation claims for service-connected diseases or 

injuries, original pension claims, and death compensation claims. The number of rating 

claims VBA received each year has grown steadily over the past 5 years, from 

735,275 claims in FY 2003 to 838,141 claims received in FY 2007. Non-rating claims do 

not require rating decisions and include dependency claims, income adjustments for 

pension claims, and burial claims. The number of non-rating claims received has varied 

over past 5 years, with 726,479 claims received in FY 2007. 

VBA tracks all rating and non-rating claims awaiting decisions. In his February 2008 

testimony, the Deputy Under Secretary for Benefits distinguished between VBA’s claims 

inventory and claims backlog. The claims inventory is comprised of all claims awaiting 

decisions and provides a “snap-shot” of VBA’s workload. It includes all claims that are 

carried over from previous periods as well as claims received during the current period. 

The ages of claims in the inventory range from 1 day to over 365 days. At the end of 

FY 2007, VBA had a claims inventory of 564,145 claims (391,593 rating claims and 

172,552 non-rating claims). The claims backlog is a subset of the claims inventory; it 

represents claims that exceed a certain age—in other words, older claims awaiting 

processing decisions. 

Results 

VBA has effectively managed its hiring initiative by implementing processes to ensure 

the timely hiring and training of new employees. VBA is also progressing at integrating 

new employees into the claims processing workforce, but the new FTE are not expected 

to have a positive impact on decreasing the claims inventory until at least the end of 

FY 2009, when they have completed 1–2 years of formal and on-the-job training. 

Furthermore, we could not conclude that the hiring initiative alone will result in 

eliminating VBA’s backlog because a number of other factors contribute to the backlog, 

and, according to VBA officials, some of these factors are outside of their control. 

VBA Has Effective Hiring Processes. VBA has implemented effective processes to 

ensure it hires a large number of employees in a relatively short period. Although VBA 

had not yet met its hiring goal as of May 2008, it increased its claims processing 

workforce by approximately 30 percent in 19 months, and it was on track to meet its 

hiring goal by September 30, 2008. We reviewed the hiring processes at three VA 

regional offices (VAROs) and determined that the average of 28 days from the closing of 

a job announcement to making a job offer was timely. We also found that new 

employees have adequate office space and IT support and that the attrition rate of new 

employees is not a significant factor in VBA achieving its FY 2008 hiring goal. 

VBA Implemented an Effective Process To Ensure Training, but Reviewing New 

Employees’ Work is a Challenge. VBA has implemented an effective process for 

ensuring new employees receive timely training. However, VBA officials reported that 

maintaining productivity while also ensuring reviews of the work completed by new 

VA Office of Inspector General 

ii 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

employees has been a challenge. Until new employees become proficient at their 

assigned tasks, VBA requires senior claims processors to review 100 percent of their 

work. These 100 percent reviews leave less time for senior employees to process claims. 

The senior claims processors at the VAROs we visited told us that with the rapid influx 

of new employees, they now review the work of up to eight new claim processors. Prior 

to the hiring initiative, senior claim processors typically oversaw the work of less than 

three claim processors. VARO supervisors are reporting delays in processing claims, but 

productivity should increase as new employees increase their proficiency and VBA 

promotes and trains more senior claims processors. 

Integrating New Employees into VBA’s Workforce Can Help To Reduce the Claims 

Inventory. VBA has made good progress at integrating new employees into the claims 

processing workforce. In the short term, the large influx of new employees has resulted 

in a decrease in VBA’s overall productivity from an average of 176.8 claims processed 

per FTE in FY 2006 to a projection of 155.8 claims processed per FTE in FY 2008. This 

dip in productivity has also resulted in a moderate increase in VBA’s claims inventory 

since FY 2006, yet VBA officials are confident that by the end of FY 2009, as the new 

employees are trained, productivity will increase. Our analyses also support this—by the 

end of FY 2009, VBA should be able to process 9–16 percent more claims than in 

FY 2007, and begin to see a downward trend in the claims inventory. 

Furthermore, our analyses show that by the end of FY 2011, VBA could complete about 

27 percent more claims than in FY 2007 and theoretically eliminate the inventory, 

including its backlog of older claims. However, we expect that VBA will always have an 

inventory because it cannot control the number of claims it receives or when they are 

received, and other factors can delay claims processing, such as delays in obtaining 

evidence from third parties. Also, our analyses assume that the number of claims 

received would not increase greatly due to court cases, legislative changes, or increased 

military engagement and would grow at an annual rate of 2 percent. 

VBA Needs to Redefine Rating Claims Backlog. We disagree with how VBA currently 

defines backlog of rating claims and think that VBA needs to define its rating claims 

backlog in a more meaningful, understandable way. (For this discussion, we did not 

assess non-rating claims backlog because this was addressed previously in the OIG’s 

Audit of Veterans Benefits Administration Non-Rating Claims Processing, Report 

Number 06-03537-69, dated February 7, 2008.) 

VBA defines rating claims backlog as its “actual inventory” minus its “normal running 

inventory.” VBA defines “actual inventory” as the number of rating claims awaiting 

decisions at any point in time and “normal running inventory” as the number of rating 

claims VBA expects to have if it is meeting its processing performance target. Because 

this approach is based on averages, it does not portray the full extent of the rating claims 

backlog. For example, on May 3, 2008, the actual number of claims in VBA’s inventory 

VA Office of Inspector General 

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Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

was 396,897 (that is, “actual inventory”). However, if VBA was meeting its FY 2008 

performance target of 169 days to complete a claim, its inventory would have been 

395,832 claims (that is, “normal running inventory”). Because VBA was not meeting its 

performance target, it calculated a backlog of 1,065 claims (actual inventory of 396,897 

claims – normal running inventory of 395,832 claims). 

By comparison, our “aging methodology” shows VBA’s backlog to be 110,992. Our 

methodology defines backlog as all claims that exceed a target time period. To illustrate, 

if we use VBA’s FY 2008 performance target of 169 average days to complete a claim, 

the rating claims backlog as of May 3, 2008, would be 110,922 (the number of claims 

older than 169 days). However, because VBA’s 169-day performance target is based on 

the average length of time it actually takes to process claims, we could not conclude that 

this was an appropriate performance measure for backlog. Therefore, in redefining how 

it measures backlog, VBA needs to establish a target time period that is derived from an 

analytical assessment of how long it should take to process claims. 

Recommendations 

1. We recommended that the Acting Under Secretary for Benefits adopt a new definition 

for measuring rating claims backlog as the number of claims that are older than a 

realistic target time period. 

2. We recommended that the Acting Under Secretary for Benefits implement a plan to 

monitor and report backlog based on a new definition as described in 

Recommendation 1. 

Acting Under Secretary for Benefits Comments 

The Acting Under Secretary for Benefits concurred “in part” with the two audit 

recommendations. The Acting Under Secretary reported that VBA has never formally 

defined or measured its claims backlog, citing that stakeholders often refer to VBA’s 

entire inventory as a backlog. In response to this misconception, VBA has attempted to 

explain the difference between its expected normal inventory if claims are being 

processed within established timeliness targets and what portion of its inventory might 

represent backlogged claims. The Acting Under Secretary stated that VBA would 

continue to collect and study data to determine if a backlog performance measure could 

be developed and used as an effective management tool to improve claims processing. 

Their target for completing their planned actions is February 28, 2009. In addition, the 

Acting Under Secretary provided technical comments, which we have incorporated into 

the body of the report, as appropriate. (See Appendix C for the full text of the Acting 

Under Secretary’s comments.) 

