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[Senate Hearing 110-616]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 110-616
 
       HEARING ON FISCAL YEAR 2009 BUDGET FOR VETERANS' PROGRAMS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 13, 2008

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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

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                     COMMITTEE ON VETERANS' AFFAIRS

                   Daniel K. Akaka, Hawaii, Chairman
John D. Rockefeller IV, West         Richard M. Burr, North Carolina, 
    Virginia                             Ranking Member
Patty Murray, Washington             Arlen Specter, Pennsylvania
Barack Obama, Illinois               Larry E. Craig, Idaho,
Bernard Sanders, (I) Vermont         Kay Bailey Hutchison, Texas
Sherrod Brown, Ohio                  Lindsey O. Graham, South Carolina
Jim Webb, Virginia                   Johnny Isakson, Georgia
Jon Tester, Montana                  Roger F. Wicker, Mississippi
                    William E. Brew, Staff Director
                 Lupe Wissel, Republican Staff Director

                            C O N T E N T S

                              ----------                              

                           February 13, 2008
                                SENATORS

                                                                   Page
Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii........     1
Burr, Hon. Richard, Ranking Member, U.S. Senator from North 
  Carolina.......................................................     3
Murray, Hon. Patty, U.S. Senator from Washington.................     6
Craig, Hon. Larry E., U.S. Senator from Idaho....................     8
Brown, Hon. Sherrod, U.S. Senator from Ohio......................    10
Wicker, Hon. Roger F., U.S. Senator from Mississippi.............    12
Tester, Hon. Jon, U.S. Senator from Montana......................    13
Sanders, Hon. Bernard, U.S. Senator from Vermont.................    68
Webb, Hon. Jim, U.S. Senator from Virginia.......................    72

                               WITNESSES

Peake, Hon. James B., M.D., Secretary of Veterans Affairs; 
  Accompanied by: Hon. Daniel L. Cooper, Under Secretary for 
  Benefits; Hon. Michael J. Kussman, M.D., Under Secretary for 
  Health; Hon. William F. Tuerk, Under Secretary for Memorial 
  Affairs; Hon. Robert J. Henke, Assistant Secretary for 
  Management; Hon. Robert Howard, Assistant Secretary for 
  Information and Technology; and Hon. Paul J. Hutter, General 
  Counsel........................................................    15
    Prepared statement...........................................    19
    Response to written questions submitted by:
      Hon. Daniel K. Akaka.......................................    28
      Hon. Richard Burr..........................................    35
      Hon. Patty Murray..........................................    54
      Hon. Bernard Sanders.......................................    55
      Hon. Larry E. Craig........................................    58
    Response to questions arising during hearing by:
      Hon. Daniel K. Akaka.......................................    58
      Hon. Patty Murray..........................................    58
      Hon. Larry E. Craig........................................    58
        Attachment 1.............................................    59
Blake, Carl, National Legislative Director, Paralyzed Veterans of 
  America........................................................    81
    Prepared statement...........................................    83
Baker, Kerry, Associate National Legislative Director, Disabled 
  American Veterans..............................................    86
    Prepared statement...........................................    87
Kelley, Raymond C., National Legislative Director, Amvets........    95
    Prepared statement...........................................    96
Needham, Christopher, Senior Legislative Associate, National 
  Legislative Service, Veterans of Foreign Wars of The United 
  States.........................................................    99
    Prepared statement...........................................   100
Gaytan, Peter S., Director, National Veterans Affairs and 
  Rehabilitation Commission, American Legion.....................   103
    Prepared statement...........................................   104
Rowan, John, National President, Vietnam Veterans of America.....   114
    Prepared statement...........................................   116

                                APPENDIX

National Coalition for Homeless Veterans; prepared statement.....   137
Executive Committee, Friends of VA Medical Care and Health 
  Research (FOVA); prepared statement............................   140
Rieckhoff, Paul, Executive Director, Iraq and Afghanistan 
  Veterans of America (IAVA); prepared statement.................   141
Brasuell, David E., Idaho Division of Veterans Services; letter..   142
Hess, Francis J., Jr.; letter....................................   144

       HEARING ON FISCAL YEAR 2009 BUDGET FOR VETERANS' PROGRAMS

                              ----------                              

                      WEDNESDAY, FEBRUARY 13, 2008

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room 418, Russell Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Committee, presiding.
    Present: Senators Akaka, Murray, Brown, Tester, Webb, 
Sanders, Burr, Craig, and Wicker.

   OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, U.S. 
                      SENATOR FROM HAWAII

    Chairman Akaka. Aloha and welcome to the hearing. Before we 
begin, I ask for a moment of silence to honor the memory of a 
longtime member of the veteran community, Richard Fuller, who 
died last evening.
    Richard began his work on veterans' issues in the late 
1970's when he joined the staff of the House Veterans' Affairs 
Committee. Later, and for many years after that, Richard was a 
tireless and tenacious advocate for the Paralyzed Veterans of 
America.
    Today's hearing is just the sort of event for which he 
would have prepared testimony or appeared or both. His 
intelligence and charm and wit were such effective tools in 
helping policymakers to truly understand the needs of veterans 
and our responsibility to them.
    Richard will be greatly missed by those who knew and worked 
with him. So let us have a moment of silence for Richard. 
[Pause.]
    We thank God for Richard and send blessings to him and his 
family.
    Again, aloha and welcome to all.
    When the President released billions of dollars in 
contingency funding last month, he put VA on course to make the 
improvements that we all know are needed. It was my sincere 
hope that the fiscal year 2009 budget would build upon that 
financial commitment.
    After all, the challenges facing veterans grow more complex 
as the wars in Iraq and Afghanistan continue. Yet, in his very 
last budget, submitted to this body, the President is proposing 
limited funding overall and at the same time some very severe 
cutbacks to key programs.
    The Administration is quick to say that this latest budget, 
if enacted, would nearly double the budget in effect since 
President Bush took office 7 years ago. This statement ignores 
the fact that it was the work of Congress which has, on 
average, doubled the President's request each and every year.
    While the Administration is requesting a straightforward 
increase for VA, an even greater of level of resources must be 
dedicated to care for the newest veterans and for their very 
specific needs. The Administration has consistently 
underestimated the impact that Operations Enduring and Iraqi 
Freedom would have on the VA health care system.
    An even more pressing concern is the need for VA to do a 
better job of reaching out to these veterans and bringing them 
into the fold for care. Preventing suicide and healing 
invisible wounds, especially for members of the Guard and 
Reserves, takes a much more aggressive approach than is 
embodied in this budget.
    It is also true that the budget before us targets key areas 
for drastic funding cuts. To cut VA research again is 
incredibly shortsighted. To cut the Inspector General's Office 
again, the central gear in oversight efforts is unwise. And to 
drastically cut construction at a time when VA should be 
upgrading its infrastructure is reckless and will prove to be 
quite costly in the long run.
    On the benefits side of the ledger, in the last year 
Congress has provided a significant amount of funding through 
VA for much needed staffing to adjudicate claims. Our Nation's 
veterans deserve nothing less than having their claims rated 
accurately and in a reasonable period of time.
    Now, the American people, especially veterans, will expect 
to see a decreasing backlog and increased timeliness and 
quality. I pledge to you my continuing support to get veterans 
the benefits they need in an appropriate amount of time. I am 
committed to working with the Secretary and my colleagues on 
both sides of the aisle to ensure that the Department gets what 
it truly requires to deliver high quality benefits and services 
to veterans.
    I am also deeply committed to working with all Members of 
Congress to recognize the reality that meeting the needs of 
veterans is truly part of the ongoing costs of war.
    This budget takes a meek approach to funding VA, especially 
in light of the sacrifices made by those who have served in the 
past conflicts and the devastating injuries sustained by many 
who are serving today. I do not doubt that we will turn this 
budget around. We must support a much more aggressive approach 
for improved health care and benefits, and we have much work to 
do.
    Secretary Peake, before I yield to my colleagues, I want to 
ask you to pass along to the President, Secretary Gates, and 
others involved in the process, my very deep disappointment 
with the proposal made by the President in his State of the 
Union regarding GI Bill benefits.
    To put before the Nation a proposal that does not seem to 
have been very well thought out, either in terms of cost or 
impact it could have on the ability to keep critical personnel 
in the Armed Forces, is ill-advised.
    I look forward to our dialog with Secretary Peake and other 
top VA officials as well as the representatives of veterans 
service organizations here with us today.
    One last matter before I turn to Senator Burr and others 
for opening statements. Today's hearing is our first event back 
in the Committee's hearing room following a major renovation 
which began last spring.
    The changes to the room are dramatic, as you can see. When 
I walked into the room this morning for the first time, I 
wondered whether I was in the right room. It has certainly been 
improved. It is much better than it was and it is dramatic. 
Some of it you can see, but many changes are not visible.
    While a great many people had a hand in bringing about 
these changes, one individual truly made it all happen and that 
is the Committee's Chief Clerk, and I wanted to point her out.
    Kelly Fado, if you are here, will you please stand? 
[Applause.]
    As any homeowner who has been through a renovation can 
attest, Murphy's Law applies nowhere more strongly than in 
connection with renovation efforts. Kelly had her hands full 
for many months, all the while performing myriad other tasks as 
the Committee's Clerk.
    As you can see from the results, she did a superb job. 
Kelly, I again thank you for your extraordinary and detailed 
work that brought the Committee this awesome kind of change.
    Senator Burr.

        STATEMENT OF HON. RICHARD BURR, RANKING MEMBER,
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr.  Thank you, Mr. Chairman.
    One can only walk into the room and say, wow. Being a true 
conservative, though, I miss the folding tables we used before. 
[Laughter.]
    It is, indeed, a sign that the work that is done in this 
room is extremely important and, Mr. Chairman, I want to thank 
you and, more importantly, Kelly, for overseeing the transition 
to what I think is a state-of-the-art room where people--not 
just in the room, but people outside, now with the 
telecommunications ability here and TV capacity--have the 
opportunity to see these hearings, to hear the substance, to 
hear the insight of the witnesses.
    General Peake, let me take this opportunity to welcome you 
to your first hearing in the Senate as the man in charge, and I 
truly do say the man in charge.
    You have had a very short time to get your hands around a 
$90 billion budget, but I know you have prepared well for the 
hearing and I look forward to your testimony.
    Of course, it is helpful to have a good budget to support 
and I think on the whole you do. The medical care and 
disability benefits of our Nation's veterans are among our top 
priorities.
    The fiscal year 2009 budget puts the right focus on 
critical programs that serve our Nation's heroes, wherein the 
overall medical care increases 5.8 percent. We see a 9 percent 
growth for mental health services, a 10 percent growth for 
prosthetics, a 7 percent growth for rehabilitative care; and, 
maybe most important during this time of war, a 21 percent 
increase in medical services for veterans of Operations Iraqi 
Freedom and Enduring Freedom.
    But, I would like us to take a new approach in how we view 
the VA budget. We all know that funding for veterans has 
doubled since President Bush took office. This increase has 
come during a time when most other domestic agencies have been 
held at little or no growth. So, clearly VA's budget has been 
and will remain a top priority to this Administration.
    What I would like to know is if this money is translating 
into a better, more modern health and benefits system for our 
veterans. If it is, then we know we have made a good 
investment. But, if the system is not what we would like, then 
I suggest we think a little differently in how we propose to 
spend over $90 billion to improve the lives of veterans.
    Let me give you an example. Recently I introduced the 
Veterans Mental Health Treatment First Act. That legislation 
would put VA's focus on what we all agree should be VA's most 
important job: restoring the capability of disabled veterans 
and improving their quality of life.
    To me, there are two troubling facts for veterans with Post 
Traumatic Stress Disorder. One, there has been a 120 percent 
increase in the number of veterans with PTSD on the disability 
compensation roles since 1999. Two, the VA Inspector General 
tells us that once a veteran with PTSD is on the rolls, the 
disability rating tends to get progressively higher until a 100 
percent rating is assigned to that veteran.
    These facts raise a number of questions. If VA has 
recognized medical treatment therapies that are effective, then 
why does the evidence suggest that its core population, the 
service-disabled, simply progressively get worse and never 
better?
    I believe there are two ways that we can improve on this. 
First, we need appropriate incentives to get veterans into 
treatment. Second, we need VA to emphasize wellness, recovery 
and restoration first, as opposed to focusing on a rush to 
assign disability ratings.
    Both the Dole-Shalala and the Disability Benefits 
Commission highlighted the need for appropriate incentives to 
achieve the desired goals of wellness and employment. I happen 
to agree with both of those commissions.
    Although the Treatment First Act focuses on veterans with 
mental illness, I am wondering if similar problems exist for 
other veterans. How has VA's focus on prevention and clinical 
practice guidelines translated into helping veterans with 
service-related conditions to become less disabled, or, at 
worst, not as disabled as they would otherwise have been 
without treatment?
    After all, shouldn't that be our primary goal? Is not that 
the expectation of today's modern warrior? Frankly, a renewed 
focus on prevention and wellness is the forward thinking 
solution to the claims backlog problem, as well. After all, if 
we help veterans get well, stay well and help them to be 
gainfully employed, maybe they will not need to file disability 
claims. Under that scenario everybody wins.
    Speaking of the claims backlog, it is another area where 
the traditional approach to solving problems in Washington has 
not gotten us very far. Veterans from my home State of North 
Carolina regularly tell me how frustrated they are with the 
claims process.
    I would like everyone to follow along with me as I read 
from the VA budget on why backlogs and processing delays 
continue, and I quote, Instead of the traditional average of 
two to three disabilities per claim, regional offices are now 
dealing with a workload in which approximately 16 percent of 
the cases involve eight or more issues per claim. The 
multiplicity of issues coupled with the procedural changes 
flowing from decisions by the court and from the complaint 
notification requirements mandated by law has increased the 
amount of time required to resolve an initial disability 
compensation claim.''
    Sound familiar? It should. Folks, I just read from the 1997 
VA budget submission. The same reasons given in 1997 for 
backlogs, delays and frustrated veterans are nearly identical 
to the reasons given for those same problems in this year's 
budget and I suspect every year in-between.
    How has Congress addressed the backlog problem since 1997? 
Since 1997 the budget has more than doubled, resulting in a 
doubling of staff dedicated to claims processing. But still the 
problem remains. What this should tell us is money is not 
necessarily the cure-all to this problem.
    We need a new approach. I am anxious to work with my 
colleagues here at the VA to try to find something new. We also 
need to begin addressing the fundamental problems with the 
disability system. Both the Dole-Shalala and the Disability 
Benefit Commission tell us that the disability rating schedule 
is out of date, that it needs to be completely overhauled, that 
it needs to be updated to reflect loss of quality of life and 
that a modern compensation system should place more emphasis on 
treatment and vocational rehabilitation.
    These are fundamental reforms that are long overdue. We 
have got to act with urgency so that there is a modern, 
coordinated and coherent purpose attached to the overall VA 
benefits system that we can all be proud of. Our goal should be 
a system that empowers veterans--a system that gives them the 
opportunity to return to a full and productive life, yet 
compensates them for the loss of quality of life and earnings 
capacity.
    Let me finish with one final thought. VA has been a leading 
innovator in health care delivery. The electronic patient 
record is an example of this innovation that the private sector 
should and will do well to follow.
    There is one area, however, where I think the VA is lagging 
behind the private sector. VA does not do enough to compare 
itself to the services provided to the outside world. I must 
say, though, that it is not the VA's fault. It is Congress's 
fault.
    We have had a law on the books that says VA cannot compare 
its own costs for a particular medical service against the same 
service performed by a non-VA provider. How does this make any 
sense? Why is this good for veterans? I have yet to hear a good 
business case made for keeping this outdated ban in place.
    Mr. Chairman, in summary, I am pleased to have a good 
starting point to talk about veterans' services for the coming 
fiscal year. We also need to start looking at VA's budget 
differently. Programs need to show results and they should be 
focused on the goals of restoration, recovery, improved care of 
the lives of our veterans in this country.
    Mr. Chairman, I look forward to exploring these issues with 
our witnesses today but also with my colleagues on this 
Committee.
    General Peake, once again I welcome you.
    Mr. Chairman, if I might have the latitude to also welcome 
our newest member, Senator Wicker, to our side of the 
Committee.
    Chairman Akaka. Certainly.
    The Chair recognizes Senator Murray for your opening 
statement.

                STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Thank you very much, Mr. Chairman, and 
thank you, Senator Burr.
    We fully appreciate your holding this very important 
hearing as we talk about the President's proposed VA budget for 
fiscal year 2009. And I want to thank the representatives from 
the veterans service organizations who are here with us as 
well. They put a lot of work into writing and crafting the 
Independent Budget and they are here today as well to testify 
about the resources that our veterans really need.
    Mr. Chairman, I also want to take a moment of personal 
privilege to welcome a number of my constituents who are AFGE 
employees who are here from the Spokane VA and Seattle VA. 
These are the people who really make it happen on the ground 
and work very hard for our veterans. If you could just stand up 
for a minute. I just want to recognize all of you who work for 
our veterans on the ground out there. [Applause.]
    I join with all of you in extending a warm welcome to 
Secretary Peake. He is here for his very first Senate hearing 
as Secretary of the VA and we welcome you. And I want you to 
know I very much look forward to your trip next week to at the 
Walla Walla VA. I appreciate the fact that you responded to my 
invitation so quickly to come out and see on the ground what is 
happening. I think you will be impressed, as we all are, of the 
needs there and how we are moving forward. I really appreciate 
your coming out and being there.
    Secretary Peake, many veterans and many Members of this 
Committee have placed a tremendous amount of faith in your 
ability to rise to the unprecedented challenges that are facing 
the VA today. We have an opportunity to change course at the VA 
but we have to do it quickly and we have got to get it right. 
They say out in VISN 20, where we are, that business as usual 
is not an option. They wear buttons and T-shirts saying that. 
And, Secretary Peake, I know that you know that well.
    Secretary Peake, Congress and our veterans really are 
counting on you and your first test arrived on February 4 with 
the release of the President's budget. Given your short time on 
the job, I recognize you did not play a large role in creating 
the document, but 
you do have the unenviable job of being here today to defend 
that budget.
    I say ``unenviable'' because at this point I find this 
budget unacceptable in many areas for a number of reasons, 
starting with my fear that it would close the VA's door to 
thousands of our Nation's veterans.
    The present budget that was sent to us includes new fees 
and increased co-pays that I believe really will discourage 
many of our veterans from accessing the VA even as our veterans 
are turning to the VA in larger numbers than ever before.
    Now, the VA does not discuss the likely impact of that 
policy proposal in this year's budget submission but in 
previous budgets that have been sent to us the Administration 
estimated that those fees and those co-pays would result in 
nearly 200,000 veterans leaving the system and more than 1 
million veterans choosing not to enroll.
    I am also extremely disappointed that this budget continues 
to ban Priority 8 veterans from enrolling in the VA health care 
system. It is estimated, Mr. Chairman, that more than 1.5 
million veterans have already been turned away from the VA 
since the Priority 8 ban was put into effect back in 2003 and 
many more have been deterred from seeking care.
    I have made it very clear over the last several years that 
I believe that denying or discouraging our veterans from 
seeking care in the VA system because of their income is 
morally wrong, and I believe it will also make it harder to 
maintain and ensure that we have a strong voluntary military.
    Another issue I want to mention is that while the 
President's budget does increase spending for VA medical care 
by $2 billion, it appears that this level will not meet the 
real needs of veterans once medical inflation and other factors 
that we need to consider are put in place.
    The Independent Budget estimates that the true cost of VA 
medical care is $1.6 billion more than the President requested. 
I worry that underfunding medical care will prevent the VA from 
being able to provide timely and high quality health care that 
our veterans deserve. And given the Administration's 
involvement in covering up previous shortfalls in VA funding, I 
think this Committee has very good reason to be concerned about 
a future shortfall.
    Along the same line, I am very troubled that the President 
is proposing an 8 percent cut to VA medical and prosthetic 
research. We all know that one of the signature injuries of the 
war in Iraq is Traumatic Brain Injury, but there is still a 
great deal more we do not know about the condition.
    Cutting funding for research seems to be the wrong thing to 
do as we are trying to better understand the injuries that our 
veterans are experiencing.
    Third, I am incredibly concerned that the President's 
budget proposed cutting funding for major and minor 
construction by nearly 50 percent at a time when a list of 
needed repairs and expanded facilities is stacking up.
    The Administration's own budget documents detail the 
numerous projects that will not receive funding this year 
because of inadequate requests.
    Finally, I object to the President's proposed funding cut 
to the VA Inspector General. I am very concerned about doing 
anything that might hinder the IG's ability to be an effective 
watchdog over this incredibly complex system at the very time 
we are trying to encourage effective oversight.
    Secretary Peake, when I voted for your confirmation in 
December, I said that while we should not dwell on the mistakes 
of the past, we have to learn from them. So, I am very 
concerned that this budget is evidence that the Administration 
yet is not learning. And in the State of the Union address just 
a few weeks ago the President said he was dedicated to 
providing for our Nation's veterans.
    But, at a time when we are seeing thousands of new veterans 
entering the VA system with serious medical needs as a result 
of the wars in Iraq and Afghanistan, the Administration is 
underestimating the cost of medical care and it is cutting 
funding for construction and medical and prosthetic research. 
And at a time when our older veterans are seeking care in 
record numbers, the President is proposing fees and co-pays 
that will literally shut the door to thousands of patients.
    We all know too well what happens when the VA gets 
shortchanged. The men and women who have served us end up 
paying the biggest price. Our veterans are heroes and they 
deserve the best we can give them. I believe that we can do a 
lot better than the budget request that has been sent to us by 
this Administration.
    Secretary Peake, I appreciate your coming before the Senate 
Veterans' Affairs Committee. We have a number of questions for 
you and I look forward to hearing your responses this morning.
    Thank you.
    Chairman Akaka. Senator Craig.

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

    Senator Craig. Mr. Chairman, Ranking Member Burr, again 
thank you, as all of our colleagues have said, for holding this 
hearing in relation to the VA budget.
    Secretary Peake and his forces are welcomed before the new 
dias of the Veterans' Affairs Committee. This is a pretty swank 
place, Danny.
    Chairman Akaka. Yes.
    Senator Craig. I wonder if we could afford it. But, we are 
not going to worry about budgets today, obviously. I do want to 
thank you for being here to present the budget that has been 
presented to us by the Administration.
    I would also like to welcome all of our service 
organizations and thank them for their work. We appreciate what 
you do and the value of what you do.
    I have got to run to another hearing so I will not go into 
the detail of the budget. I will say, as a Member of this 
Committee long-standing, as many of our colleagues are, we are 
very proud of the fact that we have presided over unprecedented 
increases in the veterans budget now for nearly 8 years 
straight--11 percent, 12 percent, 13 percent, and last year 18 
percent. No other agency of the Federal Government other than 
Defense and supplemental spending have grabbed the attention of 
the Congress like the veterans budget has.
    Now, having said that, I also believe it is important that 
we do not throw money for the sake of throwing money to look 
good. We put money in the right places to make it work on 
behalf of America's veterans. I have said it before this 
Committee before in talking with two former Secretaries, after 
looking at last year's budget in relation to what we wanted to 
accomplish, we wanted to go after PTSD and to respond to the 
needs of our veterans.
    They, in a moment of quietness, said to me, Larry, we 
cannot even spend that kind of money because we cannot bring 
the systems up fast enough, to go out and recruit the quality 
of people we need and train them and put boots on the ground in 
relation to serving our veterans in the time that the Congress 
expects with the money that we are being sent.
    That was a rather dramatic statement but probably an honest 
one as it relates to gearing up to get things done, and I think 
that, Mr. Chairman, we need to be cautious. We need to be 
responsive, and most assuredly, we need to be responsible to 
our veterans, but just placing money out there to make it look 
good does not necessarily mean the services get to the ground.
    A young Marine was home in Idaho during the Christmas 
break. He was found in his car dead with a gun on the seat 
beside him. The moment the news broke, I turned to my wife and 
said, ``I fear that is a suicide.'' Well, it was.
    It spoke to me legions about the reality of service today, 
the phenomenal responsibility our men and women in uniform have 
and take and in some instances the consequence of that service. 
So, it is overpowering to me and I think this Committee that we 
get it right, we do it right and we respond to these young men 
and women in a way that things like that, if at all possible, 
can be avoided and they can transition and live a life as a 
civilian after they have served our country in a way that we 
would hope they can and with that and their families.
    Mr. Chairman, I have one other item to cover that I will 
raise with you, Mr. Secretary. It is of concern to me. I 
introduced legislation in the 109th Congress that became law. 
But a specific provision of it has not yet been implemented.
    I would like to submit for the record two letters, Mr. 
Chairman, one from the Idaho Division of Veterans Services and 
one from an Idahoan and his family, who contacted me.
    [The letters can be found in the Appendix.]
    Senator Craig. The issue is quite simply this, Mr. 
Secretary: the Idaho State Veterans Home, and any State 
veterans home, as I understand it, is not receiving 
reimbursement from the Department of Veterans Affairs for 
housing veterans with a disability rate of 70 percent or more 
at this time, because the regulation has not been either 
written or implemented.
    Included in the law is the enactment date of 90 days after 
the enactment of the Act. The bill was signed into law December 
2006, and yet the provision, I am told, has not yet been 
implemented 
by VA.
    Now, amazingly enough, I am also told that VA is currently 
reimbursing private nursing homes who care for veterans with 
the same disability rating. In other words, we have been able 
to respond to the private homes, but we cannot respond to the 
State homes.
    These are the facts I have in front of me. I am not going 
to ask you to respond at this moment, but if you would get back 
to me on it. Again, if this is a matter of bureaucratic 
slowness, then shame on VA. But, there appears to be a 
discrepancy between what can be provided and is being provided 
in private homes versus the State homes.
    So, with that, again, Mr. Secretary, and the crew you've 
got with you, thank you. Welcome. We are glad you are here. We 
look forward to your service to the VA and think you will do a 
tremendous job.
    Chairman Akaka. Thank you very much, Senator Craig.

               STATEMENT OF HON. SHERROD BROWN, 
                     U.S. SENATOR FROM OHIO

    Senator Brown. Thank you, Mr. Chairman. Senator Wicker, 
welcome to the Committee. I am glad you are on with us.
    Secretary Peake, nice to see you. I am proud to have voted 
for your confirmation, too.
    I just listened to the comments around the table, and 
contrasting that with roundtables I have done around Ohio with 
different groups of people in 55 of Ohio's counties--some 80 
roundtables--many of those roundtables--about a dozen of them--
have been exclusively with veterans or just returning Iraq 
soldiers; I just do not buy the comments I hear around the 
table implicitly suggesting that we are spending too much, that 
the VA cannot keep up.
    I have more confidence in you perhaps than my friend from 
Idaho does that you can spend wisely. That is the philosophy of 
the Defense Department, continuing to pump more money in, 
assuming that the generals and the Pentagon will spend it 
wisely.
    I have that same confidence in you and all of you at this 
table. That is why I am so proud that the VSOs have put this 
document together--the Independent Budget--because it is clear 
to me that we are in times of war. Of course, our budget has 
gone up for the VA. It should go up for the VA.
    I have met at these roundtables: going to hospitals; going 
to funerals; talking to families; talking on the phone to 
families who are being ripped apart because of untreated PTSD.
    I mean, it is pretty clear to me that we can do a whole lot 
better in Congress and certainly the VA is partly at fault, as 
Senator Burr suggests, on those waiting lists. But, certainly 
the President's budget is, as Senator Murray articulated so 
well, is so shortsighted in what we have done.
    I have a couple of comments. I will first apologize. I have 
a Banking markup I need to go to. I have looked at the 
testimony and I will certainly--Diane and all of us will--pay 
very specific attention, because by-and-large we know what 
needs to be done.
    At one of my roundtables in Cleveland, at the Louis Stokes 
Medical Center, I met with some recently returning Iraqi war 
vets, most in their 20's and 30's. In attendance was also Dr. 
John Shupe who was going to be in the audience today, but is 
apparently stuck in traffic. Coming from Cleveland, he knows 
how to do this traffic. I am surprised he has not been able to 
get here yet. Dr. Shupe is part of a group at Cleveland State, 
which is working with returning vets to get them into the 
classrooms and help make their transition a bit easier.
    We have not done that very well. At schools across the 
country, a recently returned Iraq solider, a recently returned 
Marine will be stuck in class, will be put in class with 30 
other students who have had none of that experience in their 
lives, and this recently returning soldier has a difficult 
time.
    Dr. Shupe has put together a program at Cleveland State to 
small groups of students as they integrate into this large 
campus at Cleveland State groups of veterans, people like Mario 
Turner, who was in one of these who suffers from PTSD and was 
uncertain about going into a class of 100 other students.
    There are programs like that which we are trying to 
replicate around Ohio and we would like to work with the VA 
overall in helping with that. Part of it is passing the new GI 
Bill and what we can do for educational opportunities. That is 
great, of course. We should do that. We look at what it did for 
our country in the 1940's and 1950's--including, I assume, for 
some of you--and in the 1960's. But we have this opportunity. 
We need to also do what we can do on the ground that the way.
    I also heard in these roundtables consistently the 
unhappiness of the proposed increased enrollment fees, doubling 
the co-pay and the President wanting to even increase further 
than that for prescription drugs. If you are taking four or 
five drugs and you have to pay $7 per drug per month, that is 
real money. Maybe not to people that dress like we do around 
this Committee table. But that is real money for a lot of these 
vets.
    And I would hope the President would back off. He did once 
already under pressure and I hope all of you would consider 
that as we move forward.
    But another point that I wanted to make, Senator Murray 
outlined a lot of the issues of the President's budget overall. 
On the one hand, the President's budget for 2009 is $51 billion 
in tax cuts for people making over $1 million a year.
    Think about the choices and the priorities, $51 billion in 
tax cuts for people making over a million a year but we cannot 
fund veteran services well enough, people that many of them are 
going to be disabled and injured and hurt for the next 30 or 40 
years.
    It is a moral question. We know that. But also, as Senator 
Murray pointed out about oversight, the President's budget cuts 
the budget for Office of the Inspector General by $4 million.
    Think of the message that sends. You have problems out 
there at Walter Reed. You have problems here but we do not 
really want to know about them so let us just cut the oversight 
budget. I mean, that just speaks volumes; we are a better 
people than that, a better government than that. We need to 
move in a very different direction there.
    The last point. I appreciate Senator Burr's comments about 
the backlog. A veteran population of about a million in my 
State of Ohio. There is a backlog of 14,000 claims, 5,000 of 
those claims have been pending for over 180 days.
    I asked Secretary Peake about that before. I really 
appreciate his responsiveness. I know he would want to do 
something about that. That is a serious, serious issue and I 
think we can work on that together.
    I thank you all for your public service, those of you at 
the VA, and I particularly thank the public service and service 
to our country of the activists in the veterans service 
organizations that did this and have done so much more now and 
did so much more for our country in their lives.
    Thank you.
    Chairman Akaka. Thank you very much, Senator Brown.
    Now, I would like to welcome Senator Wicker to the 
Committee. As you know, Senator Wicker was the Ranking Member 
on the Mil-Con/VA Appropriations Subcommittee, so we know you 
know a lot about VA. I welcome you to the Committee and ask for 
your opening statement.

              STATEMENT OF HON. ROGER F. WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Wicker. Thank you very much, Mr. Chairman. I guess 
I have learned a little about the VA during my service in the 
House but certainly I think I can learn a lot more under your 
leadership and your tutelage here on this Committee, and it is 
a pleasure for me to join you and the rest of the Committee.
    Secretary Peake, it has been mentioned several times that 
this is your first appearance before this Committee so you and 
I have that in common today.
    As we listen to the opening statements, there is a bit of 
frustration that we are going to have a vote at 10:30. There 
are other Committees that are also working, so Members have to 
come and go.
    I think I am learning that questions we might have been 
able to ask, we sort of raise in our opening statements and 
hope that the witnesses will address them during or perhaps 
after the hearing.
    Let me congratulate you on your new position and to mention 
two things that perhaps the witnesses might talk about when 
they finally get a chance to speak themselves.
    Senator Craig and Senator Brown, and perhaps others before 
them, mentioned the historic increases that this Congress has 
provided, and the Chairman is correct. I was happy to have a 
role in that as Ranking Member in the Appropriations 
Subcommittee on Mil-Con/VA on the House side.
    I know that when we were formulating this budget, whether 
it was a justified concern or not, we did try to provide the VA 
with flexibility in case there were some accounts where you 
would not be able to spend all of the money to ensure that the 
VA would not be in a position of having to account at the end 
of the fiscal year for unused funds.
    We wanted to give you funds that you could, indeed, expend. 
So, I would like for you to discuss that when it comes time for 
your testimony, Mr. Secretary, and particularly with regard to 
the medical construction budget for fiscal year 2009. Based on 
the historic increases that we had in 2008, I think that the 
Committee would benefit from hearing how that played into the 
request for this year.
    Then there has been a lot of concern with regard to the 
interplay between health records--between DOD and the VA--and 
this has been a source of frustration for years.
    DOD and VA have made progress ensuring electronic health 
information. Both Departments have been able to meet several 
milestones in response to the emerging and urgent needs for 
increased support of care delivered to the returning wounded 
warriors.
    Both Departments, VA and DOD, have established time lines 
that include specific milestones for exchanging electronic 
health information, implementing mechanisms to achieve 
interoperability and transition from legacy systems.
    It does appear that in the hand-off from DOD to VA for so 
many of our wounded warriors, we are still seeing what might be 
termed ``a patchwork of linkups'' between systems that we 
already had.
    So, I would also hope that this Committee in working with 
you, Secretary Peake, could address the obstacles that there 
have been and the potential that we have to develop an honest-
to-goodness, personal, portable electronic medical record for 
members to have as members of the military, and also to take 
with them as they move to veterans care.
    Mr. Chairman, once again I thank you for your warm welcome 
and your courtesies to me during my 6 weeks now in the Senate.
    To our witnesses, thank you for your attendance, and 
certainly also to the veterans who are here today.
    I am glad to be part of this and I look forward to working 
with you all.
    Thank you, sir.
    Chairman Akaka. Thank you so much, Senator Wicker.
    Senator Tester for your opening statement.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman and Ranking Member 
Burr. It is a pleasure to be here. I want to also thank the 
Members of this Committee for being here today.
    You guys are doing some great work. I will just tell you 
that right up front. I will preface all my comments with the 
fact that once the folks get in the system, you guys are able 
to provide some pretty darn good health care. We do have some 
problems and I know that you all are up to the task of meeting 
those problems.
    I also want to welcome especially Secretary Peake. It is 
good to have you in front of the Committee as the confirmed 
Secretary of the VA. You have a big job ahead of you, and I 
know you are up to the task.
    Just a couple of things I want to touch on and I do not 
want to be too repetitive. First of all, an increase in the 
budget I believe of $2 billion, and there has been eight 
straight years of budget increases. But I will also tell you 
there is a conflict going on in Iraq and Afghanistan and there 
is a big group of folks that are coming home from those 
conflicts that are going to need some help from injuries that 
are seen and injuries that are unseen. And we need to be geared 
up.
    If, in fact, we appropriate money to you and you cannot 
figure out how to utilize it in a timely manner, then we will 
help you in that. You just need to tell us because the truth is 
that issues like PTSD are issues that we need to address sooner 
than later. And you folks know that. You are the experts at it.
    But the truth is that when it comes to an issue that is 
unseen like PTSD or TBI, we need to be ready to handle them, 
and to be honest with you, the reason I feel more urgency on 
this now than ever is because of the hearings I have had around 
the State of Montana and the fact that the Vietnam vets are 
coming out because it is bringing back memories. They do not 
want these folks to go through the same thing that they went 
through. So we need to be ready to go.
    I would just tell you that in the budget, there are some 
things that I find a bit annoying. The fee increase for 
prescription drugs and enrollment. It has been mentioned 
before. I think it is ludicrous. Quite honestly it does not 
make a lot of sense to me. It is kind of like having a person 
there and we are going to give you good care but we are going 
to needle you a little bit, and I just do not think it is 
necessary.
    The same thing under deductibility increase, and you are 
following the law. I appreciate that. Maybe we need to change 
the law as far as the deductibility for travel increase because 
quite honestly, in the way it is worded in my document, there 
are $20 to $30 million additional if it went back to $6 
deductible in medical funds.
    The truth is that $20 to $30 million in this overall budget 
will treat a lot of people for illnesses. Make no mistake about 
it. But, truthfully, it is not a huge line item in this budget, 
and we need to figure out how to fund it to get it back down, 
because in truth, I mean, it just does not make any sense.
    Another issue I want to talk about and I will talk to 
Secretary Peake about it as time rolls on but you need to know 
it and I do not know if it is this way all over but recruitment 
of nurses and doctors and administrative personnel is 
critically important; and if, in fact, it is in your rules that 
you have to pay less than the private sector, we need to figure 
out a way to fix that because quite honestly you are not going 
to get the best people if you are stuck out at that level. We 
need to figure out ways we can give bonuses for recruitment or 
some way to get the very best people to treat our veterans in 
this country.
    Right now they are understaffed in Montana, and some people 
may deny that; but I have talked to veterans, I have talked to 
staff members, and across the board they will tell you that we 
are deficient in doctors, nurses and administrative personnel.
    Finally, the rating system for vets who are potentially 
disabled. It has been described to me by veterans on the ground 
as the equivalent of Chinese mathematics. Now, I do not know 
what that means because I have never taken Chinese mathematics 
but it is probably pretty complicated.
    If there are ways to simplify that--ways to make a better 
understanding of how the ratings system works, less complex, 
takes up less time--I think those are all things we need to 
strive to work for.
    We have a big job ahead of us. This budget, hopefully we 
will have the opportunity to work it over and honestly get the 
services to the ground. That is what we all want. We do not 
want it eaten up by administration. But by the same token, we 
have to have the people on the ground be able to deliver the 
service in a timely manner when people need it.
    So with that, I thank you, Mr. Chairman. Thank you, Senator 
Burr, Ranking Member, for holding this hearing and I look 
forward to further scrutiny of this budget and I look forward 
to your guys' further good work.
    Thank you.
    Chairman Akaka. Thank you very much, Senator Tester.
    Now, I want to welcome Secretary James Peake to your first 
appearance here before the Senate Veterans' Affairs Committee, 
and we look forward to your statement at this time.

 STATEMENT OF HON. JAMES B. PEAKE, M.D., SECRETARY OF VETERANS 
AFFAIRS; ACCOMPANIED BY: HON. DANIEL L. COOPER, UNDER SECRETARY 
 FOR BENEFITS; HON. MICHAEL J. KUSSMAN, M.D., UNDER SECRETARY 
FOR HEALTH; HON. WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL 
    AFFAIRS; HON. ROBERT J. HENKE, ASSISTANT SECRETARY FOR 
    MANAGEMENT; HON. ROBERT HOWARD, ASSISTANT SECRETARY FOR 
 INFORMATION AND TECHNOLOGY; AND HON. PAUL J. HUTTER, GENERAL 
                            COUNSEL

    Secretary Peake. Thank you, Mr. Chairman. I have a written 
statement that I would like to submit for the record.
    Chairman Akaka. It will be included in the record.
    Secretary Peake. Thank you.
    Chairman Akaka and Senator Burr, ladies and gentlemen of 
the Committee, I am honored to be here as the sixth Secretary 
of Veterans Affairs and now responsible for the care of 
veterans. I appreciate the opportunity that the President has 
given to be able to make a difference.
    With me today to present the President's 2009 budget 
proposal for VA is the leadership team of the Department. From 
my right we have General Howard, our Assistant Secretary for 
Information; Mr. Bill Tuerk, Under Secretary for Memorial 
Affairs; and Mr. Bob Henke, Assistant Secretary for Management.
    On my far left, Mr. Hutter, our General Counsel; Admiral 
Daniel Cooper, Under Secretary for Benefits; and Dr. General 
Mike Kussman, Under Secretary for Health.
    In my almost 2 months now at the VA, I have seen both the 
compassion and the professionalism of our employees. It is 
frankly just what I expected. The culture is one of deep 
respect for the men and women we serve.
    This group at the table and the VA at-large understand that 
America is at war and it is not business as usual; and I do 
have my button.
    I appreciate the importance of and I do look forward to 
working with this Committee to build on VA's past successes but 
also to look to the future to ensure that veterans continue to 
receive timely accessible delivery of high quality benefits and 
services earned through their sacrifice and service and that we 
meet the needs of each segment of our veterans population.
    The President's request totals nearly $93.7 billion--$46.4 
billion for entitlement programs and $47.2 billion for 
discretionary programs. The total request is $3.4 billion above 
the funding level for 2008, and I am talking about the funding 
level that includes the $3.7 million plus up from the emergency 
funding.
    This budget will allow VA to address the areas critical to 
our mission, namely, to provide timely, accessible, and high-
quality health care to our highest priority patients.
    We will advance our collaborative efforts with the 
Department of Defense, particularly working toward the 
development of a secure interoperable medical records system. 
We will improve the timeliness and accuracy of our claims 
processing.
    We will ensure the burial needs of our veterans and their 
eligible family members are met and maintain veteran cemeteries 
as national shrines.
    The young men and women in uniform who are returning from 
Iraq and Afghanistan and their families presents a new 
generation of veterans. Their transition and reintegration into 
our civilian society when they take that uniform off is a prime 
focus.
    Those seriously injured must be able to transition between 
DOD and VA systems as they move on their journey of recovery. 
This budget funds our polytrauma centers and sustains the 
network of polytrauma care that Dr. Kussman and his team have 
put in place.
    It funds the Federal recovery coordinators envisioned by 
the Dole-Shalala report and sustains the ongoing case 
management at all levels of our system.
    We know that our prosthetic support must keep pace with the 
newest generation of prostheses that our wounded warriors have 
in transitioning into the VA system, and you will see a 10 
percent increase in our budget for this.
    In 2009 we expect to treat about 333,000 OEF/OIF veterans. 
That is a 14 percent increase. We are estimating and seeing a 
slightly rising cost per patient and we have budgeted 21 
percent increase in our cost to take care of this group. That 
is nearly $1.3 billion to meet the needs of the OEF/OIF 
veterans that we expect will come to the VA for medical care.
    This budget will sustain our outreach activities that range 
from more than 799,000 letters to the more than 205,000 
engagements that our Vet Center outreach personnel have made 
with returning National Guard and Reserve units as part of the 
post-deployment health reassessment process.
    VBA has conducted more than 8,000 military briefings to 
nearly 300,000 servicemen and women. This is also part of 
seamless transition. With the authority to provide care for 5 
years coming up for service-related issues, we can without 
bureaucracy offer the counseling and the support and care that 
might be needed to avert and mitigate future problems. I 
highlight the outreach piece because we want these men and 
women to get those services.
    Mental health, from PTSD to depression to substance abuse, 
are issues I know are a great concern to you and they are a 
great concern to us. This budget proposes $3.9 billion for 
mental health across the board, a 9 percent increase from 2008. 
It will allow us to sustain an access standard that says, if 
you show up for mental health, you will be screened in 24 hours 
and within 14 days have a full mental health evaluation, if 
needed.
    It will keep expanding mental health access according to a 
uniform mental health package, train mental health officials 
and there are 51 new CBOCs planned in 2009 in addition to the 
64 that are coming on line 2008.
    Our Vet Centers will bring on yet an additional 100 OEF/OIF 
counselors and Dr. Kussman is prepared, as the need is 
identified, to add additional Vet Centers.
    We appreciate the access issues in rural America. In this 
area our Vet Centers are budgeted for 50 new vans to support 
remote access as well as expanding telemental health support in 
25 locations.
    Even as we speak, Deputy Secretary Mansfield, who would 
otherwise be with us here today, is testifying with Dr. Chu on 
the progress that has been made in our collaborative efforts 
between DOD and VA, in moving forward with recommendations from 
the Dole-Shalala report, and our focus on getting this 
transition right.
    But this budget and our mission is more than just about 
these most recently returning servicemen and women. We should 
remember that 20 percent of VA patients, who in general are 
older and with more co-morbid conditions than the general 
population, have a mental health diagnosis.
    In fiscal year 2007 we saw 400,000 veterans of all eras 
with PTSD. This budget will sustain VA's internationally 
recognized network of more than 200 specialized programs for 
the treatment of Post Traumatic Stress Disorder through our 
medical centers and clinics that serve all of our veterans.
    We have a unique responsibility to serve those who have 
served before. We still have one World War I veteran. One died 
this last week. The World War II and Korea veterans are 
recipients of our geriatric care and our efforts in improving 
long-term care, non-institutional care, where in this budget we 
have increased 28 percent. It will make a huge difference in 
their quality of life.
    We have currently 32,000 people served by home telehealth 
programs. This budget continues our work in this area and in 
the expansion of home-based primary care.
    Overall, the President's 2009 budget request includes a 
total of $41.2 billion for VA medical care, an increase of $2.3 
billion over the 2008 level and more than twice the funding 
level available at the beginning of the Administration.
    With it we will provide quality care, improve access, 
expand special services to the 5,771,000 patients we expect to 
treat in 2009. That is a 1.6 percent increase above our current 
2008 estimate.
    In April of 2006 there were over 250,000 unique patients 
waiting more than 30 days for their desired appointment date. 
That is not good. As of January 1, 2008, we had reduced the 
waiting list to just over 69,000. That is not so great either.
    Our budget request for 2009 provides the resources to 
virtually eliminate the waiting list by the end of next year.
    Information technology crosscuts this entire Department. 
This budget provides more than $2.4 billion for this vital 
function, 19 percent above our 2008 budget, and reflects the 
realignment of all of our IT operations and functions under the 
management control of a Chief Information Officer.
    A majority, $261 million, of the increase in IT funds will 
support the VA's medical care program, particularly the 
electronic medical records system. I emphasize it here because 
it is so central to the care we provide touted in such 
publications as The Best Care Anywhere book as the key to our 
quality that is lauded worldwide.
    This IT budget also includes all the infrastructure 
supports such as hardware and software and communications 
systems for those 51 new CBOCs, for example. And there is $93 
million for cyber security, continuing us on the road to being 
the gold standard.
    It will also be key as we begin to move our claims model 
down the road to paperless processes. It is an investment that 
we must make. This budget sustains the work in VETSNET that is 
giving us management tools to really get after our claims 
processing and virtual VA, our electronic data repository.
    In addition to IT, this budget sustains a 2-year effort to 
hire and train 3,100 new staff to achieve a 145-day goal for 
processing compensation and pension claims in 2009. That would 
be a 38-day improvement in processing from 2007, a 24-day or 14 
percent reduction from what we expect this year.
    This is important because the volume of claims received is 
projected to reach 872,000 in 2009. That is a 51 percent 
increase since 2000, real numbers even if it is historically a 
problem.
    The active Reserve and National Guard returning from OIF 
and OEF have contributed to a increase in new claims and bring 
with them an increased number of issues with each claim.
    This graph I think shows that, the number of issues growing 
significantly compared to the number of claims. The ADC is 
average days to complete, and what you see is relatively 
constant even though each one of those individual issues have 
to be separately adjudicated and rated.
    The President's 2009 budget includes seven legislative 
proposals, totaling $42 million. One of these proposals expands 
legislative authority to cover payment for specialized 
residential care in VA approved medical foster homes for OEF/
OIF veterans with TBI.
    We again bring to you this request for enrollment fees for 
those who can afford to pay and for a raise of the co-pays. 
Again this does not affect our VA budget as the funds would 
return directly to the Treasury and that would be $5.2 billion 
over 10 years.
    But it does reflect the matter of equity for those veterans 
who have spent a full career in service and under TRICARE to 
pay an annual enrollment fee for life care.
    The $442 million to support VA's medical and prosthetic 
research program, though less than what we have from the 
augmented 2008 budget, is actually about 7.3 percent more than 
what was asked for in 2007 and 2008. It does contain $252 
million devoted to research projects focused specifically on 
veterans returning from service in Afghanistan and Iraq, 
including projects in TBI and polytrauma, spinal cord injury, 
prosthetics, burns, pain, post-deployment mental health.
    In fact, we anticipate with the Federal and other grants 
that we would have a research portfolio in the vicinity of 
$1.85 billion.
    This budget request includes just over $1 billion in 
capital funding for VA with resources to continue five medical 
facility projects already underway in Denver, Orlando, Lee 
County, FL, San Juan and St. Louis, and to begin three new 
medical facility projects at Bay Pines, Tampa and Palo Alto, 
two of which relate to polytrauma rehab and continue our 
priority in this specialized area.
    Finally, we will perform 111,000 interments in 2009, 11 
percent more than in 2007. The $181 million in this budget for 
the National Cemetery Administration is 71 percent above the 
resources available to the Department burial program when the 
President took office. These resources will operationalize the 
six new national cemeteries that will open this year and 
provide a burial option to nearly 1 million previously unserved 
veteran families and will maintain our cemeteries as national 
shrines that will again earn the highest marks in government 
and private sector.
    This budget of nearing $93.7 billion, nearly double from 7 
years ago and with the health care component more than twice 
what it was 7 years ago, will allow us to make progress in the 
care of all of our veterans and will keep us on this quality 
journey in health and management of an extraordinary benefit 
and ensuring the excellence of our final tribute to those who 
shall have borne the battle.
    It is an honor to be with you and I look forward to your 
questions, sir.
    [The prepared statement of Secretary Peake follows:]
      Prepared Statement of Hon. James B. Peake, M.D., Secretary, 
                     Department of Veterans Affairs
    Mr. Chairman and Members of the Committee, good morning. I am happy 
to be here and I am deeply honored that the President has given me the 
opportunity to serve as Secretary of Veterans Affairs. I look forward 
to working with you to build on VA's past successes to ensure veterans 
continue to receive timely, accessible delivery of high-quality 
benefits and services earned through their sacrifice and service in 
defense of freedom.
    I am here today to present the President's 2009 budget proposal for 
VA. The request totals nearly $93.7 billion--$46.4 billion for 
entitlement programs and $47.2 billion for discretionary programs. The 
total request is $3.4 billion above the funding level for 2008. The 
President's ongoing commitment to those who have faithfully served this 
country in uniform is clearly demonstrated through this budget request 
for VA. Resources requested for discretionary programs in 2009 are more 
than double the funding level in effect when the President took office 
7 years ago.
    The President's request for 2009 will allow VA to achieve 
performance goals in four areas critical to the achievement of our 
mission:
     provide timely, accessible, and high-quality health care 
to our highest priority patients--veterans returning from service in 
Operation Enduring Freedom and Operation Iraqi Freedom, veterans with 
service-connected disabilities, those with lower incomes, and veterans 
with special health care needs;
     advance our collaborative efforts with the Department of 
Defense (DOD) to ensure the continued provision of world-class health 
care and benefits to VA and DOD beneficiaries, including progress 
toward the development of secure, interoperable electronic medical 
record systems;
     improve the timeliness and accuracy of claims processing; 
and
     ensure the burial needs of veterans and their eligible 
family members are met and maintain veterans' cemeteries as national 
shrines.
ensuring a seamless transition from active military service to civilian 
                                  life
    One of our highest priorities is to ensure that veterans returning 
from service in Operation Enduring Freedom and Operation Iraqi Freedom 
receive everything they need to make their transition back to civilian 
life as smooth and easy as possible. We will take all measures 
necessary to provide them with timely benefits and services, to give 
them complete information about the benefits they have earned through 
their courageous service, and to implement streamlined processes free 
of bureaucratic red tape.
    We will provide timely, accessible, and high-quality medical care 
for those who bear the permanent physical scars of war as well as 
compassionate care for veterans who suffer from less visible but 
equally serious and debilitating mental health issues, including 
Traumatic Brain Injury (TBI) and Post Traumatic Stress Disorder (PTSD). 
Our treatment of those with mental health conditions will include 
veterans' family members who play a critical role in the care and 
recovery of their loved ones.
    The President's top legislative priority for VA is to implement the 
recommendations of the President's Commission on Care for America's 
Returning Wounded Warriors (Dole-Shalala Commission). The Commission's 
report provides a powerful blueprint to move forward with ensuring that 
service men and women injured during the Global War on Terror continue 
to receive the health care services and benefits necessary to allow 
them to return to full and productive lives as quickly as possible. VA 
has initiated studies to determine appropriate payment levels for 
quality of life, transition assistance, and loss of earnings. The next 
step is for Congress to pass the President's legislation, which will 
modernize the disability compensation system. VA is working closely 
with officials from DOD on the recommendations of the Dole-Shalala 
Commission that do not require legislation to help ensure veterans 
achieve a smooth transition from active military service to civilian 
life.
    For example, VA and DOD signed an agreement in October 2007 to 
provide Federal recovery coordinators to ensure medical services and 
other benefits are provided to seriously-wounded, injured, and ill 
active duty servicemembers and veterans. VA hired the first recovery 
coordinators, in coordination with DOD, and they are located at Walter 
Reed Army Medical Center, National Naval Medical Center, and Brooke 
Army Medical Center. They will coordinate services between VA and DOD 
and, if necessary, private-sector facilities, while serving as the 
ultimate resource for families with questions or concerns about VA, 
DOD, or other Federal benefits.
    In November 2007, VA and DOD began a pilot disability evaluation 
system for wounded warriors at the major medical facilities in the 
Washington, DC area--Washington VA Medical Center, Walter Reed Army 
Medical Center, National Naval Medical Center, and Malcolm Grow Medical 
Center. This initiative is designed to eliminate the duplicative and 
often confusing elements of the current disability processes of the two 
departments. Key features of the disability evaluation system pilot 
include one medical examination and a single disability rating 
determined by VA. The single disability examination is another 
improvement resulting from the recommendations of the Dole-Shalala 
Commission and is aimed at simplifying benefits, health care, and 
rehabilitation for injured servicemembers and veterans.
    VA will continue to work with Congress, DOD, and other Federal 
agencies to aggressively move forward with implementing the Dole-
Shalala Commission recommendations.
                              medical care
    The President's 2009 request includes total budgetary resources of 
$41.2 billion for VA medical care, an increase of $2.3 billion over the 
2008 level and more than twice the funding available at the beginning 
of the Bush Administration. Our total medical care request is comprised 
of funding for medical services ($34.08 billion), medical facilities 
($4.66 billion), and resources from medical care collections ($2.47 
billion). We have included funds for medical administration as part of 
our request for medical services. Merging these two accounts will 
improve and simplify the execution of our budget and will make it 
easier for us to respond rapidly to unanticipated changes in the health 
care environment throughout the year. We appreciate Congress providing 
us with the authority to transfer funding between our medical care 
accounts as this helps ensure we operate a balanced medical program. We 
will evaluate the potential need for adjustments to our medical 
accounts during 2008.
    Information technology (IT) plays a vital role in direct support of 
our medical care program and VA is requesting a significant increase in 
IT funding in 2009, much of which will help ensure we continue to 
provide timely, safe, and high-quality health care services. The most 
critical component of our medical IT program is the continued operation 
and improvement of our electronic health record system, a Presidential 
priority which has been recognized nationally for increasing 
productivity, quality, and patient safety. We must continue the 
progress we have made with DOD to develop secure, interoperable 
electronic medical record systems which is a critical recommendation in 
the Dole-Shalala Commission report. The availability of medical data to 
support the care of patients shared by VA and DOD will enhance our 
ability to provide world-class care to veterans and active duty 
members, including our wounded warriors returning from Afghanistan and 
Iraq.
Workload
    During 2009, we expect to treat about 5,771,000 patients. This 
total is nearly 90,000 (or 1.6 percent) above the 2008 estimate. Our 
highest priority patients (those in Priorities 1-6) will comprise 67 
percent of the total patient population in 2009, but they will account 
for 84 percent of our health care costs.
    We expect to treat about 333,000 veterans in 2009 who served in 
Operation Enduring Freedom and Operation Iraqi Freedom. This is an 
increase of 40,000 (or 14 percent) above the number of veterans from 
these two campaigns that we anticipate will come to VA for health care 
in 2008, and 128,000 (or 62 percent) more than the total in 2007.
Funding for Major Health Care Initiatives
    In 2009 we are requesting nearly $1.3 billion to meet the needs of 
the 333,000 veterans with service in Operation Enduring Freedom and 
Operation Iraqi Freedom whom we expect will come to VA for medical 
care. This is an increase of $216 million (or 21 percent) over our 
resource needs to care for these veterans in 2008.
    The Department's resource request includes $3.9 billion in 2009 to 
continue our effort to improve access to mental health services across 
the country. This is an increase of $319 million, or 9 percent, above 
the 2008 level. These funds will help ensure VA continues to realize 
the aspirations of the President's New Freedom Commission Report, as 
embodied in VA's Mental Health Strategic Plan, to deliver exceptional, 
accessible mental health care. The Department will place particular 
emphasis on providing care to those suffering from PTSD as a result of 
their service in Operation Enduring Freedom and Operation Iraqi 
Freedom. An example of our firm commitment to provide the best 
treatment available to help veterans recover from these mental health 
conditions is our increased outreach to veterans of the Global War on 
Terror, as well as increased readjustment and PTSD services. Our 
strategy for improving access includes increasing mental health care 
staff and expanding our telemental health program that allows us to 
reach about 20,000 additional patients with mental health conditions 
each year.
    Our 2009 request includes $762 million for non-institutional long-
term care services, an increase of $165 million, or 28 percent, over 
2008. By enhancing veterans' access to non-institutional long-term 
care, the Department can provide extended care services to veterans in 
a more clinically appropriate setting, closer to where they live, and 
in the comfort and familiar settings of their homes surrounded by their 
families. This includes adult day health care, home-based primary care, 
purchased skilled home health care, homemaker/home health aide 
services, home respite and hospice care, and community residential 
care. During 2009 we will increase the number of patients receiving 
non-institutional long-term care, as measured by the average daily 
census, to about 61,000. This represents a 38 percent increase above 
the level we expect to reach in 2008.
    VA's medical care request includes nearly $1.5 billion to support 
the increasing workload associated with the purchase and repair of 
prosthetics and sensory aids to improve veterans' quality of life. This 
is $134 million, or 10 percent, above the funding level in 2008. This 
increase in resources for prosthetics and sensory aids will allow the 
Department to meet the needs of the growing number of injured veterans 
returning from combat in Afghanistan and Iraq.
    Requested funding for the Civilian Health and Medical Program of 
the VA (CHAMPVA) totals just over $1 billion in 2009, an increase of 
$145 million (or 17 percent) over the 2008 resource level. Claims paid 
for CHAMPVA benefits are expected to grow by 9 percent (from 7.0 
million to 7.6 million) between 2008 and 2009 and the cost of 
transaction fees required to process electronic claims is rising as 
well.
    Our budget request contains $83 million for facility activations. 
This is $13 million, or 19 percent, above the resource level for 
activations in 2008. As VA completes projects within our Capital Asset 
Realignment for Enhanced Services (CARES) program, we will need 
increased funding to purchase equipment and supplies for newly 
constructed and leased buildings.
Quality of Care
    The resources we are requesting for VA's medical care program will 
allow us to strengthen our position as the Nation's leader in providing 
high-quality health care. VA has received numerous accolades from 
external organizations documenting the Department's leadership position 
in providing world-class health care to veterans. For example, our 
record of success in health care delivery is substantiated by the 
results of the December 2007 American Customer Satisfaction Index 
(ACSI) survey. Conducted by the National Quality Research Center at the 
University of Michigan Business School and the Federal Consulting 
Group, the ACSI survey found that customer satisfaction with VA's 
health care system was higher than the private sector for the eighth 
consecutive year. The data revealed that patients at VA medical centers 
recorded a satisfaction level of 83 out of a possible 100 points, or 6 
points higher than the rating for care provided by the private-sector 
health care industry.
    In December 2007 the Congressional Budget Office (CBO) issued a 
report highlighting the success of VA's health care system. In this 
report--The Health Care System for Veterans: An Interim Report--the CBO 
identified organizational restructuring and management systems, the use 
of performance measures to monitor key processes and health outcomes, 
and the application of health IT as three of the major driving forces 
leading to high-quality health care delivery in VA. In October 2007, 
the Institute of Medicine released a report--Treatment of PTSD: An 
Assessment of The Evidence--that States VA's use of exposure-based 
therapies for the treatment of PTSD is effective. This confirms the 
Department's own conclusions and bolsters our efforts to continue to 
effectively treat veterans of the Global War on Terror who are 
suffering from PTSD and other mental health conditions.
    These external acknowledgments of the superior quality of VA health 
care reinforce the Department's own findings. We use two primary 
measures of health care quality--clinical practice guidelines index and 
prevention index. These measures focus on the degree to which VA 
follows nationally recognized guidelines and standards of care that the 
medical literature has proven to be directly linked to improved health 
outcomes for patients. Our performance on the clinical practice 
guidelines index, which focuses on high-prevalence and high-risk 
diseases that have a significant impact on veterans' overall health 
status, is expected to grow to 86 percent in 2009, or a 1 percentage 
point rise over the level we expect to achieve in 2008. As an indicator 
aimed at primary prevention and early detection recommendations dealing 
with immunizations and screenings, the prevention index will also grow 
by 1 percentage point above the estimated 2008 level, reaching 89 
percent in 2009.
Access to Care
    In April 2006 there were over 250,000 unique patients waiting more 
than 30 days for their desired appointment date for health care 
services. As of January 1, 2008, we had reduced the waiting list to 
just over 69,000. Our budget request for 2009 provides the resources 
necessary for the Department to virtually eliminate the waiting list by 
the end of next year. Improvements in access to health care will result 
in part from the opening of 64 new community-based outpatient clinics 
in 2008 and 51 more in 2009 (bringing the total number to 846).
    The Department will expand its telehealth program which is a 
critical component of VA's approach to improve access to health care 
for veterans living in rural and remote areas. Other strategies include 
increasing the number of community-based outpatient clinics and 
enhancing VA's participation in the National Rural Development 
Partnership that serves as a forum for identifying, discussing, and 
acting on issues affecting those residing in rural areas. In 2009 the 
Department's Office of Rural Health will conduct studies to evaluate 
VA's rural health programs and develop policies and additional programs 
to improve the delivery of health care to veterans living in rural and 
remote areas.
Medical Collections
    The Department expects to receive nearly $2.5 billion from medical 
collections in 2009, which is $126 million, or more than 5 percent, 
above our projected collections for 2008. About $8 of every $10 in 
additional collections will come from increased third-party insurance 
payments, with almost all of the remaining collections resulting from 
growing pharmacy workload. We will continue several initiatives to 
strengthen our collections processes, including expanded use of both 
the Consolidated Patient Account Center to increase collections and 
improve operational performance, and the Insurance Card Buffer system 
to improve third-party insurance verification. In addition, we will 
enhance the use of real-time outpatient pharmacy claims processing to 
facilitate faster receipt of pharmacy payments from insurers and will 
expand our campaign to increase the number of payers accepting 
electronic coordination of benefits claims.
Legislative Proposals
    The President's 2009 budget includes seven legislative proposals 
totaling $42 million. One of these proposals expands legislative 
authority to cover payment of specialized residential care and 
rehabilitation in VA-approved medical foster homes for veterans of 
Operation Enduring Freedom and Operation Iraqi Freedom who suffer from 
TBI. Another proposal would reduce existing barriers to the early 
diagnosis of human immunodeficiency virus (HIV) infection by removing 
requirements for separate written informed consent for HIV testing 
among veterans. This change would ensure that patients treated by VA 
receive the same standard of HIV care that is recommended to non-VA 
patients.
    The 2009 budget also contains three legislative proposals which ask 
veterans with comparatively greater means and no compensable service-
connected disabilities to assume a modest share of the cost of their 
health care. They are exactly the same as proposals submitted but not 
enacted in the 2008 budget. The first proposal would assess Priority 7 
and 8 veterans with an annual enrollment fee based on their family 
income:

------------------------------------------------------------------------
                                                   Annual Enrollment Fee
------------------------------------------------------------------------
Under $50,000....................................                  None
$50,000-$74,999..................................                  $250
$75,000-$99,999..................................                  $500
$100,000 and above...............................                  $750
------------------------------------------------------------------------

    The second legislative proposal would increase the pharmacy co-
payment for Priority 7 and 8 veterans from $8 to $15 for a 30-day 
supply of drugs. And the last provision would equalize co-payment 
treatment for veterans regardless of whether or not they have 
insurance.
    These legislative proposals have been identified in VA's budget 
request for several years. The proposals are consistent with the 
priority system of health care established by Congress, a system which 
recognizes that priority consideration must be given to veterans with 
service-disabled conditions, those with lower incomes, and veterans 
with special health care needs.
    These proposals have no impact on the resources we are requesting 
for VA medical care as they do not reduce the discretionary medical 
care resources we are seeking. Our budget request includes the total 
funding needed for the Department to continue to provide veterans with 
timely, accessible, and high-quality medical services that set the 
national standard of excellence in the health care industry. Instead, 
these three provisions, if enacted, would generate an estimated $2.3 
billion in revenue from 2009 through 2013 that would be deposited into 
a mandatory account in the Treasury.
    One of our highest legislative priorities is to establish the 
position of Assistant Secretary for Acquisition, Logistics, and 
Construction. The person occupying this new position would serve as 
VA's Chief Acquisition Officer, a position required by the Services 
Acquisition Reform Act of 2003. This will elevate the importance of 
these critical functions to the level necessary to coordinate their 
policy direction across the Department's programs and other government 
agencies. An Assistant Secretary with focused policy responsibility for 
acquisition, logistics, and construction would ensure these vital 
activities receive the visibility they need at the highest levels of 
VA. Legislation to accomplish this was introduced in the Senate on 
October 4, 2007, as S. 2138. We would appreciate Congress' support of 
this legislation.
                            medical research
    VA is requesting $442 million to support VA's medical and 
prosthetic research program. Our request will fund nearly 2,000 high-
priority research projects to expand knowledge in areas critical to 
veterans' health care needs, most notably research in the areas of 
mental illness ($53 million), aging ($45 million), health services 
delivery improvement ($39 million), cancer ($37 million), and heart 
disease ($33 million).
    One of our highest priorities in 2009 will be to continue our 
aggressive research program aimed at improving the lives of veterans 
returning from service in Operation Enduring Freedom and Operation 
Iraqi Freedom. The President's budget request for VA contains $252 
million devoted to research projects focused specifically on veterans 
returning from service in Afghanistan and Iraq. This includes research 
in TBI and polytrauma, spinal cord injury, prosthetics, burn injury, 
pain, and post-deployment mental health. Our research agenda includes 
cooperative projects with DOD to enhance veterans' seamless transition 
from military treatment facilities to VA medical facilities, 
particularly in the treatment of veterans suffering from TBI.
    The President's request for research funding will help VA sustain 
its long track record of success in conducting research projects that 
lead to clinically useful interventions that improve the health and 
quality of life for veterans as well as the general population. Recent 
examples of VA research results that have direct application to 
improved clinical care include the use of a neuromotor prosthesis to 
help replace or restore lost movement in paralyzed patients, continued 
development of an artificial retina for those who have lost vision due 
to retinal damage, use of an inexpensive generic drug (prazosin) to 
improve sleep and reduce trauma nightmares for veterans with PTSD, and 
advancements in identifying a new therapy to prevent or slow the 
progression of Alzheimer's disease.
    In addition to VA appropriations, the Department's researchers 
compete for and receive funds from other Federal and non-Federal 
sources. Funding from external sources is expected to continue to 
increase in 2009. Through a combination of VA resources and funds from 
outside sources, the total research budget in 2009 will be almost $1.85 
billion.
                       general operating expenses
    The Department's 2009 resource request for General Operating 
Expenses (GOE) is $1.7 billion. Within this total GOE funding request, 
nearly $1.4 billion is for the management of the following non-medical 
benefits administered by the Veterans Benefits Administration (VBA)--
disability compensation; pensions; education; housing; vocational 
rehabilitation and employment; and insurance. The 2009 budget request 
provides VBA over two times the level of discretionary funding 
available when the President took office and underscores the priority 
this Administration places on improving the timeliness and accuracy of 
claims processing. Our request for GOE funding also includes $328 
million to support General Administration activities.
Compensation and Pensions Workload and Performance Management
    A major challenge in improving the delivery of compensation and 
pension benefits is the steady and sizable increase in workload. The 
volume of claims receipts is projected to reach 872,000 in 2009--a 51 
percent increase since 2000.
    The number of active duty servicemembers as well as reservists and 
National Guard soldiers who have been called to active duty to support 
Operation Enduring Freedom and Operation Iraqi Freedom is one of the 
key drivers of new claims activity. This has contributed to an increase 
in the number of new claims, and we expect this pattern to persist at 
least for the near term. An additional reason that the number of 
compensation and pension claims is climbing is the Department's 
commitment to increase outreach. We have an obligation to extend our 
reach as far as possible and to spread the word to veterans about the 
benefits and services VA stands ready to provide.
    Disability compensation claims from veterans who have previously 
filed a claim comprise about 54 percent of the disability claims 
received by the Department each year. Many veterans now receiving 
compensation suffer from chronic and progressive conditions, such as 
diabetes, mental illness, cardiovascular disease, orthopedic problems, 
and hearing loss. As these veterans age and their conditions worsen, VA 
experiences additional claims for increased benefits.
    The growing complexity of the claims being filed also contributes 
to our workload challenges. For example, the number of original 
compensation cases with eight or more disabilities claimed increased by 
168 percent during the last 7 years, reaching over 58,500 claims in 
2007. Over one-quarter of all original compensation claims received 
last year contained eight or more disability issues. In addition, we 
expect to continue to receive a growing number of complex disability 
claims resulting from PTSD, TBI, environmental and infectious risks, 
complex combat-related injuries, and complications resulting from 
diabetes. Claims now take more time and more resources to adjudicate. 
Additionally, as VA receives and adjudicates more claims, this results 
in a larger number of appeals from veterans and survivors, which also 
increases workload in other parts of the Department, including the 
Board of Veterans' Appeals and the Office of the General Counsel.
    The Veterans Claims Assistance Act of 2000 has significantly 
increased both the length and complexity of claims development. VA's 
notification and development duties have grown, adding more steps to 
the claims process and lengthening the time it takes to develop and 
decide a claim. Also, the Department is now required to review the 
claims at more points in the adjudication process.
    VA will address its ever-growing workload challenges in several 
ways. For example, we will enhance our use of information technology 
tools to improve claims processing. In particular, our claims 
processors will have greater on-line access to DOD medical information 
as more categories of DOD's electronic records are made available 
through the Compensation and Pension Records Interchange project. We 
will also strengthen our investment in Virtual VA, which will reduce 
our reliance upon paper-based claims folders and enable accessing and 
transferring electronic images and data through a Web-based 
application. Virtual VA will also dramatically increase the security 
and privacy of veteran data. The Department will continue to move work 
among regional offices in order to maximize our resources and enhance 
our performance. Also, this year we will complete the consolidation of 
original pension claims processing to three pension maintenance centers 
which will relieve regional offices of their remaining pension work. In 
addition, we will further advance staff training and other efforts to 
improve the consistency and quality of claims processing across 
regional offices.
    Using resources available in 2008, we are aggressively hiring 
additional staff. By the beginning of 2009, we expect to complete a 2-
year effort to hire about 3,100 new staff. This increase in staffing is 
the centerpiece of our strategy to achieve our 145-day goal for 
processing compensation and pension claims in 2009. This represents a 
38-day improvement (or 21 percent) in processing timeliness from 2007 
and a 24-day (or 14 percent) reduction in the amount of time required 
to process claims this year.
    In addition, we anticipate that our pending inventory of disability 
claims will fall to about 298,000 by the end of 2009, a reduction of 
more than 94,000 (or 24 percent) from the pending count at the close of 
2007. At the same time we are improving timeliness, we will also 
increase the accuracy of the compensation claims we adjudicate, from 88 
percent in 2007 to 92 percent in 2009.
Education and Vocational Rehabilitation and Employment Performance
    With the resources provided in the President's 2009 budget request, 
key program performance will improve in both the education and 
vocational rehabilitation and employment programs. The timeliness of 
processing original education claims will improve by 13 days during the 
next 2 years, falling from 32 days in 2007 to 19 days in 2009. During 
this period, the average time it takes to process supplemental claims 
will improve from 13 days to just 10 days. These performance 
improvements will be achieved despite an increase in workload. The 
number of education claims we expect to receive will reach about 
1,668,000 in 2009, or 9 percent higher than last year. In addition, the 
rehabilitation rate for the vocational rehabilitation and employment 
program will climb to 76 percent in 2009, a gain of 3 percentage points 
over the 2007 performance level. The number of program participants is 
projected to rise to 91,700 in 2009, or 5 percent higher than the 
number of participants in 2007.
Funding for Initiatives
    Our 2009 request includes $10.8 million for initiatives to improve 
performance and operational processes throughout VBA. Of this total, 
$8.7 million will be used for a comprehensive training package covering 
almost all of our benefits programs. A little over one-half of the 
resources for this training initiative will be devoted to compensation 
and pension staff while nearly one-quarter of the training funds will 
be for staff in the vocational rehabilitation and employment program. 
These training programs include extensive instruction for new employees 
as well as additional training to raise the skill level of existing 
staff. Our robust training program is a vital component of our ongoing 
effort to improve the quality and consistency of our claims processing 
decisions and will enable us to be more flexible and responsive to 
changing workload demands.
                    national cemetery administration
    Results from the December 2007 ACSI survey conducted by the 
National Quality Research Center at the University of Michigan and the 
Federal Consulting Group revealed that for the second consecutive time 
VA's national cemetery system received the highest rating in customer 
satisfaction for any Federal agency or private sector corporation 
surveyed. The Department's cemetery system earned a customer 
satisfaction rating of 95 out of a possible 100 points. These results 
highlight that VA's cemetery system is a model of excellence in 
providing timely, accessible, and high-quality services to veterans and 
their families.
    The President's 2009 budget request for VA includes $181 million in 
operations and maintenance funding for the National Cemetery 
Administration (NCA), which is 71 percent above the resources available 
to the Department's burial program when the President took office. The 
resources requested for 2009 will allow us to meet the growing workload 
at existing cemeteries by increasing staffing and funding for contract 
maintenance, supplies, and equipment, open new national cemeteries, and 
maintain our cemeteries as national shrines. We will perform 111,000 
interments in 2009, or 11 percent more than in 2007. The number of 
developed acres (7,990) that must be maintained in 2009 will be 8 
percent greater than in 2007.
    Our budget request includes an additional $5 million to continue 
daily operations and to begin interment operations at six new national 
cemeteries--Bakersfield, CA; Birmingham, AL; Columbia-Greenville, SC; 
Jacksonville, FL; Sarasota, FL; and southeastern Pennsylvania. 
Establishment of these six new national cemeteries is directed by the 
National Cemetery Expansion Act of 2003. We plan to open fast track 
burial sections at five of the six new cemeteries in late 2008 or early 
2009, with the opening of the cemetery in southeastern Pennsylvania to 
follow in mid-2009.
    The President's resource request for VA provides $9.1 million in 
cemetery operations and maintenance funding to address gravesite 
renovations as well as headstone and marker realignment. When combined 
with another $7.5 million in minor construction, VA is requesting a 
total of $16.6 million in 2009 to improve the appearance of our 
national cemeteries which will help us maintain cemeteries as shrines 
dedicated to preserving our Nation's history and honoring veterans' 
service and sacrifice.
    With the resources requested to support NCA activities, we will 
expand access to our burial program by increasing the percent of 
veterans served by a burial option within 75 miles of their residence 
to 88 percent in 2009, which is 4.6 percentage points above our 
performance level at the close of 2007. In addition, we will continue 
to increase the percent of respondents who rate the quality of service 
provided by national cemeteries as excellent to 98 percent in 2009, or 
4 percentage points higher than the level of performance we reached 
last year.
          capital programs (construction and grants to states)
    The President's 2009 budget request includes just over $1 billion 
in capital funding for VA, $5 million of which will be derived from the 
sale of assets. Our request for appropriated funds includes $581.6 
million for major construction projects, $329.4 million for minor 
construction, $85 million in grants for the construction of State 
extended care facilities, and $32 million in grants for the 
construction of State veterans cemeteries.
    The 2009 request for construction funding for our health care 
programs is $750.0 million--$476.6 million for major construction and 
$273.4 million for minor construction. All of these resources will be 
devoted to continuation of the Capital Asset Realignment for Enhanced 
Services (CARES) program. CARES will renovate and modernize VA's health 
care infrastructure, provide greater access to high-quality care for 
more veterans, closer to where they live, and help resolve patient 
safety issues. Some of the construction funds in 2009 will be used to 
expand our polytrauma system of care for veterans and active duty 
personnel with lasting disabilities due to polytrauma and TBI. This 
system of care provides the highest quality of medical, rehabilitation, 
and support services.
    Within our request for major construction are resources to continue 
five medical facility projects already underway:

     Denver, CO ($20.0 million)--replacement medical center 
near the University of Colorado Fitzsimons campus
     Lee County, FL ($111.4 million)--new building for an 
ambulatory surgery/outpatient diagnostic support center
     Orlando, FL ($120.0 million)--new medical center 
consisting of a hospital, medical clinic, nursing home, domiciliary, 
and full support services
     San Juan, PR ($64.4 million)--seismic corrections to the 
main hospital building
     St. Louis, MO ($5.0 million)--medical facility 
improvements and cemetery expansion.

    Major construction funding is also provided to begin three new 
medical facility projects:

     Bay Pines, FL ($17.4 million)--inpatient and outpatient 
facility improvements
     Tampa, FL ($21.1 million)--polytrauma expansion and bed 
tower upgrades
     Palo Alto, CA ($38.3 million)--centers for ambulatory care 
and polytrauma rehabilitation center.

    In addition, we are moving forward with plans to develop a fifth 
Polytrauma Rehabilitation Center in San Antonio, TX, with the $66 
million in funding provided in the 2007 emergency supplemental.
    Minor construction is an integral component of our overall capital 
program. In support of the medical care and medical research programs, 
minor construction funds permit VA to address space and functional 
changes to efficiently shift treatment of patients from hospital-based 
to outpatient care settings; realign critical services; improve 
management of space, including vacant and underutilized space; improve 
facility conditions; and undertake other actions critical to CARES 
implementation. Further, minor construction resources will be used to 
comply with the energy efficiency and sustainability design 
requirements mandated by the President.
    We are requesting $130.0 million in construction funding to support 
the Department's burial program--$105.0 million for major construction 
and $25.0 million for minor construction. Within the funding we are 
requesting for major construction are resources for gravesite expansion 
and cemetery improvement projects at three national cemeteries--New 
York (Calverton, $29.0 million); Massachusetts ($20.5 million); and 
Puerto Rico ($33.9 million).
    VA is requesting $5 million for a new land acquisition line item in 
the major construction account. These funds will be used to purchase 
land as it becomes available in order to quickly take advantage of 
opportunities to ensure the continuation of a national cemetery 
presence in areas currently being served. All land purchased from this 
account will be contiguous to an existing national cemetery, within an 
existing service area, or in a location that will serve the same 
veteran population center.
                         information technology
    The President's 2009 budget provides more than $2.4 billion for the 
Department's IT program. This is $389 million, or 19 percent above our 
2008 budget, and reflects the realignment of all IT operations and 
functions under the management control of the Chief Information 
Officer.
    IT is critical to the timely, accessible delivery of high-quality 
benefits and services to veterans and their families. Our health care 
and benefits programs can only be successful when directly supported by 
a modern IT infrastructure and an aggressive program to develop 
improved IT systems that will meet new service delivery requirements. 
VA must modernize or replace existing systems that are no longer 
adequate in today's rapidly changing health care environment. It is 
vital that VA receives a significant infusion of new resources to 
implement the IT-related recommendations presented in the Dole-Shalala 
Commission report.
    Within VA's total IT request of more than $2.4 billion, 70 percent 
(or $1.7 billion) will be for IT investment (non-payroll) costs while 
the remaining 30 percent (or $729 million) will go for payroll and 
administrative requirements. Of the $389 million increase we are 
seeking for IT, 86 percent will be devoted to IT investment. The 
overwhelming majority ($271 million) of the IT investment funds will 
support VA's medical care program, particularly VA's electronic health 
record system.
    VA classifies its IT investment functions into two major 
categories--those that directly impact the delivery of benefits and 
services to veterans (i.e., veteran facing) and those that indirectly 
affect veterans through administrative and infrastructure support 
activities (i.e., internal facing). For 2009, our $1.7 billion request 
for IT investment is comprised of $1.3 billion in veteran facing 
activities and $418 million in internal facing IT functions. Within 
each of these two major categories, IT programs and initiatives are 
further differentiated between development functions and operations and 
maintenance activities.
    The increase in this budget of 94 full-time equivalent staff will 
provide enhanced support in two critical areas--information protection 
and IT asset management. Additional positions are requested for 
information security: testing and deploying security measures; IT 
oversight and compliance; and privacy, underscoring our commitment to 
the protection of veteran and employee information. The increase in IT 
asset management positions will bring expertise to focus on three 
primary functions--inventory management, materiel coordination, and 
property accountability.
    Our 2009 budget request contains $93 million in support of our 
cyber security program to continue our commitment to make VA the gold 
standard in data security within the Federal Government. We continue to 
take aggressive steps to ensure the safety of veterans' personal 
information, including training and educating our employees on the 
critical responsibility they have to protect personal and health 
information. We are progressing with the implementation of the Data 
Security--Assessment and Strengthening of Controls Program established 
in May 2006. This program was established to provide focus to all 
activities related to data security.
    As part of our continued operation and improvement of the 
Department's electronic health record system, VA is seeking $284 
million in 2009 for development and implementation of the Veterans 
Health Information Systems and Technology Architecture (HealtheVet-
VistA) program. This includes a health data repository, a patient 
scheduling system, and a reengineered pharmacy application. HealtheVet-
VistA will equip our health care providers with the modern tools they 
need to improve safety and quality of care for veterans. The 
standardized health information from this system can be easily shared 
between facilities, making patients' electronic health records 
available to all those providing health care to veterans.
    Until HealtheVet-VistA is operational, we need to maintain the 
VistA Legacy system. This system will remain operational as new 
applications are developed and implemented. This approach will mitigate 
transition and migration risks associated with the move to the new 
architecture. Our budget provides $99 million in 2009 for the VistA 
Legacy system.
    In support of our benefits programs, we are requesting $23.8 
million in 2009 for VETSNET. This will allow VA to complete the 
transition of compensation and pension payment processing off of the 
antiquated Benefits Delivery Network. This will enhance claims 
processing efficiency and accuracy, strengthen payment integrity and 
fraud prevention, and position VA to develop future claims processing 
efficiencies, such as our paperless claims processing strategy. To 
further our transition to paperless processing, we are seeking $17.4 
million in 2009 for Virtual VA which will reduce our reliance on paper-
based claims folders through expanded use of electronic images and data 
that can be accessed and transferred electronically through a Web-based 
platform.
    We are requesting $42.5 million for the Financial and Logistics 
Integrated Technology Enterprise (FLITE) system. FLITE is being 
developed to address a long-standing internal control material weakness 
and will replace an outdated, non-compliant core accounting system that 
is no longer supported by industry. Our 2009 budget also includes $92.6 
million for human resource management application investments, 
including the Human Resources Information System which will replace our 
current human resources and payroll system.
                                summary
    Our 2009 budget request of nearly $93.7 billion will provide the 
resources necessary for VA to:

     provide timely, accessible, and high-quality health care 
to our highest priority patients--veterans returning from service in 
Operation Enduring Freedom and Operation Iraqi Freedom, veterans with 
service-connected disabilities, those with lower incomes, and veterans 
with special health care needs;
     advance our collaborative efforts with DOD to ensure the 
continued provision of world-class health care and benefits to VA and 
DOD beneficiaries, including progress toward the development of secure, 
interoperable electronic medical record systems;
     improve the timeliness and accuracy of claims processing; 
and
     ensure the burial needs of veterans and their eligible 
family members are met and maintain veterans' cemeteries as national 
shrines.

    I look forward to working with the Members of this Committee to 
continue the Department's tradition of providing timely, accessible, 
and high-quality benefits and services to those who have helped defend 
and preserve liberty and freedom around the world.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Akaka to 
     LTG James B. Peake, Secretary, Department of Veterans Affairs
Board of Veterans' Appeals Performance
    Question 1. Despite an increase in the number of appeals decided 
per Veterans Law Judge, the Board of Veterans' Appeals cycle time 
continues to increase. Please explain this disparity.
    Response. The Board of Veterans' Appeals (Board) ``cycle time'' is 
the average time it takes from when a case is received at the Board 
until a decision on that appeal is dispatched, excluding time the case 
was with the appellant's service organization representative. The 
Board's cycle time decreased from 148 days in 2006 to 136 days in 2007. 
The Board anticipates, however, that cycle time may increase in the 
short term due to fluctuations in the receipt of certain types of 
``priority'' appeals.
    The Board gives priority to certain types of cases: including cases 
that are advanced on the docket, cases remanded to the Board from the 
U.S. Court of Appeals for Veterans Claims, cases returned from the 
agency of original jurisdiction (AOJ) after a Board remand, and cases 
in which the Board has held a hearing. Historically, when a higher 
percentage of the Board's workload is made up of these priority 
appeals, cycle time will increase. This is because ``priority'' 
appeals, by nature of being a priority, are quickly sent to a veterans 
law judge for adjudication, with minimal waiting time. Contrarily, 
original appeals that do not fall into a ``priority'' category must be 
worked in their regular order on the Board's docket.
    As productivity continues to increase, the Board is better able to 
expeditiously adjudicate these priority appeals, and therefore make 
greater progress in adjudicating original appeals. The more original 
appeals that the Board is able to adjudicate, the more progress will be 
made in reducing the backlog. However, the short-term effect is that 
cycle time may increase as more of the earlier cases on the docket are 
decided.
    It is the Board's intention to meet or exceed the 2009 target of 
150 days for cycle time. The Board's strategic target remains 104 days. 
The Board expects to make progress toward that strategic target as 
newly hired attorneys become fully trained and as the Board continues 
to work to improve efficiency and productivity by emphasizing training, 
focusing on reducing avoidable remands, and ensuring that decisions are 
clear, concise, coherent, and correct.
Court Decision
    Question 2. Should legislative and judicial relief from the effect 
of the Haas decision fail, what are VA's plans for adjudicating the 
nearly 11,000 Agent Orange claims that have been received since August 
2006?
    Response. The Haas decision could potentially affect many veterans 
who have claims based on herbicide exposure in which the only evidence 
of exposure is the receipt of the Vietnam Service Medal or service on a 
vessel off the shore of Vietnam. In order to be prepared for 
adjudication of claims that will be influenced by the decision rendered 
by the U.S. Court of Appeals for the Federal Circuit, the Department of 
Veterans Affairs (VA) released instructions in December of 2006 to all 
regional offices on the correct process for tracking and controlling 
claims with Haas issues. Although the Department of Defense (DOD) could 
not provide us with exact numbers, it estimated that over 800,000 
veterans are potentially affected. More 13,000 claims have already been 
received. We do not believe that Congress intended to provide 
presumptive exposure to military personnel who served far from Vietnam 
merely because they were awarded the Vietnam Service Medal (VSM).
    If Haas is not reversed, the veterans affected by the decision fall 
within the class in the Nehmer v. United States litigation. Under that 
litigation VA would be required to attempt to identify previously 
denied veterans and readjudicate their claims awarding service 
connection for any of the presumptive disabilities authorized by Agent 
Orange Act back to the date the disability was first claimed. Among the 
presumptive disabilities are several very common conditions, such as 
diabetes and prostate cancer. We do not have data on current number of 
denied veterans. We are unable to provide the number because no file 
exists in DOD or VA of veterans awarded the VSM. As a consequence, VA 
would be required to review all Vietnam era veterans with denied 
conditions that are presumptive under the Agent Orange Act.
Proposed Legislative Initiatives
    Question 3. The Administration has proposed making permanent the 
authority for IRS income data matching for VA eligibility 
determinations. Congress frequently relies on this provision as a saver 
to pay for enhancements to VA benefit programs. Can Congress expect the 
Administration to increase its yearly mandatory budget request to pay 
for such improvements in entitlement programs?
    Response. Currently, the mandatory compensation and pension (C&P) 
account is authorized to reimburse VBA, the Veterans Health 
Administration (VHA) and Information Technology Service (ITS) for 
operating costs associated with performing the Internal Revenue 
Service/Social Security Administration (IRS/SSA) data matches. The 
income information is used to verify and determine the correct benefit 
payment, eligibility for health care services, co-payment status and 
enrollment priority assignment. Income verification helps to ensure the 
integrity of both VBA's benefit programs, and VHA's health care 
programs. While the operating costs of maintaining these matches total 
nearly $27 million in fiscal year 2009 the anticipated savings 
generated is estimated at $35 million in fiscal year 2009. The net 
savings over 10 years should reach $270 million. The ability to ensure 
that veterans and survivors are receiving the appropriate level of 
benefits and health care services amounts to good stewardship of 
taxpayer dollars, but the savings aren't separately identifiable within 
the C&P appropriation. However, if this program is not extended, VA 
would have to request more funds from Congress to pay benefits, and 
some of these benefits would be erroneously paid due to the loss of 
this oversight ability.
Dedicated Staff for Rating Schedule Updates
    Question 4. Given the various Commission recommendations on 
modernizing the rating schedule, I am concerned that VA does not have 
the resources to undertake this monumental task when the appropriate 
time arises. How many staff at VA are dedicated solely to updating the 
rating schedule?
    Response. The regulations staff in the C&P service, consisting of 
seven staff members and the services of a contract consultant, is 
responsible for maintenance of all regulations in Parts 3, 4 and 13 of 
title 38 Code of Federal Regulations (CFR).
    A contract was awarded to Economic Systems, Inc. the first week of 
February 2008. Two studies are currently underway: Transition Benefits 
recommended by the Dole-Shalala Commission, and Quality of Life and 
earnings loss payments. Both studies are expected to be completed by 
the end of July 2008.
    The rating schedule has been undergoing a complete review and 
revision since the 1990's through a deliberative process that includes 
input from, the Veterans Health Administration, non-VA medical experts, 
and veterans service organizations, among others. The general public 
also has the opportunity to review and comment on proposed changes to 
the schedule. To date, 12 of the 16 body system sections in the 
schedule have been revised, and a 13th is nearing publication. The 
remaining three body systems are in various stages of development. 
Major changes that have been made include the addition of new 
conditions and deletion of obsolete and rarely used conditions, 
updating of medical terminology, and most importantly, the development 
of more objective criteria, based on current medical knowledge. These 
changes will promote consistency in evaluations nationwide. Necessary 
revisions of body systems in the rating schedule are being carried out 
on an ongoing basis.
Adjudication of Global War on Terror Claims
    Question 5. VA expects to continue to receive a high volume of 
Global War on Terror claims. Given the prioritization of such claims, 
would it be helpful to have dedicated FTE toward this initiative or a 
Tiger Team of adjudicators for this purpose?
    Response. Since the onset of the combat operations in Afghanistan 
and Iraq, VA has provided expedited and case-managed services for all 
seriously injured Global War on Terror (GWOT) veterans and their 
families. This individualized service begins at the military medical 
facilities where the injured servicemembers return for treatment, and 
continues as these servicemembers are medically separated and enter the 
VA medical care and benefit systems. Each regional office (RO) is 
required to have an Operation Enduring Freedom/Operation Iraqi Freedom 
(OEF/OIF) coordinator to case manage all claims from seriously injured 
veterans received in their jurisdiction. The coordinator facilitates 
the veteran's claim through the entire process and is responsible for 
keeping the veteran and his/her family informed as to the status of 
their claim.
    In February 2007, VBA began to prioritize the processing of all 
GWOT veterans' disability claims. This initiative covered all active 
duty, National Guard, or Reserve veterans who were deployed in the OEF/
OIF theatres or in support of those combat operations. Each RO has 
dedicated personnel processing GWOT claims on a priority basis. We also 
established two development centers in Phoenix and Roanoke to support 
OEF/OIF claims processing, and we are in the process of expanding these 
centers and adding two more development centers in Lincoln and Togus.
Status of VA/DOD Disability Evaluation Pilot
    Question 6(a). In November 2007, VA and DOD began a pilot 
disability evaluating system for servicemembers at the major medical 
facilities in the Washington, DC, area. To date, how many 
servicemembers have participated in this pilot program?
    Response. As of February 22, 2008, a total of 181 soldiers, 
sailors, airmen, and marines have been designated by the Department of 
Defense (DOD) for inclusion in the pilot; and 158 servicemembers have 
participated in the pilot program.

    Question 6(b). How many examinations have occurred at the 
Washington, DC, VA Medical Center?
    Response. As of February 22, 2008, 553 specific examinations had 
been conducted, an average of about 4 examinations per servicemember in 
pilot.

    Question 6(c). How long does it take for a servicemember to receive 
a decision on a claim?
    Response. The strategic target for the pilot is to reduce the 
average time it takes for a servicemember separated or retired through 
the disability evaluation system (DES) pilot and to receive their first 
benefit check from VA on the first day of payment eligibility. The 
pilot began on November 26, 2007. None of the participants have 
completed the full physical evaluation board (PEB) process and been 
separated from service. As of February 17, 2008, one servicemember had 
been found medically unfit to return to duty by the service PEB and 
referred to VA for rating. That rating, completed in less than 5 days, 
was accepted by the member, and he is currently pending separation. The 
time from referral to the medical evaluation board (MEB) to the 
member's acceptance of the decision was less than 50 days.