VA Office of Inspector General 

iv 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

OIG Response 

We agree with the Acting Under Secretary for Benefits that stakeholders often do not 

understand the difference between VBA’s pending claims inventory and the claims 

backlog. We support VBA’s efforts to make this important distinction and to eliminate 

the misconceptions about inventory and backlog. We intended our audit 

recommendations to have VBA develop a more meaningful and understandable way to 

monitor claims processing delays in order to better identify and address potential causes 

for these delays, as well as to better inform its stakeholders. 

We disagree with the Acting Under Secretary’ comment that VBA has never formally 

defined or measured backlog. In his February 2008 testimony before the House 

Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial 

Affairs, VBA’s Deputy Under Secretary for Benefits defined backlog as follows: 

“‘Backlog’ is actually the current inventory minus the normal running inventory if we are 

meeting our timeliness goals.” He then reported that “with an inventory of 400,000, 

61,000 claims should be considered ‘backlog.’” Although the Deputy Under Secretary 

testified in the second quarter of FY 2008, according to VBA officials, the backlog he 

reported was based on VBA’s FY 2009 performance target (or “timeliness goal”) of 

145 average days to complete a claim. We believe that VBA’s approach to arrive at the 

61,000 estimate significantly understates the backlog and that until VBA adopts another 

methodology for measuring backlog, they will continue to understate the actual backlog 

of older rating claims. 

In his response to the audit report, the Acting Under Secretary also took issue with our 

use of VBA’s FY 2008 169-day performance target in calculating the rating claims 

backlog. He stated that VBA has never testified to or defined its normal running 

inventory using the 169-day target; instead, they have used 145 days or 125 days. While 

the Acting Under Secretary is correct that VBA has not testified or defined its normal 

running inventory using the 169-day target, we believe that since we conducted our audit 

work in FY 2008 and primarily used FY 2008 workload data, our use of the 169-day 

target was appropriate to illustrate the flaws in VBA’s definition of backlog. 

Furthermore, it is important to recognize that VBA’s performance target for completing 

rating claims changes each year. For example, the Department of Veterans Affairs 

FY 2007 Performance and Accountability Report reported a performance target of 

160 days for FY 2007, and the FY 2009 Budget Submission showed targets of 169 days 

for FY 2008 and 145 days for FY 2009. In addition, VBA has an overall “strategic 

target” of 125 days. Regardless of which target we used, our conclusion would have 

been the same—VBA’s definition for backlog does not fully portray the extent of its 

backlog. Furthermore, the fact that VBA’s performance targets change annually 

reinforces our position that any performance standard that VBA uses to measure backlog 

VA Office of Inspector General 

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Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

should be derived from an analytical assessment of the number of days it should take to 

process rating claims as opposed to the average number of days it actually takes. 

We find VBA’s implementation plans to be generally acceptable. We strongly 

recommend, however, that VBA move forward to develop a sound methodology for 

measuring backlog to provide its stakeholders with meaningful, accurate information 

about claims processing delays and better monitor how effectively and timely it is serving 

veterans and their families. 

(original signed by:) 

BELINDA J. FINN 

Assistant Inspector General 

for Auditing 

VA Office of Inspector General 

vi 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

1

Introduction

Purpose

In 2007, with supplemental funding from Congress, VBA initiated an ambitious plan to

increase its claims processing workforce by about 30 percent. We performed this audit to

determine the impact of its hiring initiative on reducing the claims processing backlog.

The audit objectives were to assess the effectiveness and timeliness of VBA’s hiring

process, VBA’s process for ensuring new employees are trained and supervised, and

VBA’s overall progress at integrating new employees into the claims processing

workforce.

Background

Appropriations for VBA’s Hiring Initiative. Ensuring sufficient staffing to meet the

growth in the number and complexity of veterans’ benefits claims has been a significant

challenge for VBA. Recognizing this, in FYs 2007 and 2008, Congress passed

legislation giving VBA $185 million to hire additional claims processing personnel, as

described below. Congress also gave VBA $2 million to lease space and $39.7 million to

provide IT resources for new employees.

 On May 25, 2007, Congress enacted Public Law 110–28, “U.S. Troop Readiness,

Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act,

2007,” which provided VBA $60.8 million for “the expenses related to hiring and

training new claims processing personnel.” This supplemental appropriation was in

addition to the $1.25 billion VBA already received for General Operating Expenses

(GOE) in the FY 2007 appropriation.

 On December 26, 2007, Congress enacted Public Law 110–161, “Consolidated

Appropriations Act, 2008,” which gave VBA an additional $124.2 million for GOE to

hire more than 1,800 new claims processors.1In January 2008, the President

designated this FY 2008 funding as an emergency requirement, thereby releasing it to

VBA.

With these additional appropriations, VBA officials determined that they could hire about

3,100 new FTE to bring VBA-wide staffing up to 15,570 FTE by the end of FY 2008.

VBA Organization and Responsibilities. VA’s Under Secretary for Benefits provides

centralized program direction and oversees all VBA activities. VBA also has three

Associate Deputy Under Secretaries who oversee the Offices of Policy and Program

Management, Field Operations, and Management. The Office of Field Operations (OFO)

1According to the “Transfer of Disbursing Authority,” VBA actually received about $128.7 million. However, we

used the figure shown in the House Appropriations Committee report for Public Law 110-161.
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

2

is the program management office for VBA’s hiring initiative. OFO is responsible for

the management of the 57 VAROs that administer VA benefits programs. Each VARO

operates a Veterans Service Center (VSC), which is responsible for the development and

processing of rating claims.

The VSC is primarily staffed by Veterans Service Representatives (VSRs) and Rating

Veterans Service Representatives (all referred to as claims processors in this report).

Other VSC staff include managers, coaches, claims assistants, legal instrument

examiners, and file clerks, among others. VSC staff are typically assigned to one of six

specialized teams that process claims using a production line approach, with each team

focusing on specific phases of claims processing. Depending on the teams to which they

are assigned, claims processors can work on both rating and non-rating claims. The six

specialized teams are described below.

 The Pre-Determination Team assembles supporting evidence, such as medical and

service records, to prepare claims for the Rating Team.

 The Rating Team makes decisions on claims that require consideration of medical

evidence.

 The Post-Determination Team processes rating decisions for payment and notifies

veterans or their dependents about claims decisions.

 The Triage Team reviews and manages all mail.

 The Public Contact Team handles personal interviews and telephone inquiries.

 The Appeals Team processes appeals of VBA decisions submitted by veterans or their

dependents.

Details of VBA’s Hiring Plan. In his February 2008 testimony before the House

Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial

Affairs, VBA’s Deputy Under Secretary for Benefits reported that in FY 2007, VBA

implemented an aggressive hiring initiative and since January 2007 it had hired more

than 1,800 new employees. He added that as part of its hiring initiative, VBA planned to

hire 3,100 FTE by the end of FY 2008 and that it was also conducting ongoing

recruitment to replace losses due to attrition.

VBA allocated the 3,100 new FTE primarily to 4 VBA business lines—C&P, education,

VR&E, and loan guaranty. The C&P business line received 91 percent of the total

allocation (2,834 FTE) because C&P operations represent the largest portion of VBA’s

workload. However, according to VBA officials, they also allocated some positions to

other business lines because when C&P workload increases, the workload in these other

areastypically increases. Exhibit 1 shows VBA’s allocations by business line.
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Exhibit 1. VBA’s Hiring Plan 

VBA Business Line FTE Allocated Percent Total 

C&P 2,834 91% 

VR&E 133 4% 

Education 83 3% 

Loan Guaranty 25 1% 

Other Support Services 25 1% 

ALL VBA 3,100 100% 

In allocating FTE to the VAROs, OFO considered past performance, space capacity, and 

consolidation of special functions. For example, VBA is centralizing processing of all 

original pension awards at three Pension Maintenance Centers (PMCs) to more 

effectively use resources and improve technical accuracy. VBA is also creating nine 

National Call Centers (NCCs) to provide information and answer veterans’ questions 

about their claims. Some of the FTE went to these PMCs and NCCs. The Philadelphia 

VARO received the largest number of FTE, in part, because it is the largest of the PMCs 

with jurisdiction over the population of veterans residing on the East Coast. Exhibit 2 

shows the top 20 VAROs receiving FTE. For a complete list of VAROs, see Appendix 

A. 