    Question 6(d). If this pilot program were expanded to cover all 
servicemembers who receive a disability decision through the MEB/PEB 
process, how would VBA's ability to meet current requirements be 
effected?
    Response. Expansion to cover all servicemembers being processed 
through the MEB/PEB process would impact both VHA and VBA.
    At both the MEB and PEB stages of the process, some individuals are 
found medically fit for retention. VA is conducting the examinations in 
this DES pilot prior to the MEB and PEB fitness determination. Members 
who are found fit will have undergone VA examinations that would not 
have occurred but for the pilot. Additionally, full implementation of 
the pilot would most logically involve VA in the re-examination of 
retirees on the temporary disability retired list. In many 
circumstances, these too would be additional examinations normally not 
done.
    From a benefits perspective, additional military services 
coordinators would be needed to counsel individual servicemembers, take 
claims, schedule examinations, coordinate with PEB liaison officers, 
and perform other activities that are part of the DES process.
    VBA is currently assessing the resources required to meet our 
current and future needs, should the pilot become the standard business 
practice in the DES. We believe firmly that a single separation exam is 
an important component in a single rating determination. At this point 
in the DES pilot, we have too few data to determine if this process 
will become a successful standard for all separating servicemembers. 
Work remains to be done on the process, scalability and model to ensure 
a successful system-wide deployment.
Cuts to the Office of the Inspector General
    Question 7. The President's budget recommends a significant cut to 
the Office of the Inspector General. This comes at a time when the IG 
has just finished its review of the failings in the quality management 
of the Marion VAMC surgical program, in addition to other audits. 
Please explain why the Administration is seeking this cut, and which 
specific investigations or staff would be eliminated.
    Response. While the budget proposed for the Office of Inspector 
General (OIG) supports fewer positions, the resource level is 
sufficient to meet its mandated obligations and to respond to the most 
urgent issues raised by Congress and the VA. OIG will continue to 
assess and prioritize its workload to maximize productivity and ensure 
the greatest impact possible. This budget will allow OIG to continue to 
address the challenges and growing demand for VA services.
Numbers of OEF/OIF Veterans
    Question 8(a). VA has repeatedly underestimated the growth in 
workload from OEF/OIF veterans. The current budget submission projects 
that by the end of 2009, VA will have provided health care to 333,275 
OEF/OIF veterans, and estimates that in 2007 and 2008, VA will have 
served 205,600 and 293,300, respectively. Yet, the most recent VA 
Health Care Utilization report states that as of the 4th Quarter of 
2007, VA had served a total of 299,585 OEF/OIF veterans in 2007 and 
229,015 by the 1st quarter of 2007, indicating that VA served at least 
70,570 new OEF/OIF veterans in 2007. Does VA stand by the prediction 
that between the end of 2007 and the end of 2009, VA will serve only 
33,000 new OEF/OIF veterans?
    Response. Yes, based on our experience in fiscal year 2007 and 
fiscal year 2008 the 14 percent increase (39,930) appears realistic. 
The fiscal year 2007 actual OEF/OIF unique patients were 205,628. The 
299,585 figure referenced is a cumulative total since the beginning of 
the OEF/OIF. VA estimates it will treat 293,345 and 333,275 OEF/OIF 
unique patients in 2008 and 2009, respectively.

    Question 8(b). Further, please explain significant underestimation 
of the total number of veterans served in 2007, and explain the changes 
made in the estimating process as a result.
    Response. VA has updated the model each year using the most current 
baseline data available and has made several enhancements to the model 
methodology. Significant improvements over the past 3 years include 
enhanced methodology for projecting OEF/OIF veteran enrollment and 
health care use, enhanced veteran enrollment projections, and inclusion 
of a more detailed analysis of enrollee reliance on VA health care 
versus other providers. VA has also added several new data sources 
including the Social Security Death Index, which improved the 
projections by providing a more accurate count of enrolled veterans. In 
addition, the 2000 Census Long Form has provided more detailed 
information on the income of non-service-connected veterans, and has 
enabled us to more accurately assign veterans into the income-based 
enrollment priorities.
    The fiscal year 2007 budget estimate (excluding the effects of 
proposed enrollment fees and pharmacy co-payment increases) was 
5,498,290 unique patients. The fiscal year 2007 actual was 5,478,929 
unique patients, a difference of 0.4 percent or 19,361 unique patients. 
The fiscal year 2008 projection is 5,681,420 unique patients of which 
4,219,270 had been seen by December 2007.
Construction
    Question 9. The President's budget request would cut both major and 
minor construction by nearly fifty percent. Minor construction would be 
reduced as well. Some estimates of the current Non-Recurring 
Maintenance backlog indicate it could be as high $1.5 billion, yet only 
$800 million is designated for these projects. Please describe VA's 
plan to address the widespread facility problems, and explain how the 
funds requested in this budget would address the looming backlog of 
projects in all areas of construction.
    Response. VHA prioritizes major and minor projects at a national 
level using set criteria; therefore, the highest priority projects, 
which best reflect the goals and mission contained in VA's strategic 
plan and VHA's goals, are included within the budget. The remaining 
unfunded major and minor project needs will have to compete in the next 
submission cycle. Critical needs that were not supported within this 
budget will be addressed through other capital asset investment 
options, such as leases or nonrecurring maintenance (NRM).
    NRM requests follow a similar prioritizing process; however, the 
program and funding is decentralized. The veterans integrated service 
networks (VISN) use criteria to prioritize and fund the highest needs 
within its respective VISNs. The remaining backlog of NRM needs will be 
addressed on an as needed basis. If critical issues arise, VISNs can 
supplement the NRM allocation with medical facilities funds.
Priority 8 Veterans
    Question 10. The Committee continues to work to resolve the issues 
surrounding health care eligibility for priority 8 veterans. In this 
process, it is essential to determine the effect on VA of admitting 
this group of veterans. Unfortunately, VA has not been able to provide 
a reliable prediction of the number of middle-income veterans who would 
enter the system if they were made eligible. What is the latest 
estimate for the number of such veterans who have been denied access?
    Response. Since the suspension of enrollment in Priority 8 in 
January 2003 through the end of fiscal year 2007, a total of 386,767 
Priority Group 8 veterans have applied for enrollment and were 
determined to be ineligible to enroll. This figure does not include 
enrollees who were initially denied enrollment and subsequently 
enrolled in an eligible priority group based on a change in the 
veteran's status.
Research
    Question 11(a). The budget request would once again cut research 
funding. Among the research projects that would be cut are: 39 from 
acute and traumatic injury, 42 from mental health, 26 from substance 
abuse, and 36 from diabetes and major complications, to name but a few. 
Yet in his testimony before the Committee on February 13, 2007, 
Secretary Peake said that mental health and the needs of servicemembers 
recently returned from Iraq and Afghanistan are major priorities. In 
light of the major advances achieved by VA researchers, and the 
enormity of the challenges ahead, how does VA justify a cut in research 
funding and the elimination of so many projects?
    Response. VA remains committed to increasing the impact of its 
research program. We have carefully prioritized our research projects 
to ensure they address the needs of OEF/OIF veterans as well as other 
veteran populations. In fact, the fiscal year 2009 budget request 
includes $252 million for research directed at the full range of health 
issues of OEF/OIF veterans, including Traumatic Brain Injury (TBI) and 
other neurotrauma, Post Traumatic Stress Disorder (PTSD) and other 
post-deployment mental health, prosthetics and amputation health care, 
polytrauma, and other health issues. Additional research funding 
priorities covered by the fiscal year 2009 budget request include aging 
and geriatrics, chronic diseases and health promotion, personalized 
medicine, women's health, and long-term care. VA researchers also 
compete for and receive funding from other Federal and non-Federal 
research sponsors that provide additional resources for VA's research 
program.

    Question 11(b). The Institute of Medicine recently published a 
report addressing the status of research on PTSD treatments. One clear 
recommendation was that more research be conducted to determine the 
most effective treatments, and that such research ought to be centrally 
coordinated and directed. What plans does VA have to coordinate and 
advance research on PTSD?
    Response. VA has an ongoing, well-established collaboration with 
other Federal funding organizations to coordinate and advance PTSD 
treatment research. The Institute of Medicine (IOM) report details 
important research recommendations that will guide future PTSD 
interventional studies in meeting the highest accepted standards for 
randomized controlled trials. VA convened a scientific working group in 
February 2008 that included National Institute of Mental Health (NIMH) 
and DOD representatives to consider the IOM report as well as to 
provide guidance for scientists developing PTSD treatment studies. 
Other ongoing activities include VA's collaboration with DOD on 
reviewing PTSD and TBI research proposals for funding, issuing joint 
research solicitations with NIMH, and managing the PTSD research 
portfolio to preclude overlap, all of which will lead to even more 
treatment advances for PTSD.
    VA continues to lead in supporting treatment research related to 
the mental and physical health consequences of military service, 
including PTSD. VA is particularly proud of the scientists who 
contributed to establishing the evidence base supporting the 
effectiveness of a psychotherapeutic approach and prolonged-exposure 
therapy, highlighted as an example of the highest level of evidence in 
the IOM report (October 2007) now being implemented in clinical care.
    A few examples of important PTSD research currently being conducted 
by VA include: a large trial to determine how well the drug risperidone 
works in patients with chronic PTSD when other drug therapy has failed; 
a multi-site trial of the drug prazosin that has been found to be 
particularly effective in reducing sleep-related problems in PTSD 
patients; a longitudinal study of Vietnam veterans to determine the 
long-term health consequences related to PTSD; and an innovative study 
following veterans from Iraq to determine emotional and psychological 
changes related to their deployment.

    Question 11(c). Tinnitus is now the number 1 service-connected 
disability for servicemembers returning from Iraq and Afghanistan, yet 
VA dedicates very little research to this condition. How does VA plan 
to address tinnitus, and the linkages between this condition and other 
serious medical conditions?
    Response. VA supports a broad sensory loss research portfolio, 
including several projects addressing tinnitus. VA scientists have 
developed a research-based model of tinnitus clinical management that 
is designed for efficient implementation in VA audiology clinics. The 
researchers plan to implement this program at one VA audiology clinic 
and then evaluate its effectiveness and acceptability to patients and 
audiologists. If shown to be effective, the program could establish the 
standard for tinnitus management at all VA medical centers and clinics. 
VA researchers are also developing a diagnostic test to identify 
tinnitus, which is currently done by self-report.
    In collaboration with DOD, VA investigators are conducting a study 
to determine which auditory processing disorders are more often 
associated with exposure to high-explosive blasts, whether there is 
spontaneous recovery of auditory function after blast exposure, how 
much recovery may be expected, and how rapidly it occurs.
    In addition, VA researchers are developing new methods capitalizing 
on the ability of the ear to produce low level sounds in response to 
tones delivered to the ear for the early detection of changes in the 
cochlea before permanent noise-induced hearing loss has occurred. Early 
detection can allow for the implementation of precautionary procedures 
to protect military personnel.
    In the clinical setting, VA tinnitus treatment involves a 
progressive approach ranging from patient education to more 
comprehensive services involving amplification, biofeedback-relaxation 
techniques, cognitive-behavioral therapy, drug therapy, sound therapy 
(maskers and masking devices), and combined techniques. Because 
tinnitus has many causes, many of which are outside the audiology scope 
of practice, the approach to tinnitus is multi-disciplinary. Some of 
these services are done by audiologists and some are referred to 
appropriate professionals. VA has also produced a veteran health 
initiative on hearing impairment that devotes a chapter to tinnitus.
Vocational Rehabilitation and Employment
    Question 12. Budget documents state that VR&E has implemented over 
80 of the 2004 Task Force report and that you ``plan to continue to 
implement the remaining recommendations based on receiving the 
requested levels of funding and FTE.'' Please explain in detail how 
your requested fiscal year 2009 level of 1,073 FTE--which provides no 
increase over the fiscal year 2008 level--will allow you to continue to 
implement these recommendations.
    Response. Fiscal year 2009 will see a continued focus on 
implementing and refining the remaining 2004 task force 
recommendations. Our initiatives include targeted training for the 
field on changes to policy and procedures resulting from task force 
recommendations and a study of long-term outcomes geared toward 
increasing our rehabilitation rate. The budget level of 1,073 full time 
employees (FTE) represents a 6 percent increase since release of the 
task force report and will enable us to achieve our program goals of 
high-quality, consistent, and outcome-oriented services to veterans.

    Question 13. In your budget documents, you note that VA's VR&E 
program ``will continue to grow in the area of increasing partnerships 
with other agencies and organizations.'' Please provide the Committee 
with the amount of funds earmarked for these partnerships in fiscal 
year 2008 and proposed for fiscal year 2009.
    Response. Vocational rehabilitation and employment (VR&E) continues 
to work to extend our partnerships with the community in order to 
enhance services for veterans and develop employment opportunities for 
veterans. This outreach, funded at over $4.5 million in fiscal year 
2008 and $5 million in fiscal year 2009, includes: disabled transition 
assistance program (DTAP) presentations and materials, coordination 
with community and military organizations via career fairs; together 
with DOD, support of early intervention through the Coming Home to Work 
program; a joint demonstration project with the Department of Labor 
VETS program to improve employment services to veterans; and aggressive 
outreach to the employment community.
Education
    Question 14. VA has requested a funding level of only $13 million 
for reimbursement to State Approving Agencies for fiscal year 2009. 
This would constitute over a 30 percent reduction in funds available 
for this purpose. Please explain the impact of this reduction on VA's 
workload, and on the accuracy and timeliness of approval of education 
programs.
    Response. VA did not submit a legislative proposal to restore 
funding in the fiscal year 2009 budget submission because bills were 
already before Congress that would restore or increase funding.
    S. 1215 would continue State Approving Agency (SAA) funding at $19 
million for years after fiscal year 2007. At a hearing before the 
Senate Veterans' Affairs Committee on May 9, 2007, VA testified in 
support of S. 1215. VA stated that the statutory requirement to reduce 
SAA funding to $13 million would cause SAAs to reduce staffing, 
severely curtail outreach activities, and perform fewer supervisory and 
approval visits. VA further stated that reduced funding might cause 
some SAAs to decline to enter into contracts with VA and that VA would 
have to assume the additional duties.
    H.R. 2579 would make only $13 million available from the 
Readjustment Benefits (RB) account for SAA expenses and permit VA to 
use General Operating Expenses (GOE) appropriations for the additional 
funds. At a hearing before the House Committee on Veterans' Affairs, 
Subcommittee on Economic Opportunity, on June 21, 2007, VA testified 
against H.R. 2579 because VA maintains that funding for SAA activities 
should be an authorized expenditure from the RB account rather than a 
discretionary expense from the GOE account to guarantee that funding is 
available for these contracts.
Information Technology
    Question 15. The budget request calls for improved collaboration 
with the Department of Defense to efficiently and effectively transfer 
records between the two agencies, to share critical medical 
information, and to process disability claims quickly. The 2009 budget 
request does not provide details on how these outcomes will be achieved 
or resourced. Specifically, how does the fiscal year 2009 budget 
request support IT initiatives to improve VA/DOD collaboration?
    Response. The fiscal year 2009 budget request currently identifies 
over $65 million to support improved VA/DOD collaboration.
    The largest portion of the request, $50.2 million is in direct 
support of the wounded, ill and injured, and supports the following:

     Automated workflow processes, an expanded document 
management capability and the exchange of clinical data from the 
combined exam process.
     The TBI/psychological health center of excellence 
requirement to exchange information collected in the cognitive 
assessment tool.
     Non-clinical case management by the creation and 
integration of a case management system and the development of the My 
e-Benefits portal.
     More timely exchange of current admissions, discharge and 
transfer data to support accurate compensation determination.
     Development of an embedded fragment registry.

    Indirect support for interagency collaboration is also provided by 
various electronic data sharing initiatives. The fiscal year 2009 
budget request includes $10.5 million to support the following 
projects:

     Expansion of the VA/DOD identity repository (VADIR) and 
the implementation of the VA Identity and Access Management Strategy. 
VADIR is the enterprise database that contains the common population of 
active servicemembers, veterans and beneficiaries served by VA and DOD.
     Clinical health data repository (CHDR), allowing 
computable exchange of lab data with DOD.
     Federal health information exchange (FHIE), to provide 
clinically relevant data feeds, from DOD's electronic health records 
(EHR) to the FHIE repository, for active duty, retired and separated 
servicemembers. FHIE is DOD and VA's current interagency method of 
storing electronic health records, when servicemembers are separated 
from active duty.

    The fiscal year 2009 budget request also includes $5 million to 
support the North Chicago Federal Health Care Facility initiative. 
Funds will be used to address Navy health care provider and 
administrative functions such as patient registration and billing, 
software designs to enable functions that include single sign-on and 
exchange of orders, and project management services.
NCA
    Question 16. The 2009 budget request includes $5 million for land 
acquisition for future National Cemeteries. How many projects does VA 
believe these funds will support, and over what period of time will 
this money be spent?
    Response. It is difficult to estimate how many land purchases the 
$5 million will support or over what period of time the money will be 
spent. Recent land acquisition costs associated with major cemetery 
construction projects have ranged from $4 million to $12 million. Much 
will depend on the location, the existing market conditions, and the 
number of acres involved. The money will be spent when an acceptable 
parcel becomes available for purchase.
Benefits Delivery at Discharge
    Question 17. How does the President's budget request support BDD, 
especially for members of the Guard and Reserve?
    Response. The President's budget will support expansion and 
enhancement of services we provide to separating servicemembers, 
including benefits delivery at discharge (BDD) and services to members 
of the Guard and Reserves. We operate 153 BDD sites, and we are working 
with DOD to pilot a new DES for servicemembers undergoing the MEB/PEB 
process. DOD will use this program to determine fitness for continued 
military service, and VA will use the program to determine service-
connected disabilities and their severity for purposes of expediting 
disability compensation benefits.
    The fiscal year 2009 budget request supports expansion of our 
outreach to returning National Guard and Reserve soldiers and their 
families. When units of National Guard or Reserves soldiers are 
returning home, VA provides briefings and assists with filing claims. A 
memorandum of agreement was signed in 2005 between VA and the National 
Guard Bureau to institutionalize our partnership and support better 
communication. We are encouraging State National Guard coalitions to 
improve local communication and coordination of benefits briefings to 
assure that National Guard and Reserve soldiers are fully aware of 
benefits. In 33 States, memoranda of understanding have been signed 
between VA, the State National Guard offices, and the State department 
of veterans affairs to promote the relationship and cooperation in 
providing services and benefits to their members. VA has a memorandum 
of agreement with the Army Reserve in the concurrence process that will 
formalize this relationship, as we did with the National Guard. We are 
also working on agreements with the other Reserve components to 
formalize those relationships.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Richard Burr to 
     LTG James B. Peake, Secretary, Department of Veterans Affairs
Medical Care
    Question 1(a). The nearly 2.8 million veterans in receipt of 
disability compensation have a wide range of conditions. I would 
imagine that the Department of Veterans Affairs (VA) offers treatment 
or physical therapy for a good number of those conditions which could, 
at best, make a veteran less disabled or, at worst, halt or slow the 
progression of a disability. Is that a fair characterization?
    Response. Yes, VA offers treatment of physical therapy for a good 
number of conditions. Patients who do not have chronic, degenerative, 
or non-reversible disabling conditions are most likely to benefit from 
those treatments. In fiscal year 2007, VA provided outpatient physical 
therapy services to nearly 304,000 unique veterans, occupational 
therapy to more than 104,000 unique veterans, and kinesio therapy to 
more than 58,000 unique veterans.

    Question 1(b). How many of the 2.8 million service-disabled 
veterans seek treatment from VA for their service-connected conditions?
    Response. In fiscal year 2007, VA treated 1,373,129 veterans for 
their service-connected condition in outpatient clinics and 60,474 as 
inpatients. But, because of the overlap (with some patients receiving 
treatment both inpatient and outpatient), the net is 1,378,742 veterans 
treated overall.

    Question 1(c). For those who do seek treatment, do you see an 
improvement in their disability status?
    Response. Yes, for example, as patients improve their functioning 
in the mental health care and polytrauma/TBI, symptoms associated with 
disability can often decrease, even if the disability status remains 
unchanged.

    Question 1(d). Does VA track the relationship between the treatment 
it provides and improved disability status?
    Response. VA does not systematically track physical disability 
status as part of the clinical process of delivering mental health care 
and polytrauma/TBI care. Disability rating is a separate process 
performed by VBA.

    Question 1(e). For those veterans who do not seek treatment from 
VA, what incentives do you have to get them to do so?
    Response. The best incentive for veterans to seek treatment is the 
high-quality care provided at our facilities and our world-class 
electronic health record system. To let veterans know about these 
opportunities, and given the importance of outreach to servicemembers 
and veterans of Operation Enduring Freedom/Operation Iraqi Freedom 
(OEF/OIF), VA promotes and conducts activities at both national and 
local levels. Our outreach begins with a letter from the Secretary of 
Veterans Affairs to each newly separated OEF/OIF veteran. The letter 
thanks veterans for their service, welcomes them home, and provides 
basic information about health care and other benefits provided by VA. 
To date, VA has mailed over 766,000 initial letters and 150,000 follow-
up letters to veterans. VA also partners with Federal agencies, 
Veterans Service Organization (VSOs), and State, county, and local 
agencies and governments to contact veterans, and we offer outreach to 
active duty personnel at military demobilization sites. Special 
outreach to Guard and Reserve soldiers is an integral part of VA's 
outreach efforts; we provide briefings on benefits and health care 
services at town hall meetings, family readiness groups, and during 
unit drills near the homes of returning Guard and Reserve soldiers. Our 
Vet Centers provide outreach and a full range of readjustment 
counseling services to combat veterans in a comfortable, nonclinical 
environment for veterans.
    Veterans choose their health care providers based on a number of 
factors such as: quality of care, economics, demographics, and the 
ability of the health care provider to respond to their unique health 
care needs. VA's proven track record for providing high-quality health 
care is equal to or higher than private-sector health care providers. 
VA health care is also cost effective for eligible veterans. Moreover, 
VA understands veterans' issues and the health consequences resulting 
from their military experience whether combat related or not.
    VHA's most powerful incentive is the scope and quality of its 
services. As a nationally integrated health care system, VHA provides 
veterans with a high-quality and low-cost health care. Through a 
network of 153 hospitals and medical centers, over 731 CBOCs, 209 Vet 
Centers, and 135 nursing home facilities, VA offers to eligible 
veterans a full continuum of health care--from health promotion, 
disease prevention, diagnostic, therapeutic, and rehabilitative to 
recovery and palliative care.

    Question 2(a). The Government Accountability Office (GAO) 
criticized VA in prior years for relying on unspecified ``management 
efficiencies'' to reduce its need for appropriated dollars. GAO rightly 
opined that, if VA couldn't measure how exactly it saved money by 
becoming more efficient, then it shouldn't count those savings in the 
budget. That does not mean, however, that VA should stop looking to 
become more efficient altogether. Please describe VA's efforts to 
contain costs by improving operations and service delivery?
    Response. Performance measures are used to evaluate the performance 
of all facilities in the field to determine if network and facility 
directors are providing the oversight to ensure our veterans are 
receiving appropriate care in a cost effective manner.
    For example, efficient formulary management is an area of cost 
avoidance that is measured. This is accomplished through the use of 
preferred drug regimens developed at the national and/or network level. 
The overall cost avoidance is based on the aggregation of potential 
cost savings in 15 drug regimens on the pharmacy benefits management 
grid. The potential cost saving is based upon closing 75 percent or 
more of the gap between current costs and the average costs of the five 
networks with the lowest unit costs.
    Advanced clinical access (ACA) is a patient-centered, 
scientifically-based set of redesign principles and tools that enable 
staff to examine their health care delivery processes and redesign 
them. The ACA principles are extraordinarily powerful and result not 
only in improved access, but also in improved patient, staff and 
provider satisfaction, improved quality, improved efficiency, and 
decreased cost. The implementation of ACA assists health care delivery 
providers eliminate delays within its systems by implementing key 
principles such as measuring supply and demand, reducing backlogs, 
decreasing appointment types, developing contingency plans, predicting 
and anticipating patient care needs and improving efficiency through 
actions such as optimizing rooms and equipment.
    The Office of Productivity, Efficiency and Staffing provides 
effective management tools for the systematic, longitudinal measurement 
and reporting of productivity, efficiency and staffing in VHA. It 
produces recommendations for standards and guidance to enhance the 
provision of safe, efficient, effective and compassionate care. The 
office conducts studies and produce data on ``best practices'' to 
optimize clinical productivity, efficiency and staffing, promoting the 
goals of clinical excellence and accessible health care. The scope of 
this office includes the creation and publication of longitudinal 
databases, directives, guidelines, best practices, benchmarks.
    The foundation of VHA's integrated delivery system is a primary 
care model and, as such, was the first priority for the development of 
a staffing model. The primary care panel size staffing model is fully 
operational in VHA. A panel size defines the number of active patients 
assigned to each primary care provider. The staffing model permits VHA 
to measure the overall productivity of primary care providers, system 
capacity and staffing. The staffing guidance establishes that for every 
1200 active primary care patients (adjusted for patient risk, support 
staff and exam room capacity), a 1.0 primary care direct patient care 
provider is recommended. This places VHA in the unique position of 
having the ability to study and understand the relationship of panel 
size (productivity) versus outcomes (quality and satisfaction), access, 
and efficiency (cost).
    VHA staffing models will be consistent with the President's 
Executive Order to ensure health care programs administered by the 
Federal Government promote quality and efficient health care delivery. 
The Executive Order further calls for Government programs to explore 
similar initiatives in the private and non-Federal sector with the 
purpose of improving the quality and efficiency of health care. To this 
end, VHA will continue to use a relative value unit (RVU) model to 
measure productivity of specialty providers. RVU is an industry 
accepted metric used in Medicare and the private sector that considers 
the time and intensity of the service delivered by the specialty 
physician. The use of an RVU model permits the assessment of 
productivity and efficiency (cost/RVU) within VHA and comparison to 
external benchmarks.
    Other examples are: (a) decrease the cost per unit in fee care for 
radiation therapy; (b) decrease the cost per unit in fee care for non-
health care common procedure coding system in home services and 
supplies; (c) decrease unintended variation in length of stay in non-VA 
contract hospitalization for pacemaker care and (d) decrease unintended 
variation in level of service in non-VA contract hospitalization for 
cardiology care.

    Question 2(b). How does VA measure whether it is, in fact, becoming 
more efficient and, yet, maintain its quality?
    Response. The actuarial model reflects the impact of VA health care 
clinical practices that are expected to result in more efficient use, 
thereby moderating the increase for 2009 expenditures.

     Clinical cost avoidance: Cost is decreased through 
initiatives like ACA, management of inpatient care, and high degree of 
management for pharmaceuticals.
     Pharmacy cost avoidance: This item recognizes that VA's 
intensity trend growth (cost trend) will be slower relative to the 
private sector as a whole because of its formulary and robust pharmacy 
benefit management.

    Question 3(a). VA's medical care budget has been criticized by some 
as not providing sufficient resources to account for medical inflation.
    Response. The President's 2009 request includes total budgetary 
resources of $41.2 billion for VA medical care, an increase of $2.3 
billion or 5.9 percent over the 2008 level and more than twice the 
funding available at the beginning of the Bush administration. Our 
total medical request fully accounts for inflation and is comprised of 
funding for medical services ($34.08 billion), medical facilities 
($4.66 billion), and resources from medical care collections ($2.47 
billion).

    Question 3(b). Please provide the assumptions that you used to 
build your request for medical services and medical facilities.
    Response. Our 2009 request for $41.2 billion in support of our 
medical care program was largely determined by three key cost drivers 
in the actuarial model we use to project veteran enrollment in VA's 
health care system as well as the use of health care services of those 
enrolled:

     inflation;
     trends in the overall health care industry; and
     trends in VA health care.

    The impact of inflation will increase our resource requirements for 
acute inpatient and outpatient care by more than $1.4 billion.
    There are several trends in the U.S. health care industry that 
continue to increase VA's cost of doing business regardless of any 
changes in enrollment, number of patients treated, or program 
initiatives. The two most significant trends are the rising use and 
intensity of health care services. In general, patients are using 
medical care services more frequently and the intensity of the services 
they receive continues to grow. For example, sophisticated diagnostic 
tests, such as magnetic resonance imaging (MRI), positron emission 
tomography (PET), and computed tomography (CT), are now more frequently 
used either in place of, or in addition to, less costly diagnostic 
tools such as x-rays. As another illustration, advances in cancer 
screening technologies have led to earlier diagnosis and prolonged 
treatment which may include increased use of costly pharmaceuticals to 
combat this disease. These types of medical services have resulted in 
improved patient outcomes and higher quality health care.
    The cost of providing timely, high-quality health care to our 
Nation's veterans is also growing as a result of several factors that 
are unique to VA's health care system. We expect to see changes in the 
demographic characteristics of our patient population. Our patients as 
a group will be older, will seek care for more complex medical 
conditions, and will be more heavily concentrated in the higher cost 
priority groups. Furthermore, veterans are submitting disability 
compensation claims for an increasing number of medical conditions, 
which are also increasing in complexity.

    Question 3(c). What inflationary factors are included in your 
assumptions? What inflation rates did you apply to those factors?
    Response. Inflation factors such as medical inflation and special 
cost trends such as pharmacy, which reflects the increase or decrease 
in a constant set of services due to labor and supply costs, were 
included in the assumptions.

    Question 3(d). How were the inflation rates determined?
    Response. Assumptions about future inflation trends are developed 
by a workgroup of VA staff and experts on health care trends in the 
U.S. The workgroup reviews VA historical inflation trends and 
historical and estimated Medical Consumer Price Index (CPI) trends in 
developing the assumptions. Separate inflation trends are developed and 
applied to inpatient services, ambulatory services, pharmacy, and 
prosthetics. This allows the model to be sensitive to the different 
inflationary pressures within the various services. The inflation 
factors are then used in the model to trend forward the unit costs from 
the most recently completed fiscal year to develop unit costs for 
future years. The composite impact of the multiple inflation trends in 
the expenditure projections supporting the 2009 VA health care budget 
was 4.63 percent.

    Question 3(e). Are there significant one-time expenditures, such as 
equipment purchases, obligated in fiscal year 2008 that explain why 
obligations for medical services are expected to grow at a rate that is 
less than expected Consumer Price Index inflation?
    Response. Yes, the equipment decrease of $1.131 billion is the 
result of one-time purchases of state-of-the-art equipment in fiscal 
year 2008 and investments in non-recurring maintenance of $0.3 billion.

    Question 3(f). What other factors help to explain the low 
percentage increase in expected obligations from fiscal year 2008 to 
2009?
    Response. As stated in the response to Question 3(e), the equipment 
decrease of $1.131 billion is the result of one-time purchases of 
state-of-the-art equipment in fiscal year 2008 and investments in non-
recurring maintenance of $0.3 billion.

    Question 4(a). VA's medical care budget has also been criticized 
for possibly underestimating demand for VA care, i.e., many believe 
you'll see more Global War on Terror veterans than you've projected. 
How did you arrive at the number of total veterans you estimated would 
seek treatment in fiscal year 2009 for each priority group? How many 
total episodes of care (inpatient, outpatient, Vet Center visits, etc.) 
did you project for fiscal year 2009 relative to fiscal year 2008?
    Response. VA uses an actuarial model to forecast patient demand and 
associated resources needs. Actuarial modeling is the most rational way 
to project the resource needs of a health care system like the VHA. The 
annual patient projections generated by the VA enrollee health care 
projection model are a function of the projected enrolled population 
and the mix and intensity of workload for those enrollees as projected 
by the model. The patient projections are then adjusted to account for 
those enrollees who seek only non-modeled services such as Vet Centers. 
While historical relationships are used to develop the patient 
projection model, it is recognized that there may be variation between 
projected and actual annual patient counts. These variations derive 
from differences between priority groups in the percent of respective 
enrollees who use VHA services. In addition to the projections made by 
actuarial model, VA tracks actuals against projections on a monthly 
basis for the prior year and adjustments are made to the budget 
accordingly.
    The estimates in the 2009 President's submission represent the best 
possible estimates based on the information available at that time. 
Workload estimates are shown in the chart below:

            Summary of Workloads for VA and Non-VA Facilities
------------------------------------------------------------------------
                                         2008
             Description                Current      2009      Increase/
                                       Estimate    Estimate    Decrease
------------------------------------------------------------------------
Outpatient Visits (000):
  Staff.............................      57,139      62,024      4,885
  Fee...............................       6,604       7,211        607
  Readjustment Counseling...........       1,113       1,222        109
                                     -----------------------------------
      Total.........................      64,856      70,457      5,601
                                     ===================================
Patients Treated:
  Acute Hospital Care...............     567,503     573,326      5,823
  Rehabilitative Care...............      13,933      13,748       (185)
  Psychiatric Care..................     119,948     130,548     10,600
  Nursing Home Care.................      92,144      93,002        858
  Subacute Care.....................       7,318       6,294     (1,024)
  Residential Care..................      26,962      26,520       (442)
                                     -----------------------------------
      Inpatient Facilities, Total...     827,808     843,438     15,630
                                     ===================================
Average Daily Census:
  Acute Hospital Care...............       8,356       8,219       (137)
  Rehabilitative Care...............       1,097       1,073        (24)
  Psychiatric Care..................       5,343       5,899        556
  Nursing Home Care.................      34,633      34,970        337
  Subacute Care.....................         195         145        (50)
  Residential Care..................       8,157       8,072        (85)
                                     -----------------------------------
      Inpatient Facilities, Total...      57,781      58,378        597
  Home and Community-Based Care.....      44,192      61,029     16,837
                                     -----------------------------------
      Inpatient and Home and             101,973     119,407     17,434
       Community-Based Care, Grand
       Total........................
                                     ===================================
Length of Stay:
  Acute Hospital Care...............         5.4         5.2       (0.2)
  Rehabilitative Care...............        28.8        28.5       (0.3)
  Psychiatric Care..................        16.3        16.5        0.2
  Nursing Home Care.................       137.6       137.2       (0.4)
  Subacute Care.....................         9.8         8.4       (1.4)
  Residential Care..................       110.7       111.1        0.4

Dental Procedures...................   3,475,395   3,620,884    145,489
------------------------------------------------------------------------

    Question 4(b). How did you arrive at the number of Operation 
Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans you 
estimated would seek treatment? How many episodes of care did you 
assume for these veterans?
    Response. VA uses an actuarial model to forecast patient demand and 
associated resources needs. Actuarial modeling is the most rational way 
to project the resource needs of a health care system like VHA. The 
estimates in the 2009 President's submission represent the best 
possible estimates based on the information available at that time. VA 
estimates it will treat 293,345 and 333,275 OEF/OIF unique patients in 
2008 and 2009, respectively. In addition to the projections made by 
actuarial model, VA tracks actuals against projections on a monthly 
basis for the prior year and adjustments are made to the budget 
accordingly.
    The annual OEF/OIF patient projections generated by the VA enrollee 
health care projection model are a function of the projected enrolled 
population and the mix and intensity of workload for those enrollees as 
projected by the model. While historical relationships are used to 
develop the patient projection model, it is recognized that there may 
be variation between projected and actual annual patient counts. These 
variations derive from differences between priority groups in the 
percent of respective enrollees who use VHA services. The number of 
OEF/OIF veterans projected to seek services was adjusted from the model 
results to account for veterans who only use non-modeled services and 
non-enrolled veterans. Using the base year 2006 enrollee health care 
projection model, VA projects following use of modeled services for 
OEF/OIF enrolled veterans:

------------------------------------------------------------------------
                Service Category                     2008        2009
------------------------------------------------------------------------
Inpatient bed days of care......................      53,646      65,506
Special program services bed days of care.......     135,507     188,842
Ambulatory care services........................   4,090,239   5,078,094
Outpatient mental health services...............      47,884      67,995
Pharmacy/durable medical equipment services.....   2,803,401   3,595,196
Other devices and equipment services............     153,932     198,672
Dental procedures...............................     314,798     377,898
------------------------------------------------------------------------

    Question 4(c). To get a sense of how accurate VA's forecasting of 
demand is, how did your projected demand in the fiscal year 2007 budget 
match with the actual demand numbers?
    Response. The fiscal year 2007 budget estimate excluding the 
effects of proposed enrollment fees and pharmacy co-payment increases 
was 5,498,290 unique patients. The fiscal year 2007 actual was 
5,478,929 unique patients, a difference of 0.4 percent or 19,361 unique 
patients.

    Question 4(d). How has your projected demand for fiscal year 2008 
matched up with actual demand so far this year?
    Response. The fiscal year 2008 projection is 5,681,420 unique 
patients of which 4.2 million had been seen by December 2007. The 
fiscal year 2008 OEF/OIF fiscal year projection is 293,345 of which 
126,000 had been seen by December 2007.

    Question 5. What is the per-patient cost for veterans in each of 
the eight priority groups? What is the per-patient cost of OEF/OIF 
veterans?
    Response. Cost per patient, fiscal year 2009 estimates by priority 
group is shown in the chart below.

------------------------------------------------------------------------
                                                             Cost Per
                     Priority Groups                          Patient
------------------------------------------------------------------------
1.......................................................         $13,943
2.......................................................           6,501
3.......................................................           5,755
4.......................................................          22,477
5.......................................................           7,122
6.......................................................           3,359
1-6.....................................................           8,997
7.......................................................           3,837
8.......................................................           3,946
7-8.....................................................           3,916
OEF/OIF.................................................           3,802
------------------------------------------------------------------------

    Question 6. Assuming that veterans received 100 percent of their 
care from VA (i.e., there was no reliance on other sources of care), 
what is the total cost of providing health care to veterans in each of 
the eight priority groups?
    Response. Based on an analysis using the VA enrollee health care 
projection model, VA projects that an additional $77.9 billion would be 
expended in fiscal year 2009 if all enrollees obtained 100 percent of 
their care for modeled services from VHA. The current reliance 
expenditures in the table below reflect the model settings and 
assumptions developed to inform the fiscal year 2009 budget process. 
Non-modeled services such as Vet Centers, long-term care, spina bifida 
care, and foreign medical programs are excluded.
    The 100 percent reliance expenditures reflect the cost estimates 
when adjustments under the current reliance scenario are set to 100 
percent for all modeled services, including special programs, dental 
and pharmacy. For the 100 percent reliance scenario, all other 
assumptions outside of reliance reflect the current scenario; the unit 
costs for new services are the same as those developed under the 
current reliance scenario. This assumes that VA will provide services 
in-house to the same extent that services are currently provided. 
Capacity constraints would require many of these services to be 
purchased in the community at costs that will vary from VA costs. These 
projected additional expenditures do not include the costs of capital 
infrastructure that would be needed to provide services in-house under 
a 100 percent reliance scenario.

----------------------------------------------------------------------------------------------------------------
                                                                            2009 Expenditure Projections ($ in
                                                                                         millions)
                                                                Average  ---------------------------------------
                       Priority Level                         Enrollment               100 percent
                                                                            Current      Reliance    Additional
                                                                            Reliance                Expenditures
----------------------------------------------------------------------------------------------------------------
1...........................................................     955,551     $8,984.4    $19,529       $10,544.5
2...........................................................     575,201      2,215.4      6,396.6       4,181.2
3...........................................................   1,034,069      3,089.5     10,509.2       7,419.7
4...........................................................     242,301      3,417.3      7,937.4       4,520.2
5...........................................................   2,349,789     10,604.7     30,123.0      19,518.3
6...........................................................     265,712        466.4      2,311.8       1,845.4
7a..........................................................      19,985         38.7        322.4         283.8
7c..........................................................     560,975      1,039.6      8,745.9       7,706.3
8a..........................................................      77,648        171.4      1,161.7         990.3
8c..........................................................   1,621,256      3,308.8     24,232.9      20,924.2
                                                             ---------------------------------------------------
All.........................................................   7,702,486    $33,336.3   $111,270       $77,933.7
                                                             ===================================================
----------------------------------------------------------------------------------------------------------------

    Question 7. What provisions in the budget advance or contribute to 
the Military Sexual Trauma Program?
    Response. In fiscal year 2007, The Office of Mental Health Services 
(OMHS) funded a military sexual trauma (MST) support team that is 
designed to help ensure that VA is in compliance with legally mandated 
monitoring of MST screening and treatment. The team also helps to 
coordinate and expand legally mandated education and training efforts 
related to MST, and to promote best practices in the field.
    In fiscal year 2008, OMHS approved funding for additional personnel 
in order to enable the expansion of training/education and program 
development efforts, particularly with regard to MST among men. For 
example, OMHS conducts monthly national training teleconference and 
sponsors an annual MST clinical training program. OMHS has focused on 
increasing veterans' access to MST related care by redesigning and 
disseminating a MST brochure for veterans; making materials available 
to clinical staff on-line; training efforts targeted at frontline staff 
who are often pivotal in ensuring that veterans get directed to the 
people able to help them get access to MST related care; and, 
increasing staff awareness of issues specific to men who experience 
MST.
    In fiscal year 2009, the MST support team will assess the need for 
additional residential treatment programs/treatment tracks for MST, 
continue to focus on improving access to MST related care, assure that 
all MST coordinators receive evidence-based training for trauma and 
assure that the residential and in-patient treatment environment 
promotes safety, security and privacy. Based on our initial fiscal year 
2008 focus on MST among men there will additional needs for improving 
access and training in this specific area.

    Question 8(a). It is my understanding that VA is expected to update 
its physical therapy qualification standards by July 2008. Is this 
correct? If not correct, please provide a timeline on when those 
standards will be updated?
    Response. Yes. Proposed qualification standards for physical 
therapy are currently under review for concurrence within VA from all 
parties involved (e.g., labor partners, human resources, etc.). We 
expect that final qualification standards would be approved for 
implementation in 2008.

    Question 8(b). Are there qualification standards for other VA 
service providers that are in the process of being revised or will soon 
begin the process of being revised? If so, please provide the scheduled 
updates.
    Response. We are currently revising or developing new qualification 
standards for the following health care occupations:

------------------------------------------------------------------------

                                      Received
------------------------------------------------------------------------
Blind rehabilitation specialist.....   11/2004  Fall 2008
Nurse anesthetist (CRNA)............    5/2006  Summer 2008
Occupational therapist..............    3/2006  Summer 2008
Pharmacist..........................    1/2004  Fall 2008
Social worker.......................   12/2003  Fall 2008
------------------------------------------------------------------------

    Question 9. What are VA's plans with respect to the authority 
granted it under section 201 of Public Law 109-461?
    Response. In May 2007, VA provided a report to Congress entitled 
``Marriage and Family Therapy Workload.'' As a follow-up to that 
report, a recently initiated occupational study will assess the current 
and future use of therapists and counselors within VA. During this 
endeavor, VA has been in contact with key officials at the American 
Association for Marriage and Family Therapy, the American Counseling 
Association, the American Mental Health Counselors Association, and VA 
professionals in the areas of mental health, social work and pastoral 
counseling.
    We have received a great deal of information from these 
organizations. This information, along with a survey of facility 
staffing and health care needs that VA will undertake in the next few 
months, will allow VA to create an action plan to properly use these 
professionals.
Compensation and Pension
    Question 1. If the fiscal year 2009 budget request is adopted, 
direct full-time employees for the Compensation and Pension Service 
will increase by over 2,600 from fiscal year 2007 to fiscal year 2009. 
With those staffing levels, VA expects to complete approximately 
943,000 claims in fiscal year 2009, which is about 118,000 more claims 
than were decided in fiscal year 2007. Although I applaud the increase 
in total production, VA will be producing only 45 additional decisions 
per year for each additional direct full-time employee hired since 
fiscal year 2007. Do you think this is a good return on our investment? 
Do you expect to see bigger gains in productivity in later years?
    Response. Our aggressive recruitment program to increase the 
staffing level in C&P program is absolutely essential to reducing our 
pending claims inventory and providing more timely decisions to 
veterans. Because it takes 2 years for new employees to complete their 
training and become productive in all aspects of claims processing, 
this initial investment in both formal and on-the-job training must be 
made.
    Our recruitment plan calls for us to continue to add new employees 
throughout 2008. This timeline allows us to support their training 
requirements and complete the necessary infrastructure changes to our 
facilities. As a result of our recruitment initiative as well as our 
normal rate of employee attrition, we project that more than one third 
of our workforce will have less than 2 years of experience at the end 
of fiscal year 2008.
    We fully expect decision output per employee to continue increase 
in subsequent years as these new employees complete their training and 
gain experience.

    Question 2(a). In the fiscal year 2008 budget proposal, VA 
projected productivity of 101 claims per direct full-time employee in 
fiscal year 2008. Now, VA is predicting that productivity in fiscal 
year 2008 will be only 85.2 claims per direct full-time employee. What 
factors account for this 16 percent drop in this productivity goal 
since last year?
    Response. The significant increase in new hires lowers the overall 
average of cases completed per employee, since these are less 
experienced workers

    Question 2(b). How do you determine the per-full-time-employee 
output goal?
    Response. It is important to understand that for the purposes of 
the C&P budget, we report output per direct FTE for our primary and 
most resource-intensive work unit, disability claims requiring a rating 
decision. We project to complete over 878,000 disability rating claims 
this fiscal year and over 942,000 in fiscal year 2009. However, in 
total we will complete over 2.2 million award actions of all types, as 
well as nearly 7 million non-claims related correspondence actions, 
over 340,000 fiduciary actions, 8,500 military service briefings to 
nearly 400,000 servicemembers, nearly 7 million telephone calls, and 1 
million personal interviews. Our direct labor employees in C&P support 
all of these requirements, as well as appellate processing 
requirements, and include managerial, supervisory, and administrative 
support personnel in the field and in Headquarters.
    In projecting output per FTE for disability rating claims, VBA 
takes into account the total number of direct labor FTE in C&P and the 
experience level of our employees. Employee experience is categorized 
in 6-month increments until the journey level is attained. An average 
weight is assigned to the projected contribution at each experience 
level. The weights for fiscal year 2008 are as follows:

        0-6 months: 40 percent
        6-12 months: 60 percent
        12-18 months: 70 percent
        18-24 months: 80 percent

    Question 3. During fiscal year 2008, the Compensation and Pension 
Service expects a direct full-time employee level of 10,304 and a 
productivity level of 85.2 decisions per direct full-time employee. If 
that same level of staffing was maintained in fiscal year 2009 but 
productivity improved to 100 claims per direct employee--a level VA has 
achieved in the past--VA would be able to handle over 1 million claims. 
That's almost 10 percent more claims than VA expects to complete in 
fiscal year 2009 with the addition of almost 700 direct full-time 
employees. What factors were considered by VA in deciding to seek more 
employees rather than simply focusing on increasing productivity of the 
existing employees?
    Response. VA considered the continuing rate of increase in our 
disability claims workload, as well as increases in all other workload 
areas including public contact and outreach; pension, burial, and other 
ancillary benefit claims; and appellate workload. Additional resources 
are also required to support more and better training, an enhanced and 
expanded quality assurance program, and an aggressive program of field 
oversight, all of which are also essential to improving the quality and 
consistency of our decisions. Increasing and maintaining a staffing 
level commensurate with our increasing workloads in all areas will be 
key to reducing the inventory, improving both the quality and 
timeliness of service delivery, and ensuring we are meeting the needs 
of veterans and their families.

    Question 4. As partial justification for the requested staffing 
level for the Compensation and Pension Service, the Administration's 
fiscal year 2009 budget request includes the following explanation:

        Recent decisions of the Court of Appeals for Veterans Claims 
        (CAVC) have also had an impact on [VA's] ability to bring 
        claims inventories into a more acceptable range and make 
        progress in achieving our timeliness goals * * *. Court 
        decisions that mandate the specific content of our notices to 
        claimants and the specific timing of the notice impose both 
        highly complex and problematic duties in a claims system that 
        was designed to be informal.

    Are there specific CAVC opinions that, if overturned by Congress, 
would help improve VA's ability to handle its caseload without 
negatively impacting outcomes for veterans? If so, please list the 
specific opinions.
    Response. We have identified the following decisions of the United 
States Court of Appeals for Veterans Claims (Veterans Court) that, if 
overturned, would improve our ability to manage our caseload without 
negatively impacting outcomes for veterans:

    Mayfield v. Nicholson, 19 Vet. App. 103 (2005) (Mayfield I)--
Framework was provided for prejudicial error analysis concerning all 
four Veterans Claims Assistance Act (VCAA) notice elements. The Court 
held that first element notice error, informing the claimant what is 
needed to substantiate his/her claim, is presumptively prejudicial and 
the burden automatically shifts to VA in all cases before the Veterans 
Court to demonstrate that did not prejudice the appellant. The U.S. 
Court of Appeals for the Federal Circuit (Federal Circuit) affirmed 
this holding in Sanders v. Nicholson, 487 F.3d 881 (2007), and further 
held that any error by VA in providing the notice is presumptively 
prejudicial to the appellant.
    These decisions primarily contribute to decisional documents being 
unnecessarily lengthy and complex, as any error in the approximately 
800,000 notice letters VA sends out annually would be presumptively 
prejudicial. Also, it delays resolution of appeals by the Board and the 
increased number of remands from the Board solely for notice compliance 
exacerbates VBA's workload and claims processing delays with little 
tangible benefit flowing to the claimant.

    Pelegrini v. Principi, 18 Vet. App. 112, 121 (2004)--VA's 
implementing regulation imposes a fourth requirement that VA ``request 
that the claimant provide any evidence in the claimant's possession 
that pertains to the claim,'' and that notice is defective if it does 
not specifically make such a request.
    This decision imposes a burden upon veterans service 
representatives (VSR) to ensure that VA's notice document specifically 
includes this request.

    Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006)--Notice must 
be provided to a claimant of how a VA service connection claim may be 
substantiated as to all five elements of that claim, to include 
disability rating and effective date, and that certain standards apply 
for the timing and content of that notice. The Court extended the 
notice requirements of 38 U.S.C. Sec. 5103(a) to the disability rating 
and effective date elements as well.
    The Court also held that, if a claimant's application suggests 
there is ``specific information or evidence necessary to resolve an 
issue relating to elements of a claim,'' VA must ``tailor the notice to 
inform the claimant of the evidence and information required to 
substantiate the elements of the claim reasonably raised by the 
application's wording.''
    This decision significantly expanded the content of notice letters 
with requirements for heightened specificity on downstream elements 
that we do not believe are consistent with the intent of the VCAA to 
only provide generic notice of how to substantiate a claim.

    Kent v. Nicholson, 20 Vet. App. 1 (2006)--In claims to reopen for 
service connection on the basis of new and material evidence, the VCAA 
requires VA to review the bases for denial in the prior decision and 
respond with a notice letter that describes what evidence would be 
necessary to substantiate the element or elements required to establish 
service connection that were found insufficient in the previous denial. 
Failure to comply with this requirement, in most circumstances, is 
presumed to be prejudicial error.
    This decision places high burden upon VSRs to ensure that VCAA 
notice is compliant with this holding as VSRs must review the file to 
determine the exact basis of previous the denial and also inform the 
claimant of possible evidence and/or theories to substantiate a claim 
that were not considered in the previous denial. In many circumstances 
such detailed notice may not be possible without the assistance of a 
rating qualified decisionmaker.

    Hupp v. Nicholson, 21 Vet. App. 342 (2007)--The Court held that the 
notice provided in response to a claim for dependency and indemnity 
compensation (DIC) benefits under 38 U.S.C. Sec. 1310 must include:

    (1) A statement of the conditions, if any, for which a veteran was 
service-connected at the time of his or her death;
    (2) an explanation of the evidence and information required to 
substantiate a DIC claim based on a previously service-connected 
condition; and
    (3) an explanation of the evidence and information required to 
substantiate a DIC claim based on a condition not yet service-
connected.

    This decision imposes high burden upon VSRs to review claims file 
and create a notice document that is compliant with this holding and 
lengthens the time to process such claims.

    Palor v. Nicholson, 21 Vet. App. 325 (2007)--Persons claiming 
benefits based upon service in the guerrilla forces of the Philippines 
during World War II must be notified by VA: (1) of the opportunity to 
submit official United States documentation of service as evidence; and 
(2) that United States service department certifications that 
Philippine service either qualifies or does not qualify the claimant 
for veteran status may be binding.
    This decision imposes a high burden upon VSRs to review a claims 
file and create a notice document that is compliant with this holding 
and lengthens the time to process such claims.

    Vazquez-Flores v. Peake, Vet. App. No. 05-0355 (January 30, 2008)--
The Court interpreted 38 U.S.C. Sec. 5103(a) as requiring significantly 
more content to be contained in VCAA notice letters sent to veterans in 
response to claims for increased ratings. The Court held that, if VA 
receives a claim for an increased rating and if the diagnostic code 
(``DC'') under which the disability is rated contains criteria 
necessary for entitlement to a higher disability rating that would not 
be satisfied by the claimant demonstrating a noticeable worsening or 
increase in severity of the disability and the effect that worsening 
has on the claimant's employment and daily life (such as a specific 
measurement or test result), VA must provide at least general notice of 
those criteria to the claimant.
    This case expands upon the Court's holding in Dingess with 
substantial expansion of the specificity of the notice for increased 
ratings claims that is a significant departure from the intent that 
such notices be generic concerning an increased rating claim. The 
burden upon VBA personnel processing claims will be enormous and 
require labor-intensive efforts and scrutiny to ensure that such 
letters pass judicial muster at the administrative, appellate, and 
judicial review levels.

    Haas v. Nicholson, 20 Vet. App. 257 (2006)--The Court determined 
that Vietnam veterans who served in the waters off the shore of 
Vietnam, and did not set foot in Vietnam or serve on its inland 
waterways, are entitled to a presumption of exposure to herbicide 
agents, to include Agent Orange.
    This case expanded the class of veterans determined to have been 
presumptively exposed to herbicides in Vietnam significantly beyond the 
intent of Congress and VA's implementing regulation, which we believe 
is limited to veterans who served on land in Vietnam or service on the 
inland waterways. The Haas decision would significantly increase VA's 
adjudication workload because if the decision is upheld it would extend 
the presumption of exposure to herbicide to as many as approximately 
832,000 veterans not previously covered. (This number consists of all 
veterans who received the Vietnam Service Medal but did not serve 
within South 
Vietnam.)

    Question 5. In 2001, a task force chaired by Admiral Daniel Cooper 
recommended that VA allocate employees ``to those Regional Offices that 
have consistently demonstrated high levels of quality and productivity 
in relation to workload and staffing levels.'' If the fiscal year 2009 
budget request is adopted, would the additional staff for claims 
processing be allocated to offices that have consistently performed 
well?
    Response. VBA allocates resources based on a number of factors, 
including the number of claims received at a regional office (RO) and 
specific performance factors. VBA's resource allocation model allocates 
more FTE to ROs that process claims more efficiently and accurately, as 
well as those that receive a greater share of the workload. The model 
allocates staffing levels based on four factors: (1) performance on 
timeliness measures; (2) accuracy of completed work; (3) volume of 
incoming claims work, including compensation and pension claims, 
telephone inquiries, and non-rating claims; and (4) performance on 
appeals measures. Additional adjustments are made for special 
circumstances and new or unique missions performed by an RO. These new 
missions include the consolidation of all original pension workload to 
the pension maintenance centers, the creation of additional development 
centers, and the consolidation of general assistance and education 
calls to national call centers.

    Question 6(a). According to the fiscal year 2009 budget request, 
the Compensation and Pension Service ``proposes to design and develop a 
Web-enabled, rules-based automated information system to improve the 
business process of [Compensation and Pension] claims adjudication.'' 
What impact would this initiative potentially have on productivity?
    Response. VBA, in collaboration with VA's Office of Information and 
Technology (OIT), is developing the paperless delivery of veterans 
benefits initiative. This initiative is envisioned to employ a variety 
of enhanced technologies to support end-to-end claims processing. In 
addition to imaging and computable data, we will also incorporate 
enhanced electronic workflow capabilities, enterprise content and 
correspondence management services, and integration with our modernized 
payment system, VETSNET. We are also exploring the utility of business-
rules-engine software for both workflow management and to potentially 
support improved decisionmaking by claims processing personnel.
    The initiative builds on two pilot programs currently underway. 
These pilot projects have demonstrated the utility of imaging 
technology in our C&P business line. Both projects use our virtual VA 
imaging platform, which is a document and electronic claims-folder 
repository.
    To fully develop this initiative, VBA will be engaging the services 
of a lead systems integrator (LSI). The LSI will work closely with VBA 
and OIT to fully document business and system requirements. In 
addition, we will document demonstrable milestones and performance 
metrics, as well as life-cycle funding requirements.
    Until we have had the opportunity to fully develop the initiative, 
it is premature to speculate on productivity or other performance 
improvements.

    Question 6(b). What are the proposed milestones for this initiative 
and target completion dates for those milestones?
    Response. As noted above, we will be engaging the services of a LSI 
to assist us in fully developing the initiative. Until we have had the 
opportunity to complete this development process, it is premature to 
speculate on milestones and timelines. In the interim, however, we are 
working to expand our current pilot projects to increase the use of the 
``e-file'' in compensation claims processing.

    Question 6(c). How much funding, in total, would VA need to 
complete this initiative?
    Response. We will be engaging the services of a LSI to assist us in 
fully developing the initiative. Until we have had the opportunity to 
complete this development process, it is premature to speculate on the 
life-cycle cost of the initiative. By proxy, SSA's ``eDib'' initiative 
has a reported life-cycle cost of $800 million and a timeline of 8 
years to fully implement.

    Question 7. For fiscal year 2009, what level of funding is 
requested for the Appeals Management Center and how many full-time 
employees will that funding level support? What were the key 
performance outcomes (e.g., timeliness and accuracy) for the Appeals 
Management Center in fiscal year 2007 and what are they expected to be 
in fiscal years 2008 and 2009?
    Response. In fiscal year 2008, the Appeals Management Center (AMC) 
is funded at $9.5 million and is staffed with 114 full-time employees. 
The AMC will hire an additional 6 FTE in fiscal year 2008. The budget 
request for fiscal year 2009 provides funding for the AMC to sustain 
this increased staffing level.
    In fiscal year 2007, the AMC's accuracy rate was 85 percent. The 
AMC accuracy target for fiscal year 2008 is 90 percent. Through the 
first quarter of fiscal year 2008, the AMC achieved an accuracy rate of 
89 percent. It is expected that the quality of decisions will continue 
to improve through the remainder of fiscal year 2008 and in fiscal year 
2009 as the experience level of decisionmakers increases. In fiscal 
year 2007, the average age of remands in AMC's inventory was 349 days. 
This was above the fiscal year 2007 target of 317 days. The AMC is 
taking several steps to improve the timeliness of pending remands and 
to reduce the pending inventory. In addition to significantly 
increasing its staffing level, the AMC is brokering claims to VBA 
resource centers for processing and has also increased overtime 
funding. The AMC's fiscal year 2008 target for the average age of the 
remand inventory remains 317 days. Performance targets for the AMC in 
fiscal year 2009 have not yet been established.
Insurance
    Question 1. A Servicemembers' Group Life Insurance Advisory Council 
Meeting was held in November 2007. At that meeting, VA recommended very 
specific improvements to the Traumatic Injury Protection coverage under 
Servicemembers' Group Life Insurance. For example, VA recommended that 
the categories of loss that are eligible for payment be expanded to 
include second degree burns on at least 20 percent of the body or face. 
What is the status of those recommendations and when do you anticipate 
that they will be fully implemented?
    Response. A summary of the draft version of the Traumatic Injury 
Protection Under Servicemembers' Group Life Insurance (TSGLI) Year One 
Review has been presented to DOD for concurrence or comment. Once DOD's 
input is received, VA will prepare and implement the final report. At 
this date we are awaiting the response from DOD.
Vocational Rehabilitation and Employment
    Question 1(a). The Administration's fiscal year 2009 budget request 
includes funding for 1,073 direct full-time employees for the 
Vocational Rehabilitation and Employment (VR&E) program. Would you 
please provide a breakdown of the number of those requested VR&E 
employees that would serve in each type of position, including 
counselors, employment coordinators, contracting specialists, and 
support staff?
    Response. For fiscal year 2009, staffing is projected as follows:

     Counselors: 764
     Employment coordinators: 85
     Contract specialists: 24
     Management and administrative support: 200

    Question 1(b). With the requested funding level, what would be the 
average caseload per counselor?
    Response. The requested funding level and projected workload 
enables us to achieve our average caseload standard of 125 participants 
per rehabilitation counselor.

    Question 2. According to the Administration's fiscal year 2009 
budget request, VA sends ``a motivational letter to all new [individual 
unemployability (IU)] beneficiaries to advise them of potential 
eligibility to Vocational Rehabilitation and Employment Benefits.'' 
Does VA plan to revise this policy in response to the Veterans' 
Disability Benefits Commission's recommendation that all applicants for 
individual unemployability benefits be screened for employability by 
VR&E counselors before an IU rating is assigned? What impact would it 
have on VR&E's staffing requirements if this recommendation were 
adopted?
    Response. VA has formed a work group to review the Commission's 
recommendations concerning the screening of all individual 
unemployability (IU) applicants by VR&E counselors prior to assignment 
of IU ratings. Included in this study is an analysis of VR&E staffing 
implications. The work group expects to complete its study and provide 
recommendations within the next 3 months.

    Question 3(a). The fiscal year 2009 Independent Budget recommended 
that VR&E ``follow up with veterans after being referred to other 
agencies for self-employment to ensure that the veteran's 
entrepreneurial opportunities have been successfully achieved.'' What 
procedures now govern follow-up with these veterans? Are there 
additional steps that should be taken to ensure that veterans who opt 
to pursue this track do not fall through the cracks?
    Response. Numerous steps and procedures are involved with the 
development and follow-up of a plan of service under self-employment. 
The veteran is responsible for developing a written business plan for 
consideration by either a case manager or contractor specializing in 
business plans. The assigned VR&E case manager will ensure that the 
veteran works with a professional business consultant, either on a 
voluntary or contractual basis, to develop a proposed business plan. 
The VR&E case manager continues to work with the veteran during this 
initial process. Once the business plan has been developed, a 
professional consultant evaluates the economic viability of the 
proposed business plan. After acceptance of the business plan and 
economic viability evaluation by the VR&E case manager, the veteran 
along with the VR&E case manager will develop the self-employment plan. 
The VR&E case manager remains involved with the veteran for a minimum 
of 12 months after the self-employment plan has been implemented. The 
VR&E case manager has scheduled meetings with the veteran to review 
his/her individual progress and evaluate any further needs to ensure 
success of the veteran.

    Question 3(b). Would any such additional steps require more VR&E 
staffing?
    Response. No additional steps are necessary, and we do not project 
the need for any additional FTE.

    Question 4. During fiscal years 2008 and 2009, how many VR&E staff 
will be dedicated to supporting the CHTW program? How many participants 
do you expect during those years?
    Response. In order to meet the increased need for VR&E early 
outreach, the ``Coming Home to Work'' (CHTW) program has been expanded 
to all 57 VR&E field offices. Each VR&E field office will have at least 
one person assigned to the CHTW program. Prior to the expansion of the 
CHTW program, there were 438 participants. Although we cannot estimate 
precisely, this number is expected to increase significantly as a 
result of the expansion of the program.

    Question 5(a). According to the fiscal year 2009 budget request, 
VR&E will be conducting a study of the long-term outcomes of veterans 
participating in VR&E programs. What is the expected timeline for this 
initiative?
    Response. Contractor support is required in developing the design 
of the study and survey instrument. The contract is projected to be 
awarded in fiscal year 2009 with a completion date for final results by 
the end of fiscal year 2010.

    Question 5(b). How many veterans do you anticipate surveying?
    Response. During the development of the project, the various 
statistical elements such as methodology, sample size, and population 
to survey will be determined.

    Question 5(c). How long after they have completed the VR&E program 
will former participants be contacted?
    Response. We are unable to make this projection at this early stage 
of developing the study.
Education
    Question 1(a). As one means of gauging productivity, the 
Compensation and Pension Service reports the output per direct full-
time employee. What would be a reasonable per-full-time employee output 
goal for the Education Service?
    Response. In the education program, we track completed work units, 
which includes both original and supplemental education claims as well 
as other award actions of all types. A reasonable output goal per 
direct education FTE would be approximately 1900 completed work units 
per year.

    Question 1(b). What level of productivity per direct full-time 
employee did the Education Service attain in fiscal year 2007 and what 
are the expected productivity levels per full-time employee for fiscal 
years 2008 and 2009?
    Response. In fiscal year 2007, education attained productivity of 
1935 completed work units per direct FTE, and we expect to achieve 1820 
completed work units per direct FTE in fiscal year 2008 and 1850 in 
fiscal year 2009. While we are adding employees in the education 
program in fiscal year 2008, the trainees' lack of experience will 
limit their contribution to productivity in fiscal year 2008 and 2009. 
In fiscal year 2007, education processed original and supplemental 
claims in 32 and 13 days, respectively. In fiscal year 2008, education 
expects to process original and supplemental claims in an average of 24 
and 11, days, respectively. In fiscal year 2009, education expects to 
process original and supplemental claims in an average of 19 and 10 
days, respectively. The education payment accuracy rate will increase 
from 95 percent in 2007, to 96 percent in 2008 and 2009.

    Question 2(a). According to the fiscal year 2009 budget request, 
the Education Service ``will continue in 2009 the process of 
centralizing Regional Processing Office call centers, which accept all 
calls directed to the 1-888-GIBILL1 number.'' During fiscal years 2008 
and 2009 how many of these calls do you anticipate receiving?
    Response. We project to receive approximately 2 million education 
calls in each of these 2 fiscal years.

    Question 2(b). During fiscal years 2008 and 2009 how many full-time 
employees will be devoted to answering these calls?
    Response. We expect to devote approximately 180 FTE to answering 
education calls and providing administrative/managerial support to the 
Education Call Center in each of these 2 fiscal years.

    Question 2(c). Where will those employees be located?
    Response. During first quarter of fiscal year 2008, employees 
assigned to the four regional processing offices continued to answer 
calls to our education toll-free number. Beginning February 2008, phone 
service is being transferred sequentially from the Buffalo, Atlanta, 
and St. Louis offices to the Education Call Center at the Muskogee 
office. By the beginning of fiscal year 2009, all employees devoted to 
education phone service will be in Muskogee.

    Question 3(a). According to testimony submitted by VA regarding the 
fiscal year 2008 budget request, the Education Service was working on 
providing individuals with greater access to information about their 
education benefits on-line and VA expected ``a decline in the number of 
telephone inquiries that we receive as we add more self-service options 
on our GI Bill Web site.'' What information is now available to 
education participants on-line?
    Response. The following on-line services are available to current 
Montgomery GI Bill Active Duty (MGIB-AD) and Montgomery GI Bill Select 
Reserve (MGIB-SR) program participants: certification of monthly 
enrollment, change of address, access to status of pending claim, 
access to remaining benefit entitlement, access to delimiting date, and 
establishing and changing direct deposit accounts.

    Question 3(b). Has VA seen a decline in the number of telephone 
inquiries?
    Response. During the first 4 months of fiscal year 2008, call 
volume has been at its lowest level since fiscal year 2004. This is in 
spite of significant increases in education program participation. A 
significant factor in the lower call volume is VA's improvements in 
claims processing timeliness. On-line self service is a contributing 
factor as well. For example, during fiscal year 2007, over 82,000 
changes of address were processed on-line. Prior to fiscal year 2007, 
this action would have required contacting a benefits counselor during 
normal business hours at one of our regional processing offices.

    Question 4(a). According to the Administration's fiscal year 2009 
budget request, the Education Service ``is working to determine what 
outcome-based performance measures will be used to measure the 
effectiveness of the [State Approving Agency (SAA)] efforts.'' When do 
you anticipate having these performance measures in place? In the 
meantime, what steps are being taken to ensure that veterans are being 
well-served by the funding provided for SAAs?
    Response. Beginning with the fiscal year 2008 SAA contracts, VA has 
begun collecting data that will provide baseline information on 
resources expended on certain SAA functions. Additionally, VA is 
working with the SAAs to determine outcome measures that would be 
appropriate and consistently measurable. We are working to incorporate 
outcome-based performance measures in the fiscal year 2009 SAA 
contracts and business plans.

    Question 4(b). Does the fiscal year 2009 budget request include any 
funding for SAAs, above the $13 million from the readjustment benefits 
account that may be used for that purpose?
    Response. VA did not submit a legislative proposal to restore 
mandatory funding in the fiscal year 2009 budget submission because 
bills were already before Congress that would restore or increase 
funding.
    S. 1215 would continue SAA funding at $19 million for years after 
fiscal year 2007. At a hearing before the Senate Veterans' Affairs 
Committee on May 9, 2007, VA testified in support of S. 1215. VA stated 
that the statutory requirement to reduce SAA funding to $13 million 
would cause SAAs to reduce staffing, severely curtail outreach 
activities, and perform fewer supervisory and approval visits. VA 
further stated that reduced funding might cause some SAAs to decline to 
enter into contracts with VA and that VA would have to assume the 
additional duties.
    H.R. 2579 would make only $13 million available from the RB account 
for SAA expenses and permit VA to use GOE appropriations for the 
additional funds. At a hearing before the House Committee on Veterans' 
Affairs, Subcommittee on Economic Opportunity, on June 21, 2007, VA 
testified against H.R. 2579 because VA maintains that funding for SAA 
activities should be an authorized expenditure from the RB account 
rather than a discretionary expense from the GOE account to guarantee 
that mandatory funding is available for these contracts.
Board of Veterans' Appeals
    Question 1. During fiscal year 2009, how many appeals do you expect 
the Board of Veterans' Appeals (Board) to receive and how many 
decisions do you expect the Board to produce?
    Response. In fiscal year 2009, the Board expects to receive 43,000 
cases and produce at least 41,000 decisions. We expect even greater 
productivity in the future as recently-hired attorneys become fully 
trained and more experienced as they reach the journeyman level (GS-14) 
over the next several years.

    Question 2. According to the fiscal year 2009 budget request, the 
Board is responsible for deciding allegations of clear and unmistakable 
error in prior Board decisions. How many of these cases did the Board 
receive in fiscal year 2007? How many do you expect the Board to 
receive in fiscal years 2008 and 2009?
    Response. In fiscal year 2007, the Board received 48 motions for 
revision of prior Board decisions based on clear and unmistakable error 
(CUE). The Board cannot predict the number of motions for revision of 
Board decisions based on CUE that will be received in fiscal year 2008 
and 2009. However, over the past 3 fiscal years, the Board has received 
an average of 78 such motions per year. There is no reason to expect 
that the number received for fiscal year 2008 and 2009 would 
substantially differ from prior years.

    Question 3. According to the fiscal year 2009 budget request, 
``[r]ecent judicial precedent had significant effect on the Board's 
workload.'' Would you please provide additional detail as the impact 
these court opinions have had on the Board's workload? For example, how 
many appeals have been stayed, remanded, or reconsidered based on these 
opinions?
    Response. Veterans law continues to become increasingly complex. In 
addition to statutory and regulatory changes, a significant number of 
decisions continue to be issued by the Veterans Court and the Federal 
Circuit that have immediate and dramatic impact on the policies and 
procedures that must be followed by VA in developing and deciding 
claims for veterans benefits. One of the most sweeping changes to occur 
in the area of veterans' law during the past decade was the 
promulgation of the VCAA in November 2000. This legislation continues 
to have major impact on VA due to the ongoing issuance of significant 
court decisions interpreting VA's duties under the VCAA.
    Although VCAA was enacted more than 7 years ago, the courts 
continue to provide novel interpretations of the duties to notify and 
assist a claimant in substantiating a claim for benefits, as required 
by the VCAA. Most recently, the Veterans Court issued a decision in 
Vazquez-Flores v. Peake, No. 05-355 (U.S. Vet. App. Jan. 30, 2008), 
which sets forth detailed and specific requirements for the type of 
VCAA notice that must be provided to claimants seeking an increased 
disability rating. Given that increased rating claims constitute 30.8 
percent of all issues on appeal (i.e. issues where a notice of 
disagreement (NOD) has been filed), this Court decision has had an 
immediate and dramatic impact on all pending increased rating claims 
and appeals.
    VA disagrees with the detailed notice requirements set forth in 
Vazquez-Flores, and, as such, has filed a motion for reconsideration of 
this decision with the Veterans Court. Simultaneously, a motion was 
filed requesting that the Veterans Court stay the precedential effect 
of Vazquez-Flores while it rules on the reconsideration motion. Until 
such time as these motions are ruled upon, VA is obligated to apply the 
holdings in this decision to all increased rating claims and appeals. 
While the Board is currently making every effort to render final 
decisions in cases involving increased rating claims, these efforts may 
be unsuccessful and may result in the need for large numbers of cases 
to be remanded to the AOJ for compliance with the detailed notice 
requirements set forth in Vazquez-Flores.
    Vazquez-Flores is one of several major court decisions issued since 
2000 interpreting the requirements of the VCAA. With such ever-changing 
interpretations of the duties under the VCAA, many of which include 
increased specificity in notice, it has become increasingly challenging 
for the Board to render timely final decisions for all types of claims. 
Depending on the facts in an appeal, a large portion of each Board 
decision is now devoted to a discussion of VCAA compliance. When VCAA 
notice is found to be inadequate, the Board must engage in a lengthy 
prejudicial error analysis. See Sanders v. Nicholson, 487 F.3d. 881 
(Fed. Cir. 2007); Simmons v. Nicholson, 487 F.3d. 892 (Fed. Cir. 2007). 
If the Board finds that the claimant was prejudiced by inadequate VCAA 
notice, and the appeal cannot be granted in full, the case must then be 
remanded to the AOJ to cure any VCAA notice defect. This process 
significantly lengthens the time to obtain a final resolution in the 
appeal, and contributes to the much criticized ``hamster wheel'' of 
appeals and remands in the veterans claims adjudication system.

    Question 4. If the fiscal year 2009 budget request is adopted, the 
number of staff for the Board's Decision Teams will have increased from 
303 in fiscal year 2007 to 352 in fiscal year 2009, a 16 percent 
increase. During that same period, the deficiency-free rate is 
projected to decline from 94 percent to 92 percent, the appeals 
resolution time is projected to increase from 660 days to 700 days, and 
the cycle time is projected to increase from 136 days to 150 days. What 
specific factors account for these lowered performance goals?
    Response. In order to fully respond to the concerns raised by this 
question, each of these performance measures is addressed separately, 
below.

    Deficiency-free rate: The Board's performance goal for the 
deficiency-free decision rate has remained unchanged at 92 percent over 
the past few years. This goal remains the same for future years. In 
practice, the Board's actual performance has exceeded our goal and we 
are making every effort to ensure that this trend will continue in the 
future. For example, in fiscal year 2007, the Board exceeded the 92 
percent goal with a deficiency-free decision rate of 93.8 percent. So 
far in fiscal year 2008, through January 31, 2008, the Board is on 
target to again exceed our 92 percent goal with a deficiency-free rate 
of 94.2 percent. We are endeavoring to maintain this high level of 
achievement by a program of rigorous training, mentoring and quality 
review.
    Appeals Resolution Time (ART): ART is the average length of time it 
takes VA to process an appeal from the date the claimant files a NOD 
until the case is finally resolved, including resolution at the RO 
level or by issuance of a final, non-remand decision by the Board. ART 
was initially established as a tracking measure before VCAA was enacted 
in November 2000. VCAA, among other things, heightened VA's duty to 
assist and duty to notify claimants of the type of evidence needed to 
substantiate their claim. This resulted in adding more steps to the 
claims process and a concomitant increase in the length of time 
required to develop claims. In addition, the Veterans Court and the 
Federal Circuit have issued a series of precedential decisions 
interpreting VCAA, which required additional action on VA's part. See 
Holliday v. Principi, 14 Vet. App. 280 (2001), Quartuccio v. Principi, 
16 Vet. App. 183 (2002), Charles v. Principi, 16 Vet. App. 370 (2002), 
Pelegrini v. Principi, 18 Vet. App. 112 (2002), Mayfield v. Nicholson, 
444 F.3d 1328 (Fed. Cir. 2006), Dingess/Hartman v. Nicholson, 19 Vet. 
App. 473 (2006), Kent v. Nicholson, 20 Vet. App. 1 (2006), and Vazquez-
Flores v. Peake, No. 05-355 (U.S. Vet. App. Jan. 30, 2008). The 
evolving nature of VA's responsibilities under the VCAA, as interpreted 
by the courts, has continued to cause increases in ART.
    Other factors affecting ART are the statutory and regulatory 
prescribed time periods that are built into the adjudication process, 
which allow claimants time to take certain action, such as respond to 
requests from VA, submit evidence or argument in support of their claim 
for benefits, and pursue the next step in the adjudication and/or 
appeals process. After the point in which a NOD is filed, there are 330 
days of potential mandatory waiting times in the adjudication system.
    For example, the law requires that a NOD shall be filed within 1 
year from the date of mailing of the notice of the result of initial 
review or determination. 38 U.S.C. Sec. 7105(b)(1); 38 CFR 
Sec. 20.302(a). If a purported NOD is filed, but the statement is 
unclear and the AOJ cannot identify whether the claimant intends to 
appeal, or what adverse decision the claimant may be disagreeing with, 
the AOJ will contact the claimant to clarify whether the statement was 
intended as a NOD. 38 CFR Sec. 19.26(b). The claimant will have a 
period of 60 days to respond to that request, or 1 year from the date 
or the decision being appealed, whichever is later. 38 CFR 
Sec. 19.26(c)(1).
    Once an appellant has filed a NOD, the AOJ sends a notice informing 
the claimant that he or she has the right to have the decision reviewed 
by a decision review officer (DRO) under 38 CFR Sec. 3.2600(a). To 
obtain such review, the claimant is provided a period of 60 days after 
VA mails the notice to elect DRO review. 38 CFR Sec. 3.2600(b). The 
case must sit without any action for the full 60 day period, or until 
the appellant responds to the notice, whichever comes first. If the 
appellant chooses to have a DRO review the decision, the reviewer may 
conduct additional development, hold an informal conference with a 
claimant and/or conduct a hearing, if appropriate. 38 CFR 
Sec. 3.2600(c). If the DRO process is not selected, or if the review 
process is complete and the decision remains unfavorable, at least in 
part, a statement of the case (SOC) is sent to the claimant. 38 CFR 
Sec. 19.29. The claimant is then provided a period of 60 days from the 
date of the SOC, or the remainder of the 1-year period from the date of 
the mailing of the notification of the determination being appealed, 
whichever is later, to file a substantive appeal. 38 CFR 
Sec. 20.302(b). If additional evidence is received after the 
substantive appeal is filed, a supplemental statement of the case 
(SSOC) must be issued. 38 CFR Sec. 19.31. A claimant is provided a 
period of 60 days to respond to the SSOC, 38 CFR Sec. 20.302(c), and 
the claimant may request an extension of this period, for good cause. 
If an appellant requests a hearing before a member of the Board, 
written notice must be provided to the appellant not less than 30 days 
prior to the date a hearing will be held before the Board at a VA field 
facility. 38 CFR Sec. 19.76. Once an appeal is before a Veterans Law 
Judge (VLJ) for adjudication, if the VLJ determines that a legal or 
medical opinion is required in the case, the appellant is provided a 
copy of the legal or medical opinion and provided a period of 60 days 
to respond. 38 CFR Sec. 20.903(a).
    Taking into account the evolving and increasing nature of VA's 
responsibilities, and the time needed to train new employees at both 
the RO and Board levels, VA expects ART to increase slightly from 660 
days to 700 days in 2009. The department's strategic target is 675 
days.
    The Board and VBA are working together to reduce ART and to reduce 
avoidable remands. Veterans deserve timely and correct decisions on 
claims for benefits. The record must contain all evidence necessary to 
decide the claim and show that all necessary due process has been 
provided. If the record does not meet these requirements, and the 
benefits sought cannot be granted, a remand for further development is 
necessary. However, remands from the Board to the AOJ significantly 
increase the time it takes for a veteran to receive a final decision. A 
remand typically adds more than a year to the appellate process. 
Furthermore, about 75 percent of cases remanded are subsequently 
returned to the Board, which increases the Board's workload and further 
degrades timeliness. Eliminating avoidable remands is a goal that will 
provide better service to veterans and their families and, ultimately, 
help diminish the growing backlog and improve timeliness. VA has made 
significant progress toward this goal. The Board's remand rate was 35.4 
percent in fiscal year 2007, which is down from a high of 56.8 percent 
in fiscal year 2004.
    In addition, at the direction of the Secretary and in coordination 
with VBA, the Board has proposed an expedited claims adjudication (ECA) 
initiative that will be launched as a 2-year pilot program at four ROs. 
In order to help accelerate the timely processing of all claims and 
appeals, VA will offer represented claimants the option of 
participating in the ECA initiative for expedited processing of claims 
and appeals. A claimant who elects to participate in the ECA will 
voluntarily waive specified procedural rights and, in return, be placed 
on a fast track for adjudication. The expected rapid disposition of 
these claims should reduce the backlog and thereby ultimately improve 
the overall timeliness of claims processing.
    Participation in the ECA Initiative will be offered in writing by 
VA as an option when a claim is received. During the pilot program, 
participation will extend to claims for benefits administered by VBA at 
four ROs for veterans who are represented. Participation will be only 
open to claims for disability compensation benefits under 38 CFR Parts 
3 and 4, excluding a narrow class of claims including pension benefits, 
survivor benefits, and simultaneously contested claims.
    In addition to expedited claims at a participating RO, any claims 
appealed to the Board under the ECA Initiative will be screened upon 
arrival at the Board to ensure that the record is adequate for 
decisional purposes when the appeal reaches its place on the Board's 
docket. If the record is inadequate, the Board will take prompt action 
under existing law and regulations, such as soliciting a waiver of RO 
consideration of additional evidence, and remand the case for further 
development, if necessary.
    During the summer of fiscal year 2007, the Chairman briefed the 
Veterans Service Organizations (VSO), the Senate Veterans' Affairs 
Committee, the Subcommittee on Disability Affairs and Memorial 
Assistance of the House Veterans' Affairs Committee, and the Office of 
Management and Budget regarding the ECA Initiative.
    VA is currently in the process of drafting proposed regulations to 
implement the ECA pilot program. The Department is excited about this 
program and the positive impact it is expected to have in speeding up 
the adjudication of claims and appeals before VA, which should be 
reflected in an improvement in ART.
    Cycle time: The Board's ``cycle time'' is the average time it takes 
from when a case is received at the Board until a decision on that 
appeal is dispatched, excluding time the case was with the appellant's 
service organization representative. The Board's cycle time decreased 
from 148 days in 2006 to 136 days in 2007. The Board anticipates, 
however, that cycle time may increase in the short term due to 
fluctuations in the receipt of certain types of ``priority'' appeals.
    The Board gives processing priority to certain types of cases, 
including: cases that are advanced on the docket, cases remanded to the 
Board from the Veterans Court, cases returned from the AOJ after a 
Board remand, and cases in which the Board has held a hearing. 
Historically, when a higher percentage of the Board's workload is made 
up of these priority appeals, cycle time will decrease. This is because 
``priority'' appeals, by nature of being a priority, are quickly sent 
to a VLJ for adjudication, with minimal waiting time. Contrarily, 
original appeals that do not fall into a ``priority'' category, must be 
worked in their regular order on the Board's docket.
    As productivity continues to increase, the Board is better able to 
expeditiously adjudicate these priority appeals, and therefore make 
greater progress in adjudicating original appeals. The more original 
appeals that the Board is able to adjudicate, the more progress will be 
made in reducing the backlog. However, the short-term effect is that 
cycle time may increase as more of the earlier cases on the docket are 
decided.
    It is the Board's intention to meet or exceed the 2009 target of 
150 days for cycle time. The Board's strategic target remains 104 days. 
The Board expects to make progress toward that strategic target as 
newly hired attorneys become fully trained and as the Board continues 
to work to improve efficiency and productivity by emphasizing training, 
focusing on reducing avoidable remands, and ensuring that decisions are 
clear, concise, coherent, and correct.
General Counsel
    Question 1(a). Under Public Law 109-461, veterans and other VA 
claimants may now hire attorneys to assist with their claims once a 
Notice of Disagreement has been filed. What role does the General 
Counsel's office play in monitoring fee agreements from these attorneys 
and ensuring that attorneys have complied with all applicable 
requirements, such as any training or education standards?
    Response. In Public Law 109-461, Congress authorized the Secretary 
of Veterans Affairs to review attorney fee agreements and order a 
reduction of any fee that is excessive or unreasonable, such decisions 
being appealable to the Board. In May 2007, VA published a notice of 
proposed rulemaking under which attorneys would be required to file all 
fee agreements with the Office of the General Counsel (OGC). Agreements 
that are on file with OGC could be reviewed at the request of a 
claimant or on OGC's own initiative. A presumption of reasonableness 
would attach to fee agreements calling for a fee of not more than 20 
percent of past-due benefits awarded by VA. Agreements calling for a 
fee exceeding 20 percent would be reviewed for reasonableness under a 
standard established in VA's regulations.
    VA's notice of proposed rulemaking also addressed the provisions in 
Public Law 109-461 that affect VA's accreditation of attorneys. VA 
proposed to implement the new law by, among other things, establishing 
a standard of conduct for attorneys who represent VA claimants, 
establishing accreditation application requirements for attorneys, and 
prescribing a qualification standard for attorneys. Under the proposed 
rule, OGC would review the application of each attorney to determine 
whether he or she meets the accreditation requirements. Additionally, 
OGC may initiate suspension or cancellation of accreditation 
proceedings when it receives information that an attorney no longer 
meets the accreditation requirements, has engaged in improper conduct, 
or has demonstrated a lack of competence in providing representation. 
The General Counsel's decision canceling the accreditation of an 
attorney may be appealed to the Board and reviewed by the Veterans 
Court and, as to legal matters, the Federal Circuit. The qualification 
standards for attorneys were the subject of extensive comments during 
the public comment period. These comments will be addressed in the 
final-rule notice.

    Question 1(b). Does the requested level of funding provide 
sufficient staff to handle those functions?
    Response. The requested level of funding is adequate for staffing 
OGC's administration of the accreditation and fee-review programs based 
on the number of attorneys currently providing representation before 
VA. As the program develops, we will monitor the impact of Public Law 
109-461 on OGC resources and collect data to support future funding 
requests.

    Question 2(a). As the Administration's fiscal year 2009 budget 
request points out, the caseload at the U.S. Court of Appeals for 
Veterans Claims increased by 76 percent from 2004 to 2007. How many 
full-time employees of the General Counsel's office are now allocated 
to handling appeals before that court?
    Response. The employees of Professional Staff Group VII (PSG VII) 
of OGC represent the Secretary in all cases filed with the Veterans 
Court. There are 108 full-time employees of PSG VII allocated to the 
various administrative and legal functions required for handling cases 
at the Veterans Court. In addition to that number, there is one full-
time employee (FTE) of VA's Office of Information and Technology who 
supports the computer system of PSG VII, and there are three full-time 
employees on contract from Xerox Business Systems who support the 
photocopying needs of PSG VII.
    OGC has increased the FTE in PSG VII in each of the last 5 fiscal 
years in response to the rising workload before the Veterans Court.

     Current FTE level--108
     FTE level fiscal year 2007--98
     FTE level fiscal year 2006--96
     FTE level fiscal year 2005--79
     FTE level fiscal year 2004--73

    Moreover, it is anticipated that PSG VII will expand by an 
additional 12 employees before the end of fiscal year 2008.

    Question 2(b). Would any of the additional staffing requested for 
fiscal year 2009 be allocated for that purpose?
    Response. No. After ramping up staffing levels in PSG VII over the 
past 5 years, OGC will seek to address other growing needs in fiscal 
year 2009. OGC intends to place 13 of the additional 14 requested FTE 
in its field offices (Regional Counsel). The following table shows 
trends in OGC's field and headquarters staffing:

----------------------------------------------------------------------------------------------------------------
                                                                              2008
                                                                      --------------------             Increase
                                                                2007              Current    2009        (+)
                                                               Actual   Budget   Estimate  Estimate    Decrease
                                                                       Estimate                          (^)
----------------------------------------------------------------------------------------------------------------
Average employment:
  Field.....................................................      408       400       412       425           13
  Central Office............................................      262       245       245       246            1
                                                             ---------------------------------------------------
      Total.................................................      670       645       657       671          +14
----------------------------------------------------------------------------------------------------------------

    Question 2(c). What is the average caseload handled by VA attorneys 
practicing before that court and what is an optimal caseload?
    Response. For the 12-month period extending from February 2007 
through February 2008, the average caseload per attorney was 
approximately 73 cases (72.637 cases per attorney). We are currently 
evaluating the optimal caseload per attorney.

    Question 3. VA recently announced that it has awarded a $3.2 
million contract to Economic Systems Inc. to study the feasibility of 
implementing transition payments, the appropriate levels of disability 
compensation for loss of earning capacity, and the appropriate payments 
for loss of quality of life. Those studies are expected to be completed 
in August 2008. If VA were to undergo a comprehensive overhaul of the 
disability rating schedule based on the results of those studies or 
others, would additional staff be required in the General Counsel's 
office?
    Response. Staffing needs related to overhaul of VA's rating 
schedule would depend upon the breadth of the contractor's findings and 
recommendations with regard to the rating schedule, decisions by the 
Secretary and Congress about whether and how to implement the 
contractor's recommendations, and the time period during which the 
overhaul of the rating schedule would occur. However, any effect of 
such an overhaul on OGC's staffing needs would not be expected until 
after fiscal year 2009.
Information Technology
    Question 1. Information Technology (IT) will provide the 
infrastructure to accomplish most of the VA-wide improvements you are 
trying to accomplish. Please explain how the requested funding level 
for IT will ensure that your short, medium, and long term goals are met 
with both the speed and the success that they deserve.
    Response. VA requested $2.442 billion in fiscal year 2009 to 
support IT development, operations and maintenance, and payroll. This 
level of funding provides adequate resources to meet VA's most 
critical, immediate needs as defined and agreed to by the members of 
the IT governance structure.
    The IT governance procedures allow VA to effectively manage 
competing initiatives, funding allocations, and emergent requirements 
in an orderly and disciplined manner while, at the same time, targeting 
numerous goals with varying timeframes. In the short term, VA's 
infrastructure requires sufficient funding to meet day-to-day service 
agreements to ensure effective operational readiness and maintaining a 
secure environment. For example, by the end of fiscal year 2009, VA 
will have completed 50 percent of the infrastructure for the personal 
identification verification initiative, a key element of cyber security 
in direct support of a Homeland Security Presidential Directive. We are 
also investing in replacement projects to meet future medium and long 
term requirements (goals). Our VETSNET initiative, a suite of 
applications that permit an orderly transition from the benefits 
delivery network (BDN), is on-target to support the retirement of the 
BDN in early 2012, while the veterans' health information systems and 
technology architecture (VistA) will be replaced by a new system, VistA 
HealtheVet, using modern applications and tools well suited to 
accommodate future enhancements.
    VA's Business Needs and Investment Board (BNIB) is charged with 
balancing the immediate needs of today with the emerging needs of the 
future while skillfully determining the most appropriate mix of 
expenses and investments. The BNIB is comprised of representatives from 
VA's business lines and OIT. It provides recommendations to the 
Information Technology Leadership Board (ITLB), a senior governance 
element, for additional due diligence to make sure the planning process 
correctly supports established needs. Finally, the Senior Management 
Council (SMC) confirms that the requested IT budget is in harmony with 
the strategic goals of VA. Using this method, the operators/providers/
designers of VA's IT infrastructure, architecture, projects, and 
programs are accountable to ensure that, not only are the needs of our 
internal customers accommodated, but also the needs of our primary 
customer, the veteran, are accommodated at the highest level of 
satisfaction possible.
National Cemetery Administration
    Question 1(a). The National Shrine Commitment list consists of 
projects and repairs that must be completed at NCA National Cemeteries 
to bring them into compliance as National Shrines. It is my 
understanding that new requirements are added annually to the existing 
list and then the list is re-ranked in order of assessed importance and 
that the number of items on the list that are repaired depends solely 
on whatever money you receive that year. Is that correct?
    Response. The number of items that are repaired in the National 
Shrine project inventory depends on the amount of money received in a 
given year, the cost of the items and their priority relative to other 
system-wide needs such as gravesite expansions. Keeping existing 
National Cemeteries open for burials is NCA's highest priority.
    The fiscal year 2002 Millennium Act Report to Congress identified 
3,566 repair items for $280 million (i.e., the ``National Shrine 
Commitment list''). NCA believes that 497 of these items--estimated at 
$35 million--can be deferred indefinitely, leaving a total inventory of 
3,069 items for $245 million. Through fiscal year 2007, NCA completed 
work on 1,130 items estimated at $100 million. The cost of the 
remaining 1,939 items to be accomplished is estimated at $145 million.
    NCA's focus on the shrine commitment is not limited to the 
Millennium Act study. The report's list represents a ``snapshot'' of 
requirements in 2002.
    Since that time, other shrine needs have emerged and have received 
funding as higher priorities. NCA anticipates spending approximately 
$55 million in fiscal year 2008 on National Shrine projects from all 
accounts.

    Question 1(b). Do you have a strategic plan in place to address the 
repairs on the list, e.g., does your budget request use a 
recapitalization methodology?
    Response. NCA's budget request does not reflect a formal 
recapitalization methodology. NCA currently relies on its annual 
construction planning process and gravesite assessment survey as the 
primary sources for developing the inventory of shrine-related work and 
determining project priorities.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Patty Murray to 
     LTG James B. Peake, Secretary, Department of Veterans Affairs
    Question 1. Secretary Peake, I know you are aware of the serious 
need to train psychologists who are skilled in treating PTSD, TBI and 
other post-deployment issues--it has been documented in numerous 
commission reports just in the past year. In an effort to address this 
training pipeline crisis, I spearheaded an effort in VA's 2008 
Appropriations Bill providing you with immediate authority to transfer 
up to $5 million for a joint effort with HHS. The idea is to take 
advantage of their existing Graduate Psychology Education Program to 
quickly begin training more specialists in the types of conditions 
facing returning veterans. Secretary Peake, can you tell me where this 
effort stands at the VA, what your plans are, and your expected 
timeframe for initiating this program?
    Response. Congress has authorized:

        Sec. 227. (a) Upon determination by the Secretary of Veterans 
        Affairs that such action is in the national interest, and will 
        have direct benefit for veterans through increased access to 
        treatment, the Secretary of Veterans Affairs may transfer not 
        more than $5,000,000 to the Secretary of Health and Human 
        Services for the Graduate Psychology Education program, which 
        includes treatment of veterans, to support increased training 
        of psychologists skilled in the treatment of Post Traumatic 
        Stress Disorder, Traumatic Brain Injury, and related disorders.