Exhibit 2. Top 20 VAROs Receiving C&P FTE 

315 

140 137 133 133 128 123 

107 106 105 99 94 82 

62 60 60 59 54 46 46 

0 

50 

100 

150 

200 

250 

300 

350 

N

u

mber of FTE 

Philadelp

hia

Seattle

St. Louis

Salt Lake

Waco

Phoenix

Nash

ville

St. Paul

M

uskogee

Milwau

kee

San 

Diego

Clevelan

d

Winston-Salem

St. Petersb

urg

Colu

m

bia

H

u

ntington

Roanoke

Baltimore

Atlanta

Togus 

VA Regional Office 

VA Office of Inspector General 

3 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Status of Hiring Initiative. VBA’s OFO and Office of Resource Management (ORM) 

are responsible for tracking the hiring initiative. At the beginning of FY 2007, the C&P 

business line had 8,252 C&P FTE. From the beginning of FY 2007 to May 10, 2008, it 

lost 1,577 FTE and hired 4,033 new FTE, which resulted in a net gain of 2,456 C&P 

FTE. The C&P business line plans on hiring the remaining 378 FTE to reach their goal 

of 2,834 FTE by the end of FY 2008. 

Claims Processing Workload. Claims processing is the most significant portion of 

C&P business line’s workload, and C&P employees process two major types of claims: 

rating claims and non-rating claims. Claims that are based on disability—commonly 

referred to as rating claims by VBA—require a trained rating specialist to evaluate 

medical evidence. Rating claims include original and re-opened disability compensation 

claims for service-connected diseases or injuries, original pension claims, and death 

compensation claims. As Exhibit 3 shows, the number of rating claims VBA received 

each FY grew steadily over the past 5 years, from 735,275 claims in FY 2003 to 

838,141 claims received in FY 2007. Non-rating claims do not require rating decisions 

and include dependency claims, income adjustments for pension claims, and burial 

claims. The number of non-rating claims received varied over the past 5 years, as shown 

below. 

Exhibit 3. Claims Received FYs 2003–2007 

2003 2004 2005 2006 2007 

Rating Claims 735,275 771,115 788,298 806,382 838,141 

Non-Rating Claims 781,487 759,142 725,002 684,907 726,479 

All Claims 1,516,762 1,530,257 1,513,300 1,491,289 1,564,620 

Claims Inventory Versus Claims Backlog. In his February 2008 testimony, the Deputy 

Under Secretary for Benefits distinguished between VBA’s claims inventory and claims 

backlog. The inventory is comprised of claims that are awaiting decisions from VBA and 

provides a “snap-shot” of VBA’s workload. It includes all claims that are carried over 

from previous periods as well as claims received during the current period. For both 

rating and non-rating claims, the number of claims received each year has generally 

exceeded the number of claims processed each year, resulting in carry-over. As a result, 

the end-of-year claims inventory has increased by about 66 percent over the past 5 years 

(from 338,896 total claims at the end of FY 2003 to 564,145 total claims at the end of 

FY 2007), as shown in Exhibit 4 on the following page. 

VA Office of Inspector General 

4 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

End-of-Year Pending Inventory 600,000 

500,000 

400,000 

300,000 

200,000 

100,000 

0 

Exhibit 4. Claims Inventory at the End of FYs 2003–2007 

Total: 

Non-rating Total: 564,145 

532,484 Rating Total: 

465,096 

Total: 

413,099 

Total: 

338,896 

253,597 

321,458 346,292 378,296 391,593 

85,299 

91,641 

118,804 

154,188 

172,552 

2003 2004 2005 2006 2007 

Fiscal Year 

Claims in the inventory range in age from 1 day to over 365 days. The claims backlog is 

a subset of the inventory. The backlog represents claims that exceed a certain age—in 

other words, older claims that are awaiting processing. For example, Exhibit 5 shows the 

ages of rating claims in the inventory as of May 3, 2008. The backlog over 366 days is 

14,400, and the backlog over 169 days is 110,922 (96,522+14,400). (See pages 18–19 

for a discussion on backlog and how our definition of backlog differs from VBA’s 

definition.) 

Exhibit 5. Age of Rating Claims as of May 3, 2008 

366+ days 

14,400 (4%) 

170-365 days 1-60 days 

96,522 (24%) 127,987 (32%) 

121-169 days 

50,679 (13%) 61-120 days 

107,309 (27%) 

VA Office of Inspector General 

5 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Scope and Methodology 

We conducted the audit from March 2008 through May 2008 and made visits to VA 

Central Office and VBA Central Office and three VAROs: Seattle, WA; Cleveland, OH; 

and Nashville, TN. We selected the three VAROs based on their large percentages of 

FTE authorizations and because each VARO was located in a different VBA Regional 

Area. We limited the scope of our review to the new FTE hired and authorized for the 

C&P business line October 2006–May 2008. 

We interviewed VA budget officials and officials in VBA’s OFO, ORM, Office of 

Human Resources, Office of Employee Development and Training, C&P Service, and 

Office of Performance Analysis and Integrity. During our visits to the three VAROs, we 

interviewed Assistant Directors, Assistant Service Center Managers, Human Resources 

Liaisons, Training Coordinators, Information Management officials, coaches of claims 

processing teams, and senior claims processors. We also interviewed the directors of 

VBA’s four regional Human Resource Centers (HRCs) located in Jackson, MS; 

Detroit, MI; Denver CO; and Baltimore, MD to obtain information on VBA’s hiring 

process and performance standards. We did not review the quality of VBA’s training 

program, the quality of the supervisory reviews, or the quality of its claim processing 

decisions. 

We used the Personnel and Accounting Integrated Date (PAID) system to determine how 

many new FTE VBA hired. We also used data from the Benefits Delivery Network 

(BDN) and Veterans Service Network (VETSNET) to determine claims inventory and 

backlog. We reviewed the Security Controls Assessment (SCA) reports for the three 

systems, and we found no deficiencies that would limit reliability of data. In addition, we 

tested data elements to identify calculation errors, data outside the time frame, 

duplication of records, alphabetic characters in numeric fields (or vice versa), negative 

amounts in positive-only fields (or vice versa), or illogical relationships between data 

elements. We found none of these obvious flaws. Based on our review of the SCA 

reports and our testing, we concluded the data from these systems are sufficiently reliable 

to meet the audit objectives. 

Our assessment of internal controls focused only on those controls related to our audit 

objectives. We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our audit 

objectives. 

VA Office of Inspector General 

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Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Results and Conclusions

VBA has effectively managed its hiring initiative by implementing processes to ensure 

the timely hiring and training of new employees. VBA is also progressing at integrating 

new employees into the claims processing workforce, but the new FTE are not expected 

to have a positive impact on decreasing the claims inventory until at least the end of 

FY 2009, when they have completed 1–2 years of formal and on-the-job training. 

Furthermore, we could not conclude that the hiring initiative alone will result in 

eliminating VBA’s claims backlog because other factors may contribute to the backlog, 

and, according to VBA officials, some of these factors are outside their control. 