    The Department of Veterans Affairs (VA) has determined not to 
transfer funding to the Department of Health and Human Services (HHS). 
VA recognizes the need for psychology training and has taken internal 
steps to expand psychology internship and postdoctoral training 
opportunities, thus using this funding to directly enhance care for 
veterans mental health. Those have been expanded by 160 positions for 
the upcoming training year for a total of 640 funded training positions 
in psychology that will recur on a yearly basis.
    We do recognize that there are training needs at the graduate level 
that would better prepare psychology graduate students for VA 
internships and postdoctoral fellowships, as well as eventual VA 
employment. Rather than fund graduate programs indirectly in a manner 
that would not necessarily result in curricular changes or increased 
numbers of VA qualified psychologists, VA will work toward greater 
collaboration with selected graduate programs of psychology to enhance 
training in clinical content related to VA care, including effective 
functioning within an interdisciplinary health care system. For 
example, such collaboration might include identifying graduate programs 
in psychology to work closely with affiliated VA medical centers that 
provide psychology internship or postdoctoral training:

    a. In these collaborations, affiliated VA medical center psychology 
staff should have faculty appointments in the graduate psychology 
education programs to supplement the graduate education in content 
areas including:
    i. Concepts of interdisciplinary health care provision and the 
    skills necessary for effective provision of interdisciplinary care.
    ii. Clinical content related to Post Traumatic Stress Disorder, 
    Traumatic Brain Injury and related disorders, if such expertise is 
    not well-represented among the faculty of the graduate program.
    iii. Clinical content related to the ``President's New Freedom 
    Commission on Mental Health: Transforming Mental Health Care in 
    America.'' This would include emphasis on the Recovery Model of 
    Treatment for Serious Mental Illness.
    b. Students in such collaborative programs would be eligible to 
apply for practicum training experience with VA during the years of 
graduate training. Psychology training staff at the affiliated VA 
facility will make decisions regarding acceptance of students for 
training, based on their judgment of the students.

                                 ______
                                 
  Response to Written Questions Submitted by Hon. Bernard Sanders to 
     LTG James B. Peake, Secretary, Department of Veterans Affairs
    Question 1. Secretary Peake, as you know in January of 2003 the VA 
announced that it would no longer allow Priority 8 veterans to enroll 
into the VA health care system. Can you tell me the amount of time, the 
resources, and anything else that the VA would need from Congress so 
that we can bring these Category 8 veterans back into the system in an 
orderly way? Can you also provide your best estimate of how many 
veterans per year have not been able to use the VA health care system 
due to this Priority 8 policy?
    Response. At the request of the House Veterans' Affairs Committee, 
VA analyzed the strategic resources related to reopening enrollment for 
Priority 8 veterans. The report was sent to Chairman Filner on 2/25/08.

     VA's projected demand for health care services is expected 
to increase in the next several years under the current enrollment 
policy. Accounting for the increased growth expected under the current 
enrollment policy and reopening enrollment in 2013 to new Priority 8 
veterans would result in a total growth in enrollees of 22 percent and 
a total growth in users of 21 percent.
     VA estimates that it would require $3.1 billion dollars to 
provide health care services to the additional 1.4 million enrollees 
and approximately 750,000 patients during the first year of 
implementation. The full magnitude of the cost of reopening enrollment 
to new Priority 8 veterans must be viewed within a long-term strategic 
framework, namely the estimated 5-year cost of $16.9 billion and the 
10-year cost of $39.2 billion, as well as capital costs not included in 
these estimates.
     As of the end of fiscal year 2007, 386,767 Priority Group 
8 veterans had applied for and been determined to be ineligible to 
enroll based on the January 2003 enrollment decision. This figure does 
not include enrollees who were initially denied enrollment and 
subsequently enrolled in an eligible priority group based on a change 
in the veteran's eligibility. VHA analysis of current Priority Group 8 
enrollees indicates that 45 percent are not users of VHA health care 
services in any year. Assuming that the non-enrolled Priority Group 8 
veterans exhibit the same characteristics (and thus would use services 
in a similar way), we estimate that approximately 212,722 non-enrolled 
Priority Group 8 veterans have not been able to use VHA services due to 
the 2003 enrollment decision.

    Question 2. Secretary Peake, there was a good deal of discussion at 
this week's hearing of the need for more extensive outreach to our 
returning and existing veterans. Given this and the fact that you 
mentioned you would soon be talking about outreach with the Nation's 
Adjutant Generals, I wanted to inform you about an innovative outreach 
program we have in the State of Vermont. This program, established with 
funds secured through the Department of Defense, is run by the Vermont 
National Guard, in coordination with the local VA Medical Center. It 
uses trained veterans to contact each and every returning Iraq and 
Afghanistan servicemember and their family to check in on them and see 
if they are getting the help they need. This could include but is not 
limited to: mental health counseling (such as for PTSD), VA benefits, 
military benefits, marriage counseling, financial counseling, suicide 
prevention, substance abuse, and other areas. They also provide 
appropriate referral services to the VA, State, local, or other 
appropriate avenues for assistance. This program is coordinated with 
the Guard's existing Family Assistance programs. The program also has a 
24-hour helpline staffed by Vermonters who work for the National Guard, 
who are there to help returning veterans and their families in need. 
While this program is operated using DOD resources, I believe a similar 
effort could be established within VA. Working with my colleagues, I 
was able to secure $3 million in the Department of Defense 
Appropriations bill to have this program replicated on a national 
level. The funding is now part of the larger Yellow Ribbon 
Reintegration Program established in Public Law 110-181. I would 
welcome the opportunity to discuss our Vermont program with you and 
explore ways that the VA can become more actively involved in similar 
outreach programs. I would appreciate any comments you may have on our 
Vermont program and the possibility to expand these types of programs.
    Response. VA is in full support of GWOT Guard and Reserve soldiers 
returning from the war and VA participates in the execution of Guard 
and Reserve post-deployment health re-assessment (PDHRA) events along 
with reintegration programs. VA also collaborates with the National 
Guard in the execution of State coalitions and full collaboration and 
training with the National Guard and VA transitional assistance 
advisors (TAAs). These State coalitions use the State leadership Triad 
of the State Director VA, State Adjutant General and VA leadership in 
each State.
    The Vermont Door Knockers Program is an additional program in the 
State that hired National Guard staff to proactively divide the State 
into regions and act as State outreach mobile teams to provide face-to-
face contact to those returning from the war. Information about home of 
record is shared with outreach workers to facilitate enrollment into VA 
health care and other VA benefits. Those needing additional services 
are referred to the State TAA for specialized outreach and coordination 
efforts with the local VA medical center or RO. VA is supportive of all 
outreach efforts and facilitates the development and maintenance of 
State coalitions to ensure the integration of services that are 
delivered to Guard and Reserve soldiers returning home. VA is 
partnering with all stakeholders at the State and local area by 
providing training, outreach materials and access to health care and 
benefits by experts at the VA medical center, RO, Vet Centers, VSOs, 
community organizations, State directors VA; as well as, active 
participation in Welcome Home and Family Program events held in regions 
throughout the State for returning troops.

    Question 3. Secretary Peake, can you provide me with the VA's best 
estimate 
of how many veterans would leave the VA system or choose not to enroll 
if VA 
were to implement the copayment and enrollment fees proposed in the 
President's budget?
    Response. VA estimates that approximately one-half of the estimated 
1.7 million enrolled Priority 8 veterans, or 852,000 enrollees, would 
be assessed the tiered enrollment fee in 2010--the first year the 
tiered enrollment fee would be assessed. Of these 852,000 Priority 8 
veterans, VA estimates that 440,000 enrollees will choose not to pay 
the enrollment fee. According to VHA's analysis of enrollment and use 
data, approximately 45 percent of Priority 8 enrollees do not seek VHA 
health care in any given year. VA estimates nearly two-thirds of 
enrollees who will choose not to pay the tiered enrollment fee are non-
users of VA health care.
    A very large proportion (all but 1 percent) of Priority 7 enrollees 
have incomes below the $50,000 threshold; therefore most Priority 7 
enrollees would not be subject to the tiered enrollment fee.

    Question 4. Secretary Peake, establishing a Community-Based 
Outpatient Clinic in Brattleboro, VT, is an issue that is very 
important to the veterans that live in the southern part of my State. I 
was very interested and happy to see you discuss CBOCs in your prepared 
remarks and I very much hope that a CBOC in Vermont is among those 64 
CBOCs you discussed opening this year. My office has heard from many 
veterans who live in this southern part of the State who are without a 
nearby veterans' health care facility. My understanding is that the 
proposed 2008-2012 VA New England Health Care System Strategic Plan has 
come to the same conclusion about the challenges to access our veterans 
in this region are experiencing. Since the need for a facility is 
something that there seems to be agreement on, I would like to work 
with you to advance this process and take the steps necessary to 
establish the clinic, including securing the appropriate funding and 
receiving approval from the VA Central Office in Washington. Is that 
something we can work on together and that I can count on your support 
for?
    Response. We are continuing to evaluate the health care services 
being provided within the VISN 1--VA New England Health Care System, 
and will consider expanding those services as needs are identified.
    The Secretary's 2004 Capital Asset Realignment for Enhanced 
Services (CARES) decision document for VISN 1 did not include a CBOC 
for the Town of Brattleboro, VT; however, a preliminary review 
conducted by VISN 1 has identified Brattleboro as an underserved area. 
In order to determine the validity of establishing a CBOC, a business 
plan must be reviewed and approved. A business plan to open a CBOC in 
Brattleboro is currently under development. VISN 1 will submit a 
proposal during the fiscal year 2008 national call for CBOC business 
plans for potential fiscal year 2009 activation. This proposal will be 
evaluated against a set of national criteria and will prioritize the 
need for a CBOC in this location against other proposals nationwide.

    Question 5. Secretary Peake, as you may know, the VA's National 
Center for PTSD has it Executive Division located in White River 
Junction, VT, at the VA Medical Center there. The Center, with its six 
divisions, has emerged as the world leader in research and education on 
PTSD and provides essential clinical tools and guidance to facilities 
around the country. In fact, your prepared remarks hailed the work that 
the VA has done in PTSD research. Now, with so many returning 
servicemembers experiencing PTSD and older veterans from the Vietnam 
era experiencing reoccurrence of their PTSD, the work of this center is 
more important than ever. Currently the Center is experiencing a major 
space shortage at its Executive Division in Vermont. It shares space 
with the VA Medical Center and while they are honored to have the 
Center in White River, the current need for space is hampering the 
operation of both facilities. I wrote to then-Secretary Nicholson about 
this in 
August of 2007 and Acting Secretary Mansfield wrote me back in October 
of 2007 saying that the VA Central Office was planning to provide $2.4 
million in funding for a modular building, archival storage space, and 
video conferencing capabilities to meet these needs. This was very 
welcome news. Can you give me an update on the status of that project 
and when these resources will be available to begin 
construction?
    Response. The expansion project for the National Center for PTSD 
(NCPTSD) is still being developed. The tentative plan consists of 
erecting a modular building of approximately 7,500 gross square feet, 
which would meet the NCPTSD expanding requirement needs.
    White River Junction VA Medical Center is currently working on a 
minor construction proposal to submit to VA Central Office by the end 
of fiscal year 2008.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Larry E. Craig to 
     LTG James B. Peake, Secretary, Department of Veterans Affairs
    Question 1. Previous Federal regulations provided for reimbursement 
to States for a $300 per burial interment cost if the interment took 
place within 2 years of the permanent burial cremation. This is 
important to me because my State of Idaho paid for numerous remains of 
veterans to be moved to our State Veterans Cemetery, although Idaho did 
not qualify within the 2-year timeframe.
    In Public Law 110-157, language would eliminate the 2-year 
timeframe and allow States, such as Idaho, to receive the $300 
reimbursed by the Department of Veterans Affairs. My question is, 
whether States have begun to get reimbursed for the cost of 
reinterment. If not, can you please provide me with a timeframe for 
reimbursement to take place?
    Response. Section 202 of Pub. L. 110-157 removed the time limit for 
States to file for reimbursement for the burial in State cemeteries of 
unclaimed remains of deceased veterans (for interments and inurnments 
occurring on or after October 1, 2006). States may apply for 
retroactive reimbursement for burials from that date. Guidance to 
implement this provision has been drafted and will be released to 
regional offices in the spring.

    Question 2. Public law 110-157, section 202, also contains language 
for a grant program for States, not to exceed $5 million, to be used 
for operating and maintenance costs of veterans' cemeteries. Can you 
please provide me with the information, criteria and methodology for 
implementing this grant and when you think this grant will be made 
available to the States?
    Response. NCA is developing a regulation to implement the amendment 
for operation and maintenance grants for State cemeteries. The 
methodology for the grants will be similar to NCA's program to maintain 
national cemeteries as shrines. The focus will be to correct gravesite 
deficiencies, such as cleanliness, height and alignment of headstones 
and markers, leveling of gravesites, and turf conditions. The proposed 
regulation will be published in the Federal Register, and we expect to 
begin awarding grants for operation and maintenance in fiscal year 
2009.
                                 ______
                                 
  Response to Questions Arising During the Hearing by Hon. Daniel K. 
 Akaka to LTG James B. Peake, Secretary, Department of Veterans Affairs
    Question 18. What is the funding for outreach in the fiscal year 
2009 Budget.
    Response.  This is still in process and should be provided shortly.
                                 ______
                                 
Response to Questions Arising During the Hearing from Hon. Patty Murray 
    to LTG James B. Peake, Secretary, Department of Veterans Affairs
    Question 1. Clarify what is and is not funded at American Lake 
complex.
    Response. What is funded: American Lake Seismic Corrections--
Nursing Home Care Unit & Dietetics. The project will construct a one 
story, 83-bed Nursing Home Care Unit with Alzheimer Ward, Dietetics and 
other support functions. The project is intended to improve patient and 
staff flow as well as correcting life safety, fire and seismic 
deficiencies.
    What is not funded: Two projects for Seattle--Nursing Home Care 
Unit and Replacement of the Mental Health and Research building. The 
NHCU includes seismic corrections, and the Mental Health and Research 
building provides appropriate space and life safety corrections. Both 
were submitted in the fiscal year 2009 Major Construction cycle, but 
were not scored high enough for funding. Therefore, they were submitted 
for the fiscal year 2010 cycle.
                                 ______
                                 
  Response to Questions Arising During the Hearing from Hon. Larry E. 
 Craig to LTG James B. Peake, Secretary, Department of Veterans Affairs
                            vha issue brief
    Issue Title: Status of Regulations to implement Public Law 109-
461--Full Cost of Care for State Veterans Nursing Homes
    Date of Report: 2/20/2008
    Issue: Members of Congress are querying VA about the status of the 
development of regulations for the State veteran nursing homes so that 
they may be reimbursed for providing services to disabled veterans 
rated at 70 percent or higher. These inquiries are being made a result 
of questions they have received from their constituents, primarily the 
members of the National Association of State Veterans Home 
Administrators.
    Background: On December 22, 2006, the President signed Public Law 
109-461, Full Cost of Care for State Veterans Nursing Homes, which 
added a new section 1745 to title 38, United States Code. This new 
section requires VA to begin paying States a higher rate for nursing 
home furnished to certain veterans in State nursing homes. The higher 
rate must be paid for veterans with an SC disability rated 70 percent 
or higher, and those receiving care for an SC disability. The new law 
also includes a provision requiring VA to furnish or pay for drugs for 
certain additional veterans receiving care in a State nursing home. 
Both of these new provisions are effective 90 days after the law was 
signed, or in late March 2007.
    Current Status: The following information is provided in response 
to recent Congressional inquiries from Hon. Larry E. Craig:

    Question 1. Why has it taken over a year and yet the regulations 
are still not implemented for the State VA nursing homes to be 
reimbursed for providing services to disabled veterans rated at 70 
percent or higher.
    Response.  The regulation development process for all Federal 
agencies has prescribed phases that proposed regulatory changes must go 
through; these include initial development, internal agency 
concurrences, submission to OMB, and publication in the Federal 
Register for public comment. Following the public comment period, 
issues that are raised are reviewed and changes, when appropriate can 
be incorporated into the final rule. The average VA time for processing 
two-stage regulations is 22.4 months. VA is presently at the 13-month 
point in processing these new State nursing home regulations.

    Question 2. Where is VA in the process of implementing these 
regulations? Have the regulations been drafted? Are the regulations 
being reviewed by OMB?
    Response.  VA has been actively pursuing the regulation development 
process. The regulations have been drafted. VA expects the regulations 
to be forwarded to OMB by April 30, 2008. The history and projected 
timelines associated with this initiative are included in attachment 
one, Chronology of Regulation Development Actions Related to Pub. L. 
109-461.

    Question 3. What is the projected implementation date and timeline 
so that constituents can be advised?
    Response. VA expects the projected implementation date to be 
October 2008. This includes allocations for 45 days for internal VHA 
and VA reviews and concurrences; 90 days of processing time through 
OMB; 60 days for publication in the Federal Register and allowing for 
the public comment period; and 30 days for VA to review and respond to 
comments. After the regulation process has been completed, VA, at the 
facility level, will most likely make payments retroactive to March of 
2007 (to the date that was 90 days after the President signed the new 
Public Law). We would pay the difference between the regular per diem 
rate that the veteran received, and the amount that will be given with 
the implementation of this new law.
                                 ______
                                 
                              Attachment 1
             chronology of regulation development actions 
                     related to public law 109-461
    December 2006: On December 22, 2006, the President signed Public 
Law 109-461, Full Cost of Care for State Veterans Nursing Homes.
    January 2007: Preliminary discussions were held at VA and a VA 
workgroup of subject matter experts was formed.
    February 2007: VA work group, led by the Office of Geriatrics and 
Extended Care, was formed. It included VA representatives from Pharmacy 
Benefits Management, the Chief Business Office, and the Office of 
General Counsel. Preliminary reviews were conducted to determine the 
issues associated with the new per diem payable and the issuance of 
medications and drugs.
    March 2007: VA addressed the National Association of State Veteran 
Home Administrators (NASVHA) at their winter conference in Alexandria, 
VA. VA considers NASVHA to be one of our primary stakeholders for the 
State home program. At this meeting, based on a NASVHA request, VA 
committed to working proactively with their membership to assure that 
they had an opportunity to actively participate in the regulation 
development process, versus having to wait until the public comment 
period.
    April 2007: Rewriting of the regulation and development of the rate 
chart began.
    May/June 2007: Meetings were held at VACO to determine proposed 
content. Significant effort was put into developing payment computation 
formulas that would be consistent with the spirit and intent of the new 
Public Law and, at the same time, would give due consideration to 
patient needs and revenue generation issues that were surfaced by the 
State homes.
    July 2007: NASVHA summer conference. VA representatives again 
addressed the National Association of State Veteran Home Administrators 
(NASVHA) at their summer conference in New Orleans, LA. At this 
meeting, VA discussed the regulation development process, associated 
timelines, and the proposed methodology for calculating payments under 
the new Public Law.
    August 2007: Three NASVH members came to VA Central Office and 
several NASVHA members joined the meeting via conference call to meet 
with members of VA staff who were drafting regulations to implement 
Pub. L. 109-461. This meeting included representatives from VA's Office 
of Geriatrics and Extended Care, the Office of General Counsel, the 
Chief Business Office, and the Office of Public and Intergovernmental 
Affairs. Based on discussions at that meeting and the information in 
their follow-on letter, dated September 21, 2007, VA modified the VA SC 
per diem calculation methodology that was proposed in March 2007, to 
include the 13 percent profit margin as a part of the prevailing rate 
payable in the geographic area in which the State home is located. VA 
also agreed to grant NASVHA additional time so that they could further 
define their positions regarding the billing of secondary payers (such 
as Medicare) and issues associated with bed holds and social worker 
qualifications.
    September 2007: Met with Cheryl Sklar and other members of the 
Requirements Analysis and Engineering Management Office (RAEM), to 
discuss how to capture veteran's priority group status to be able to 
report and receive information on 70 percent service-connected veterans 
and 50 percent service-connected veterans for full cost of care and/or 
free medications.
    October 2007: Multiple discussions with VHA staff, attorneys who 
were drafting the proposed regulation, and members of the National 
Association of State Veterans Homes.
    November 2007: Developed a new VA Form for the pharmacy benefit of 
free medications for veterans that are 50 percent or more service-
connected. Worked with the Office of Forms and Publications to give the 
form a number and the final touches on the form itself. Also, the 10-
5588 and the 10-10SH Forms needed to be revised to include the full 
cost of care veterans and the veterans who are eligible for free 
medications.
    December 2007: Developed the Impact/Cost Analysis with the cost for 
the full cost of care and the cost of the medications for the above 
mentioned veterans.
    January 2008: On Monday, January 28, 2008, VA received final 
comments and recommendations from the National Association.
    February 2008: VA reviewed comments. Decisions were made to remove 
two other sections from the proposed regulations because they were not 
mandated by Pub. L. 109-461 and because there were concerns from NASVHA 
about their appropriateness. This was delaying the processing of the 
regulation. These two items, which addressed bed hold and social worker 
qualifications, will be processed through a separate regulatory change 
action.
    On February 14, 2008, the Office of Geriatrics and Extended Care 
submitted the regulation to the office of the Assistant Secretary, 
Regulation Policy and Management (00REG) so that it can be placed into 
formal VHA and VA concurrence processes.

    Chairman Akaka. Thank you very much, Secretary Peake. I 
also want to welcome your Under Secretaries and Assistant 
Secretaries who are here with you at this time and thank you 
for your testimony.
    Secretary Peake, during your confirmation hearing before 
this Committee you said you would, and I quote, ``work hard 
with the Administration, with OMB and would come forward, if 
needed, to ask Congress for additional funding for VA.''
    Are you fully confident in this budget, given that the 
growth in total spending recommended by the President is 
actually below the rate of inflation?
    Secretary Peake. Sir, I believe that with this budget, as I 
just testified, that we can meet the needs of our veterans as 
we move forward to improve the access to care, to continue to 
improve the quality of the care, and I believe that I have 
confidence that we can do that with this budget.
    Chairman Akaka. Secretary Peake, Congress has extended the 
access afforded to combat veterans for VA health care from 2 to 
5 years.
    Secretary Peake. Yes, sir.
    Chairman Akaka. Improving access will help, but it will not 
be the catalyst for all veterans to come in for the care and 
services they need. Outreach is what is critical now and that 
falls squarely on your shoulders.
    How much is designated in this budget for outreach? And are 
you confident that this is enough to move VA from a passive 
approach to a much more aggressive one to prevent suicides and 
improve the quality of life for veterans?
    Secretary Peake. Sir, I believe that I tried to highlight 
in my testimony what I believe is the importance of outreach 
and I think that we can do better with it.
    We send out an unbelievable number of letters--800,000--
that go out from the Department. The Under Secretary for 
Benefits sends out two different packages with all the 
information.
    One of the things that I touted recently at a talk with the 
military health system was the importance of grabbing the 
reservists as they come back, and trying to make sure that they 
get oriented.
    I think we need to do a better job of reaching to their 
families, because they are the ones-- particularly in the area 
of mental health--that may be able to recognize an issue and 
throw the flag, and encourage the soldier, sailor, airman or 
Marine to come in for assistance.
    So, I met just last night with the Oregon Adjutant General 
to talk about issues. I look forward to engaging the TAGS when 
they come into town about how to better reach National Guard 
and Reserve populations.
    But, with this opportunity to bring people in now with 5 
years that gives us a chance, even if they are still getting 
their benefit adjudicated--it does not rely on that--that we 
can still get them into our system and give them the counseling 
that they need, the care that they need. That is what we will 
be focusing on, sir.
    Chairman Akaka. Will you please provide the amount of 
funding for outreach, for the record?
    Secretary Peake. Sir, I will take that for the record.
    Chairman Akaka. I have other questions, but let me first 
ask for questions from our Ranking Member.
    Senator Burr. Thank you, Mr. Chairman.
    Secretary Peake, the Institute of Medicine issued a report 
last year indicating that there was one kind of treatment for 
PTSD, exposure therapy, that it found to be effective.
    However, the IOM also found that the quality of research on 
PTSD treatment as whole, and I quote their report, ``has not 
received the level of research activity needed to support 
conclusions about the potential benefits of treatment 
modalities.'' And went on to say that the studies conducted for 
nearly three decades, and again I quote, ``do not form a 
cohesive body of evidence about what works and what does not 
work.''
    Now, given this criticism, I do not understand why the 
budget proposes a $9.3 million reduction in research on mental 
illness to a level that is even below the level found in 2007.
    Can I ask you to comment or somebody to comment?
    Secretary Peake. Yes, sir, you will notice that it still 
is, in fact, the largest budget line in the resource portfolio 
at $52 million or so, with the addition of substance abuse on 
top of it, because I think these are all related. It starts to 
get up toward a quarter of our resource portfolio.
    We are also going to work very closely with DOD, which has 
a big effort in this as well, and in fact, we will be proposing 
a deputy to be part of General Sutton's task force in looking 
at PTSD as we move forward.
    As you know, we have centers around the VA that focus on 
PTSD that really are paid for out of clinical funds, as well. 
So, although I appreciate and, frankly, agree with the 
Institute of Medicine--that we need to know more about PTSD, 
mental health, all the co-morbid mental health conditions that 
come together--I think we have a reasonably robust portfolio 
that I think will give us the information that we need.
    Senator Burr. General, let me ask specifically. How does 
the VA intend to improve the quality of the research on PTSD so 
that we have more evidence-based treatments available for our 
veterans?
    Secretary Peake. In the clinical environment where you are 
taking care of people on protocol and measuring the results, 
and with the ability to leverage our computerized patient 
records, I think we can follow through with our patients and be 
able to develop that kind of information so that we keep moving 
the ball forward on that.
    Senator Burr. I am not accusing the VA of focusing on a 
single treatment, but clearly there are some red flags that we 
are raising that we are not aggressively going after. I have 
talked to Dr. Kussman and there are efforts being made; and I 
commend you for that.
    There are over 150 projects listed in your 5-year 
department-wide major construction plan. All of these projects, 
I would assume, are based on the Capital Asset Realignment for 
Enhanced Services, CARES, analysis completed several years ago.
    In North Carolina, however, CARES underestimated the 
veteran demographics considerably; and I suspect that it is 
already obsolete in other areas of the country as well.
    Two specific questions. Is CARES still a valid blueprint on 
which to base future capital funding decisions?
    Secretary Peake. Well, sir, I think CARES is based 
generally on 2004 data basically and I think that, as you 
rightfully point out, some of the demographics have shifted. I 
think it is the kind of thing that needs to be evaluated as we 
move along.
    In fact, when I asked about the CBOCs, an example, there 
were 156 that were in the CARES program, 24 now we think 
probably do not really fit the future needs. And when you look 
at the 51 that are going to be done in 2009, there are probably 
still 10 of the CARES that have not made the priority list.
    So I think it is, like any plan, it never survives first 
contact with the enemy, you know. But it is better to have a 
plan that we can then march off of as we look and continue to 
re-evaluate the needs and follow the migration of our veterans.
    Senator Burr. I appreciate the fact that you are re-
evaluating.
    One last question. I was disturbed, as I am sure you were 
and everyone within the VA, to read the Inspector General's 
report regarding the substandard care provided to a veteran at 
the Salisbury VA Medical Center that may, and I stress may, 
have cost him his life.
    Let me quote from the IG's report. ``We have determined 
that the patient's diagnostic testing was delayed on several 
occasions and that providers missed multiple opportunities over 
a period of years to diagnose colon cancer. Had providers 
followed up with the appropriate colonoscopy surveillance 
testing to remove polyps, it is possible that the patient's 
developing colon cancer could have been detected and treated in 
time to prevent metastatic disease.''
    What quality assurance mechanisms are in place to ensure 
that this type of mistake is not repeated?
    Secretary Peake. Sir, there are a variety of quality 
assurance mechanisms across the VA, to include our surgical 
quality assurance, that look statistically at outcomes. At the 
local level there are quality measures. I think our 
computerized patient record is one of the things that will help 
us move forward, where clinical reminders are appropriately 
made available, where all the tests and all of the diagnostic 
x-rays are available to the clinician and not being lost. So I 
think there are many mechanisms in place to try to improve 
that.
    I do not know the specifics of the individual case and 
perhaps, Mike, if you have a comment on that specific. I just 
do not.
    Dr. Kussman. Thank you, sir.
    Senator Burr, as you know, that case goes back to 2005. The 
IG came and looked at that and came back again, as you know, to 
look at what had been put in place. A lot of things were put in 
place at Salisbury and across our system to be sure this does 
not happen again.
    One of the things that I have instituted now is we have 
been measuring a lot of things as outpatients and we have done 
very well. The question is, well, what is actually going on in 
our hospitals and things? And so we have now put in some new 
performance measures to look at, if somebody needs a 
colonoscopy, how long does it take for that colonoscopy to be 
done? How long does it take if something is found in that 
colonoscopy, how long does it take to get the definitive 
procedures like a biopsy or further surgery.
    We are also looking at how long it takes to get cataracts 
done, hip replacements, knee replacements. We looked at high 
volume procedures. So, we are starting to measure those just 
like we measure the blood pressure and other things that people 
have. So, there is a lot of effort to try to eliminate those 
types of things from happening.
    Senator Burr. I appreciate the efforts that you are making.
    I thank the Chair.
    Chairman Akaka. Thank you very much, Senator Burr.
    Senator Murray.
    Senator Murray. Thank you very much, Mr. Chairman.
    Secretary Peake, last year Congress passed the Joshua Omvig 
Suicide Prevention Act, which gave the VA some very important 
tools to deal with the tragedy of suicide. This is something I 
have been following very closely. I am deeply concerned about 
and I am very saddened to hear that we are continuing to hear 
about the increases in the number of suicides among our active 
duty soldiers.
    Yesterday, the AP reported on a VA study that found that 
Guard and Reserve soldiers accounted for 53 percent of the 
veterans' suicides from 2003 to the end of 2005. That statistic 
really raised concerns for me because I know that members of 
our Guard and Reserve oftentimes do not think of themselves as 
veterans. They see themselves as going back--going back to 
their same jobs--and sort of disassociate themselves from the 
VA system.
    What are we doing in particular to reach out and find those 
Guard and Reserve soldiers who go back often to very remote 
communities not associated with a military base on the ground? 
The VA may not know of them. They may not think of themselves 
as veterans. How are we going to get those Guard and Reserve 
soldiers who are struggling today and as we see these increased 
numbers of suicides, know that it is a population we need to 
reach?
    Secretary Peake. There were two great examples--one in 
Minnesota and one in New Hampshire--where the Guard really 
focused on pulling people back in. They got them home and then 
they brought them back and had a chance to really get 
integrated with the VA and all of the services that were 
available to them.
    I think that is the kind of effort that we dovetail with 
when the units have their post-deployment health reassessment, 
which is designed to come later rather than right away because 
we know the propensity of soldiers to say, OK, let me fill this 
out. I want to go home. We want to get to them after that.
    Senator Murray. Is the DOD cooperating with you in trying 
to find a way to go out and find these men and women so they do 
not get lost?
    Secretary Peake. Yes. As I was saying, I would like to find 
a way to reach out even further than that, perhaps with calls 
or whatever. We send letters, but as you know, that sometimes 
winds up in file 13.
    Senator Murray. For somebody who is sitting in a chair in a 
remote community, a letter does not mean much.
    Secretary Peake. The other is to reach their families and 
do a family education because it is the family that will notice 
something different. We know from the research that was done in 
the military that it is the people that may need the help the 
most that are least likely to assess it.
    When we looked at the information that you reported from, 
you mentioned yesterday that population that was looked at was 
all the people that had separated. That is active and reserve. 
That is about 50/50.
    Senator Murray. Right.
    Secretary Peake. So, it is not surprising that about half 
and half in that particular group. So, it is not an alarming 
big difference between the active and the reserves. It is still 
significant. There were 144 deaths in that cohort that were due 
to suicide and anyone of them is unacceptable.
    But, going back to the Act--we have that suicide hot line. 
They have had 23,000 calls. 250 of those calls were from active 
duty people. We had about 400 rescues is what I understand just 
from the suicide hot line piece of it.
    We have had a teaching program so that everybody is aware 
in our VA facilities. If somebody comes in, they get screened 
not only for PTSD but for TBI and suicide tendencies. One of my 
former officers told me that she went in and in the radiology 
department they were asking her. She says, they are really 
serious about this.
    Senator Murray. I am glad to hear that and we need to stay 
on top of this and we really need to think particularly about 
Guard and Reserve soldier while reaching those men and women 
out there.
    Let me ask you another question. I called you a little over 
a month about some serious issues that I had heard about 
happening at the VA's Polytrauma Rehab Center in Palo Alto, 
California. We have a reporter from KOMO News in Seattle that 
had been chronicling the story of several families that had 
gotten very poor treatment at the Polytrauma Rehab Center.
    As you know, we have a number of men and women coming home 
with serious head injuries. They are being sent to that. They 
are being told that that is a premier facility and I have to 
tell you, it is pretty disheartening for me to watch that news 
story and hear that one of the mothers of a young soldier who 
had been treated there said if that is premier, then I do not 
know what the worst is, honestly. I mean those really stab at 
the heart of all of us who want to make sure every one of those 
men and women are treated to the best of our ability and are 
not forgotten and really treated quickly, fast and with the 
best care possible.
    I called you about that probably 5 or 6 weeks ago now and 
you told me that you were going to look into it and I wanted to 
ask you today, for the record before this Committee, what has 
happened now at Palo Alto and what are we doing to make sure 
that does not happen again?
    Secretary Peake. First of all, we acknowledge that there 
were some issues. These were cases back in October, as I 
understand it,
    Senator Murray. Right.
    Secretary Peake. And to my knowledge we have not had new 
instances.
    There was a hard look at what was going on out there. I 
think there were some staffing issues. There was a 16-point 
plan put in place. One of the issues was leadership. We have a 
new director that has now been identified who will be starting 
in April who is already making rounds there.
    In the 16 initiatives, they range from policy and 
procedures to new hiring to training. We have had folks rotate 
actually back to Bethesda and Walter Reed. So, they actually 
get a sense of where these Soldiers, Sailors, Airmen and 
Marines are coming from. So, what was laid out by Dr. Kussman 
and his team I think was a good plan and my sense is that it is 
moving forward.
    Senator Murray. OK. So you have evaluated the situation. 
You have hired new leadership. They are going to be there in 
April. Meanwhile, if somebody has a brother or a son or someone 
who is at the trauma center today, what kind of care are they 
getting?
    Secretary Peake. I think they are getting excellent care. 
As I understand it now, we are back up to full capacity. That 
was one of the issues.
    Senator Murray. That was one of the issues.
    Secretary Peake. They were down and they are up. There was 
some question about whether they were cherry picking. I think 
there is no suggestion that that is going on now, and so I have 
confidence. This is one of our four polytrauma centers.
    Senator Murray. Right.
    Secretary Peake. And so, it is really important to us that 
we do it right.
    Senator Murray. I really appreciate that. I am going to 
continue to follow this and would love to have a chance to talk 
with you again in a few months when your new leadership is in 
place; because, as you know, with our Soldiers coming home with 
brain injury, we do not want to listen to any parent tell us 
that they got less than desirable care. Some of these stories 
were pretty horrible.
    Secretary Peake. I went out to Bethesda. It was a soldier 
that had actually returned to Bethesda from Palo Alto. I spoke 
to his wife, so I have a first-hand view of her concerns, as 
well.
    Senator Murray. Good. One of the things that I am hearing 
from parents or spouses of someone who has TBI is, that the 
sooner they get the good care to really help their brain 
function better is critically important. So, leaving anybody 
without care is really disheartening to all of us who want to 
make sure we do the right thing.
    Secretary Peake. Part of it is being able to care for a 
family in distress; that is part of this, as well. 
Unfortunately, perception is reality; so we want to--need to--
make sure that we make sure that we wrap our arms around them 
as well.
    Senator Murray. OK. I really appreciate your direct 
attention to that.
    I also wanted to ask you about the massive cuts to the 
major and minor construction programs in the President's budget 
that has been submitted. As you know well, the VA's 
infrastructure across the country is well over 50 years old. 
There are a lot of really serious upgrades that are needed.
    I know in my home State we have four projects that are on 
the VA's priority list, two of them are in Seattle and ranked 
at No. 4 and No. 5 and they are not going to receive any money 
because of such a low number request in this year's budget.
    We have important projects at American Lake, at Walla Walla 
VA where you are going to be visiting next week. How do we 
expect the VA to meet their goals when the Administration cuts 
the construction budget in half?
    Secretary Peake. Well, we have to responsibly prioritize 
against the requirements as we see them. American Lakes, I 
understand that we are funding that at about $38 million as I 
recall the number.
    You are right about there being an aging infrastructure. I 
think on average it is 57 years old. We have put money this 
year into the maintenance piece of it that will hopefully keep 
us eating into our backlog rather than just staying stable with 
it.
    Senator Murray. Actually in the budget document it is zero 
for American Lake.
    Secretary Peake. Let me get back to you for the record, 
ma'am.
    Senator Murray. I really really appreciate that.
    Secretary Peake. Because I believe we have money--at least 
in design--to move that project along.
    Senator Murray. OK. On the documents we have it listed as 
zero.
    Thank you very much, Mr. Chairman.
    Chairman Akaka. Thank you, Senator Murray.
    Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    We have another panel coming up that has representatives 
from the VSOs and I would love to get their opinion on the 
first question I have to ask. It deals with Priority 8 vets. 
These are veterans who have no service-connected injury. In 
Montana they are classified as Priority 8 if they make over 
$27,000 a year. I know that varies around the country.
    My question is--it is an issue of fairness as far as I am 
concerned and I hear about it a lot when I go back to Montana--
do you think when the guys or gals were recruited that they 
were told they were not going to get benefits if they made too 
much money?
    Secretary Peake. Well, sir, I would tell you that our 
priority, I think, is appropriately for those with service-
connected disabilities; those with special needs; and those who 
really have a significant economic need. Whether $27,000 is the 
right number--I do not really know if that is the right 
number--I do think that it is appropriate that we focus on 
those that really have the needs that were consequent to their 
service to this Nation.
    Senator Tester. I could not disagree with that, Mr. 
Secretary, and I think that is the right priority, so to speak. 
But in all fairness, and I will just say this for the record, 
that I think the Priority 8 vets ought to get the benefits, 
too. I do not care if they are making $100,000 a year. I think 
it is important that we live up to our promise to folks who 
protect this country, and it is just that simple for me.
    I want to talk about budget construction for just a second. 
If you could very briefly--because I know you could go on for 
probably hours on this--but how do you construct a budget? Does 
the President give you a bottom line that you have to live 
under and then you go line-item by line-item and move money 
around? How do you construct this budget? And it was probably 
done before you got here; so, if you could tell me how your 
predecessor did it, it would be great. Or anybody?
    Secretary Peake. Let me ask Mr. Henke to talk about the 
construction.
    Senator Tester. As concise as you can because budgets tend 
to get rather weighty. So, if you could just give me how you do 
it?
    Mr. Henke. Yes, sir. We began the process in the summer of 
last year bringing it to conclusion with OMB and the 
Administration in November. We do not have a fixed cap total. 
We model very accurately the demand for health care and bring 
that forward and have extended discussions with the 
Administration at the end of the year.
    But, there is no ``control total'' to hit that we must live 
under. There is no fixed point under which we must come.
    Senator Tester. Sir, I understand the benefits portions--
getting the money to the ground for the veterans is critically 
important--but oversight helps ensure that it happens, that the 
benefits actually get to the veterans on the ground.
    There is a $4 million cut to the IG. What is the thought 
process on that? Because you have got a huge agency that, as I 
said before, does really good work. We want to make sure it 
does. I cannot oversee you. I oversee your budget. I cannot, 
other than what veterans tell me on the ground, know what is 
really going on.
    Can you tell me why you cut the IG $4 million?
    Mr. Henke. Well, sir, the $4 million cut is from what was 
plussed up last year in the contingent emergency funding. 
Without the emergency funding it shows a bit of a growth. The 
IG has the ability to carry over some funding into 2009. We 
will have to understand what the funding impact might be in 
2009, but it certainly is not because we do not believe the IG 
is a very important element.
    Senator Tester. So, what you are saying is that with the $4 
million cut the IG is still going to have plenty of flexibility 
to go out and determine if the job is being done to the best of 
their ability?
    Mr. Henke. I will count on them to do that, and I believe 
they will have the resources to do that.
    Senator Tester. OK. In your opening comments, Secretary 
Peake, you talked about, in regard to the enrollment fees, you 
said that you were going to charge the fees because retired 
military had to pay the fees for TRICARE. Is that what I heard?
    Secretary Peake. What I said is, one of the rationales for 
charging fees in the first place is an issue of equity. I 
pulled the pay table for Sergeant Major E9 with 28 years of 
service, and I think it is $3,999 a month. So, if you multiply 
that out, it is $48,000 a year. That soldier, who spent 28 
years of his life serving his country--maybe multiple tours in 
Iraq or whatever--will pay $460 a year for his family as an 
enrollment fee for TRICARE for like services.
    So, to say that a veteran who is a Priority 8, as an 
example, should not pay an enrollment fee who is making $50,000 
(which is what it would be); this does not quite seem right.
    Senator Tester. But the Priority 8 is not eligible at all.
    Secretary Peake. We have some in our system, Priority 7s 
and 8s. They are the only people that will be affected by this 
enrollment fee.
    Senator Tester. The Priority 8s?
    Secretary Peake. Yes, 7s and 8s.
    Senator Tester. Thank you. I am out of time. I will pass it 
on.
    Chairman Akaka. Thank you, Senator Tester. We will have 
another round.
    Senator Sanders.

               STATEMENT OF HON. BERNARD SANDERS,
                   U.S. SENATOR FROM VERMONT

    Senator Sanders. Thank you, Mr. Chairman. I apologize for 
being late but I was presiding.
    First, Dr. Peake, let me thank you. I know that in the 
Veterans' Affairs Committee we put a sum of money to make sure 
that travel reimbursement rates went up. Senator Tester and I 
and others wrote you asking to implement that policy and you 
did. And I can tell you that in the State of Vermont there is a 
lot appreciation for that. So, I am glad we were able to move 
quickly on that.
    My line of questioning is going to be pretty simple and 
that is to say that any objective look at what is going on in 
terms of the needs of our veterans right now suggests that we 
cannot pursue a course of policy which is normal--because these 
are not normal times.
    We have some 29,000 soldiers who have been wounded in Iraq, 
many of them seriously. We have--God only knows how many--
soldiers who are going to come home with TBI, but we expect 
that tens of thousands of those returning will need to be 
diagnosed and treated.
    Senator Murray and others have talked about the rates of 
suicides which are appallingly high and all of us are concerned 
about how we do a better job in preventing that.
    On top of all of that we have a situation with our older 
veterans, where our waiting lines are extremely long and people 
are not getting into the hospitals or clinics in a timely 
manner. It takes far too long for many of the claims to be 
processed for our veterans. That is what we are facing.
    And I do not have to tell you, Mr. Secretary, although you 
are new to your job, that Members on this Committee feel that 
there is something very very wrong when we have a President who 
thinks it is OK to give hundreds of billions of dollars in tax 
breaks to the wealthiest 1 percent, but we cannot find a few 
billion dollars to begin to address these issues.
    I am disturbed. We made some real progress, Mr. Chairman--
and I thank you very much for your leadership on this--in 
producing the largest increase in funding for the VA in the 
history of that agency. And as you know--I do not mean to be 
terribly political here--we had to do this fighting the 
Administration.
    Now, we are back this year with all of these problems out 
there, with PTSD, with TBI, with waiting lists, with claims 
backlog; and the President has come forth with a 3.9 percent 
increase for the year knowing that all of these problems are 
looking at us; staring us in the face. We also know the cost of 
medical inflation is very high. We know you are going to have 
to hire thousands of doctors and nurses and psychologists and 
other people.
    So, my first question is, given the enormous problems 
facing the VA, why has the President given us a budget that 
calls for only a 3.9 percent increase?
    Secretary Peake. Well, sir, if you look at the medical 
aspect of it in terms of the increase, it is more like 5.8 
percent. Medical inflation is about 4.63 percent. So, it is a 
real growth of maybe close to 1.2 percent. I understand that 
that is where we are.
    We were fortunate to have the plus up that we had this last 
year because it gave us a chance to do some one timers that 
needed to be done. And we got the ability, I think, with the 
budget that we have to sustain those, as well as, to move 
forward in the area of outreach, as an example. And I owe the 
chairman a more detailed breakdown of that.
    But I think it starts to sustain the important advances 
that we have made and allows us to consolidate. I think we will 
continue to do the hiring that we talked about and the budget 
is on target for that goal.
    Senator Sanders. But you talked about the medical side of 
your budget getting an increase. But, everything being equal, 
if last year's load was the same as this year's load, we are 
talking about not only the old--and I think we are all in 
agreement that we are not going to forget about the older 
veterans----
    Secretary Peake. Right.
    Senator Sanders. But, you have all the guys and women 
coming home with PTSD and TBI. I think common sense would 
suggest that in order to address that need, you are going to 
need a budget a heck of a lot larger.
    I would point out that we are spending, Mr. Chairman, about 
$12, $14 billion a month--a month--in Iraq fighting that war; 
and it disturbs me that we cannot come up with a fraction of 
what we spend in a month to make sure that we take care of the 
people who fought that war.
    Do you have any additional thoughts on that?
    Secretary Peake. Except to say, sir, that we are looking at 
a 14 percent increase in the number of OEF/OIF people that we 
think are going to come to us; and we have been very careful 
not to underestimate that. But, we have already programmed a 21 
percent increase in what we expect to expend on that group of 
people.
    So, I think we are, again, sir, we are trying to put the 
money where the priority is appropriately; and make sure we do 
not drop the ball on this important cohort of people; and we 
will still take care of our older veterans.
    Senator Sanders. And you think this budget will enable us 
to appropriately take care of our older veterans and deal with 
the huge increase in caseload that the VA is going to 
experience?
    Secretary Peake. Overall our caseload increase we expect to 
be about 1.6 percent above what our current 2008 estimate is.
    Senator Sanders. Is there not some dispute about the 
accuracy of those estimates?
    Secretary Peake. Sir, my understanding is that we have in 
the past--some years ago--been as much as 5 or 6 percent off, 
and I know that some of it was out of model. Probably because 
of the scrutiny of this Committee, I think we have gotten a lot 
better at that. And, as I look at the variances, it really is 
starting to get tighter.
    I think we are doing a better job of forecasting and, you 
know, I believe that--and we should be held accountable that 
way.
    Senator Sanders. I think it would be a tragedy if, for 
whatever reason, the VA underestimated the kind of caseload 
that it would get and then requested less money than, in fact, 
you will end up needing.
    So, again, do you think that you have the money to 
adequately treat our older veterans and the people coming home 
from Iraq and Afghanistan?
    Secretary Peake. I do, sir.
    Senator Sanders. OK. We may have a disagreement on that, 
but let me ask you this then about the fees and the co-pays. My 
understanding is that one of the goals, frankly, of increasing 
fees is essentially to drive veterans away from the VA system; 
to lower the caseload; to say, you are going to be paying more 
for your prescriptions or if you are a veteran with a family 
income of $50,000 to $75,000; you are either going to pay $250, 
or if you have a higher income, your fee will be up to $500. I 
think it is quite obvious that a lot of veterans who are hard-
pressed financially will say, I am not going to go into the VA. 
Is that the goal: to drive away--and by the way I understand 
this is not your invention. This has been going on year after 
year. And year after year, of course, the Congress throws this 
in the garbage can where it should be thrown.
    It is an absurd proposal. And I have to say that the idea 
of raising revenue from veterans who have put their lives on 
the line defending this country to pay off our deficit--when at 
the same time giving tax breaks to billionaires--is literally 
beyond comprehension.
    Do you have any comment on that, Secretary Peake? Sir, the 
estimates are that about 144,000 Priority 8 folks in our system 
would choose to not pay the fee.
    So, I think, yes, there are some that would go out and our 
estimate also is that those are people that already have health 
insurance elsewhere. And I know that is an older study, but I 
think the number was about 90 percent would have other health 
insurance.
    Senator Sanders. Some may but some may not. And I think 
just to push people outside of the system, to push one veteran 
outside the system because he cannot afford the fee is really 
outrageous. But we do not have to discuss that too much because 
that proposal is going to go nowhere, and it should go nowhere.
    I want to get back to Senator Tester's observation about 
Priority 8s; and it is, again, the same principle. We have in 
the State of Vermont many veterans who served their country who 
expected to be able to access VA health care who make more than 
$27,000 a year. And as you know, 3 or 4 years ago President 
Bush threw these people off of VA health care.
    Secretary Peake. It was 2003. Secretary Principi made the 
decision because of----
    Senator Sanders. Because of what? We cannot afford tax 
breaks for the rich and keep veterans in our health care 
system?
    Secretary Peake. Well, sir, actually part of the issue is 
the ability to make sure that we can take care of priority 
veterans: those with service-connected disabilities; those with 
special needs; those with really means-tested shortfalls.
    Senator Sanders. Mr. Secretary, I understand that. We have 
heard that very often. And the question is, can we do both? I 
think we can. It is not a question of prioritizing. Sure. 
Everybody here understands that we want to pay rapt attention, 
do everything we can, for those who are coming back.
    I do not know necessarily that it has to be an either/or. 
Some of us believe that we have the capability and you are 
seeing a Committee that wants to do both. We are telling you we 
have the money to do that and I will. And I know, Mr. Chairman, 
we have had success in this Committee trying to bring Priority 
8s back into the VA system. We intend to do that.
    My last question, if I might. There has been a tension, to 
be very frank--trying not to be political but being very 
frank--between the White House and many of us in Congress. And 
we have, last year, given you a very ample budget against--I 
have to say it--what the White House had requested.
    So, you are in this difficult position of being forced to 
accept more money than your boss wanted you to have. 
[Laughter.]
    Many people would very happy to be in that situation, but 
you are in a difficult position. I would simply hope, and maybe 
get a thought from you. We have given you the money. We want 
that money to be spent cost effectively and we want it to do 
the job that we have outlined. The needs are so, so great out 
there--with the older veterans and the newer veterans--it is 
not easy because you are going to have to hire so many people 
and do a lot of reorganization.
    Can you tell us very briefly how you are going to be doing 
that?
    Secretary Peake. Yes, sir. Well, you are right that when 
you are ramping up, as was brought up earlier, that presents 
some challenges. I think some of the opportunities that we have 
been given with the physicians' pay bill and so forth allow us 
to be more competitive so we are able to see that.
    The other good thing about that is that we are seeing an 
increase retention. So instead of a 9 percent loss, we wind up 
with a 4 percent loss in terms of attrition. So those are all 
positive things that I think are going to allow us to move 
forward with this money that we have been getting.
    Senator Sanders. Are you making, and this is a difficult 
issue for the whole health care system not just the VA, but are 
you making progress in getting the nurses you need, 
psychologists, psychiatrists, physicians?
    Secretary Peake. Yes, we are. We are making progress and I 
was just looking at some of the other tools that we have in 
relation to the personnel and that includes loan forgiveness 
and by 2012 we will have like $100 million in loan forgiveness.
    We have some scholarship programs that we have been able to 
do and we have quite a number of folks in various scholarship 
programs.
    Senator Sanders. I would love the opportunity. I will give 
you a ring and maybe we can chat.
    Secretary Peake. Very good.
    Senator Sanders. Thank you, Mr. Chairman, whoever the 
chairman may be.
    Senator Webb, you are the Chair.
    Senator Webb [presiding]. We may have a GI Bill by the time 
he gets back. [Laughter.]