In the short term, the large influx of new employees has resulted in a decrease in VBA’s 

overall productivity from an average of 176.8 claims processed per FTE in FY 2006 to a 

projection of 155.8 claims processed per FTE in FY 2008. This dip in productivity has 

also resulted in a moderate increase in VBA’s claims inventory since FY 2006, yet VBA 

officials are confident that by the end of FY 2009, as the new employees are trained, 

productivity will increase. Our analyses also support this—by the end of FY 2009, with 

about 30 percent more C&P employees, VBA should be able to process about 9–16 

percent more claims than in FY 2007. Furthermore, our analyses show that by the end of 

FY 2011, VBA could complete about 27 percent more claims than in FY 2007 and 

theoretically eliminate the inventory, including its backlog of older claims. However, 

VBA will always have an inventory because it cannot control the number of claims it 

receives or when they are received, and other factors can delay claims processing, such as 

delays in obtaining evidence from third parties. In developing our estimates, we assumed 

that the number of claims received would not increase greatly due to court cases, 

legislative changes, or increased military engagement and would grow at an annual rate 

of 2 percent. 

We identified two management challenges during the audit. First, VBA requires that 

senior claims processors review 100 percent of the work performed by new employees. 

However, with the large number of new employees, the new employee to senior claims 

processor ratio has increased, and VAROs are challenged to maintain productivity while 

ensuring quality reviews. We discuss this issue further under Issue 2. Second, VBA 

needs to change its method for defining rating claims backlog to provide more 

meaningful and consistent information. We discuss this issue further under Issue 3. 

VA Office of Inspector General 

7 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Issue 1: VBA’s Hiring Process is Effective and Timely 

Results 

As of May 10, 2008, VBA had 2,456 new C&P FTE, achieving 87 percent of its hiring 

goal of 2,834 FTE. Although VBA had not yet met its hiring goal as of May 2008, it 

increased its claims processing workforce by approximately 30 percent in 19 months, and 

it was on track to meet its hiring goal by September 30, 2008. VBA uses the Office of 

Personnel Management’s (OPM’s) 45-day hiring model as a baseline to measure 

timeliness from the closing of a job announcement to making a job offer. We reviewed 

hiring processes at the three VAROs and determined that the VAROs averaged 28 days 

from the closing of a job announcement to making a job offer. We also found the 

attrition rate of new employees to be less than VBA’s overall attrition rate. 

VBA’s Hiring Process. According to VBA Human Resources and VARO officials, 

VBA is able to meet OPM’s 45-day hiring model (shown in Exhibit 6) because the hiring 

initiative is a high priority, many of the tasks are taking less time than allowed, and they 

are hiring multiple candidates from a single list of qualified candidates. For example, one 

VARO had formed multiple teams so they could conduct interviews simultaneously, 

assign values to responses, and rank order the candidates. The VARO Director and his 

senior staff reviewed the selection recommendations and decided which candidates to 

hire. Although the OPM model allows 22 days for VAROs to complete interviews, check 

references, and select employees, the VARO staff reported that they typically completed 

these actions in 10–12 days. 

Exhibit 6. OPM’s 45-Day Hiring Model 

15 Days 5 Days 

Announcement 

Closes 

HRC Qualifies 

Candidates 

HRC Delivers 

Certification to 

VARO 

VARO Reviews 

Applications 

VARO Interviews 

Candidates 

VARO Checks 

References 

VARO Selects 

Candidates & 

Returns 

Certification to 

HRC 

HRC or VARO 

Makes Job Offers 

15 Days 5 Days 2 Days 3 Days 

VARO officials were satisfied with the quality of candidates, in terms of experience and 

education, applying and hired for open positions. They also used various recruitment 

VA Office of Inspector General 

8 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

methods. In addition to posting open positions on USAJobs, the Federal Government 

website for vacancy announcements, VAROs recruited new employees from college job 

fairs and veterans’ career fairs and worked with other VA entities to identify eligible 

veteran candidates for open positions. VARO officials stressed that they recognized they 

were investing substantial resources to hire and train new employees and, therefore, 

worked hard to ensure their screening processes for candidates identified appropriate 

employees to fill the open positions. 

Support for New Employees. VBA was also taking necessary actions to ensure that 

new employees had adequate office space and IT support, such as computers. VBA 

worked with the VAROs and the General Services Administration (GSA) to find 

additional office space and with the VA Office of Information and Technology (OI&T) 

for IT support. 

According to VBA officials, they acquired all of the space needed for the hiring initiative. 

At the VAROs we visited, staff told us that obtaining additional office space had been a 

temporary challenge, but VBA and GSA addressed, or were in the process of addressing, 

their space needs. IT officials at the three sites we visited described the primary 

challenge as the lack of additional IT FTE to support the new employees. However, in 

April 2008, OI&T authorized an additional 44 FTE to support the VAROs.

2 The 

additional staff would bring the user-to-IT support staff to OI&T’s preferred ratio of 75:1. 

Attrition of New Employees. We determined that the national attrition rate of new 

employees was not a significant factor in regards to VBA achieving its hiring goal by the 

end of FY 2008. When VBA set its hiring goals for FYs 2007 and 2008, it considered 

losses through attrition, including resignations, retirements, and terminations. 

Our analysis of PAID workforce statistics as of February 29, 2008, showed an attrition 

rate of 3.6 percent for new claims examiners who began employment since FY 2007. 

This attrition rate includes transfers, resignations, and terminations. The attrition rate for 

new claims examiners is lower than the attrition rates for all claims examiners in 

FYs 2006 and 2007, 7 percent and 6 percent, respectively. However, since many of the 

new claims examiners have been with VBA for less than 1 year, we believe it is 

premature to conclude that the attrition rate will remain low. 

Conclusion 

VBA implemented effective processes to ensure it could hire a large number of 

employees in a relatively short period. The three VAROs we visited were meeting 

OPM’s 45-day hiring model and reported that they were satisfied with the quality of 

candidates applying for open positions. Attrition of new employees is not a significant 

2

OI&T is a separate organization within VA. The 44 FTE authorized by OI&T are not part of the 3,100 FTE 

allocated for VBA’s special hiring initiative. 

VA Office of Inspector General 

9 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

factor in VBA achieving its FY 2008 hiring goal. However, since many of the new 

claims examiners have been with VBA for less than 1 year, we cannot be certain that the 

attrition rate will remain low. 

VA Office of Inspector General 

10 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Issue 2: VBA Implemented an Effective Process To Ensure 

Training, but Reviewing New Employees’ Work is a Challenge 

Results 

Although we did not assess the quality of VBA’s training programs, we found that VBA 

had implemented an effective process for ensuring new employees received timely 

training.

3 However, reviewing the work of the new employees during follow-on training 

while trying to maintain claims processing productivity has been a challenge for VBA 

because of the large number of new employees, the work review requirements, and the 

promotions of experienced VBA personnel to fill other needs. VBA is taking action to 

ensure that this situation is temporary. 

VBA’s Training Process. Veterans’ benefits claims processing is a specialized field that 

requires extensive formal and informal training. To become fully proficient in their work 

assignments, most claims processors require at least 1–2 years of training and on-the-job 

experience. VBA provides new employees training in three phases: prerequisite, 

centralized, and follow-on. The three phases are shown in Exhibit 7. 

Exhibit 7. VBA New Employee Training 

Prerequisite Training 

Local VA Regional Office 

(1-3 weeks) 

Centralized Challenge Training 

Veterans Benefits Academy or VA Regional Office 

(3 weeks) 

Follow-On Training 

Local VA Regional Office 

(14-20 weeks) 

Prerequisite Training. The first phase of training takes place at the employees’ local 

VAROs and takes 1–3 weeks to complete. During prerequisite training, new employees 

3

In May 2008, the Government Accountability Office (GAO) issued a report that addresses the uniformity and 

design of VBA training—Increased Focus on Evaluation and Accountability Would Enhance Training and 

Performance Management for Claims Processors, GAO-08-561. 

VA Office of Inspector General 

11 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

learn basic claims processing concepts and principles, such as how to use VBA 

information systems, read claim folders, and understand medical terminology. 

Centralized Challenge Training. Phase two of training is a 3-week course that is typically 

held at the Veterans Benefits Academy in Baltimore, MD for employees on 

Pre-Determination and Rating Teams and at selected VAROs for employees on 

Post-Determination Teams. The curriculum for the training varies based on the 

specialized C&P team. When the volume of newly hired claims processors exceeds the 

capacity of the Academy, VBA conducts Centralized Challenge Training at selected 

VAROs. To accommodate the large number of new employees it must train, VBA 

substantially increased the number of training classes from 27 classes in FY 2006 to 67 in 

FY 2007 and 44 in FY 2008 through April. Exhibit 8 shows the number of new 

employees who completed centralized training in FY 2007 and FY 2008 through April. 

Exhibit 8. VBA Centralized Challenge Training – Number of Graduates 

Course FY 2007 

FY 2008 

(through April 2008) 

Pre-Determination 823 565 

Post-Determination 354 302 

Rating 270 400 

TOTAL 1,447 1,267 

Follow-On Training. The last phase of new employee training is completed at the 

employees’ local VAROs and takes a minimum of 14–20 weeks to complete. Follow-on 

training consists of both classroom instruction and on-the-job training. VAROs adapt 

this phase of training to address identified processing issues, such as changes in laws and 

court cases that affect rating claims. Also, they have the flexibility to adjust the training 

schedule to ensure claims processing work continues. 

Reviews of New Employees’ Work. VBA officials indicated that reviewing new 

employees’ work while also trying to maintain claims processing productivity is expected 

to be a temporary challenge. The senior claims processors at the VAROs we visited told 

us that with the rapid influx of new employees, they now review the work of up to eight 

new claim processors. Prior to the hiring initiative, senior claim processors typically 

oversaw the work of less than three new claim processors. 

Several factors contribute to the current work review challenge. First, a large number of 

employees were hired in a relatively short period, and senior claims processors must 

review 100 percent of new employees’ work until the employees develop the skills and 

knowledge to work independently. Also, VBA needed to promote experienced claims 

processors into higher-level positions to oversee more or larger claims processing teams 

and to make rating claims decisions. When these experienced employees move into 

higher-level positions, they also must undergo training to learn their new roles and 

VA Office of Inspector General 

12 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

responsibilities. As a result, the influx of new employees combined with the promotion 

of experienced claims processors means VBA now has fewer people to review the work 

of new employees. VARO supervisors also reported delays in processing claims due to 

these factors. 

Although these factors may have reduced claims processing production in the short term, 

they should enable VBA to increase production by enhancing the proficiency of new staff 

in the long term. Additionally, VARO staff reported that VBA was providing training to 

assist those seeking promotions to senior claims examiners so that they could prepare for 

the VSR Skills Certification exam. Since VBA expects all new employees to be fully 

trained within 2 years, this review challenge should be temporary as new employees 

continue to gain experience and work more independently. 

Conclusion 

VBA has implemented effective processes to ensure that new employees receive timely 

training including prerequisite training, centralized training, and ongoing follow-on 

training. However, reviewing new employees’ work is a temporary challenge for VBA. 

As new employees increase their proficiency and recently promoted employees learn 

their new roles and responsibilities, the work review challenge is expected to subside. 

VA Office of Inspector General 

13 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

Issue 3: Integrating New Employees into VBA’s Workforce 

Can Help To Reduce the Claims Inventory 

Results 

VBA has made good progress at integrating new employees into the claims processing 

workforce, but the new FTE are not expected to have a positive impact on decreasing the 

claims inventory until at least the end of FY 2009, after they have completed 1–2 years of 

formal and on-the-job training. In the short term, VBA’s productivity has decreased as a 

result of the large number of new employees, but our analysis shows that by the end of 

FY 2009 VBA will increase its productivity and begin to reduce the claims inventory. 

Furthermore, our analyses show that by the end of FY 2011, VBA could complete about 

27 percent more claims than in FY 2007 and theoretically eliminate the inventory, 

including its backlog of older claims. However, we expect that VBA will always have an 

inventory because it cannot control the number of claims it receives or when they are 

received, and other factors can delay claims processing, such as delays in obtaining 

evidence from third parties. 

Claims Processing Productivity. VBA officials consider new employees to be fully 

productive when they can independently complete the range of duties they are assigned. 

For example, employees on the Pre-Determination Team are fully productive when they 

can independently determine what evidence is needed to support a claim and can obtain 

the evidence. Most officials and staff we interviewed agreed that, due to the complexity 

of the work, it takes 1–2 years for a claims processor to become fully productive. 

To estimate the productivity of new employees, VBA officials told us they use a 

“25 percent” rule. For every 6 months that new employees are on the job and learning, 

they become 25 percent more productive. Therefore, at the end of their first year, new 

employees are considered 50 percent productive. After 1-1/2 years on the job, new 

employees would be considered 75 percent productive, and after 2 years on the job, 

100 percent productive. 

Temporary Decrease in Productivity. As Exhibit 9 illustrates, we expect claims 

processing productivity—the number of claims processed per FTE—to decrease in 

FY 2008 from FY 2006.

4 VBA officials also expected this decrease in production 

because new employees are still being trained and senior claims processors are using a 

portion of their time to train and review the work of new employees hired in FY 2007 and 

early FY 2008. Despite the lower productivity, the total number of claims processed 

increased because of the larger number of FTE involved in claims processing. 

4

The number of rating claims completed as of April 30, 2008, was 502,994 (71,856 claims per month) and nonrating claims was 428,463 (61,209 per month). To arrive at the number of rating and non-rating claims completed 

through FY 2008, we multiplied the number of claims per month by 12 months. 

VA Office of Inspector General 

14 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

15

Exhibit 9. Productivity of C&P FTE in FYs 2006–2008

FY

Rating Claims

Completed

Non-Rating

Claims

Completed

Total Claims

Completed

Average

Number of

C&P FTE

Claims

Completed per

Average FTE

2006 774,378 649,523 1,423,901 8,056 176.8

2007 824,844 708,115 1,532,959 8,875 172.7

2008 862,275 734,508 1,596,783 10,248 155.8

According to VBA officials, this decrease in productivity is short-term while they work

to integrate new employees into the claims processing workforce. Based on our analyses,

we agree that the decrease in productivity should be short-term.

Increase in Productivity by FY 2009. We estimate that VBA should receive a total of

1,602,370 claims (858,408 rating and 743,962 non-rating) in FY 2008 and 1,634,417

claims (875,576 rating and 758,841 non-rating) in FY 2009. To estimate the impact the

new employees would have on the claims inventory in FYs 2008 and 2009, we developed

three scenarios. We based the first two scenarios on VBA’s “25 percent” rule for

measuring productivity; whereas, we based the third scenario on the assumption that

productivity would remain somewhat constant after the first 2 quarters of FY 2008. (For

more details on our estimates and calculations, see Appendix B.)

 The first scenario assumes that new employees are only 50 percent productive in the

year that they are hired. We determined the production rate in 2007 to estimate the

total claims the average number of FTE employed during each period would complete

in FYs 2008 and 2009.

 The second scenario assumes that new employees are 75 percent productive in the

year that they are hired. We determined the production rate in 2007 to estimate the

total claims the average number of FTE employed during each period would complete

in FYs 2008 and 2009.

 The third scenario assumes that FTE will be as productive in quarters 3 and 4 of

FY 2008 as they were in the first 2 quarters. We calculated the production rate and

applied it to FY 2009 to estimate the total claims the average number of FTE

employed during the period will complete in FY 2009.