                  STATEMENT OF HON. JIM WEBB, 
                   U.S. SENATOR FROM VIRGINIA

    I apologize for the late entry here. I have had a Foreign 
Relations Committee meeting with Secretary Rice in Armed 
Services and another event and then a vote. This is a very 
important Committee to be on and these issues I care a lot 
about.
    I obviously note that the funding in this bill for enhanced 
educational benefits is not what we would have expected. I do 
not know if you had a question on that before I arrived or not?
    Secretary Peake. I have not.
    Senator Webb. Would you address that issue?
    Secretary Peake. Well, with our voc rehab and education 
programs, you will see a drop in manpower of about six, I 
think, that really is our headquarters. We have another 53 
people going out into the field in our voc rehab that, in fact, 
with some of the restructuring that Admiral Cooper is doing, we 
will have another 40, I think, out into the field in terms of 
our voc rehab counseling and so forth.
    Senator Webb. What about educational benefits writ large, 
for instance, an enhanced GI Bill? Do you have any planning for 
that in this budget?
    Secretary Peake. Well, not in this budget and we need to 
work with DOD on that. It is where the resources would actually 
come from for that.
    Senator Webb. You mean in terms of manpower resources to do 
it? You are assuming this would come out of Title 10 funding?
    Secretary Peake. We wind up administering that benefit, as 
I understand it, rather than entirely funding that benefit 
ourselves.
    Senator Webb. Has that traditionally been true, staff?
    Mr. Towers. Yes, sir, that is correct.
    Senator Webb. I am talking about GI Bills in the past?
    Mr. Towers. Typical GI Bill.
    Senator Webb. Typical GI Bill.
    Mr. Cooper. The GI Bill that we have now----
    Senator Webb. For instance, the World War II GI Bill.
    Mr. Towers. Yes, sir. I understand.
    Senator Webb. Who paid for the World War II GI Bill?
    Mr. Cooper. I cannot answer that question.
    Senator Webb. How about the Vietnam GI Bill?
    Mr. Cooper. The GI Bill we have right now--the Montgomery 
GI Bill--that is in mandatory funding. The money under the 
current GI Bill the individual pays, as you know, $1200 in the 
first year to become eligible. And then DOD tells us those who 
are eligible to execute that bill.
    Senator Webb. Right. I mean, DOD tells you who is eligible 
to get a veteran benefit, per se, by the character of the 
discharge. It does not necessarily mean that DOD will fund 
veterans benefits.
    Mr. Cooper. Yes, sir.
    Senator Webb. It has been my experience in the past that 
the VA pays for the title 38 benefits.
    Mr. Cooper. We pay for title 38 benefits, yes.
    Senator Webb. This would be a title 38 benefit.
    Mr. Cooper. That is correct.
    Senator Webb. Then you would pay.
    Mr. Cooper. There is nothing in the budget.
    Senator Webb. Secretary Peake, I would like your thoughts 
on the Dole-Shalala formula for characterizing disability. I 
had some questions about that when Senator Dole and Secretary 
Shalala were testifying. Specifically, how you would work 
together with DOD if they are simply characterizing someone as 
no longer being fit for active duty service. How is that going 
to work?
    Secretary Peake. We have a pilot that is going on now; and, 
again, this is just a pilot, not a full implementation of what 
Dole-Shalala has recommended.
    The issue is that the pilot says that the Department of 
Defense will determine--and the service specifically will 
determine--fitness for duty. That fitness, when that 
determination is going to be made, then we would do a full 
examination. The VA would do the full examination to find 
whatever claimable conditions might be there and adjudicate 
those.
    One of those claimed conditions would be the unfitting 
condition that then we would give that number, how we 
adjudicated that particular unfitting condition and that would 
be the percent that DOD would use to determine whether that 
servicemember was either medically retired or separated with a 
severance payment. That is the 30 percent issue.
    What Dole-Shalala would say is that any soldier that is 
determined to be unfit would get an annuity based on their 
time, grade, years of service and so forth, regardless of what 
the percentage would be.
    We would then pay the benefit based on whatever percentage 
we wind up adjudicating. So it would be totally separate. So 
the pilot program is kind of a hybrid right now. The Dole-
Shalala would pay a transition.
    Senator Webb. So you are talking present law, pilot and 
where this might go. You are talking about three separate 
issues.
    Secretary Peake. Exactly.
    Senator Webb. There is present law, DOD will adjudicate a 
percentage and the VA makes a separate determination basically?
    Secretary Peake. Right.
    Senator Webb. So where are you going to go on this?
    Here is a thought that I have. Someone is either going to 
be given a severance from the military without knowing the 
percentage that they are going to receive or they are going to 
be adjudicated by the VA before they are discharged?
    Secretary Peake. If we can break it down. The way it 
currently works is, you go to a medical board. They 
theoretically use the VA schedule of rating to make that 
determination on only the unfitting condition. That then 
determines whether you are retired medically or whether you get 
a severance pay and are separated.
    In the future with Dole-Shalala if it were to go the full 
Dole-Shalala approach--you would go before the Board and you 
would be determined whether you are fit or unfit regardless of 
the rating. And if you are unfit, you get an annuity based on 
your time in service and grade.
    Then you get your full adjudication of all of your 
potentially claimable conditions by the VA and you get your 
benefits from the VA based on that. Those benefits would be 
really three different kinds. One is quality of life that would 
need to be sorted out. Another would be an earnings; and then 
another would be a transition payment that could be either 3 
months' worth of pay, or like a stipend for a year in training 
or education.
    Senator Webb. So, you would receive an annuity based on 
your time in the military. Let us say you are 100 percent, you 
are fully disabled it would not----
    Secretary Peake. It would not make any difference.
    Senator Webb. It would not show up in the annuity that you 
would receive?
    Secretary Peake. That is correct.
    Senator Webb. Or, if you were 10 percent you are going to 
get an annuity for the rest of your life based on time and 
grade.
    Secretary Peake. It has nothing to do with the percent.
    Senator Webb. I understand. Let us say if you have someone 
who is getting out after 5 years and they have a condition that 
eventually is going to be adjudicated as 10 percent. As long as 
they have been characterized as unable to perform their 
military duties, they are going to get an annuity based on 5 
years?
    Secretary Peake. Correct.
    Senator Webb. Have you priced that out?
    Secretary Peake. I have not seen the full pricing of that.
    Senator Webb. It would be interesting to see. Do you have 
any percentages on the number of people now coming out of, say, 
Iraq/Afghanistan who are getting some small percentage?
    Secretary Peake. Yes.
    Senator Webb. What would be the percentage of that force?
    Secretary Peake. Let me ask Admiral Cooper. We just looked 
at that the other day. There are about 290,000 people, I think, 
that had been adjudicated, that have a claim and the numbers 
that were less than 10 percent. We have that number for you, 
sir.
    Mr. Cooper. The total number of people coming out of Iraq 
and Afghanistan who have filed a claim is 258,000 out of 
800,000 that are now veterans. Out of 800,000 veterans, 
258,000----
    Senator Webb. Approximately one-third?
    Mr. Cooper. Approximately one-third, yes, sir.
    Senator Webb. And of those, how many of those--what 
percentage of those are being adjudicated as having a claim of 
at least 10 percent, having a disability of at least 10 
percent?
    Mr. Cooper. About 80 percent that are 10 percent and above.
    Senator Webb. So, basically one-quarter of those who have 
become veterans have claims that have been adjudicated 
favorably at 10 percent or higher?
    Mr. Cooper. Yes, sir. But that does not necessarily qualify 
them as fit or unfit.
    Secretary Peake. They may be fit.
    Mr. Cooper. As a matter of fact, the No. 1 disability that 
we have adjudicated is tinnitus.
    Senator Webb. Tendinitis.
    Mr. Cooper. Tinnitus--ringing in the ear.
    Senator Webb. I have that problem. That is why I cannot 
understand the word.
    [Laughter.]
    Mr. Cooper. Sir, the fact is of all those GWOT veterans 
that we have adjudicated, about 80 percent are 10 percent or 
above, but very few of those will have the condition that is 
limiting.
    Senator Webb. You are not estimating that up to 25 percent 
of the people serving are going to be adjudicated as unfit for 
further military service by DOD before you make the 
determination?
    Mr. Cooper. That is correct.
    Secretary Peake. Many of these folks are reservists still. 
You come out, you get a DD-214. You can claim, and if you go 
back into the service, you stop getting paid while you are in 
the service and then it starts up again when you come back out 
if you have a compensable condition.
    Senator Webb. I understand under present--in fact, I have a 
close family friend who just had that happen to him. Four years 
in the Marine Corps, was adjudicated 20 percent. He has just 
been called back in the recent call-up and I think he is 
probably going to re-enlist, but he has been adjudicated.
    I am really curious as to how this transition is going to 
work in terms of when you go to an annuity. If you have some 
projections--I do not want to take anymore time with this, but 
if you have some projections, it would be interesting to look 
at those.
    Secretary Peake. Let me go back for the record and report 
on that in terms of the scoring.
    Senator Webb. Senator Murray, I am happy to yield the gavel 
back to you.
    Senator Murray [presiding]. Yes, Mr. Chairman. Absolutely. 
Thank you very much.
    Mr. Secretary, thank you. I think Chairman Akaka is on his 
way back here. He will be here in a minute, but I did have a 
couple of other questions.
    Last year, as you know, we did pass the Wounded Warriors 
Act as part of the Defense Authorization Bill. It has been 
signed into law. A bill, that as you know, made a lot of very 
important improvements for our servicemembers as they 
transition from the military into the VA including extending 
the period of automatic VA eligibility for returning 
servicemembers from 2 to 5 years.
    However, as I looked through the budget, I did not see any 
requests from the VA for additional funding for that extension 
or any other legislative requirements that were included in the 
Wounded Warrior Act.
    Can you tell me how the Administration is proposing to pay 
for the cost of extending the VA eligibility?
    Secretary Peake. We are estimating overall a 21 percent 
increase in what we believe we would need to expend on the 14 
percent increase in those that we think will seek our care. So, 
we think that we have that covered within our numbers now.
    Senator Murray. Are you taking it from something else?
    Secretary Peake. Well, it is within the budget if that is 
what you mean particularly. We are not taking it from--it is 
part of the health care budget. We were not disenrolling any of 
those. Even those we were seeing for 2 years, we were not 
disenrolling them. We are treating them as Priority 6s.
    Senator Murray. What about the other recommendations of the 
Dole-Shalala Commission that you are implementing? Where are 
you going to get the money to cover those costs?
    Secretary Peake. As an example, for the Federal Recovery 
Coordinators, they are hired and they are built into our 
budget.
    Senator Murray. You believe you have enough resources to 
enact all provisions of the Dole-Shalala Commission as well?
    Secretary Peake. Well, we will need some other legislative 
authority to do all the provisions of Dole-Shalala. But, those 
things that we can do administratively; we have the resources.
    Senator Murray. Do you anticipate asking us for additional 
resources as we see what the cost of those are as those things 
are implemented?
    Secretary Peake. If we have to, in terms of changing the 
disability system, as an example, I think we would need to. As 
Senator Webb was talking about, we need to get that squared out 
and understand. Once we get the studies in, which we have 
started, we have contracted to do two studies so that we can 
try to understand better what the issues of quality of life 
would be, and the issues of the transition payments, and the 
earnings issues.
    Senator Murray. OK. We had several high-profile cases of 
data breach, as you will recall, in 2006; and after that, we 
passed a law laying out how we expect the Department to handle 
those kinds of events. The requirements of that included an 
analysis of the breach by an outside expert or the IG and the 
provision of services such as credit monitoring and victim 
assistance if individuals were deemed to be at risk, and 
reporting back to Congress.
    Can you tell me how many breaches have been reported since 
this law was enacted? Does anybody have that?
    Secretary Peake. Let me ask General Howard if he has that 
specific data. I do not.
    Mr. Howard. Ma'am, there have been several large ones. For 
example, you recall the Birmingham incident.
    Senator Murray. Yes.
    Mr. Howard. That for sure is one. There have been a lot of 
them, but most of them have been very small.
    With respect to the provision in the law, we now have a 
contract on the shelf that can be used, if we need to, in order 
to comply with the law for independent risk assessment. We have 
not done that to date, though.
    Senator Murray. OK. Are we following the provisions of the 
law that require credit monitoring for anybody?
    Mr. Howard. Yes, we are.
    Senator Murray. And reporting back to Congress.
    Mr. Howard. We do two things. First, when we have an 
incident, we immediately assess, you know, whether or not 
individuals may have been harmed. If there is any inclination 
at all that has happened, we immediately notify them. And then 
under further review if we believe they should be awarded 
credit protection, we also send a letter out to them and they 
can opt in for that if they desire.
    Senator Murray. Thank you very much. One final question.
    Dr. Peake, in the President's State of the Union address, 
he called on Congress to allow U.S. troops to transfer their 
unused education benefits to family members. But I noticed in 
the budget he did not ask for any money for it. We are being 
told that it will cost anywhere between $1 and $2 billion 
dollars. So I am left wondering where the President's sincerity 
is in requesting us to do something when he did not ask the 
money for it or not. I am wondering if you could share with us 
why there is no additional request for the cost of that in the 
budget proposal. That would be helpful.
    Secretary Peake. My understanding is that would be a DOD 
cost as opposed to VA cost. However, we have been doing this 
for the Army. We have done some 300 families. And from our 
perspective, we will be able to implement that whenever the 
time comes; and we think it is a good thing.
    Senator Murray. OK. Very good, thank you.
    Mr. Chairman.
    Chairman Akaka [presiding]. Thank you very much.
    Mr. Secretary, this question builds on what Senator Murray 
and I talked about a moment ago.
    You state that the President's top priority is to enact the 
recommendations of the Dole-Shalala Commission. You added that 
Congress needs to pass the President's legislation. I continue 
to have reservations about the President's proposal regarding 
the disability compensation system.
    I can assure you that Congress is doing its due diligence, 
but we will not pass legislation until we are satisfied that 
such legislation is appropriate for all veterans.
    This Committee has held two hearings on veterans' 
disability compensation already this session. Another one is 
scheduled for later this month.
    I also will add that VA has initiated its own studies to 
determine appropriate payment levels for quality of life, 
transition assistance, and loss of earnings. I believe that 
Congress would be in dereliction of its duty to pass 
legislation to reform the disability compensation system 
without knowing the outcome of these studies.
    I want to continue on the topic of compensation and what 
can be accomplished in the short term.
    We have high expectations for VBA to improve upon the 
quality and timeliness of claims decisions. Last year, Congress 
was able to increase staffing for this.
    Can you tell us when veterans can expect to see results 
from this significant investment in manpower? Is there 
something more that Congress can provide?
    Secretary Peake. Sir, I think you will, given the training 
program and the efforts that Admiral Cooper has made in 
bringing people on board, we are already starting to see, I 
think, a change in those numbers. We expect that it will be 
down to 169 days by the end of this year, 145 by the end of 
2009. I think we need to move forward with the paperless 
process.
    We have put an RFI out to get industry input on rules-based 
engines. We have a systems integrator that will be hired to 
help us look at restructuring how we are doing business.
    If you walk through the BVA mail room, I mean, it is like 
stepping back into the 1950's and it is not the way we can do 
it in an industrial age. And so we are going to need to figure 
that out and make the investment to get to a paperless 
environment.
    I think also, sir, that this issue, we do need to figure 
out how to simplify our disability system. When it takes 2 
years, 3 years to train somebody adequately to be able to 
adjudicate a claim, it is not because they are not bad people 
or not smart or anything like that, it means our system is too 
complex.
    And so I think it is a combination of things, but we have 
to get moving on it.
    Chairman Akaka. Thank you.
    Secretary Peake, I would like to revisit the issue of 
Priority 8 veterans. You mentioned that you were unsure if the 
current threshold is high enough or not enough. You have the 
authority to raise this threshold.
    So my question to you is, is this something that you are 
considering?
    Secretary Peake. Sir, I would tell you that I am certainly 
willing to look at it and consider it and I will do so and work 
with the Committee on it.
    Chairman Akaka. Thank you. I have further questions, but 
let me call on Senator Burr.
    Senator Burr. Thank you, Mr. Chairman. I only have one 
additional question and it is specifically on the VA proposed 
budget which requests additional staff to decide disability 
claims, process education claims, to litigate, and decide 
appeals. But, General, it does not seek additional staffing for 
vocational rehab and employment programs. As I mentioned 
previously in my statement, I think the focus of the VA should 
be on recovery, rehabilitation and returning veterans with 
disabilities to the most productive lives we can offer.
    So, I would ask whether you think the VA has placed enough 
emphasis on this VBA program which, in my view, most closely 
aligns with what I think are the goals of the agency and this 
Committee.
    Secretary Peake. Sir, I agree with your assessment that the 
voc rehab and education is one of the things that we really 
need to be moving forward. We have too many people that drop 
out of it once we get started.
    To your first point, sir, there is a headquarters 
reduction, but there is a field increase of about 53 people. I 
think that we need to make sure that our veterans have more 
access to that; and that we look at ways to keep people in 
those programs and measure the outcomes in terms of careers and 
employment, and not just measure people in the process.
    So, it is one of the first briefings I asked to have when I 
got to the VA, and it is one that will take an increasing 
priority in terms of focus.
    Senator Burr. General, I want to take this opportunity to 
thank you for responding to the President's request. More 
importantly, for the team that you have got assembled around 
you of incredibly talented folks that, in many cases, have to 
come up here and listen to us rant and rave--some legitimate; 
some rantings, quite honestly, none of us will ever figure out 
the exact reasons.
    But, the fact is that not a day goes past that I do not 
think that everyone that is assembled at the VA is focused on 
exactly what each is there for, and that is: to serve the 
veteran in the most effective way possible.
    We ask you to do an impossible thing, and that is: to 
project what the future is going to look like--the future 
caseload, the future patient mix, the future disabilities that 
VA beneficiaries are going to have. It is impossible. We do not 
expect it to be perfect.
    I hope, collectively, we can begin to make the types of 
reforms that I think we would all agree have to be made in any 
health care delivery system. And I think it is vitally 
important that we understand what it costs us and the length of 
time to do a colonoscopy at the VA and what it costs and how 
long it takes to do a colonoscopy in the private sector. And if 
there is a discrepancy that is major or minor, then we ought to 
ask ourselves, are they doing it wrong or are we doing it 
wrong?
    Maybe we can find some things to replicate and that is what 
I am encouraged about is that in every area of the Veterans 
Administration, I am seeing people who are searching for what 
the answer is to providing that quality care at the most 
efficient, effective cost they can find.
    I think clearly, as we go forward, you know I am passionate 
about looking at the disability system and trying to 
collectively come up with something that is understandable, not 
just for us, for veterans.
    But also to work with Dr. Kussman as we begin to map out 
what the VA health care delivery system will look like in the 
future and what makes sense based upon the way we treat people 
today and a sensitivity as to where they live and how they can 
best access the services as more and more of our Guard and 
Reserve happen not to come from urban areas but from rural 
areas.
    This is going to be a challenge. My hope is that there is 
not as much pressure on the transportation needs of veterans in 
the future because we have been able to redefine how we deliver 
medical services in a way that they do not have to go that far. 
And my hope is that the Congress will be a partner with the 
Veterans Administration for this.
    I thank each one of you for your willingness to be here 
today and I thank the Chairman for his leadership on this 
Committee.
    Chairman Akaka. I thank our Ranking Member here; and he did 
not have to say it, for his passion about VA issues. And I 
certainly am glad he is here, and I look forward to working 
with him.
    I would now like to ask Under Secretary Tuerk a question. 
You came to Hawaii last year to advise Senator Inouye and me on 
a planned expansion to the Columbarium space at Punchbowl.
    My question to you is, is that still on track?
    Mr. Tuerk. Yes, Mr. Chairman, I am glad to have the 
opportunity to update you on that. The first phase of that 
project, where we intend to spend some $3.7 million to add 
3,385 new niches to the Columbarium at the Punchbowl, is on 
track. We anticipate awarding a contract this September, 
committing 2008 funds to this project. Subsequently, we will 
proceed up the existing Columbarium, up toward the rim of the 
crater. So my short answer, Senator, is, yes, we are on track. 
We are moving right now to begin the first phase of the 
expansion. And I am here to assure you again there will not be 
any interruption of service at the Punchbowl.
    Chairman Akaka. Well, thank you so much for that.
    Mr. Secretary, I want to thank you profusely for your 
testimony, your answers to our questions, and thank you for 
what you are doing as Secretary of VA.
    I also want to thank your Under Secretaries who are present 
here for what they are doing. There is a difference now in how 
we are facing the budget here today.
    So, I am looking forward to working with you and with the 
Committee on this, and together I know we can do a good job in 
providing the best services we can to our veterans.
    So, I want to thank you all very much.
    Secretary Peake. Thank you very much, Mr. Chairman.
    [Pause.]
    Chairman Akaka. The hearing will come to order.
    I want to welcome the second panel and I want you to know 
that I appreciate each of you being here today.
    First, I welcome the representatives of the Independent 
Budget: Carl Blake, National Legislative Director of Paralyzed 
Veterans of America.
    Kerry Baker, Associate National Legislative Director for 
Disabled American Veterans.
    Raymond Kelley, National Legislative Director for AMVETS.
    Christopher Needham, Senior Legislative Associate for the 
National Legislative Service of Veterans of Foreign Wars.
    I also welcome Peter Gaytan, Director of the National 
Veterans Affairs and Rehabilitation Commission of the American 
Legion.
    Finally, I welcome our dear friend over the years, John 
Rowan, National President of Vietnam Veterans of America.
    Again, I thank all of you for joining us today. Your full 
statements will appear in the record of the Committee.
    Mr. Blake, will you please begin with your testimony.

    STATEMENT OF CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, 
                 PARALYZED VETERANS OF AMERICA

    Mr. Blake. Mr. Chairman, Ranking Member Burr, on behalf of 
the four coauthors of the Independent Budget, I would like to 
thank you for allowing us the opportunity to testify today on 
the health care recommendations for the Department of Veterans 
Affairs for fiscal year 2009.
    For fiscal year 2009, the Administration requests 
approximately $41.2 billion for Veterans' health care. This 
includes approximately $2.5 billion for medical care 
collections.
    Although we recognize this is another positive step forward 
in achieving adequate funding for the VA, we believe still more 
can be done.
    For fiscal year 2009 the Independent Budget recommends 
approximately $42.8 billion for total medical care budget 
authority, an increase of about $3.7 billion over the fiscal 
year 2008 operating budget authority and approximately $1.6 
billion above the Administration's request for fiscal year 
2009.
    The one lead difference between our recommendation and the 
VA's recommendation this year is in the increase in patient 
workload. Our increase in patient workload is based on a 
projected increase of approximately 120,000 new unique 
veterans. This includes Category 1 though 8 veterans and non-
veterans who also have coverage under the VA.
    We estimate the cost of these new unique patients to be 
approximately $792 million. The increase in patient workload 
also includes a projected increase of about 85,000 new 
Operation Enduring Freedom and Operation Iraqi Freedom veterans 
at a cost of approximately $253 million. This alone puts a 
difference of about $600-plus million between our 
recommendation and the Administration's recommendation.
    Our policy and initiatives include additional funding for 
improved mental health and TBI services, long-term care 
services, funding for homeland security and emergency 
preparedness and prosthetics.
    Also, for medical facilities, the Independent Budget 
recommends approximately $4.6 billion. This includes an 
additional $250 million to address non-recurring maintenance 
needs of the VA. We are pleased to see that this year the 
President's budget does include a significant plus up in 
funding for non-recurring maintenance.
    Although not proposed to have a direct impact on veterans 
health care, we are deeply disappointed that the Administration 
chose to once again recommend an increase in prescription co-
payments and index enrollment fees based on income.
    Although the VA does not overtly explain impact of these 
proposals in its budget submission, similar proposals in the 
past have estimated that nearly 200,000 veterans will chose to 
disenrolling from the system and nearly one million veterans 
will chose not to enroll.
    It is astounding that this Administration would continue to 
recommend policies that would push veterans away from the best 
health system in the world. Congress has soundly rejected these 
proposals in the past and we call on you to do so once again.
    Mr. Chairman, as you know, the whole community of national 
veterans service organizations strongly supports an improved 
funding mechanism for VA health care. However, if the Congress 
cannot support mandatory funding, there are alternatives which 
could meet our goals of timely, sufficient, and predictable 
funding.
    We are currently working on a proposal that could change 
VA's medical care appropriation tor an advance appropriation 
which would provide approval 1 year in advance, thereby 
guaranteeing its timeliness and predictability.
    Furthermore, by adding transparency to VA's health care 
enrollee projection model, we can focus the debate on the most 
actuarially sound projection of veterans' health care costs to 
ensure sufficiency. Under this proposal Congress would retain 
its discretion to approve appropriations, retain all of its 
oversight authority, and most importantly, there would be no 
PAYGO implications.
    We look forward to the opportunity to talk to both your 
staff and Senator Burr's staff about this proposal.
    We would also ask that this Committee in your views and 
estimates for fiscal year 2009 recommend to the Budget 
Committee either mandatory funding or this new advanced 
appropriation approach to take the uncertainties out of funding 
for health care for our Nation's wounded, sick, and disabled 
veterans.
    Finally, Mr. Chairman, I would end with two points. First, 
I would like to thank both your Committee staff and the Staff 
of Senator Burr, as well as legislative aides for all of the 
members of the Committee, for allowing the Independent Budget 
the opportunity, the week before the President's Budget was 
released, to come and brief our budget recommendations in 
advance and give them an idea of where we intended to go before 
the President's budget actually came out.
    I would like to believe that this actually fosters a better 
working relationship with all the staff on the Committee and it 
re-enforces the point that we make that we have nothing really 
to hide and only everything to gain in this process.
    And finally, Mr. Chairman, I would like to thank you for 
your kind words about Richard Fuller. With the exception of his 
family and a few really close friends, I am not sure that 
anyone has been more impacted by his loss than me. Richard was 
my mentor when I started at PVA and I would suggest that he 
taught me the responsibility that comes with this job and what 
we do everyday for veterans.
    So, Mr. Chairman, again, I would like to thank you. I would 
be happy to answer any questions that you might have.
    [The prepared statement of Mr. Blake follows:]
   Prepared Statement of Carl Blake, National Legislative Director, 
                     Paralyzed Veterans of America
    Mr. Chairman and Members of the Committee, as one of the four co-
authors of The Independent Budget, Paralyzed Veterans of America (PVA) 
is pleased to present our views regarding the funding requirements for 
the Department of Veterans Affairs (VA) health care system for fiscal 
year 2009.
    PVA, along with AMVETS, Disabled American Veterans, and the 
Veterans of Foreign Wars, is proud to come before you this year to 
present the 22nd edition of The Independent Budget, a comprehensive 
budget and policy document that represents the true funding needs of 
the Department of Veterans Affairs. The Independent Budget uses 
commonly accepted estimates of inflation, health care costs and health 
care demand to reach its recommended levels. This year, the document is 
endorsed by 54 veterans' service organizations, and medical and health 
care advocacy groups.
    Last year proved to be a difficult year for the appropriations 
process. The year started with an incomplete appropriation for fiscal 
year 2007. Congress eventually completed the fiscal year 2007 funding 
bills in February, placing VA in a very difficult position. While the 
funding levels provided for fiscal year 2007 were very good, the fact 
that the bill was not completed for nearly 5 months after the start of 
that fiscal year is wholly unacceptable. Congress then followed that 
action up by providing more than $1.8 billion in supplemental funding 
for the VA.
    Unfortunately, the fiscal year 2008 appropriations process did not 
go any smoother. Due to political wrangling over the Federal budget, 
the VA did not receive its appropriation until December. We were very 
disappointed that the VA was forced to endure this situation for the 
13th time in the last 14 years. This was particularly disappointing in 
light of the fact that the Administration guaranteed that the bill 
would be signed into law and because the bill was completed before the 
start of the fiscal year on October 1.
    The appropriations bill was eventually enacted, but it included 
budgetary gimmicks that The Independent Budget has long opposed. While 
the maximum appropriation available to the VA would match or exceed our 
recommendations, the vast majority of this increase was contingent upon 
the Administration making an emergency funding request for this 
additional money. Fortunately, the Administration recognized the 
importance of this critical funding and requested it from Congress. 
This emergency request provided the VA with $3.7 billion more than the 
Administration requested for fiscal year 2008.
    For fiscal year 2009, the Administration requests $41.2 billion for 
veterans' health care. This included approximately $2.5 billion from 
medical care collections. Although this represents another step forward 
in achieving adequate funding for the VA, it still falls short of the 
recommendations of The Independent Budget.
    For fiscal year 2009, The Independent Budget recommends 
approximately $42.8 billion for total medical care budget authority, an 
increase of $3.7 billion over the fiscal year 2008 operating budget 
level established by Public Law 110-161, the Omnibus Appropriations 
bill, and approximately $1.6 billion above the Administration's fiscal 
year 2009 request. It is important to note that our budget 
recommendations reflect a distinct change from past years as it 
reinforces the long-held policy that medical care collections should be 
a supplement to, not a substitute for real dollars. The Administration, 
year-after-year, chooses to include medical care collections as part of 
its overall funding authority for Medical Services. However, we believe 
that the cost of medical care services should be provided for entirely 
through direct appropriations. In order to develop this recommendation, 
we used the maximum appropriation amount included in Public Law 110-161 
for VA medical care and added the projected medical care collections to 
that amount to formulate our baseline.
    The medical care appropriation in past years has included three 
separate accounts--Medical Services, Medical Administration, and 
Medical Facilities--that comprise the total VA health care funding 
level. However, for fiscal year 2009, the Administration's Budget 
Request recommends consolidating Medical Services and Medical 
Administration into a single account. In order to properly reflect this 
change in our recommendations, the separate accounts for Medical 
Services and Medical Administration must be added together. For fiscal 
year 2009, The Independent Budget recommends approximately $38.2 
billion for Medical Services. Our Medical Services recommendation 
includes the following recommendations:

Current Services Estimate............................... $32,574,528,000
Increase in Patient Workload............................   1,045,470,000
Policy Initiatives......................................   1,000,000,000
Medical Administration..................................   3,625,762,000
                    --------------------------------------------------------
                    ____________________________________________________
    Total fiscal year 2007 Medical Services............. $38,245,760,000
                    ========================================================
                    ____________________________________________________

    In order to develop our current services estimate, we first added 
the estimated collections for fiscal year 2008 to the Medical Services 
appropriation for fiscal year 2008. This best reflects the total budget 
authority that the VA will use to provide health care services. This 
amount was then increased by relevant rates of inflation. We also use 
the Obligations by Object in the President's Budget submission in order 
to set the framework for our recommendation. We believe this method 
allows us to apply more accurate inflation rates to specific 
subaccounts within the overall account. Our inflation rates are based 
on 5-year averages of different inflation categories from the Consumer 
Price Index--All Urban Consumers (CPI-U) published by the Bureau of 
Labor Statistics every month.
    Our increase in patient workload is based on a projected increase 
of 120,000 new unique patients--Category 1-8 veterans and covered non-
veterans. We estimate the cost of these new unique patients to be 
approximately $792 million. The increase in patient workload also 
includes a projected increase of 85,000 new Operation Iraqi Freedom and 
Operation Enduring Freedom (OEF/OIF) veterans at a cost of 
approximately $253 million.
    The policy initiatives include $325 million for improvement of 
mental health services and Traumatic Brain Injury care. This amount 
represents the growing trend both within the Administration and the 
Congress to enhance the mental health services within the VA. 
Furthermore, it reinforces our belief that resources should be provided 
to the VA to allow them to be the lead for providing these specialized 
services, not outside health care organizations. We also recommend $250 
million for long-term care services. The policy portion of The 
Independent Budget further explains the shortfall that the VA has in 
meeting the Average Daily Census mandated by the Millennium Health Care 
Act. We also recommend that the VA be appropriated $325 million for 
funding the fourth mission which encompasses homeland security and 
emergency preparedness initiatives. Currently, the VA already spends 
approximately this amount, but this funding is drawn directly out of 
the Medical Services account. Finally, we recommend $100 million to 
support centralized prosthetics funding.
    As mentioned previously, our Medical Administration recommendation 
must be added to our Medical Services recommendation to properly 
reflect the format of the fiscal year 2009 budget submission. As such, 
The Independent Budget recommends approximately $3.6 billion for 
Medical Administration for fiscal year 2009.
    Finally, for Medical Facilities The Independent Budget recommends 
approximately $4.6 billion. This amount includes an additional $250 
million for non-recurring maintenance for the VA to begin addressing 
the massive backlog of infrastructure needs.
    Although The Independent Budget health care recommendation does not 
include additional funding to provide for the health care needs of 
Category 8 veterans being denied enrollment into the system, we believe 
that adequate resources should be provided to overturn this policy 
decision. During fiscal year 2008, the VA estimated that a total of 
over 1,500,000 Category 8 veterans would have been denied enrollment 
into the VA health care system. Despite the fact that we have not seen 
any solid empirical data to substantiate this continued growth rate in 
denied Category 8 veterans, the VA continues to project higher and 
higher numbers of Category 8 veterans denied enrollment into the health 
care system. Based on the projected increase in this population of 
veterans over the last 5 years, The Independent Budget estimates that 
more than 1,870,000 will have been denied enrollment by fiscal year 
2009. Assuming a utilization rate of 20 percent, in order to reopen the 
system to these deserving veterans, The Independent Budget estimates 
that the actual total cost to reopen the system will be approximately 
$1.4 billion in order to meet this new demand. For the sake of 
discussion, if the projected collections for this group of veterans 
were to be considered in this estimation, the actual cost in 
appropriated dollars would be approximately $456 million. We believe 
that the system should be reopened to these veterans and that adequate 
funding should be provided in addition to our Medical Care 
recommendation.
    Although not proposed to have a direct impact on veterans' health 
care, we are deeply disappointed that the Administration chose to once 
again recommend an increase in prescription drug co-payments from $8 to 
$15 and an indexed enrollment fee based on veterans' incomes. These 
proposals will simply add additional financial strain to many veterans, 
including PVA members and other veterans with catastrophic 
disabilities. Although the VA does not overtly explain the impact of 
these proposals, similar proposals in the past have estimated that 
nearly 200,000 veterans will leave the system and more than 1,000,000 
veterans will choose not to enroll. It is astounding that this 
Administration would continue to recommend policies that would push 
veterans away from the best health care system in the world. Congress 
has soundly rejected these proposals in the past and we call on you to 
do so once again.
    For Medical and Prosthetic Research, The Independent Budget is 
recommending $555 million. This represents a $75 million increase over 
the fiscal year 2008 appropriated level established in the Omnibus 
Appropriations Act and $113 million over the Administration's request 
for fiscal year 2009. We are particularly pleased that Congress has 
recognized the critical need for funding in the Medical and Prosthetic 
Research account, and we urge Congress to again overrule VA's request, 
one that will seriously erode VA's crucial biomedical research 
programs. Research is a vital part of veterans' health care, and an 
essential mission for our national health care system. VA research has 
been grossly underfunded in contrast to the growth rate of other 
Federal research initiatives. At a time of war, the government should 
be investing more, not less, in veterans' biomedical research programs.
    The Independent Budget recommendation also includes a significant 
increase in funding for Information Technology (IT). For fiscal year 
2009, we recommend that the VA IT account be funded at approximately 
$2.165 billion. This amount includes approximately $121 million for an 
Information Systems Initiative to be carried out by the Veterans 
Benefits Administration. This initiative is explained in greater detail 
in the policy portion of The Independent Budget.
    We remain concerned that the Major and Minor Construction accounts 
are significantly under funded in the fiscal year 2009 Budget Request. 
The Administration's request slashes funding for Major Construction 
from the fiscal year 2008 appropriations level of $1.1 billion to $582 
million. The Minor Construction account is also significantly reduced 
from the appropriated level of $631 million to only $329 million. These 
funding levels do little to help the VA offset the rising tide of 
necessary infrastructure upgrades. Without the necessary funding to 
address minor construction needs, these projects will become major 
construction problems in short order. For fiscal year 2009, The 
Independent Budget recommends approximately $1.275 billion for Major 
Construction and $621 million for Minor Construction. The Minor 
Construction recommendation includes $45 million for research facility 
construction needs.
    Finally, Mr. Chairman, as you know, the whole community of national 
veterans service organizations strongly supports an improved funding 
mechanism for VA health care. However, if the Congress cannot support 
mandatory funding, there are alternatives which could meet our goals of 
timely, sufficient, and predictable funding.
    Congress could change VA's medical care appropriation to an advance 
appropriation which would provide approval 1 year in advance, thereby 
guaranteeing its timeliness. Furthermore, by adding transparency to 
VA's health care enrollee projection model, we can focus the debate on 
the most actuarially sound projection of veterans' health care costs to 
ensure sufficiency. Under this proposal, Congress would retain its 
discretion to approve appropriations; retain all of its oversight 
authority; and most importantly, there would be no PAYGO problems.
    We ask this Committee in your views and estimates for fiscal year 
2009 to recommend to the Budget Committee either mandatory funding or 
this new advance appropriations approach to take the uncertainties out 
of health care for all of our Nation's wounded, sick and disabled 
veterans.
    In the end, it is easy to forget that the people who are ultimately 
affected by wrangling over the budget are the men and women who have 
served and sacrificed so much for this Nation. We hope that you will 
consider these men and women when you develop your budget views and 
estimates, and we ask that you join us in adopting the recommendations 
of The Independent Budget.
    This concludes my testimony. I will be happy to answer any 
questions you may have.

    Chairman Akaka. Mr. Baker.