As Exhibit 10 shows, we estimate that VBA will complete between 1,438,796 and

1,596,783 claims in FY 2008. For scenario 1, this means fewer claims completed than in

FY 2007, and for scenarios 2 and 3, it means an increase over FY 2007. However, for all

three scenarios, the claims inventory will actually increase from the starting inventory of

564,145.
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

16

Exhibit 10. Impact of the New Employees on Claims Inventory in FY 2008

Claims Completed

FY 2007

Estimated

FY 2008 Claims

Completed

Percent Change

from 2007

Percent Change in

Inventory from 2007

Scenario 1:

50% Productive 1,532,959 1,438,796 ↓6.1 % ↑29.0 %

Scenario 2:

75% Productive 1,532,959 1,593,341 ↑3.9 % ↑1.6 %

Scenario 3:

Maintain 2008

Productivity 1,532,959 1,596,783 ↑4.2 % ↑1.0 %

As Exhibit 11 shows, by the end of FY 2009, the claims inventory could begin to

decrease. We estimate that VBA will complete between 1,666,197 and 1,775,077 claims

in FY 2009. By the end of FY 2009, VBA employees should complete about

9–16 percent more claims than in FY 2007. For scenarios 2 and 3 this means as much as

a 23.3 percent decrease in the claims inventory from the starting inventory of 564,145.

Exhibit 11. Impact of the New Employees on Claims Inventory in FY 2009

Claims Completed

FY 2007

Estimated

FY 2009 Claims

Completed

Percent Change

from 2007

Percent Change in

Inventory from 2007

Scenario 1:

50% Productive 1,532,959 1,666,197 ↑8.7 % ↑23.4 %

Scenario 2:

75% Productive 1,532,959 1,775,077 ↑15.8 % ↓23.3 %

Scenario 3:

Maintain 2008

Productivity 1,532,959 1,713,488 ↑11.8 % ↓13.0 %

For FY 2010, assuming all of the employees hired in FYs 2007 and 2008 are fully

productive, VBA could complete as many as 1,944,446 claims. As a result, by the end of

FY 2010, the claims inventory could be as low as 155,174 (a 72.5 percent reduction from

FY 2007). As part of this decrease, we would also expect to see a decrease in the claims

backlog; however, because other factors may result in claims processing delays, we could

not determine the actual reduction in the claims backlog, nor can we conclude that the

claims backlog would be reduced at the same rate as the claims inventory.

For FY 2011, using the same assumptions and calculations as we used for FY 2010, we

concluded that the claims inventory—including the claims backlog—could theoretically

be eliminated by the end of the fiscal year. However, VBA cannot control the number of

claims it receives or when they are received. Also, as we explain in more detail on pages
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

17

17–18, other factors may delay the completion of claims, which contribute to the claims

backlog.

Critical Assumptions. We recommend caution when relying on these estimates because

they are based on historical workload data and are intended to only provide an

approximate range of the work VBA could accomplish with its new FTE. Also, our

estimates are based on five critical assumptions:

 The number of FTE will remain steady without significant additions or losses of FTE.

 Employees will generally work the same number of hours each year. For example, if

employees worked overtime in FY 2007, they will work a similar amount of overtime

in future years.

 All employees hired in FYs 2007 and 2008 will be fully productive by FY 2010.

 The number of claims received will grow at an annual rate of 2 percent, which is the

growth rate estimated by VBA in its FY 2009 budget submission.

 No significant events will result in increasing the number of claims received.

Examples of significant events include increased military engagement and court cases

or legislative changes that affect eligibility and rating decisions.

Factors Contributing to Claims Processing Delays. As we discussed previously, although

our calculations show that VBA could theoretically eliminate the claims inventory,

including the backlog, by the end of FY 2011, other factors may contribute to claims

processing delays, which result in claims backlog. According to VBA officials, the

primary factor for delays in processing rating claims is the time it takes to gather

evidence in support of a claim, including medical records, military records, and other

supporting evidence. For instance, when VBA requests information from a claimant or

from a third party, respondents are given 60 days to respond to the initial request and

30 days to respond to the follow-up request.5 VBA officials stated that obtaining certain

types of evidence, such as medical records from private physicians and records from

other Federal agencies, also adds to claims processing time.

In our interviews with VBA officials, they recognized that the hiring initiative alone will

not eliminate the claims backlog, and they cited several initiatives that are underway to

reduce the claims backlog. For example, VBA officials reported that VARO directors

work with VA medical center directors and contracted vendors to ensure C&P

examination results are received more timely to meet VBA’s standard of 35 days. VBA

officials are also working with the Department of Defense to improve the timeliness of

5VBA Fast Letter 08-18, dated June 12, 2008, revised the response time to respond to an initial request from 60 days

to 30 days. The time allowed for responding to follow-up requests remains at 30 days.
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

obtaining military personnel and medical records and with the Joint Services Records 

Research Center to improve the timeliness of requests for post-traumatic stress disorder 

stressor verification information. 

Furthermore, VBA officials reported that the centralization of specialized functions at 

PMCs and NCCs allows VAROs to focus their efforts on working rating claims and 

reducing inventory and backlog. Also as new employees return to their local VAROs 

after completion of Centralized Challenge Training, they are expected to be immediately 

productive by processing non-rating burial and dependency claims. These types of 

claims do not require complex development or substantial rating experience, thus 

allowing more experienced staff to process rating claims. Additionally, VBA has a Tiger 

Team that works certain types of cases, such as claims over a certain age. 

VBA Needs to Redefine its Rating Claims Backlog. We disagree with how VBA 

currently defines backlog of rating claims. (We did not assess the non-rating claims 

backlog because this was addressed in a previous OIG audit.

6

) VBA defines the rating 

claims backlog as “actual inventory” minus “normal running inventory.” VBA defines 

“actual inventory” as the number of claims awaiting decisions at any point in time and 

“normal running inventory” as the number of claims VBA expects to have if it is meeting 

its processing performance target. For FY 2008, VBA’s performance target was 169 

days as the average number of days to complete a rating claim. If VBA is meeting this 

performance target, it expects to have a normal running inventory of about 395,832 rating 

claims. Therefore, using VBA’s definition of backlog, its backlog as of May 3, 2008, 

would be 1,065 claims (actual inventory of 396,897 claims - normal running inventory of 

395,832 claims). 

VBA’s definition of backlog is difficult to understand, is not consistent with how other 

Federal agencies define backlog, and relies heavily on average days instead of actual 

days. In our opinion, backlog should be defined as claims that exceed a target time 

period. For example, the Bureau of United States Citizenship and Immigration Services, 

defines backlog of immigration benefits applications as the number of applications that 

exceed 180 days. 

To illustrate our point, we also used VBA’s claims processing performance target of 

169 days to measure backlog and found that as of May 3, 2008, VBA had 110,922 rating 

claims older than 169 days. This is 109,857 more claims than VBA would report using 

its definition (110,922-1,065). By adopting this method to define backlog, VBA would 

be providing a more meaningful and understandable measure of its workload because this 

definition accounts for the age of the entire inventory and measures against an established 

performance standard. However, we do not recommend using VBA’s 169-day 

performance target. Because it is based on the average number of days it actually takes 

6

Audit of Veterans Benefits Administration Non-Rating Claims Processing, Report Number 06-03537-69, dated 

February 7, 2008. 

VA Office of Inspector General 

18 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

VBA to complete a claim, we could not conclude that the target was an appropriate 

performance measure for backlog. Therefore, any performance standard that VBA uses 

to measure backlog should be derived from an analytical assessment of the number of 

days it should take to process rating claims as opposed to the average number of days it 

actually takes. 

Conclusion 

VBA has effectively managed its hiring initiative by implementing processes to ensure 

the timely hiring and training of new employees. VBA is also progressing at integrating 

new employees into the claims processing workforce, but the new FTE are not expected 

to have a positive impact on decreasing the claims inventory until at least the end of 

FY 2009, when they have completed 1–2 years of formal and on-the-job training. For 

FY 2010, VBA should see a significant decrease in the claims inventory, but it may not 

see the same rate of decrease in the backlog. In theory, VBA could eliminate the backlog 

by the end of FY 2011, but VBA will always have an inventory because it cannot control 

the number of clams it receives or when they are received, and there are other factors that 

can delay claims processing. Additionally, VBA needs to redefine backlog to provide a 

more meaningful and understandable measure of its workload. 

Recommendations 

1. We recommend that the Acting Under Secretary for Benefits adopt a new definition 

for measuring rating claims backlog as the number of claims that are older than a 

realistic target time period. 

2. We recommend that the Acting Under Secretary for Benefits implement a plan to 

monitor and report backlog based on a new definition as described in 

Recommendation 1. 

Acting Under Secretary for Benefits Comments 

The Acting Under Secretary for Benefits concurred “in part” with the two audit 

recommendations. The Acting Under Secretary reported that VBA has never formally 

defined or measured its claims backlog, citing that stakeholders often refer to VBA’s 

entire inventory as a backlog. In response to this misconception, VBA has attempted to 

explain the difference between its expected normal inventory if claims are being 

processed within established timeliness targets and what portion of its inventory might 

represent backlogged claims. The Acting Under Secretary stated that VBA would 

continue to collect and study data to determine if a backlog performance measure could 

be developed and used as an effective management tool to improve claims processing. In 

addition, the Acting Under Secretary provided technical comments, which we have 

incorporated into the body of the report. (See Appendix C for the full text of the Acting 

Under Secretary’s comments.) 

VA Office of Inspector General 

19 
Audit of the Impact of the Veterans Benefits Administration's Special Hiring Initiative 

OIG Response 

We find VBA’s implementation plans to be generally acceptable. We strongly 

recommend, however, that VBA move forward to develop a sound methodology for 

measuring backlog to provide its stakeholders with meaningful, accurate information 

about claims processing delays and better monitor how effectively and timely it is serving 

veterans and their families. 

VA Office of Inspector General 

20 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Appendix A 

All VAROs Receiving C&P FTE as of May 2, 2008 

Exhibit 12. C&P FTE by VARO7 

Station 

C&P Assigned 

New Employees Station 

C&P Assigned 

New Employees 

Albuquerque 11 Muskogee 106 

Anchorage 0 Nashville 123 

Atlanta 46 New Orleans 12 

Baltimore 54 New York 21 

Boise 7 Newark 5 

Boston 19 Oakland 16 

Buffalo 11 Philadelphia 315 

Chicago 19 Phoenix 128 

Cleveland 94 Pittsburgh 17 

Columbia 60 Portland 31 

Denver 44 Providence 16 

Des Moines 15 Reno 5 

Detroit 20 Roanoke 59 

Fargo 0 Salt Lake City 133 

Ft. Harrison 4 San Diego 99 

Hartford 19 San Juan 19 

Honolulu 10 Seattle 140 

Houston 38 Sioux Falls 0 

Huntington 60 St. Louis 137 

Indianapolis 37 St. Paul 107 

Jackson 44 St. Petersburg 62 

Lincoln 36 Togus 46 

Little Rock 40 Waco 133 

Los Angeles 13 Washington 0 

Louisville 41 White River Junction 3 

Manchester 5 Wichita 9 

Manila 0 Wilmington 4 

Milwaukee 105 Winston-Salem 82 

Montgomery 23 

Total 2,703 

7

The 2,703 is the FTE assigned to the VAROs out of the 2,834 VBA allocated to C&P Services. As of May 2, 2008, 

VBA had not assigned the remaining 131 FTE to any VARO. 

VA Office of Inspector General 

21 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Appendix B 

Claims Inventory Estimates Methodology 

To estimate the number of claims VBA could complete in FYs 2008 and 2009, we 

developed three production scenarios using inventory data obtained from VBA and FTE 

data extracted from PAID. Using the FTE report, we calculated the average number of 

employees during each fiscal year. To estimate the productivity of new employees, VBA 

uses a “25 percent” rule. For every 6 months that new employees are on the job and 

learning, they become 25 percent more productive. Therefore, at the end of their first 

year, new employees are considered 50 percent productive. After 1-1/2 years on the job, 

new employees would be considered 75 percent productive, and after 2 years on the job, 

100 percent productive. We based the first two scenarios on VBA’s “25 percent” rule for 

measuring productivity; whereas, we based the third scenario on the assumption that 

productivity would remain somewhat constant after the first 2 quarters of FY 2008. 

In scenario 1, which assumes new employees are 50 percent productive in their first year, 

we adjusted the average FTE by subtracting the number of new FTE and then multiplying 

the new FTE by two. Multiplying by two accounts for the new employees being 

50 percent productive, as it would take two employees to perform the work of 

one experienced employee. We then divided the claims completed in FY 2007 by the 

adjusted FTE to determine a production rate. We multiplied the calculated production 

rate by the adjusted FTE for FYs 2008 and 2009 to estimate the number of claims that 

VBA would complete. 

In scenario 2, which assumes new employees are 75 percent productive in their first year, 

we adjusted the average FTE by subtracting the number of new FTE and then multiplying 

the new FTE by 1.5. Multiplying by 1.5 accounts for the new employees being 

75 percent productive, as it would take 1.5 employees to perform the work of 

1 experienced employee. We then divided the claims completed in FY 2007 by the 

adjusted FTE to determine a production rate. We multiplied the calculated production 

rate by the adjusted FTE for FYs 2008 and 2009 to estimate the number of claims that 

VBA would complete. 

In scenario 3, which assumes employees will maintain the productivity level achieved in 

the first half of FY 2008, we estimated the claims completed for the entire FY rate by 

doubling the number of claims completed in the first 6 months of FY 2008. We then 

divided the estimated claims completed by the average number of FTE in FY 2008 to 

calculate a production rate. We multiplied the production rate by the average number of 

FTE in FY 2009 to estimate the number of claims VBA would complete in FY 2009. 

To calculate the estimated number of claims VBA could complete in FYs 2010 and 2011, 

we calculated the production rate for FY 2006, the last complete year before the hiring 

initiative began, by dividing the number of claims completed that year by the number of 

VA Office of Inspector General 

22 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

C&P FTE. We then multiplied the result by the projected number of FTE in FYs 2010 

and 2011. 

To estimate the end-of-fiscal-year inventory, we estimated the number of claims received 

each fiscal year and added that number to the previous end-of-fiscal-year inventory for 

each scenario. We then subtracted the estimated number of claims completed in each 

scenario. 

Exhibits 13–16 on the following pages show our calculations for each scenario and fiscal 

year. 