   STATEMENT OF KERRY BAKER, ASSOCIATE NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Baker. Mr. Chairman and Members of the Committee, thank 
you.
    As agreed by the organizations, I will focus my testimony 
on under staffing in VBA, the claims backlog and a few other 
related highlights from the Independent Budget.
    The claims backlog is undeniably growing. By the end of 
January there were over 816,000 pending claims including 
appeals.
    In the 4 years since the end of 2004, pending claims rose 
by an average of 63,000 per year. Also the number of cases with 
eight or more disabilities increased well over 100 percent from 
2000 to 2006. Such complex cases further slow down the claims 
process.
    Therefore, based on an estimated receipt of 920,000 claims 
in fiscal year 2009, the Independent Budget recommends Congress 
authorize 12,184 FTE for VA C&P service in fiscal year 2009. 
That number equates to successfully processing 83 cases per 
year for each direct program FTE authorized.
    In addition to staffing increase, we believe VA must attack 
the claims' backlog using new methods and policies especially 
when they follow the intent of the law, save resources and 
protect the rights of disabled veterans.
    One example deals with VA's policy of requiring medical 
opinions in cases where a claimant has already submitted an 
opinion adequate for rating purposes. Congress rescinded VA's 
prior policy of verifying a private physician's opinion with a 
VA examination prior to awarding benefits.
    Yet VA continues to refuse to render decisions in cases 
where a claimant secures a private opinion until after VA 
obtains its own opinion. We believe these actions are an abuse 
of discretion, delay decisions and prompt needless appeals.
    Congress should mandate that VA must decide cases based on 
a veterans' private medical evidence when it is adequate for 
rating purposes. This small change will preserve VA's manpower 
and budgetary resources, reduce the backlog, prevent needless 
appeals and, most importantly, better serve disabled veterans 
and their families.
    On another note, the law requires VA to accept lay evidence 
as proof of service connection for a disability if a veteran is 
a combat veteran. VA accepts certain military declarations as 
proof of combat but only a fraction of combat veterans received 
one of these qualifying medals.
    Military records usually do not document individual combat 
experiences. As a result, veterans who suffer a disability in 
combat are forced to wait a year or more while VA conducts 
research to determine whether a veteran's unit engaged in 
combat as claimed. This results in difficulty, even 
impossibility, in proving a veteran's personal participation in 
combat by official military records.
    Congress should clarify its intent by defining a combat 
veteran for all purposes under Title 38 as one who, during 
active military service, served in a combat zone for purposes 
of Section 112 of the Internal Revenue Code of 1986 or 
predecessor of law. This amendment would reinforce the original 
intent of Congress in liberalizing service connection for sick 
and disabled veterans who served in combat.
    Also, on behalf of the Independent Budget Veterans Service 
Organizations, I am going to call the Committee's attention to 
issues involving the Federal Court of Appeals for Veterans 
Claims.
    The greatest challenge facing the court today is similar to 
the VA's, the rising backlog of appeals. However, staffing is 
not the court's primary dilemma, rather the court has shown a 
propensity to remand cases to the Board of Veterans Appeals 
based on errors alleged by VA's counsel for the first time on 
appeal, notwithstanding the VA has no right to appeal a 
decision by the Board.
    In this, the court suggests that a veteran is free to 
present those assignments of error to the Board even though 
that appellant may have already done so. This leads the Board 
to repeat the same mistakes that it made previously. Such 
remands reopen the appeal to unnecessary development and 
further delays, overburden an already backlogged system and 
exemplify a far too restrictive judicial process.
    Ignoring legal arguments that serve as the very basis of an 
appeal and remanding cases on technicalities a veteran may be 
willing to waive merely adds to the claims backlog.
    We believe solving this unacceptable situation would be 
simple and cost effective. Congress should require the court, 
on a de novo basis, to decide all relevant questions of law and 
to decide all assignments of error properly presented by the 
appellant.
    Mr. Chairman, I have only highlighted a few of many 
important issues contained in our Independent Budget. We 
commend the remainder to you and I will be pleased to answer 
any questions from you or the Committee.
    Thank you.
    [The prepared statement of Mr. Baker follows:]
  Statement of Kerry Baker, Associate National Legislative Director, 
                       Disabled American Veterans
    Mr. Chairman and Members of the Committee: I am pleased to have 
this opportunity to appear before you on behalf of the Disabled 
American Veterans (DAV), one of four National veterans' organizations 
that create the annual Independent Budget (IB) for veterans programs, 
to summarize our recommendations for fiscal year 2009.
    As you know Mr. Chairman, the IB is a budget and policy document 
that sets forth the collective views of DAV, AMVETS, Paralyzed Veterans 
of America (PVA), and Veterans of Foreign Wars of the United States 
(VFW). Each organization accepts principal responsibility for 
production of a major component of our Independent Budget--a budget and 
policy document on which we all agree. Reflecting that division of 
responsibility, my testimony focuses primarily on the variety of 
Department of Veterans Affairs' (VA) benefits programs available to 
veterans.
    In preparing this 22nd Independent Budget, the four partners draw 
upon our extensive experience with veterans' programs, our firsthand 
knowledge of the needs of America's veterans, and the information 
gained from continuous monitoring of workloads and demands upon, as 
well as the performance of, the veterans benefits and services system. 
Consequently, this Committee has acted favorably on many of our 
recommendations to improve services to veterans and their families. We 
ask that you give our recommendations serious consideration again this 
year.
             the veterans benefits administration is still 
                      understaffed and overwhelmed
    To improve administration of VA's benefits programs, the IB 
recommends Congress provide the Veterans Benefits Administration (VBA) 
with enough staffing to support a long-term strategy for improvement in 
claims processing and for other programs under jurisdiction of the VBA. 
Included in our recommendations are new resources needed for training 
programs and information technologies; however, this testimony primary 
focuses on solving VA's staffing shortages as well as other initiatives 
to manage the increase in new claims and reduce the out-of-control 
claims backlog. In total, if Congress accepts our recommendations, VBA 
will be better positioned to serve all disabled veterans and their 
families.
                    understaffing and claims backlog
    Mr. Chairman, the claims' backlog is unquestionably growing. Rather 
than making headway and overcoming the protracted delays in the 
disposition of its claims, VA continues to lose ground on its claims 
backlog. According to VA's weekly workload report, as of January 26, 
2008, there were 816,211 pending compensation and pension (C&P) claims, 
which include appeals. Putting this number into perspective, at the end 
of 2004, 2005, 2006, and 2007, the total number of pending claims was 
620,926; 680,432; 752,211; and 809,707, respectively. Therefore, in the 
3 years from the end of 2004 to the end of 2007, the total number of 
pending C&P claims rose by 188,781 for an average of 62,929 additional 
pending claims per year. The VA's pending claims rose by 6,504 just 
from the end of 2007 to January 26, 2008--less than 1 month. At this 
rate, VA's caseload will pass one million claims in 3 years. With the 
wars in Iraq and Afghanistan still raging, together with the mass 
exodus from military service that usually occurs following cessation of 
combat operations, new and re-opened claims received by VA are more 
likely to increase than decrease. A caseload topping one million claims 
will truly be a demoralizing moment for America--the time to act is 
now.
    Throughout the foregoing years, many promises were made in public; 
yet VBA staffing has essentially remained nearly flat at between 9,200 
to 9,500 full-time employees (FTE)--9,287 in fiscal year 2006; 9,445 in 
fiscal year 2007; and 9,559 in fiscal year 2008. (The fiscal year 2008 
figure does not currently take into account increased staffing levels 
authorized in the most recent appropriations bill for 2008.) While we 
do not suggest additional resources as the solitary answer to the 
claims backlog, the current VBA staffing levels have proven year after 
year to be significantly below the levels needed to halt the growth in 
the claims backlog, much less sufficient to begin reducing the backlog. 
There is no proverbial silver bullet to solving VA's challenges. 
Various policy changes can and should be implemented that may 
collectively have a positive impact on reducing VA's claims backlog, 
while also improving services to VA's clientele. Nonetheless, 
implementing any policy change will utterly fail without a significant 
increase in VBA staffing that is at least on parity with VA's increased 
receipt of new and reopened claims as well as its ever-growing claims 
backlog.
    Based on an estimated receipt of 920,000 claims in fiscal year 
2009, Congress should authorize 12,184 FTE for fiscal year 2009. That 
number equates to 83 cases per year per each direct program FTE. The IB 
veterans' organizations realize that 83 claims per FTE are below VA's 
historical projections per FTE. Nonetheless, an infusion of new 
personnel into VBA's workforce will inevitably result in a reduced 
output per FTE for a significant length of time. These newly allotted 
employees will be unable to process claims at rates equal to 
experienced employees. Additionally, senior staff within VBA will be 
forced to frequently halt production of their own workload in order to 
provide necessary training to inexperienced employees. We, nonetheless, 
strongly encourage the VA to provide adequate training to ensure that 
claims are decided properly the first time. Therefore, the reduction in 
workload per FTE is unavoidable.
    Additionally, VBA's new claims per year continue to increase from 1 
year to the next despite VA's 2008 budget assertion that such claims 
were going to decline. For example, VBA received 771,115 new rating 
claims in fiscal year 2004 and 838,141 new claims in fiscal year 2007, 
equaling an average increase of 16,756 additional claims per year. 
During this same period, VA received the following Benefits Delivery at 
Discharge (BDD) claims: 39,885 in fiscal year 2004; 37,832 in fiscal 
year 2005; 40,074 in fiscal year 2006; and 37,370 in fiscal year 2007, 
for a total of 155,164 new beneficiaries that had never before been on 
VA rolls. At this rate, the average number of new BDD claims per year 
is 38,791 for a total of 232,746 new claims through the BDD process by 
the end of fiscal year 2009. These figures do not include 
servicemembers filing claims through either the military's physical 
disability evaluation systems, or those discharging via end-of-service 
contracts who then come to VA on their own to file claims after 
discharge.
    The significance of these new beneficiaries is that large portions 
of VA's workload increase via new claims each year are re-opened claims 
rather than claims from veterans who have never filed for VA benefits. 
Therefore, the increase in brand new beneficiaries into the system will 
inevitably increase further the number of re-opened claims, ultimately 
causing the total number of claims received by VA each year to continue 
growing, contrary to VA's fiscal year 2008 budget estimate. VA's 2009 
budget submission reveals the VA added 277,000 beneficiaries to its C&P 
rolls in 2007, which further proves this point.
    The complexity of the workload has also continued to grow. Veterans 
are claiming greater numbers of disabilities and the nature of 
disabilities such as Post Traumatic Stress Disorder (PTSD), complex 
combat injuries, diabetes and related conditions, and environmental 
diseases are becoming increasingly more complex. For example, the 
number of cases with eight or more disabilities increased 135 percent 
from 21,814 in 2000 to 51,260 in 2006.\1\ Such complex cases will only 
further slow down VBA's claims process.
---------------------------------------------------------------------------
    \1\ Fiscal year 2008 Budget Submission, Volume II, ``National 
Cemetery Administration, Benefits Programs, and Departmental 
Administration,'' Benefits Summary, Department of Veterans Affairs, Pg. 
6A-2 (Retrieved Feb. 2, 2008, from http://www.va.gov/budget/summary/
index.htm).
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    We believe that adequate staffing is essential to any meaningful 
strategy to get claims processing and backlogs under control. In its 
budget submission for fiscal year 2007, VBA projected its production 
based on an output of 109 claims per direct program FTE. We have long 
argued that VA's production requirements do not allow for thorough 
development and careful consideration of disability claims, resulting 
in compromised decisions, higher error and appeal rates, and ultimately 
more overload on the system. In addition to recommending staffing 
levels more commensurate with the workload, we have maintained that VA 
should invest more in training adjudicators and that it should hold 
them accountable for higher standards of accuracy. Nearly half of VBA 
adjudicators responding to survey questions from VA's Office of 
Inspector General admitted that many claims are decided without 
adequate record development. (The Board of Veterans' Appeals (Board) 
and the Court of Appeals for Veterans Claims' (Court's) remand rate 
clearly demonstrate this.) The Inspector General saw an incongruity 
between their objectives of making legally correct and factually 
substantiated decisions, with management objectives of maximizing 
output to meet production standards and reduce backlogs. Nearly half of 
those surveyed reported that it is generally, or very difficult, to 
meet production standards without compromising quality. Fifty-seven 
percent reported difficulty meeting production standards while 
attempting to ensure they have sufficient evidence for rating each case 
and thoroughly reviewing the evidence. Most attributed VA's inability 
to make timely and high quality decisions to insufficient staff. In 
addition, they indicated that adjudicator training had not been a high 
priority in VBA.
    Therefore, we believe it prudent to recommend staffing levels based 
on an output of 83 cases per year for each direct program FTE. With an 
estimated 920,000 incoming claims in fiscal year 2009, that effort 
would require 11,084 direct program FTEs in fiscal year 2009. With 
support FTE added, this would require C&P authorization of 12,184 total 
FTE for fiscal year 2009.
    Adjudicating veterans' claims is a labor-intensive system of 
personal decisionmaking, with lifelong consequences for disabled 
veterans. During Congressional hearings, VA is routinely forced to 
defend VBA budgets that it knows to be inadequate to the task. The 
priorities and goals of Congress, the Administration, and the VA must 
be on par with the necessity for a long-term strategy to fulfill VBA's 
mission and confirm the Nation's moral obligation to disabled veterans.
                       overdevelopment of claims
    Numerous developmental procedures in the VA claims' process 
collectively add to the enormous backlog of cases. While many of these 
procedures are mandatory, they are often over-utilized. This 
unnecessarily delays claims for months--when this occurs in, or leads 
to the appeals process, claims are delayed for many years. There is no 
single answer to solving the claims backlog. Therefore, in addition to 
staffing increases, Congress and VA must attack the problem using 
alternative methods, particularly when those alternative methods are 
parallel with the intent of the law, work to save departmental 
resources, and protect the rights of disabled veterans.
    For example, rather than making timely decisions on C&P claims when 
evidence development may be complete, the VA routinely continues to 
develop claims. These actions lend validity to many veterans' 
accusations that whenever VA would rather not grant a claimed benefit, 
VA intentionally overdevelops cases to obtain evidence against the 
claim. Despite these accusations, a lack of adequate training is just 
as likely the cause of such overdevelopment.
    Such actions result in numerous appeals, followed by needless 
remands from the Board and/or the Court. In many of these cases, the 
evidence of record supports a favorable decision on the appellant's 
behalf yet the appeal is remanded nonetheless. These unjustified 
remands usually do nothing but perpetuate the hamster-wheel reputation 
of veterans' law. Numerous cases exemplify this scenario; a list can be 
provided upon request. One such example is summarized in the IB 
submission. For the sake of brevity, we will not repeat the summary 
here, but urge the Committee to review the example titled 
``Improvements in the Claims Process,'' which can be found in the 
Compensation and Pension section of the General Operating Expenses 
Chapter.
    This example deals with VA requesting unnecessary medical opinions 
in cases where the claimant has already submitted one or more medical 
opinions that are adequate for rating purposes. VA claimants desiring 
to secure their own medical evidence, including a fully informed 
medical opinion, are entitled by law to do so. If a claimant does 
secure an adequate medical opinion, there is no need in practicality or 
in law for VA to seek its own opinion. Congress enacted title 38, 
United States Code (U.S.C.), section 5125 for the express purpose of 
eliminating the former 38 Code of Federal Regulations (CFR), section 
3.157(b)(2) requirement that a private physician's medical examination 
report be verified by an official VA examination report prior to an 
award of VA benefits. Section 5125 States:

        For purposes of establishing any claim for benefits under 
        chapter 11 or 15 of this title, a report of a medical 
        examination administered by a private physician that is 
        provided by a claimant in support of a claim for benefits under 
        that chapter may be accepted without a requirement for 
        confirmation by an examination by a physician employed by the 
        Veterans Health Administration if the report is sufficiently 
        complete to be adequate for the purpose of adjudicating such 
        claim. [Emphasis added]

    Therefore, Congress codified section 5125 to eliminate unnecessary 
delays in the adjudication of claims and to avoid costs associated with 
unnecessary medical examinations. Notwithstanding the elimination of 
title 38 CFR, section 3.157, and the enactment of title 38 U.S.C., 
section 5125, VA consistently refuses to render decisions in cases 
wherein the claimant secures a private medical examination and medical 
opinion until a VA medical examination and medical opinion are 
obtained. Such actions are an abuse of discretion, which delay 
decisions and prompt needless appeals. When claimants submit private 
medical evidence that is adequate for rating purposes, Congress should 
mandate that VA must decide the case based on such evidence rather than 
delaying the claim by arbitrarily and unnecessarily requesting 
additional medical examinations and opinions from the agency. Such 
enactment will preserve VA's manpower and budgetary resources; help 
reduce the claims backlog and prevent needless appeals; and most 
importantly, better serve disabled veterans and their families.
             standard for determining combat veteran status
    Title 38 U.S.C., section 1154(b) requires VA to accept lay or other 
evidence as sufficient proof of service connection of a disease or 
injury if a veteran alleges that disease or injury occurred in or was 
aggravated during combat. While VA recognizes the receipt of certain 
medals as proof of combat, only a fraction of those who participate in 
combat receive a qualifying medal. Further, military personnel records 
usually do not document actual combat experiences. As a result, 
veterans who suffer a disease or injury resulting from combat are 
forced to provide evidence that may not exist or wait a year or more 
while the VA conducts research to determine whether a veteran's unit 
engaged in combat.
    Congress should amend title 38 U.S.C., section 1154(b) to clarify 
military service as treatable service in which a member is considered 
to have engaged in combat for purposes of determining combat-veteran 
status. Such clarification would properly allow for utilization of 
nonofficial evidence as proof of in-service occurrence for service 
connection of combat-related diseases or injuries.
    This type of legislation would remove a barrier to the fair 
adjudication of claims for disabilities incurred or aggravated by 
military service in combat zone. Under existing law, veterans who can 
establish that they ``engaged in combat'' are not required to produce 
official military records to support their claim for disabilities 
related to such service. This legislation would not alter the law's 
current requirement that a veteran confirm a disability through 
official diagnosis. Further, it would not alter the requirement that a 
veteran show a nexus between a claimed disability and military service. 
The only alteration from current law would be a relaxed standard of 
proof, consistent with Congress' original intent, required to establish 
a veteran as one who engaged in combat. This relaxed standard of proof 
would then only apply to those who serve in a combat zone.
    Many veterans disabled by their service in Iraq and Afghanistan, 
and those who served in earlier conflicts are unable to benefit from 
liberalizing evidentiary requirements found in the current version of 
section 1154(b). This results because of difficulty, even 
impossibility, in proving personal participation in combat by official 
military documents.
    Impositions put forth by VA General Counsel opinion 12-99 require 
veterans to establish by official military records or decorations that 
they ``personally participated in events constituting an actual fight 
or encounter with a military foe or hostile unit or instrumentality.'' 
Oversight visits by Congressional staff to VA regional offices found 
claims denied under this policy because those who served in combat 
zones were not able to produce official military documentation of their 
personal participation in combat via engagement with the enemy. The 
only possible resolution to this problem without amending section 
1154(b) is for the military to record the names and personal actions of 
every single soldier, sailor, airman, and Marine involved in every 
single event--large or small--that constitutes combat and/or engagement 
with the enemy on every single battlefield. Such recordkeeping is 
impossible.
    Numerous veterans have been and continue to be harmed by this 
defect in the law. In numerous cases, extensive delays in claims 
processing occur while VA adjudicators attempt to obtain official 
military documents showing participation in combat: documents that may 
never be located.
    The Senate noted in 1941, in the report on the original bill, that 
the absence of an official record of care or treatment in many of such 
cases is explained by the conditions surrounding the service of combat 
veterans. Congress emphasized that the establishment of records for 
non-combat veterans was a simple matter compared to the combat 
veteran--either the veteran carried on despite his disability to avoid 
having a record made lest he or she be separated from his or her 
organization or, as in many cases, the records themselves were lost. 
Likewise, many records are simply never generated.
    Congress should clarify its intent by amending title 38, United 
States Code, section 1154(b), with respect to defining a veteran who 
engaged in combat for all purposes under title 38, as a veteran who, 
during active service, served in a combat zone for purposes of section 
112 of the Internal Revenue Code of 1986 or a predecessor provision of 
law.
                         information technology
    Mr. Chairman, in addition to boosting its staffing, we believe VBA 
must continue to upgrade its information technology infrastructure and 
revise its training tools to stay abreast of modern business practices, 
to maintain efficiency, and to meet increasing workload demands. With 
the continually changing environment in claims processing and benefits 
administration, anything less is a recipe for failure.
    In recent years, however, Congress has actually reduced 
significantly the funding for such VBA initiatives. In fiscal year 
2001, Congress provided $82 million for VBA initiatives. In fiscal year 
2002, it provided $77 million; in 2003, $71 million; in 2004, $54 
million; in 2005, $29 million; and, in 2006, $23 million, despite VBA's 
undeniable challenges.
    With restored investments in its initiatives, VBA could complement 
staffing increases for higher workloads with a support infrastructure 
designed to increase operational effectiveness. VBA could resume an 
adequate pace in its development and deployment of information 
technology solutions, as well as upgrade and enhance training systems, 
to improve operations and service delivery.
                  court of appeals for veterans claims
    The Congressional mandate that VA claimants receive the benefit of 
the doubt in appropriate cases is the cornerstone of veterans' benefits 
derived from military service. Yet, the Court has ignored the intent of 
Congress by creating a judicial roadblock that completely isolates 
claimants from their statutory right to the benefit of the doubt.

    Title 38 U.S.C., section 5107(b) grants claimants the benefit of 
the doubt as a matter of law with respect to any benefit under laws 
administered by the Secretary of Veterans Affairs (Secretary) when 
there is an approximate balance of positive and negative evidence 
regarding any issue material to the determination of a matter. Yet, the 
Court has been affirming any BVA denial when the record contains only 
minimal evidence necessary to show a ``plausible basis'' for such 
finding. This renders a claimant's statutory right to the benefit of 
the doubt futile because claims can be denied and the denial upheld 
when supported by far less than a preponderance of the evidence.

    Congress tried to correct this situation by amending the law with 
the enactment of the Veterans Benefits Improvement Act of 2002 \2\ to 
require the Court to consider whether Board findings were consistent 
with the benefit-of-the-doubt rule. The intended effect of section 401 
of the Veterans Benefits Act of 2002 has not been upheld by the 
court.\3\
---------------------------------------------------------------------------
    \2\ Pub. L. No. 107-330, 401, 116 Stat. 2820, 2832.
    \3\ Section 401 of the Veterans Benefits Act, effective December 6, 
2002, amended title 38, United States Code, sections 7261(a)(4) and 
(b)(1).

    Prior to the enactment of Veterans Benefits Act, the Court's case 
law provided (1) that the court was authorized to reverse a finding of 
fact when the only permissible view of the evidence of record was 
contrary to that found by the Board, and (2) that a finding of fact 
must be affirmed where there was a plausible basis in the record for 
the board's determination. However, Congress added new language to 
section 7261(b)(1) that mandates the Court to review the record before 
the Secretary pursuant to section 7252(b) of title 38 and ``take due 
account of the Secretary's application of section 5107(b) of this title 
* * *.'' \4\ The Secretary's obligation under section 5107(b), as 
referred to in section 7261(b)(1), is as follows:
---------------------------------------------------------------------------
    \4\ See 38 U.S.C. 7261(b)(1).

          (b) Benefit of the Doubt--The Secretary shall consider all 
        information and lay and medical evidence of record in a case 
        before the Secretary with respect to benefits under laws 
        administered by the Secretary. When there is an approximate 
        balance of positive and negative evidence regarding any issue 
        material to the determination of a matter, the Secretary shall 
---------------------------------------------------------------------------
        give the benefit of the doubt to the claimant.

    Prior to enactment of Veterans Benefits Act section 401, the Court 
characterized the benefit-of-the-doubt rule as mandating that ``when * 
* * the evidence is in relative equipoise, the law dictates that [the] 
veteran prevails'' and that, conversely, a VA claimant loses only when 
``a fair preponderance of the evidence is against the claim.'' \5\ 
Nonetheless, such characterizations have historically proven to be 
nothing more than meaningless rhetoric.
---------------------------------------------------------------------------
    \5\ Gilbert v. Derwenski, 1 Vet.App. 49, 54-55 (1990).

    Reading amended sections 7261(a)(4) and 7261(b)(1) together, which 
must be done in order to determine the effect of the Veterans Benefits 
Act section 401 amendments, reveals the Court is now directed, as part 
of its scope-of-review responsibility under section 7261(a)(4), to 
undertake three actions in deciding whether adverse Board findings are 
clearly erroneous and, if so, what the court should hold as to that 
finding. The plain meaning of the amended subsections (a)(4) and (b)(1) 
require the Court (1) to review all evidence before the Board; (2) to 
consider the application of the benefit-of-the-doubt rule in view of 
that evidence; and (3) if after carrying out actions (1) and (2), the 
Court concludes that an adverse Board finding is clearly erroneous and 
---------------------------------------------------------------------------
therefore unlawful, to set it aside or reverse it.

    Therefore, as the foregoing discussion illustrates, Congress 
intended the Veterans Benefits Act section 401 amendments to 
fundamentally alter the Court's review of Board decisions. This is 
evident by the plain meaning of the amended language and the 
amendment's unequivocal legislative history. Congress intended the 
court to take a more proactive and less deferential role in its 
judicial review. For example, Congress specifically intended the Court 
``to examine the record of proceedings--that is, the record on appeal--
before the Secretary and BVA. Section 401 also provides special 
emphasis during the judicial process to the `benefit of the doubt' 
provisions of section 5107(b) as the Court makes findings of fact in 
reviewing BVA decisions. The combination of these changes is intended 
to provide for more searching appellate review of BVA decisions, and 
thus give full force to the benefit-of-the-doubt provision.'' \6\ \7\ 
This language is consistent with the existing section 7261(c), which 
precludes the Court from conducting trial de novo when reviewing VA 
decisions--receiving evidence not part of the record before the Board.
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    \6\ 148 CONG. REC. S11334 (remarks of Sen. Rockefeller).
    \7\ 148 CONG. REC. S11337, H9003 (daily ed. Nov. 18, 2002) 
(explanatory Statement printed in Congressional Record as part of 
debate in each body immediately prior to final passage of compromise 
agreement).
---------------------------------------------------------------------------
    Perhaps the most dramatic of the three court actions directed by 
section 401 was the mandate that the court ``take due account of the 
Secretary's application of section 5107(b),'' i.e., the ``benefit-of-
the-doubt rule.'' It is against this more relaxed standard of review 
that, through the Veterans Benefits Act section 401, Congress has now 
required the Court to review the entire record on appeal and to examine 
the Secretary's determination as to whether the evidence presented was 
in equipoise on a particular conclusion. The foregoing notwithstanding, 
the Court's equipoise review is no better after the Veterans Benefits 
Act section 401 than it was before section 401 was enacted. The Court 
has ignored Congress' intent.
    In light of this background, the section 401 mandate supersedes the 
previous Court practice of upholding a factual finding unless the only 
permissible view of the evidence is contrary to that found by the 
Board. Likewise, section 401 overrules the requirement that a Board 
finding of fact must be affirmed where there is a ``plausible basis'' 
in the record for the determination. Yet, the nearly impenetrable 
``plausible basis'' standard continues to prevail to this very date as 
if Congress never amended section 7261. The former Ranking Minority 
Member of this Committee, spoke in strong support of this amendment and 
explained that ``the bill * * * clarifies the authority of the [Court] 
to reverse decisions of the [BVA] in appropriate cases and requires the 
decisions be based upon the record as a whole, taking into account the 
pro-veteran rule known as the benefit of the doubt.'' \8\
---------------------------------------------------------------------------
    \8\ 148 CONG. REC. H9003.
---------------------------------------------------------------------------
    Ultimately, the Board sits in near splendid isolation to 
arbitrarily weigh evidence and unfairly determine its probative value. 
Such determinations are the lynchpin in claims for benefits by disabled 
veterans. Regardless of the quantity and quality of evidence in favor 
of a claimant's case, a Board's conclusion that an infinitesimal amount 
of unfavorable evidence, however much lacking in quality, outweighs and 
is more probative than an immeasurable amount of high-quality evidence 
is practically untouchable by the Court. Worse yet, it is the Court's 
own doing. Essentially, when the Board renders this type of decision 
that turns on the weighing of such evidence, the Court is precluded 
from even considering the benefit-of-the-doubt rule. Evidence must 
first be in equipoise, or balance, for the benefit-of-the-doubt to 
apply. As soon as the Board finds the slightest plausible basis that a 
claimant's evidence preponderates against the claim, the favorable and 
unfavorable evidence is no longer in balance. Unless the Court finds 
such a ruling to be clearly erroneous--meaning there is no plausible 
basis regardless of how trivial such basis may be--the Court cannot 
overturn the ruling. Consequently, if the Court cannot overturn the 
ruling, it can never reach a review of the Board's application of the 
benefit of the doubt. The Court has therefore created a barrier between 
itself and a VA claimant's statutory right to the benefit of the 
doubt--a barrier moveable only by Congress.
    Congress should not allow any Federal court to ignore its 
legislative power, particularly one charged with the protection of 
rights afforded our Nation's disabled veterans and their families. To 
ensure the Court enforces the benefit-of-the-doubt rule, Congress 
should replace the clearly erroneous standard with a requirement that 
the court will reverse a factual finding adverse to a claimant when it 
determines such finding is not reasonably supported by a preponderance 
of the evidence.
                      solving the court's backlog
    The Board and the Court add substantially to the claims backlog by 
needlessly and frequently remanding numerous cases on appeal. In many 
of these appeals, the evidence of record fully supports a favorable 
decision on the appellant's behalf, yet the appeal is remanded 
nonetheless. These unjustified remands deprive the appellant, usually 
for many additional years, of benefits awardable based on facts already 
of record.
    The greatest challenge facing the Court is identical to the VA--the 
backlog of cases. The Court has shown a reluctance to reverse errors 
committed by the Board. Rather than addressing an allegation of error 
raised by an appellant, the Court has a propensity to vacate and remand 
cases to the Board based on an allegation of error made by the VA's 
counsel for the first time on appeal, such as an inadequate Statement 
of reasons or bases in a Board decision. Another example occurs when 
the VA argues, again for the first time on appeal, for remand by the 
Court because VA failed in its duty to assist the claimant in 
developing the claim notwithstanding an express finding by the Board 
that all development is complete and where the appellant accepts, and 
does not challenge such finding by the Board. Such actions are 
particularly noteworthy because the VA has no legal authority to appeal 
a Board decision to the Court.\9\
---------------------------------------------------------------------------
    \9\ 38 U.S.C.A.,   7252(a) (West 2002) (``The Court of Appeals for 
Veterans Claim shall have exclusive jurisdiction to review decisions of 
the Board of Veterans' Appeals. The Secretary may not seek review of 
any such decision.'')
---------------------------------------------------------------------------
    Consequently, the Court will generally decline to review alleged 
errors raised by an appellant that actually serve as the basis of the 
appeal. Instead, the court remands the remaining alleged errors on the 
basis that an appellant is free to present those errors to the Board 
even though an appellant may have already done so, leading to the 
possibility of the Board repeating the same mistakes on remand that it 
had previously. Such remands leave errors properly raised to the Court 
unresolved; reopen the appeal to unnecessary development and further 
delay; overburden an already backlogged system; exemplify far too 
restrictive judicial restraint; and inevitably require an appellant to 
invest many more months and perhaps years of his or her life in order 
to receive a decision that the court should have rendered on initial 
appeal. As a result, an unnecessarily high number of cases are appealed 
to the Court for the second, third, or fourth time.
    In addition to postponing decisions and prolonging the appeal 
process, the Court's reluctance to reverse Board decisions provides an 
incentive for VA to avoid admitting error and settling appeals before 
they reach the Court. By merely ignoring arguments concerning legal 
errors rather than resolving them at the earliest stage in the process, 
VA contributes to the backlog by allowing a greater number of cases to 
go before the Court. If the Court would reverse decisions more 
frequently, VA would be discouraged from standing firm on decisions 
that are likely to be overturned or settled late in the process.
    To remedy this unacceptable situation, Congress should amend title 
38 U.S.C., section 7261 to require the Court on a de novo basis to: (1) 
decide all relevant questions of law; (2) interpret constitutional, 
statutory, and regulatory provisions; and (3) determine the meaning or 
applicability of the terms of an action of the Secretary. The Court's 
jurisdiction should also be amended to require it to decide all 
assignments of error properly presented by an appellant.
                                general
    The benefit programs are effective for their intended purposes only 
to the extent VBA can deliver benefits to entitled veterans and 
dependents in a timely fashion. However, in addition to ensuring that 
VBA has the resources necessary to accomplish its mission in that 
manner, Congress must also make adjustments to the programs from time 
to time to address increases in the cost of living and needed 
improvements. We invite your attention to the IB itself for the details 
of those issues, but the following summarizes a number of 
recommendations to adjust rates and improve the benefit programs 
administered by VBA:

     cost-of-living adjustments for compensation, specially 
adapted housing grants, and automobile grants, with provisions for 
automatic annual increases in the housing and automobile grants based 
on increases in the cost of living;
     a presumption of service connection for hearing loss and 
tinnitus for combat veterans and veterans who had military duties 
involving high levels of noise exposure who suffer from tinnitus or 
hearing loss of a type typically related to noise exposure or acoustic 
trauma;
     removal of the provision that makes persons who first 
entered service before June 30, 1985, ineligible for the Montgomery GI 
Bill, along with other improvements to the program;
     no increase in, and eventual repeal of, funding fees for 
VA home loan guaranty;
     increase in the maximum coverage and adjustment of the 
premium rates for Service-Disabled Veterans' Life Insurance;
     increase in the maximum coverage available in policies of 
Veterans' Mortgage Life Insurance;
     legislation to restore protections for veterans' benefits 
against awards to third parties in divorce actions; and
     legislation to increase Dependency and Indemnity 
Compensation for certain survivors of veterans, and to no longer offset 
DIC with Survivor Benefit Plan payments.

    We hope the Committee will review these recommendations and give 
them consideration for inclusion in your legislative plans and will 
support their funding in the Congressional Budget Resolution for fiscal 
year 2009, as well as subsequent appropriations.
    Mr. Chairman, thank you for inviting DAV and other member 
organizations of the Independent Budget to testify before you today.

    Chairman Akaka. Thank you very much, Mr. Baker.
    Mr. Kelley.

STATEMENT OF RAYMOND C. KELLEY, NATIONAL LEGISLATIVE DIRECTOR, 
                             AMVETS

    Mr. Kelley. Thank you, Mr. Chairman. Thank you, Ranking 
Member Burr, for holding this hearing today.
    As a co-author of the Independent Budget, AMVETS is pleased 
to give you our best estimates on the resources necessary to 
carry out the responsibilities of the National Cemetery 
Administration (NCA).
    First, I commend the NCA staff who provide the highest 
quality service to veterans and their families during their 
tremendous grief.
    The Administration has requested approximately $181 million 
in discretionary funding for operations and maintenance of NCA. 
Of that number, $105 million is dedicated for major 
construction, $25 million for minor construction as well as $32 
million for State cemetery grants programs.
    In contrast, the Independent Budget recommends Congress 
provide $251.9 million for the operational requirements of NCA, 
a figure that includes $50 million toward the national shrine 
initiative.
    In total, our funding recommendation represents a $71 
million increase over the Administration's request.
    The national cemetery system continues to be seriously 
challenged. Adequate resources and developed acreage must keep 
pace with the increased workload.
    Currently, there are 13 national cemeteries in some phase 
of development or expansion. The Administration's budget 
provides funding for only three of these projects, while NCA 
expects to perform nearly 115,000 internments in 2009, an 8.7 
percent increase over the current year.
    Congress must also address the need for gravesite 
renovation and upkeep. Although there has been no orderly 
progress made over the years, the NCA is still struggling to 
remove decades of blemishes and scars from military burial 
grounds across the country. To date, $99 million has been 
invested in restoring the appearance of our national 
cemeteries, completing nearly 300 of the 928 deficiencies 
identified in the 2002 study on improvements of veterans 
cemeteries.
    Therefore, the Independent Budget recommends a $50 million 
commitment in fiscal year 2009 and we continue to recommend 
Congress establish a 5-year, $250 million fund for the national 
shrine so NCA can fully restore the appearance of the national 
cemeteries to reflect the utmost dignity and respect for those 
who are interred.
    The State Cemetery Grant Program is an important component 
of NCA. It greatly assists States increasing the burial 
services to veterans especially those living in areas where 
national cemeteries are under served.
    NCA admits only 80 percent of those requesting interment 
meet the 170,000 veterans within 75 miles radius threshold the 
NCA has set for itself. This re-emphasizes the importance of 
the State grants program.
    Since 1978 the VA has more than doubled the acreage 
available to accommodate more than a 100 percent increase in 
burials through these grants. In this year, States have 
indicated they plan on establishing 14 new cemeteries over the 
next 4 years. Therefore, to provide for these cemeteries and to 
reach NCA's threshold goals, the Independent Budget requests 
$42 million for the State Cemetery Grant Program in fiscal year 
2009.
    Also, the Independent Budget strongly recommends Congress 
to review the current burial benefits that have seriously 
eroded in value over the years. While these benefits were never 
intended to cover the full cost of burial, they now pay for 
just 6 percent of what they covered when the program was 
started in 1973.
    The Independent Budget requests a plot allowance be 
increased from $300 to $750, to increase the allowance for 
service-connected deaths from $2,000 to $4,100 and to increase 
non-service-connected burial benefits from $300 to $1,270. 
These increases would proportionally bring the benefits back to 
their original value.
    The NCA honors more than 2.8 million veterans with final 
resting place that commemorate their service to this Nation. 
Our national cemeteries are more than a final resting place. 
They are a memorial to those who have died in our defense, and 
hollowed ground to those who have survived.
    Mr. Chairman, this concludes my testimony and I will be 
happy to answer any questions the Committee has.
    [The prepared statement of Mr. Kelley follows:]
               Prepared Statement of Raymond C. Kelley, 
                 National Legislative Director, AMVETS
    Chairman Akaka, Ranking Member Burr, and members of the Committee: 
AMVETS is honored to join our fellow veterans service organizations and 
partners at this important hearing on the Department of Veterans 
Affairs budget request for fiscal year 2009. My name is Raymond C. 
Kelley, National Legislative Director of AMVETS, and I am pleased to 
provide you with our best estimates on the resources necessary to carry 
out a responsible budget for VA.
    AMVETS testifies before you as a co-author of The Independent 
Budget. This is the 22nd year AMVETS, the Disabled American Veterans, 
the Paralyzed Veterans of America, and the Veterans of Foreign Wars 
have pooled our resources to produce a unique document, one that has 
stood the test of time.
    In developing the Independent Budget, we believe in certain guiding 
principles. Veterans should not have to wait for benefits to which they 
are entitled. Veterans must be ensured access to high-quality medical 
care. Specialized care must remain the focus of VA. Veterans must be 
guaranteed timely access to the full continuum of health care services, 
including long-term care. And, veterans must be assured accessible 
burial in a State or national cemetery in every State.
    The VA health care system is the best in the country and 
responsible for great advances in medical science. VHA is uniquely 
qualified to care for veterans' needs because of its highly specialized 
experience in treating service-connected ailments. The delivery care 
system provides a wide array of specialized services to veterans like 
those with spinal cord injuries, blindness, Traumatic Brain Injury, and 
Post Traumatic Stress Disorder.
    Looking at the numbers alone, the VA budget would appear to be one 
that would garner only praise and be a model for years to come. 
However, the budget was signed into law 5 months after the start of the 
new fiscal year, marking the 13th time in 14 years the VA had to work 
from continuing resolutions to maintain the system. Also, the budget 
was contingent on $3.7 billion in emergency funding that was signed 
into law less than 1 month ago. This is an unacceptable way of funding 
a department that is as fluid in nature as the VA.
    Mr. Chairman, as you know, we strongly support mandatory funding 
for VA health care. However, if the Congress cannot support mandatory 
funding, there are alternatives which could meet our goals of timely, 
sufficient, and predictable funding.
    Congress could change VA's medical care appropriation to an advance 
appropriation which would provide approval 1 year in advance, thereby 
guaranteeing its timeliness. Furthermore, by adding transparency to 
VA's health care enrollee projection model, we can focus the debate on 
the most actuarially sound projection of veterans health care costs to 
ensure sufficiency.
    Under this proposal, Congress would retain its discretion to 
approve appropriations; retain all of its oversight authority; and most 
importantly, there would be no PAYGO problems.
    We ask this Committee in your views and estimates to recommend to 
the Budget Committee either mandatory funding or this new advance 
appropriations approach to take the politics out of health care for all 
of our Nation's wounded, sick and disabled veterans.
    As a partner of the Independent Budget, AMVETS devotes a majority 
of its time with the concerns of the National Cemetery Administration 
(NCA) and I would like to speak directly to the issues and concerns 
surrounding NCA.
                  the national cemetery administration
    The Independent Budget acknowledges the dedicated and committed NCA 
staff who continue to provide the highest quality of service to 
veterans and their families despite funding shortfalls, aging 
equipment, and increasing workload. The devoted staff provides aid and 
comfort to grieving veterans' families in a very difficult time, and we 
thank them for their consolation.
    The NCA currently maintains more than 2.8 million gravesites at 131 
national cemeteries in 39 States and Puerto Rico. VA estimates that 
about 24 million veterans are alive today. They include veterans from 
World War I through the Global War on Terrorism, as well as peacetime 
veterans. With the anticipated opening of the new national cemeteries, 
annual interments are projected to increase from more than 105,000 in 
2008 to 115,000 in 2009.
    The NCA is responsible for five primary missions: (1) to inter, 
upon request, the remains of eligible veterans and family members and 
to permanently maintain gravesites; (2) to mark graves of eligible 
persons in national, State, or private cemeteries upon appropriate 
application; (3) to administer the State grant program in the 
establishment, expansion, or improvement of State veterans cemeteries; 
(4) to award a Presidential certificate and furnish a United States 
flag to deceased veterans; and (5) to maintain national cemeteries as 
national shrines sacred to the honor and memory of those interred or 
memorialized.
                           nca budget request
    The administration requests $181 million for the NCA for fiscal 
year 2009. The members of The Independent Budget recommend that 
Congress provide $252 million and 51 additional FTE for continuing 
operations and workload increases of NCA. We recommend your support for 
a budget consistent with NCA's growing demands and in concert with the 
respect due every man and woman who wears the uniform of the U.S. Armed 
Forces.
    The national cemetery system continues to be seriously challenged. 
Though there has been progress made over the years, the NCA is still 
struggling to remove decades of blemishes and scars from military 
burial grounds across the country. Visitors to many national cemeteries 
are likely to encounter sunken graves, misaligned and dirty grave 
markers, deteriorating roads, spotty turf and other patches of decay 
that have been accumulating for decades. If the NCA is to continue its 
commitment to ensure national cemeteries remain dignified and 
respectful settings that honor deceased veterans and give evidence of 
the Nation's gratitude for their military service, there must be a 
comprehensive effort to greatly improve the condition, function, and 
appearance of all our national cemeteries.
    In accordance with ``An Independent Study on Improvements to 
Veterans Cemeteries,'' which was submitted to Congress in 2002, The 
Independent Budget again recommends Congress to fully fund the National 
Shrine Initiative by providing $50 million in fiscal year 2009 budget 
and a commitment of $250 million over a period of 5 years to restore 
and improve the condition and character of NCA cemeteries.
    It should be noted that the NCA has done an outstanding job thus 
far in improving the appearance of our national cemeteries, but 
critical under funding does not allow NCA to remove the backlog of 
improvements that need to be met. To date, NCA has invested $99 million 
to the initiative, making nearly 300 improvements. Additionally, $28.2 
million will be invested in restoration in 2008. This money is the full 
amount of supplemental funding that was given to NCA in fiscal year 
2008, a fact that should be a wake-up call of the importance of the 
National Shrine Initiative. Even with the funding that has been spent 
on these improvements, new areas requiring restoration are identified. 
By enacting a 5-year program with dedicated funds and an ambitious 
schedule, the national cemetery system can provide veterans and their 
families with the utmost dignity, respect, and compassion.
                   the state cemetery grants program
    The State Cemetery Grants Program (SCGP) complements the NCA 
mission to establish gravesites for veterans in those areas where the 
NCA cannot fully respond to the burial needs of veterans. Several 
incentives are in place to assist States in this effort. For example, 
the NCA can provide up to 100 percent of the development cost for an 
approved cemetery project, including design, construction, and 
administration. In addition, new equipment, such as mowers and 
backhoes, can be provided for new cemeteries. Since 1978, the 
Department of Veterans Affairs has more than doubled acreage available 
and accommodated more than a 100 percent increase in burials through 
this program.
    To help provide reasonable access to burial options for veterans 
and their eligible family members, The Independent Budget recommends 
$42 million for the SCGP for fiscal year 2009. The availability of this 
funding will help States establish, expand, and improve State-owned 
veterans' cemeteries.
    States have intentions of beginning construction of 24 new State 
cemeteries in 2008. Many States have difficulties meeting the 
requirements needed to build a national cemetery in their respective 
State. The large land areas and spread out population in these areas 
make it difficult to meet the ``170,000 veterans within 75 miles'' 
national veterans cemetery requirement. Recognizing these challenges, 
VA has implemented several incentives to assist States in establishing 
a veterans cemetery. For example, the NCA can provide up to 100 percent 
of the development cost for an approved cemetery project, including 
design, construction, and administration.
                            burial benefits
    There has been serious erosion in the value of the burial allowance 
benefits over the years. While these benefits were never intended to 
cover the full costs of burial, they now pay for only a small fraction 
of what they covered in 1973, when the Federal Government first started 
paying burial benefits for our veterans.
    In 2001 the plot allowance was increased for the first time in more 
than 28 years, from $150 to $300, which covers approximately 6 percent 
of funeral costs. The Independent Budget recommends increasing the plot 
allowance from $300 to $745, an amount proportionally equal to the 
benefit paid in 1973.
    In the 108th Congress, the burial allowance for service-connected 
deaths was increased from $500 to $2,000. Prior to this adjustment, the 
allowance had been untouched since 1988. The Independent Budget 
recommends increasing the service-connected burial benefit from $2,000 
to $4,100, bringing it back up to its original proportionate level of 
burial costs.
    The non-service-connected burial allowance was last adjusted in 
1978, and also covers just six 6 percent of funeral costs. The 
Independent Budget recommends increasing the non-service-connected 
burial benefit from $300 to $1,270.
    The NCA honors veterans with a final resting place that 
commemorates their service to this Nation. More than 2.8 million 
soldiers who died in every war and conflict are honored by burial in a 
VA national cemetery. Each Memorial Day and Veterans Day we honor the 
last full measure of devotion they gave for this country. Our national 
cemeteries are more than the final resting place of honor for our 
veterans; they are hallowed ground to those who died in our defense, 
and a memorial to those who survived.
    Mr. Chairman, this concludes my testimony. I thank you again for 
the privilege to present our views, and I would be pleased to answer 
any questions you might have.

    Chairman Akaka. Thank you very much, Mr. Kelley.
    Mr. Needham.