VA Office of Inspector General 

23 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative

Appendix B

VA Office of Inspector General

24

Exhibit 13. Impact of the New Employees on Claims Inventory in FY 2008

A B C D E F G H I J

Claims

Completed

2007

Average

FTE FY

2007

Production

Rate

(A B)

Adjusted

Average

FTE

FY 2008

Estimated

FY 2008

Claims

Completed

(C D)

Percent

Change

from

2007

Inventory

End

FY 2007

Estimated

FY 2008

Claims

Received

Estimated

Inventory

End

FY 2008

(G + H - E)

Percent

Change

from

2007

Scenario 1: 50%

Productive 1,532,959 10,120 151.5 9,497 1,438,796 ↓6.1 % 564,145 1,602,370 727,719 ↑29.0 %

Scenario 2: 75%

Productive 1,532,959 9,497 161.4 9,872 1,593,341 ↑3.9 % 564,145 1,602,370 573,174 ↑1.6 %

Scenario 3:

Maintain 2008

Productivity 1,532,959 n/a 155.8 10,248 1,596,783 ↑4.2 % 564,145 1,602,370 569,732 ↑1.0 %

Exhibit 14. Impact of the New Employees on Claims Inventory in FY 2009

A B C D E F G H I J

Claims

Completed

2007

Average

FTE FY

2007

Production

Rate

(A B)

Adjusted

Average

FTE

FY 2009

Estimated

FY 2009

Claims

Completed

(C D)

Percent

Change

from

2007

Estimated

Inventory

End

FY 2008

Estimated

FY 2009

Claims

Received

Estimated

Inventory

End

FY 2009

(G + H - E)

Percent

Change

from

2007

Scenario 1: 50%

Productive 1,532,959 10,120 151.5 10,998 1,666,197 ↑8.7 % 727,719 1,634,417 695,939 ↑23.4 %

Scenario 2: 75%

Productive 1,532,959 9,497 161.4 10,998 1,775,077 ↑15.8 % 573,174 1,634,417 432,514 ↓23.3 %

Scenario 3:

Maintain 2008

Productivity 1,532,959 n/a 155.8 10,998 1,713,488 ↑11.8 % 569,732 1,634,417 490,661 ↓13.0 %
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative

VA Office of Inspector General

25

Exhibit 15. Impact of the New Employees on Claims Inventory in FY 2010

A B C D E F G H I J

Claims

Completed

2006

Average

FTE FY

2006

Production

Rate

(A B)

Adjusted

Average

FTE

FY 2010

Estimated

FY 2010

Claims

Completed

(C D)

Percent

Change

from

2007

Inventory

End

FY 2009

Estimated

FY 2010

Claims

Received

Estimated

Inventory

End

FY 2010

(G + H - E)

Percent

Change

from

2007

Scenario 1: 50%

Productive 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 695,939 1,667,106 418,599 ↓25.8 %

Scenario 2: 75%

Productive 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 432,514 1,667,106 155,174 ↓72.5 %

Scenario 3:

Maintain 2008

Productivity 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 490,661 1,667,106 213,321 ↓62.2 %

Exhibit 16. Impact of the New Employees on Claims Inventory in FY 2011

A B C D E F G H I J

Claims

Completed

2006

Average

FTE FY

2006

Production

Rate

(A B)

Adjusted

Average

FTE

FY 2011

Estimated

FY 2011

Claims

Completed

(C D)

Percent

Change

from 2007

Estimated

Inventory

End

FY 2010

Estimated

FY 2011

Claims

Received

Estimated

Inventory

End

FY 2011

(G + H - E)

Percent

Change

from

2007

Scenario 1: 50%

Productive 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 418,599 1,700,448 174,601 ↓69.1 %

Scenario 2: 75%

Productive 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 155,174 1,700,448 -88,824 ↓115.7 %

Scenario 3:

Maintain 2008

Productivity 1,423,901 8,056 176.8 10,998 1,944,446 ↑26.8 % 213,321 1,700,448 -30,677 ↓105.4 %
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Appendix C 

Acting Under Secretary for Benefits Comments 

Department of 

Veterans Affairs Memorandum 

Date: August 8, 2008 

From: Acting Under Secretary for Benefits (20) 

Subj: OIG Draft Report—Audit of the Impact of the Veterans Benefits 

Administration's (VBA) Special Hiring Initiative (Project No. 

2008-01559-R8-0115)—WebCIMS 409483 

To: Assistant Inspector General for Auditing (52) 

1. This is in response to your request for VBA’s review of OIG 

Draft Report: Audit of the Impact of the Veterans Benefits 

Administration’s Special Hiring Initiative. Attached are 

VBA’s comments. 

2. Questions may be referred to Alyce Williams, Program 

Analyst, at 461-9364. 

(original signed by:)

A P. W. Dunne ttachment 

VA Office of Inspector General 

26 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Acting Under Secretary for Benefits Comments 

to Office of Inspector General’s Report 

The following Acting Under Secretary for Benefits comments are submitted in 

response to the recommendations in the Office of Inspector General’s Report: 

Pg 17 – Factors Contributing to Claims Processing Days: OIG’s report 

acknowledges that, “when VBA requests information from a claimant or from a 

third party, respondents are given 60 days to respond to the initial request and 30 

days to respond to the follow-up request.” VBA Fast Letter 08-18, dated June 12, 

2008, revises this response time. Effective May 30, 2008, VBA will apply a 30­

day response time when developing for evidence, such as private treatment 

records, from claimants or third-party providers. The time allowed for follow-up 

requests to third parties will remain 30 days. 

Pg 1, 4

th 

paragraph: The report cites VBA received an additional $124.2 million 

for GOE through PL 110-28. The correct amount is $128.7 million. 

Pg iii, 2nd paragraph and Pg 7, 2nd paragraph: These sentences refer to claims 

processed per FTE during FY 2008. Since the audit concluded in May 2008, the 

report should clearly state whether this is fiscal year to date productivity or a 

projection of productivity through the remainder of the year. If this is a 

projection, it should be noted along with the assumptions used, especially since 

the fourth quarter is historically VBA’s most productive period of the year. 

Pg 18, 5

th 

paragraph: This paragraph outlines VBA’s methodology for calculating 

“backlog” using the FY 2008 budget target of 169 average days to process. 

However, VBA has never testified to or defined “normal running inventory” with 

the 169 day target. Prior written and verbal testimony has used this methodology 

at the 145 day target, as well as the strategic target of 125 days. 

Recommendation 1: We recommend that the Acting Under Secretary for 

Benefits adopt a new definition for measuring rating claims backlog as the 

number of claims that are older than a realistic target time period. 

Response: Concur in part. The Veterans Benefits Administration (VBA) has 

never formally defined or measured its claims backlog. Stakeholders often refer 

to VBA’s entire pending claims inventory as a backlog. In response to this 

misconception, VBA officials have attempted to explain the difference between 

an expected normal inventory if claims were being processed within our 

established timeliness goals and what portion of our inventory might represent 

backlogged claims. 

VA Office of Inspector General 

27 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Acting Under Secretary for Benefits Comments, continued 

The various types of benefits claims and the complexity of the claims process, 

coupled with VBA’s duty to notify and assist throughout the evidence gathering 

process, make it difficult to accurately define and measure “backlogged” claims. 

We will continue to collect and study data to determine if we can develop a 

backlog measure that can be used as an effective management tool to improve 

claims processing. 

Target Completion Date: February 28, 2009 

Recommendation 2: We recommend that the Acting Under Secretary for 

Benefits implement a plan to monitor and report backlog based on a new 

definition as described in Recommendation 1. 

Response: Concur in part. VBA already has performance measures in place to 

assess both the timeliness and quality of service delivery and the volume and age 

of claims in our pending inventory. However, as stated in response to 

Recommendation 1, we will continue to collect and study data to determine if we 

can develop a backlog measure that can be used as an effective management tool 

to improve claims processing. 

Target Completion Date: February 28, 2009 

VA Office of Inspector General 

28 
Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Appendix D 

OIG Contact and Staff Acknowledgments 

OIG Contact Claire McDonald (206) 220-6651 

Acknowledgments Gary Abe 

Amy Mosman 

Todd Groothuis 

Tom Phillips 

Melinda Toom 

Theresa Zoun 

VA Office of Inspector General 

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Audit of the Impact of the Veteran Benefits Administration's Special Hiring Initiative 

Appendix E 

Report Distribution 

VA Distribution 

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Non-VA Distribution 

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain on the OIG’s 

Web site for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 

30