STATEMENT OF CHRISTOPHER NEEDHAM, SENIOR LEGISLATIVE ASSOCIATE, 
 NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE 
                         UNITED STATES

    Mr. Needham. Chairman Akaka, Ranking Member Burr and 
Members of the Committee.
    On behalf of the members of the Veterans of Foreign Wars, I 
would like to thank you for the opportunity to testify today. 
As a co-author of the Independent Budget, the VFW is primarily 
responsible for the construction section, so I will limit my 
remarks to that area.
    The President's request for construction funding will not 
meet the needs of America's veterans. As part of its budget 
submission, the VA has provided hundreds of pages of 
construction priorities that require millions of dollars of 
investment. Despite this, the Administration has essentially 
halved the major and minor construction budgets. We look to you 
in Congress, as you have done in the past, to increase the 
construction budget and live up to the needs of our veterans.
    With respect to the major construction account, the 
Administration has requested $582 million, far below the $1.1 
billion appropriated this year. This is also far behind the 
$1.275 billion called for by the Independent Budget.
    Further, the Administration is proposing just $476 million 
for hospital construction, less than half of the $1.1 billion 
recommended by the IB.
    We appreciate that the Administration's request covers 
eight medical facilities including three completely new 
projects, two of those would expand VA's polytrauma efforts. We 
believe, however, that VA can and must do more.
    The funding provided for these eight projects is tiny 
compared to their total cost. If this budget is enacted, VA 
will have a construction backlog of $2 billion in projects. At 
the pace of the Administration's request, it would take five 
fiscal years for these projects to be fully funded and even 
more for construction to be completed.
    We need to move forward to keep up with the promise of 
CARES. Former VA Secretary Anthony Principi testified before 
the House that CARES would require $1 billion a year for 5 
years. Since that time, total CARES funding is about $3 billion 
when you discount emergency hurricane repairs.
    Clearly, more needs to be done and we urge action to live 
up to the Secretary's words. You must make a steady investment 
in VA's capital infrastructure to bring the system up to date 
with the 21st century needs of veterans.
    Turning to minor construction, VA's request is just $329 
million which is about $300 million less than the current 
year's funding level. The IB has recommended $621 million with 
the majority of that going to VHA construction and renovation. 
For VHA, the Administration's request is just $273 million. 
This will not meet the needs laid out in their budget 
documentation.
    For fiscal year 2009 VA, in its capital plan, lists 145 
construction projects. Although VA does not provide cost 
estimates for these, the fiscal year 2008 cost per project was 
over $5 million per project. Simple multiplication shows that 
VA's minor construction budget is not sufficient, and for the 
sake of argument even if you halve the cost per project, it 
still would not meet the needs.
    Fully funding minor construction is important because it 
plays a key role in the maintenance of VA's facilities. VA says 
that 30 percent of all minor construction funding is used to 
offset the deficiencies of the facilities condition assessments 
or FCAs.
    In fiscal year 2007 VA estimated that there was a $5 
billion backlog in FCA maintenance. Although Congress has 
targeted funding for these essential projects, most of the 
backlog remains. The main way in which VA clears the backlog is 
through non-recurring maintenance or NRM. To that end, we were 
pleased to see the $802 million request for NRM. This is in 
line with what The IB has called for in the past.
    Industry standard is for a medical facility to spend 
between 2 and 4 percent of its plant replacement value on NRM 
funding. In VA's case this corresponds with $800 million to 
$1.6 billion, an amount VA agrees with and is included in their 
asset management plan.
    While we were pleased with the request, given the $5 
billion backlog in maintenance, it represents the low end of 
what VA needs. Accordingly, we would like Congress to increase 
funding, again as you have in the past, to reduce this backlog 
and ensure that VA delivers health care in clean, safe and well 
maintained environments.
    Mr. Chairman, this concludes my testimony and I would be 
happy to answer any questions you or the members may have.
    [The prepared statement of Mr. Needham follows:]
     Prepared Statement of Christopher Needham, Senior Legislative 
 Associate, National Legislative Service, Veterans of Foreign Wars of 
                           The United States
    Mr. Chairman and Members of this Committee: On behalf of the 2.4 
million men and women of the Veterans of Foreign Wars of the United 
States (VFW) and our Auxiliaries, I would like to thank you for the 
opportunity to testify today. The VFW works alongside the other members 
of the Independent Budget (IB)--AMVETS, Disabled American Veterans and 
Paralyzed Veterans of America--to produce a set of policy and budget 
recommendations that reflect what we believe would meet the needs of 
America's veterans. The VFW is responsible for the construction portion 
of the IB, so I will limit my remarks to that portion of the budget.
    The administration's fiscal year 2009 budget request for major and 
minor construction is woefully inadequate, especially in light of the 
administration's own supporting documents. Despite hundreds of pages of 
budgetary documents that show a need for millions of dollars in 
construction projects, the administration saw fit to halve the major 
and minor construction accounts from the fiscal year 2008 levels, 
failing to meet the future needs of our veterans. We look to you in 
Congress to correct this, and to advance VA's construction priorities 
so that future generations of veterans--those currently serving in the 
deserts of Iraq and the mountains of Afghanistan--can have a first-rate 
VA health care system that lives up to their needs.
                           major construction
    The President's request for major construction is a paltry $581.6 
million for fiscal year 2009. This is a dramatic cut from last year's 
funding level of $1.1 billion. While we appreciate that this level 
covers eight medical facility projects, including three new previously 
unfunded projects, the total level of funding does not come close to 
meeting the IB's recommendation of $1.275 billion in construction 
projects. $476.6 million of the administration's request covers 
Veterans Health Administration projects, significantly lower than the 
$1.1 billion that the IB has called for.
    In determining our recommendations, we follow VA's prioritization 
process as VA discusses in its annual 5-Year Capital Plan, which is 
included in Volume III of the Department's budget submission.
    VA determines its budget year priorities in two phases. First, 
partially funded projects from previous years are ordered by fiscal 
year and priority order. Second, newly evaluated projects from the 
current budget year are listed in priority order. These are combined, 
with the first category receiving priority over the second.
    For the current year's process, VA had seven partially unfunded 
projects at the top of the list and chose to provide funding for five 
of those projects. They also began to provide funding for the top three 
new projects as ranked in the current fiscal year: Bay Pines, FL; 
Tampa, FL; and Palo Alto, CA. We certainly appreciate the progress on 
new construction projects as last year's funding request did not call 
for any new projects. We also appreciate the focus on construction and 
improvements to VA's polytrauma centers. We believe, however, that more 
can and must be done.
    While the eight major construction projects might sound like a lot, 
the funding levels recommended for them are a tiny blip in the overall 
costs of those projects. If we look at just the partially unfunded 
projects--the backlog, if you will--even the $320 million aimed at them 
barely scratches the surface. Only the Lee County, FL, outpatient 
clinic is funded to completion. The other four projects still require a 
total future funding level of $1.26 billion. The funding for the three 
new projects totals $76.8 million out of a total construction estimate 
of $771 million. This is important because it means that there will be 
a total construction backlog of over $2 billion when the administration 
prepares its request for the following fiscal year. It is increasingly 
unlikely that the top priority construction projects--likely to include 
this year's number 4 priority project in Seattle, WA, or improvements 
in Dallas, TX, or Louisville, KY--will be funded in future years while 
VA's meager construction budget is earmarked only to prior projects, as 
was the case with last year's funding 
request.
    I would refer you to the table on Page 7-12 of VA's 5-Year Capital 
Plan for the full list of projects VA considered funding in the current 
year. The increase in funding that we are calling for could be applied 
to those prior year projects we referred to previously, or to the 
fiscal year 2009 scored projects. Both categories desperately need 
funding beyond the administration's request. Even an increase of about 
$31 million would allow VA to begin the first stages of construction on 
priority projects 4-6, which typically requires 10 percent of the total 
cost estimate.
    These projects are necessary to ensure that VA properly reinvests 
in its aging physical infrastructure. VA's facilities average over 
fifty years old, and VA has historically recapitalized at a rate far 
below hospital industry standards. From 1996-2001, for example, VA 
recapitalized at a rate of just 0.64 percent per year. This corresponds 
with an assumed building life of 155 years, far beyond any reasonable 
expectations. VA has made progress since then, but more clearly must be 
done, especially if we are to live up to the promise of CARES and 
modernize the system so that veterans now and into the future will have 
first-rate health care in clean, safe, modern and comfortable 
facilities.
    We remain concerned about the unfulfilled promise of CARES. Upon 
completion of the CARES decision document, former VA Secretary, Anthony 
Principi, testified before the Health Subcommittee of the House 
Committee on Veterans' Affairs in July 2004. His testimony noted that 
CARES ``reflects a need for additional investments of approximately $1 
billion per year for the next 5 years to modernize VA's medical 
infrastructure and enhance veterans' access to care.''
    According to VA's November 2007 testimony before that same 
Committee, Congress has appropriated just $2.83 billion for CARES 
projects, far below the need to which the Secretary had testified. 
Further, this includes a sizable amount for rebuilding facilities after 
the Gulf Coast Hurricanes--amounts we have argued that Congress should 
have provided as separate emergency funding, outside of VA's regular 
planning process. With the fiscal year 2008 appropriation, the total is 
up to $3.9 billion--better, but still lagging.
    With just $581 million requested for major construction in fiscal 
year 2009, which is far below VA's demonstrated needs, it is clear that 
VA is falling short. After that 5-year de facto moratorium on 
construction while CARES was ongoing and without additional funding 
coming forth, VA and veterans have an even greater need than they did 
at the start of the CARES process. Accordingly, we urge action to live 
up to the Secretary's words by making a steady investment in VA's 
capital infrastructure to bring the system up to date with the 21st 
century needs of veterans.
                           minor construction
    We also are greatly concerned with the administration's proposed 
slashing of the minor construction budget. As with the major 
construction account, this cut is contrary to the information the 
Department provides in the total budget document. For fiscal year 2009, 
the recommendation is just $329 million, $301 million below the fiscal 
year 2008 level and far below the $621 million called for in the 
Independent Budget.
    $273 million of the request is targeted for VHA facilities and $18 
million--about 5 percent of the total--is allocated for staff offices 
to accommodate the consolidation of VA's information technology 
programs.
    VA has a long list of minor construction projects targeted for 
fiscal year 2009. There is a list of 145 minor construction projects 
listed on page 7-95 of the 5-Year Capital Plan. Although there is no 
cost specifically associated with them, we can estimate the cost using 
the average cost of the scored projects from fiscal year 2008, which 
can be found on page 7-90. For the fiscal year 2008 projects listed, 
the average price per project is $5.6 million. If you multiply that 
cost per project by the 145 proposed fiscal year 2009 projects, VHA 
would require a budget of $812 million, nearly $500 million more than 
they have actually requested. We understand that VA has some carryover 
funding for minor construction to offset some of that balance, but even 
if all $267 million of that were applied to this list of projects, VHA 
would still require $545 million in funding instead of the $273 the 
administration has requested.
    The minor construction request seems even more deficient when you 
factor in its role with respect to the maintenance of VA's facilities. 
Every medical center is surveyed at least once every 3 years and given 
a thorough assessment of all component systems. These reviews comprise 
the Facility Condition Assessment (FCA), and the scores are used, in 
part, to produce the condition index of the facility, one of the 
benchmark statistics in VA's Real Property Scorecard. The majority of 
funding for projects and systems found to be deficient through the FCA 
is nonrecurring maintenance (NRM), but VA says that 30 percent of all 
minor construction is targeted to correct documented FCA deficiencies. 
In fiscal year 2007, VA notes that its FCA backlog was well over $5 
billion in projects. Congress has done a good job to improve some of 
these deficiencies--notably the $550 supplemental that was targeted 
toward FCA problems--but more must be done if VA is going to properly 
maintain its 
facilities.
                        nonrecurring maintenance
    Those FCA reviews show the importance of nonrecurring maintenance 
(NRM), and the $5 billion backlog shows how woefully deficient past NRM 
requests and appropriations have been. It is sad that it took the 
unconscionable situation at Walter Reed--a non-VA facility--to 
demonstrate the importance of the account. We certainly applaud VA's 
efforts post-Walter Reed to assess the maintenance of its 
infrastructure and Congress' immediate response, but it should not have 
come to that. The problems with the lack of NRM funding have been 
repeatedly pointed out in the Independent Budget, and we continue to 
ask Congress and the administration to do more.
    For fiscal year 2009, we are pleased to see that the President has 
requested $802 million for NRM funding. This is in line with what the 
IB has called for in the past. For justification of our number, we 
continue to cite the Price Waterhouse review of VA's facility 
management programs that cited industry standards to claim that VA 
should be spending between 2 and 4 percent of its plant replacement 
value on NRM. VA accepted this recommendation and adopted it as part of 
its Asset Management Plan. That VA document noted that VA's plant 
replacement value was approximately $40 billion, and accordingly, the 
NRM budget should be between $800 million and $1.6 billion.
    With the near-$5 billion backlog in FCA-observed maintenance needs, 
the proposed $802 million is surely on the low end. That amount would 
allow VA to perform maintenance at current levels, but not to dip into 
the backlog. Accordingly, we would like Congress to increase funding 
for this account, as has been done in the past. We need to eliminate 
the backlog to ensure that veterans have health care in clean, safe, 
and efficient locations, and that VA properly cares for its 
infrastructure to ensure that it lasts for years into the future.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions that you or the Members of the Committee may have.

    Chairman Akaka. Thank you very much, Mr. Needham.
    Mr. Gaytan.

   STATEMENT OF PETER S. GAYTAN, DIRECTOR, NATIONAL VETERANS 
     AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION

    Mr. Gaytan. Thank you, Mr. Chairman, for allowing the 
American Legion to offer its views on the President's budget 
request for fiscal year 2009.
    Last September, the National Commander, Marty Conatser, 
presented the American Legion's budget recommendations for the 
Department of Veterans Affairs in fiscal year 2009.
    Since our complete written testimony is submitted for the 
record, I will only address a few key concerns with the 
President's budget requests.
    Also, on behalf of the American Legion, I thank you and 
your colleagues for the fiscal year 2007 and fiscal year 2008 
VA budgets last session.
    The initial fiscal year 2008 budget agreed to by both 
bodies met or exceeded the recommendations of the American 
Legion and we appreciate the hard work of this Committee. 
Approval of the emergency funding provided in Pubic Law 110-161 
was also a welcome addition to the VA budget.
    While the fiscal year 2009 VA budget request does, indeed, 
raise health care funding slightly, it does not appear that 
this request takes into consideration several critical factors 
that will impact the actual value of the fiscal year 2009 VA 
budget, such as the normal rate of inflation, the recent 
downturn in the economy and increased unemployment, the 
successful surge of troops in Iraq and their pending re-
deployments, the extension of health care for returning OIF and 
OEF veterans from two to 5 years, and the increased medical 
research and treatment needed on Traumatic Brain Injury and 
Post Traumatic Stress Disorder.
    The American Legion does not believe that now is the time 
to cut funding for medical and prosthetic research. The 
American Legion believes each of these factors will increase 
demand for services within VA and will strain an already 
overburdened system.
    The veterans' community is all too familiar with the 
adverse impact and miscalculations in usage of VA services. We 
continue to urge Congress to provide medical care funding that 
is timely, predictable and sufficient each year. The American 
Legion looks forward to working with you and your colleagues to 
achieve this goal.
    Additionally, the American Legion is very concerned with 
the unfunded major construction projects identified in the 
CARES final report. These locations have been identified as 
priority construction projects that will allow VA to fulfill 
its mission of providing quality health care to America's 
veterans and they must be funded at a level that will allow 
them to achieve that goal.
    The American Legion adamantly opposes 2009 policy proposals 
contained in the fiscal year 2009 budget submission that seek 
to impose an annual enrollment fee and practically double the 
current co-payment for pharmaceuticals.
    The American Legion has opposed these proposals in the past 
and we once again call on the Members of this Committee to join 
us in defeating any proposal that seeks to balance the VA 
budget on the backs of America's veterans.
    Mr. Chairman, that concludes my remarks and I am available 
for any questions you may have.
    [The prepared statement of Mr. Gaytan follows:]
  Prepared Statement of Peter S. Gaytan, Director, National Veterans 
       Affairs and Rehabilitation Commission, The American Legion
    Mr. Chairman and Members of the Committee: The American Legion 
would like to begin this hearing by expressing our gratitude to you and 
your colleagues for your work on the fiscal year 2008 budget for the 
Department of Veterans Affairs (VA). From the very beginning of the 
110th Congress, there was a great deal of fiscal work to be 
accomplished. In essence, you and your colleagues had to put together 
two VA appropriations budgets during the First Session.
    The American Legion supported the Budget Resolution for the first 
time in many, many years. The American Legion supported the original 
version of the Military Construction, Veterans' Affairs, and Related 
Appropriations for fiscal year 2008, passed overwhelmingly with 
bipartisan support in both chambers; however, we were also very pleased 
when President Bush requested the additional $3.7 billion provided in 
Public Law 110-161. Needless to say, last year was an unusual 
appropriations cycle.
    The veterans' community continues to request an annual VA 
appropriation that is timely, predictable, and sufficient to meet the 
growing demands on VA. Every VA program is specifically designed to 
address the various needs of America's veterans and their families. 
Some programs date back to past proprieties of an earlier era of 
veterans such as the greatest piece of social legislation ever enacted, 
the Servicemen's Readjustment Act of 1944 (the GI Bill of Rights). 
Newer areas of concern include improved diagnosis and treatment of 
Traumatic Brain Injury. Some programs are individual entitlements that 
are funded through mandatory appropriations, while the balance are 
subject to the annual discretionary appropriations battle in Congress. 
But all represent the thanks of a grateful Nation.
    The American Legion does not support the 2009 policy proposals 
contained in the fiscal year 2009 Budget submission that seek to impose 
an annual enrollment fee and practically double the current co-payment 
for pharmaceuticals. The American Legion has opposed these proposals in 
the past and we once again call on the Members of this Committee to 
join us in defeating any proposal that seeks to balance the VA Budget 
on the backs of America's veterans.
    Mr. Chairman, The American Legion welcomes the opportunity to 
present recommendations on the fiscal year 2009 VA appropriations and 
other appropriations that fall under the jurisdiction of this 
Committee. The American Legion appreciates the efforts of the Secretary 
of Veterans Affairs and his capable leadership staff to produce a 
budget request that reflects the fiscal needs of VA to provide timely 
access to the earned benefits provided to those who served in the Armed 
Forces of the United States. In a Nation of over 300 million citizens 
and a host of visitors, only 24 million veterans have accepted the 
challenge of military service. Some veterans were placed in harm's way, 
but all accepted the oath of enlistment. All were prepared to give 
``the last full measure of devotion.''
    Last September, The American Legion National Commander Marty 
Conatser testified before you and your colleagues to outline budget 
recommendations for fiscal year 2009 and address some legislative 
concerns as well. To briefly recap, here is a table that reflects the 
final VA appropriations for fiscal year 2008, The American Legion's 
budget request for fiscal year 2009, and the President's budget request 
for fiscal year 2009:

----------------------------------------------------------------------------------------------------------------
                                                              Final  Fiscal   Legion's Request     President's
              Discretionary Funding Programs                 Year 2008 Pub.      Fiscal Year     Request  Fiscal
                                                               L. 110-161           2009            Year 2009
----------------------------------------------------------------------------------------------------------------
Medical Services..........................................     $29.1 billion  ................
Medical Administration....................................      $3.2 billion  ................       $34 billion
Medical Facilities........................................      $4.1 billion  ................      $4.6 billion
                                                           -----------------------------------------------------
  Total Medical Care......................................     $36.7 billion     $38.4 billion     $38.7 billion

Medical/Prosthetics Research..............................      $480 million      $476 million      $442 million
Major Construction........................................      $1.1 billion      $560 million      $582 million
Minor Construction........................................      $579 million      $485 million      $329 million
CARES.....................................................  ................        $1 billion  ................
State Extended Care Facilities Grants Program.............      $165 million      $275 million       $85 million
State Veterans' Cemetery Construction Grants Program......       $39 million       $45 million       $32 million
National Cemetery Administration..........................      $195 million      $228 million      $181 million
General Operating Expenses................................      $1.6 billion      $2.8 billion      $1.7 billion
Information Technology....................................        $2 billion      $2.3 billion      $2.4 billion
----------------------------------------------------------------------------------------------------------------

                  veterans affairs and rehabilitation
    The American Legion breaks down its Veterans Affairs and 
Rehabilitation testimony into three sections that mirror the major 
organizational segments of the Department of Veterans Affairs (VA). In 
these separate sections The American Legion will discuss our 
legislative budget priorities regarding the Veterans Health 
Administration (VHA), the Veterans Benefits Administration (VBA) and 
the National Cemetery Administration (NCA).
Veterans Health Administration
    The distinction of the VA as the Nation's leader in providing safe, 
high-quality health care in the health care industry (both public and 
private), has been recognized by several reputable sources:
     The medical journal Neurology commented, ``The VA has 
achieved remarkable improvements in patient care and health outcomes, 
and is a cost-effective and efficient organization'' (2007).
     Harvard University's Kennedy School of Government 
presented VA with the highly coveted ``Innovations in American 
Government'' for its advanced electronic health records and performance 
measurement system (2006).
     The Journal of the American Medical Association (JAMA) 
noted VA's health care system has ``quickly emerged as a bright star in 
the constellation of safety practice, with system-wide implementation 
of safe practices, training programs and the establishment of four 
patient-safety research centers'' (2005).
     The recent book by Phillip Longman entitled ``Best Care 
Anywhere: Why VA Health Care is Better Than Yours'' (2007).
Veterans' Health Care Benefit Enrollment Discrimination
    All veterans eligible to receive benefits from VA should have 
access to the VA health care system. The American Legion opposes any 
enrollment policy that disallows any eligible veteran, who was prepared 
to give his or her life for this country, access to what is often 
described as the best health care in the Nation. Honorable military 
service, whether for a single enlistment period or for a 30-year 
career, is not merely another period of employment in an individual's 
personal history. It is a defining portion of one's life.
    Maintaining the quality of care that VA is currently known for 
should be a national priority. But that quality of care is being denied 
to an ever-increasing number of America's veterans. Fiscal year 2009 
budget request continues the suspension of enrollment of new Priority 
Group 8 veterans due to the increased demands for services. According 
to VA, the number of Priority Group 8 veterans denied enrollment in the 
VA health care system at the end of fiscal year 2007 was 386,767. The 
American Legion believes this number is significantly higher because it 
does not include those veterans who have not attempted to use the VA 
because they are aware of the suspension. Given the recruiting and 
retention problems the Armed Forces face, it is clear that denying 
earned benefits to eligible veterans does not solve the problems 
created by an inadequate Federal budget.
    As the Global War on Terrorism wages on, fiscal resources for VA 
will continue to be stretched and this Nation's veterans will continue 
to beg elected officials for monies to sustain a viable VA. A viable VA 
is one that cares for all veterans, not just the most severely wounded. 
More importantly, VA is often the first experience veterans have with 
the Federal Government after leaving military service. This Nation's 
veterans have never let this country down; it is time for Congress to 
do its best not to let them down.
    All veterans, who are eligible to receive benefits from VA, should 
have timely access to the VA health care system. Honorable military 
service is evidence of an individual's commitment to this Nation. In 
return for honorable military service, the thanks of a grateful nation 
should not simply be a conditional benefit that can easily be 
restricted or denied by political or bureaucratic whim, but should be 
regarded as an earned right in recognition for faithful service to this 
country.
    Quality, timely and accessible VA health care is the ongoing cost 
of war. It is unconscionable to send the young men and women in the 
Armed Forces to every corner of the globe and then limit the funding to 
take care of their injuries suffered in service to this country. VA was 
created to take care of the unique needs of a very specific population, 
those veterans that wore the uniforms of the Armed Forces. Once those 
uniforms are off, these veterans should be able to depend upon the VA 
health care system for their health care needs--regardless of the type 
or severity of their injuries. Many veterans will need health care for 
the rest of their lives. The American Legion expects the VA health care 
system to ensure and provide the very best health care for this 
Nation's heroes. The American Legion strongly supports the 
reinstatement of enrollment for Priority Group 8 veterans.
Mandatory Funding of VA Medical Care
    The American Legion believes the time for mandatory funding for 
veterans' health care is now. Congress should act to ensure that we, as 
a Nation, will always provide the funding necessary to ensure veterans, 
who seek timely access to quality health care through the VA health 
care delivery system, are provided the health care they earned.
    A new generation of young Americans is now deployed around the 
world, answering the Nation's call to arms. Like so many brave men and 
women who honorably served before them, these new veterans are fighting 
for freedom, liberty and security of us all. Also like those who served 
before them, today's veterans deserve the respect of a grateful nation 
when they return home.
    Previous generations of wartime veterans were welcomed at VA 
medical facilities until the 1980's. Unfortunately, without urgent 
changes in health care funding, these new veterans will soon discover 
their battles are not yet over. This Nation's newest heroes will be 
fighting for the life of the VA health care system. Just as the 
veterans of the 20th century did, they will be forced to fight for the 
care they are eligible to receive.
    The American Legion believes that the Veterans Health 
Administration's (VHA) recurring fiscal difficulties will only be 
solved when its funding becomes a mandatory appropriation item. As a 
mandatory appropriation, law would guarantee VA health care funding for 
all eligible enrollees--and it will be a patient-based, rather than a 
budget-driven, annual appropriation.
    The American Legion continues to support legislation that 
establishes a system of capitation-based funding for VHA. This new 
funding system would provide all of VHA's funding, except that of the 
State Extended Care Facilities Construction Grant Program which would 
be separately authorized and funded as a discretionary appropriation.
    Although VHA continues to struggle to maintain its global 
preeminence with a 21st Century integrated health care delivery system, 
it is handicapped by funding methods that were developed in the 19th 
Century for a now antiquated inpatient delivery system. No modern 
health care organization can be expected to survive with such an 
inconsistent and inadequate budget process. The American Legion's 
position on VA health care funding is that health care rationing for 
veterans must end. It is time to guarantee health care funding for all 
veterans seeking VA health care.
Third-Party Reimbursements
    The Balanced Budget Act of 1997, Pub. L. 105-33, established the VA 
Medical Care Collections Fund (MCCF). The law requires that money 
collected or recovered from third-party payers after June 30, 1997, be 
deposited into this fund. The MCCF is a depository for collections from 
third-party insurance, outpatient prescription co-payments and other 
medical charges and user fees. The funds collected may be used to 
provide VA medical care and services and for VA expenses for 
identification, billing, auditing and collection of amounts owed the 
Federal Government.
    The American Legion supported legislation to allow VA to bill, 
collect and reinvest third-party reimbursements and co-payments. 
However, The American Legion has adamantly opposed the scoring of MCCF 
as an offset to annual discretionary appropriations because almost all 
of these funds derive from the treatment of non-service-connected 
medical conditions. Historically, these collection goals far exceed 
VA's ability to collect accounts receivable.
    Once again, the President's budget request for fiscal year 2009 
raises the bar on MCCF from $2.3 billion to $2.5 billion. VA's ability 
to capture these funds is critical to its ability to provide quality 
and timely health care to veterans. Miscalculations of VA required 
funding levels results in real budgetary shortfalls. Seeking an annual 
emergency supplemental appropriation is not the most cost-effective 
means of funding the Nation's model health care delivery system.
    Government Accountability Office (GAO) reports have described the 
continuing problems in VHA's ability to capture insurance data in a 
timely and accurate manner and have raised concerns about VHA's ability 
to maximize its third-party collections. GAO visited three VA medical 
centers and found the following concerns: VA lacked the ability to 
verify insurance; VA could not accept partial payment as full payment; 
VA had inconsistent compliance with collections follow up; VA failed to 
ensure documentation by VA physicians was sufficient; VA had 
insufficient automation; and, VA had a shortage of qualified billing 
coders. All of these concerns are key deficiencies contributing to the 
collections shortfalls. VA should implement all available remedies to 
maximize its collections of accounts receivable.
    The American Legion opposes offsetting annual VA discretionary 
funding by the arbitrarily set MCCF goal, especially since VA is 
prohibited from collecting any third-party reimbursements from the 
Nation's largest federally-mandated health insurer, Medicare.
Medicare Reimbursements
    Veterans contribute to the Medicare Trust Fund, as do most American 
workers, without choice, throughout their working lives. Veterans also 
paid these contributions when they served on active-duty. However, when 
a veteran is treated at a VA medical facility, VA is prohibited from 
collecting Medicare reimbursements for the treatment of allowable, 
nonservice-connected medical conditions. Since over half of VA's 
enrolled patient population is Medicare-eligible, this prohibition 
constitutes a multi-billion dollar annual subsidy to the Medicare Trust 
Fund. No other Federal health care provider is prohibited from 
receiving Medicare reimbursements. The American Legion supports 
allowing Medicare reimbursement to VHA to pay for the treatment of 
allowable, nonservice-connected medical conditions of enrolled 
Medicare-eligible veterans.
Medical Construction and Infrastructure Support
            Major Construction
    The CARES process identified more than 100 major construction 
projects in 37 States, the District of Columbia, and Puerto Rico. 
Construction projects are categorized as `major' if the estimated cost 
is over $10 million. Now that VA has a plan to deliver health care 
through 2022, it is up to Congress to provide adequate funds.
    The CARES plan calls for, among other things, the construction of 
new hospitals in Orlando, FL, and Las Vegas, NV, and replacement 
facilities in Louisville, KY, and Denver, CO, for a cost estimated to 
be well over $1 billion for these four facilities. VA has not had this 
type of progressive construction agenda in decades. Major construction 
money can be significant and proper utilization of funds must be well 
planned. Recently, Congress approved funding for a new Veterans Affairs 
Medical Center in Denver. It is our hope that funding will be provided 
for Louisville and Las Vegas as well.
    In addition to the cost of the proposed new facilities are the many 
construction issues that have been virtually ``put on hold'' for the 
past several years due to past inadequate funding and the moratorium 
placed on construction spending by the CARES process. One of the most 
glaring shortfalls is the neglect of the buildings sorely in need of 
seismic correction. This is an issue of safety. The delivery of health 
care in seismically unsafe buildings cannot be tolerated and funds must 
be allocated to not only construct the new facilities, but also to pay 
for much needed upgrades at existing facilities. Gambling with the 
lives of veterans, their families and VA employees is absolutely 
unacceptable.
    The American Legion believes that VA has effectively shepherded the 
CARES process to its current State by developing the blueprint for the 
future delivery of VA health care--it is now time for Congress to 
adequately fund the implementation of this crucial undertaking.
    The American Legion recommends $560 million for Major Construction 
in fiscal year 2009. Although the President's budget request for fiscal 
year 2009 calls for Major Construction to be $582 million, The American 
Legion also recommends an additional $1 billion specifically designated 
for approved CARES major construction.
            Minor Construction
    VA's minor construction program has also suffered significant 
neglect over the past several years. Maintaining the infrastructure of 
VA's buildings is no small task. Because the buildings are old, 
renovations, relocations and expansions are quite common. When combined 
with the added cost of the CARES program recommendations, it is easy to 
perceive that a major increase over the previous funding level is 
crucial and overdue.
    The American Legion recommends $485 million for Minor Construction 
in fiscal year 2009.
Veterans Benefits Administration
    The President's annual budget request is a detailed outline of the 
mandatory and discretionary funding needed by the Veterans Benefits 
Administration (VBA). Given VBA's many challenges and responsibilities, 
which include the annual expenditures for compensation, pension, and 
related benefit payments, it is imperative that Congress ensure that 
VBA's programs have the personnel and other resources necessary to 
operate efficiently and can provide quality and timely service. The 
budget debate process and oversight hearings provide opportunities to 
evaluate how well VBA is, in fact, performing its missions and whether 
the needs and expectations of its stakeholders are being met.
    For several years, VBA has endeavored to implement its long-term 
strategic plans to hire and train a new cadre of adjudicators, to 
continue the computer modernization program, and to institute a variety 
of procedural and programmatic changes intended to improve the claims 
adjudication process. However, external factors, such as the enactment 
of legislation providing new benefits and medical care services and 
precedent setting legal decisions by the Federal courts, continue to 
play a major role in changing VBA's plans, policies, and operations. 
VBA's efforts to address these varied and complex issues have profound 
budgetary and operational implications.
    One of the most significant challenges plaguing VBA is the sheer 
size of the backlog of pending disability claims and appeals. These 
claims are usually multi-issue cases arguing complex medical and legal 
issues that must be resolved. The American Legion believes the backlog 
is a symptom of unresolved systemic problems that adversely affect the 
adjudication and appeals process. These unresolved problems further 
contribute to the ever-growing backlog. These problems include: 
frequent decisionmaking errors at all levels of the decisionmaking 
process; failure by VA personnel to comply with the Veterans' Claims 
Assistance Act of 2000 (VCAA); lack of personal accountability by VA 
employees and managers; ineffective quality control and quality 
assurance programs; inadequate personnel training; and, an unreliable 
work measurement system. VBA is faced with a serious dilemma. While 
endeavoring to address these thorny issues, it is also aggressively 
trying to process claims faster. From the results, it does not appear 
VBA has found a way to successfully balance these competing priorities.
    As of January 5, 2008, there were more than 406,000 rating cases 
pending in the VBA system. Of these, 105,693 (26 percent) have been 
pending for more than 180 days. There are more than 163,000 appeals 
pending at VA regional offices, with more than 147,000 requiring some 
type of further adjudicative action. Additionally, there are currently 
more than 30,000 appeals pending at the Board of Veterans' Appeals and 
more than 19,000 remands pending at the Appeals Management Center.
    As previously noted, The American Legion remains deeply concerned 
by the problems arising from the VBA's general lack of compliance with 
its ``duty to notify'' and its ``duty to assist'' requirements directed 
by the VCAA. This legislation is one of the most significant, pro-
veteran improvements in the VA claims adjudication system in the past 
decade. However, VBA continues to give only lip service to this law. 
While claimants receive what VBA terms a VCAA letter, this letter, in 
fact, is generally not very informative about what particular evidence 
is needed by VBA to grant the benefit sought by the veteran. In 
addition, these VCAA letters are usually long and confusing, not very 
specific to the evidence needed from claimants, and written in 
bureaucratic language instead of ``plain English.'' Rather than helping 
claimants with the development of the claim, these letters frequently 
generate more questions, more telephone calls, and more correspondence 
to veterans' service officers or the VA regional office. Clearly, the 
VCAA letter currently in use by VBA today only serves to delay rather 
than facilitate the claims process.
    The VBA's work measurement system may directly or indirectly affect 
the VBA's failure to reduce the claims backlog. The VBA's work 
measurement system is the means by which both individual employee and 
station performance is tracked and evaluated. This system is also 
relied upon in determining staffing needs at the station, region, and 
service levels in support of VBA's annual budget request. A serious 
problem can arise if the data developed by the work measurement system 
is neither accurate nor reliable in reporting the actual amount of work 
accomplished. This produces a distorted view of the way the VBA 
adjudication process is operating and what the true staffing needs are, 
both locally and system-wide.
    The American Legion believes VBA's current work measurement system 
is seriously flawed. It does not provide VBA and Congress the needed 
information on how long it actually takes to properly process a claim 
and how many staff are required to perform this process in a timely 
manner. The American Legion advises that this work data is also subject 
to frequent manipulation and abuse, thus, its accuracy and reliability 
is open to serious question as are the conclusions and decisions drawn 
from this work data. In the view of The American Legion, the 
development and implementation of a new work measurement system should 
be one of VBA's highest priorities. The American Legion fully 
understands and appreciates the major challenges facing VBA in the 
upcoming year, but as a major stakeholder in VBA's benefit programs we 
are committed to ensuring that VBA provides the best quality and timely 
service to our Nation's veterans and their families.
National Cemetery Administration
    Approximately 24 million veterans are living today. Nearly 690,000 
veteran deaths are estimated to occur in 2009. VA estimates that 
approximately 111,000 will request interment in national cemeteries. 
Considering the growing cost of burial services and the excellent 
quality of service the National Cemetery Administration (NCA) provides, 
The American Legion foresees that this percentage will be much greater. 
Congress must therefore provide sufficient Major Construction 
appropriations to permit NCA to accomplish its Stated goal of ensuring 
that burial in a national or State cemetery is a realistic option for 
our Nation's veterans by locating cemeteries within 75 miles of 90 
percent of eligible veterans. The American Legion recommends $228 
million be appropriated for the National Cemetery Administration for 
fiscal year 2009.
            National Cemetery Expansion
    According to VA, it takes approximately 20 to 30 Full Time 
Equivalents (FTEs), to operate a national cemetery (depending on the 
size and workload at a particular facility) and it takes approximately 
8 to 10 FTEs to operate a newly-opened cemetery (cemeteries are opened 
to interments long before completion of the full site). Thus, it seems 
reasonable that at least 50 new FTEs will be needed to operate the six 
new cemeteries NCA is planning to bring online in fiscal year 2008. It 
is likely, therefore, that these new cemeteries will need the full 20 
to 30 FTEs in fiscal year 2009. The average VA employee salary with 
benefits is $63,709. The American Legion recommends that funding for an 
additional 120-150 employees be included in the fiscal year 2009 
budget.
            National Shrine Commitment
    Maintaining cemeteries as National Shrines is one of NCA's top 
priorities. This commitment involves raising, realigning and cleaning 
veterans' headstones and markers to renovate their gravesites. The work 
that has been done by VA so far has been outstanding; however, adequate 
funding is the key to maintaining this very important commitment. The 
American Legion supports NCA's goal of completing the National Shrine 
Commitment within 5 years. This commitment includes the establishment 
of standards of appearance for national cemeteries that are equal to 
the standards of the finest cemeteries in the world. Operations, 
maintenance and renovation funding must be increased to reflect the 
true requirements of the NCA to fulfill this commitment.
    VA has assessed burial sections and sites, roadways, buildings, and 
historic structures and has identified 928 potential improvement 
projects at an estimated cost of $280 million. October 2007 marked the 
end of the 5-year plan, but still much work needs to be done. With the 
addition of six new cemeteries and the addition of six more cemeteries 
that are fast-tracked to come online this year, resources will be 
strained. The American Legion recommends that $52 million be 
appropriated to the National Shrine Commitment in order to fulfill this 
commitment to the Nation's veterans.
State Cemetery Construction Grants Program
    This program is not intended to replace National Cemeteries, but to 
complement them. Grants for State-owned and operated cemeteries can be 
used to establish, expand and improve on existing cemeteries. There are 
60 operational State cemeteries and two more under construction. Since 
NCA concentrates its construction resources on large metropolitan 
areas, it is unlikely that new national cemeteries will be constructed 
in all of the States. Therefore, individual States are encouraged to 
pursue applications for the State Cemetery Grants Program. Fiscal 
commitments from the States are essential to keep the operations of 
State cemeteries on track. NCA estimates it costs about $300,000 per 
year to operate a State cemetery.
    Determining an ``average cost'' to build a new State cemetery or to 
expand an existing one is very difficult. Many factors influence cost, 
such as location, size and the availability of public utilities. The 
American Legion believes States will increasingly use the State 
Cemetery Grants Program to fulfill the needs of their veteran 
populations that are still not well served by the ``75-mile service 
area/170,000 veteran population'' threshold that currently serves as 
the VA benchmark for establishing a new national cemetery. New State 
cemeteries and expansions and improvements of existing State cemeteries 
are therefore likely to increase. With increasing costs, especially 
given the high cost of land in urban areas, and with increasing demand, 
The American Legion recommends the amount of funding for the State 
Cemetery Grants Program be substantially increased. The American Legion 
recommends $45 million for the State Cemetery Grants Program in fiscal 
year 2009.
                               economics
The GI Bill and Veterans' Education Benefits
    The American Legion has a proud history of developing the 
Servicemen's Readjustment Act of 1944 (Public Law 78-346), also known 
as the GI Bill of Rights, which served to assist 18 million veterans of 
WWII in gaining employment after military service and assisting in the 
creation of the American middle class.
    Accordingly, The American Legion supports passage of major 
enhancements to the All-Volunteer Force Education Assistance Program, 
better known as the Montgomery GI Bill (MGIB). The current make-up of 
the operational military force requires that adjustments be made to 
support all Armed Forces servicemembers. The American Legion supports 
legislation that will allow members of the Reserve Components to earn 
credits for education while mobilized, just as active-duty troops do, 
and be able to use those credits after they leave military service. Two 
of the top priorities of any veterans' education legislation are equity 
and portability of benefits. However, it is also clear that the current 
dollar value of benefits must be increased to meet the greater costs of 
today's higher education.
    In the 20 years since the MGIB went into effect on June 30, 1985, 
the Nation's security needs have changed radically from a fixed cold 
war to a dynamic Global War on Terrorism. In 1991, the Active-Duty 
Force (ADF) of the military stood at 2.1 million; today it stands at 
1.4 million. Between 1915 and 1990 the Reserve Force (RF) was 
involuntarily mobilized only nine times. Today the Nation's Reserve 
Forces are no longer a strategic force but are an operational force 
mobilized continuously and working side-by-side with active duty units 
all over the world.
    The Department of Defense (DOD) reported as of August 2007 that in 
support of Operation Iraqi Freedom (OIF) and Operation Enduring Freedom 
(OEF) there have been:

     2.4 million deployment events;
     1.6 million servicemembers have been deployed;
     540,000 servicemembers have had more than one deployment;
     443,000 National Guard and Reserve soldiers have been 
mobilized and deployed to Iraq or Afghanistan since 2001, for an 
average of 18 months per mobilization;
     Out of 540,000 servicemembers with more than one 
deployment, 103,909 are members of the Reserve Components; and
     ``Stop-loss'' (a policy that prevents troops from leaving 
the service when their enlistment end date has arrived) has been 
imposed on more than 50,000 troops.

    The American Legion recommends that the dollar amount of the 
entitlement should be indexed to the average cost of college education 
including tuition, fees, textbooks and other supplies for commuter 
students at an accredited university, college or trade school for which 
they qualify and that the educational cost index should be reviewed and 
adjusted annually.
    The American Legion supports a monthly, tax-free subsistence 
allowance indexed for inflation as part of the educational assistance 
package.
    The American Legion recommends reauthorizing and funding State 
Approving Agencies to assure current staffing and activities and to 
assure that there is no harm to veterans receiving education payments.
State Approving Agencies
    The American Legion is deeply concerned with the timely manner that 
veterans, especially returning wartime veterans, receive their 
education benefits. Annually, approximately 300,000 servicemembers 
(90,000 of them belonging to the National Guard and Reserve) return to 
the civilian sector and use their earned education benefits from the 
VA.
    Any delay in receipt of education benefits or approval of courses 
taken at institutions of higher learning can adversely affect a 
veteran's life. A recent GAO Report entitled ``VA Student Financial 
Aid; Management Actions Needed to Reduce Overlap in Approving Education 
and Training Programs and to Assess State Approving Agencies'' (GAO-07-
384) focuses on the need to ``ensure that Federal dollars are spent 
efficiently and effectively.''
    GAO recommends that VA should require State Approving Agencies 
(SAAs) to track and report data on resources spent on approval 
activities, such as site visits, catalog review, and outreach in a 
cost-efficient manner. The American Legion agrees. Additionally, GAO 
recommended that VA establish outcome-oriented performance measures to 
assess the effectiveness of SAA efforts. The American Legion fully 
agrees. In response, VA Deputy Secretary Mansfield plans to establish a 
working group with SAA to create a reporting system for approval 
activities and develop outcome-oriented measures with a goal of 
implementation in the fiscal year 2009 budget cycle. Finally, GAO 
recommended that VA should collaborate with other agencies to identify 
any duplicate efforts and use the agency's administrative and 
regulatory authority to streamline the approval process. The American 
Legion agrees. VA Deputy Secretary Mansfield responded that VA would 
initiate contact with appropriate officials at the Departments of 
Education and Labor to help identify any duplicate efforts.
    Sec. 301 of Pub. L. 107-330 created increases in the aggregate 
annual amount available for State approving agencies for administrative 
expenses from fiscal years 2003-2007 to the current funding level of 
$19 million. The American Legion fully supports reauthorization of SAA 
funding.
    The American Legion strongly recommends keeping SAA funding at $19 
million in fiscal year 2009 to assure current staffing and activities.
VA Home Loan Guaranty Program
    Since the home loan program was enacted as part of the original 
Servicemen's Readjustment Act of 1944 (the GI Bill), VA has guaranteed 
more than 18 million home loans totaling nearly $914 billion for 
veterans to purchase or construct a home, or to refinance another home 
loan on more favorable terms. In the 5-year period from 2001 through 
2006, VA has assisted more than 1.4 million veterans in obtaining home 
loan financing totaling almost $197 billion. About half of these loans, 
just over 730,000, were to assist veterans to obtain a lower interest 
rate on an existing VA guaranteed home loan through VA's Interest Rate 
Reduction Refinancing Loan Program.
    The VA funding fee is required by law and is designed to sustain 
the VA Home Loan Program by eliminating the need for appropriations 
from Congress. Congress is not required to appropriate funding for this 
program; however, because veterans must now ``buy'' into the program, 
it no longer serves the intent of helping veterans afford a home. The 
funding fee makes the VA Home Loan program less beneficial when 
compared to a standard, private loan, in some aspects. The current rate 
for mortgages is approximately 5.7 percent. The funding fee would be in 
addition to the rate given by the lender. A $300,000 loan would 
generate a fee in addition to any rate the veteran would achieve. The 
funding fee mandates the participant to buy into the program; however, 
that goes directly against the intention of the law: to provide 
veterans a resource for obtaining a home. Approximately 80 percent of 
all VA Home Loan participants must pay the funding fee and the current 
funding fee paid to VA to defray the cost of the home loan has had a 
negative effect on many veterans who choose not to participate in this 
highly beneficial program.
    The American Legion supports the elimination of the VA Home Loan 
funding fee and urges Congress to appropriate funding to sustain the VA 
Home Loan Guaranty Program.
    The American Legion reaffirms its strong support for VA's Loan 
Guaranty Program. The American Legion also supports any administrative 
and/or legislative efforts that will improve and strengthen the VA Home 
Loan Guaranty Program's ability to serve America's veterans.
Homeless Providers Grant and Per Diem Program
    In 1992, VA was given authority to establish the Homeless Providers 
Grant and Per Diem Program under the Homeless Veterans Comprehensive 
Service Programs Act of 1992 (Pub. L. 102-590). Grants from the Grant 
and Per Diem Program are offered annually (as funding permits) by the 
VA to fund community agencies providing service to homeless veterans. 
VA can provide grants and per diem payments to help public and 
nonprofit organizations establish and operate supportive housing and/or 
service centers for homeless veterans.
    Funds are available for assistance in the form of grants to provide 
transitional housing (up to 24 months) with supportive services, 
supportive services in a service center facility for homeless veterans 
not in conjunction with supportive housing, or to purchase vans.
    The American Legion strongly supports funding the Grant and Per 
Diem Program for a 5-year period instead of annually and supports 
increasing the funding level to $200 million annually.
Department of Labor Veterans' Employment and Training Service (DOL-
        VETS)
    VETS is and should remain a national program with Federal oversight 
and accountability. The American Legion is eager to see this program 
grow and especially would like to see greater expansion of 
entrepreneurial-based, self-employment opportunity training.
    The mission of VETS is to promote the economic security of 
America's veterans. This mission is executed by assisting veterans in 
finding meaningful employment. The American Legion believes that by 
strengthening American veterans, we in turn strengthen America. 
Annually, DOD discharges approximately 250,000 servicemembers. 
Recently-separated service personnel will seek immediate employment or, 
increasingly, have chosen some form of self-employment.
    In order for the VETS program to assist these veterans to achieve 
their goals, it needs to:

     Improve by expanding its outreach efforts with creative 
initiatives designed to improve employment and training services for 
veterans;
     Provide employers with a labor pool of quality applicants 
with marketable and transferable job skills;
     Provide information on identifying military occupations 
that require licenses, certificates or other credentials at the local, 
State, or national levels;
     Eliminate barriers to recently separated service personnel 
and assist in the transition from military service to the civilian 
labor market;
     Strive to be a proactive agent between the business and 
veterans' communities in order to provide greater employment 
opportunities for veterans; and
     Increase training opportunities, support and options for 
veterans who seek self-employment and entrepreneurial careers.

    The American Legion believes staffing levels for DVOP specialists 
and LVERs should match the needs of the veterans' community in each 
State and not be based solely on the fiscal needs of the State 
government.
    Contrary to the demands placed upon VETS, funding increases for 
VETS since 
9/11 does not reflect the large increase in servicemembers requiring 
these services due to the Global War on Terrorism. In support of this 
fact, the inflation rate from January 2002 to January 2008 is 15.93 
percent and yet for State Grants alone, funding has only increased a 
meek 2.5 percent ($158 million to $162 million) in the same time span.
    The President's budget request for fiscal year 2009 will allow for 
an increase of 1 percent for State Grants, the mechanism for funding 
DVOPs and LVERs. However, this does not meet the inflation rate and 
approximately 100 positions have the potential to be eliminated again 
next year.
    More services and programs are needed and yet since 2002 the VETS 
program has only received a modest 4 percent increase. Transition 
assistance, education, and employment are each a pillar of financial 
stability. They will prevent homelessness allow the veteran to compete 
in the private sector, and let our Nation's veterans contribute their 
military skills and education to the civilian sector. By placing 
veterans in suitable employment earlier, the country benefits from 
increased income tax revenue and reduced unemployment compensation 
payments, thus greatly offsetting the cost of Transitional Assistance 
Program (TAP) training. The American Legion recommends full funding for 
DOL-VETS.
Homelessness (DOL-VETS)
    The American Legion notes that there are approximately 200,000 
homeless veterans on the street each night. This number, compounded 
with 300,000 servicemembers entering the private sector each year since 
2001 with at least a third of them potentially suffering from mental 
illness, requires intensive efforts. Numerous programs to prevent and 
assist homeless veterans are available.
    The Homeless Veterans Reintegration Program (HVRP) is a competitive 
grant program. Grants are awarded to States or other public entities 
and non-profit organizations, including faith-based organizations, to 
operate employment programs that reach out to homeless veterans and 
help them become gainfully employed. The purpose of the HVRP is to 
provide services to assist in reintegrating homeless veterans into 
meaningful employment within the labor force and to stimulate the 
development of effective service delivery systems that will address the 
complex problems facing veterans. HVRP is the only nationwide program 
focused on assisting homeless veterans to reintegrate into the 
workforce.
    The competition for these grants is intense as they have one of the 
highest cutoff score thresholds to be in the competitive range for any 
grant program. Amazingly, 243 grants did fall into the competitive 
range but there was only enough funding to award 145 submissions. The 
HVRP program could only award $39 million for fiscal year 2007 but had 
to deny 98 fully qualified nominations. These 98 additional qualified 
programs would require an additional $30 million. The American Legion 
recommends $70 million for this highly successful grant program.
Training
    The National Veterans' Employment and Training Services Institute 
(NVTI) was established to ensure a high level of proficiency and 
training for staff that provide veterans employment services. NVTI 
provides training to Federal and State government employment service 
providers in competency based training courses. Current law requires 
all Disabled Veterans' Outreach Program (DVOP) and Local Veterans' 
Employment Representatives (LVER) personnel to be trained within 3 
years of hiring. The American Legion recommends that these personnel 
should be trained within 1 year. The American Legion further recommends 
$6 million in funding to NVTI.
Veterans Workforce Investment Program (VWIP)
    VWIP grants support efforts to ensure veterans' lifelong learning 
and skills development in programs designed to serve the most-at-risk 
veterans, especially those with service-connected disabilities, those 
with significant barriers to employment, and recently separated 
veterans. The goal is to provide an effective mix of interventions, 
including training, retraining, and support services, that lead to long 
term, higher wage and career potential jobs. The American Legion 
recommends $20 million in funding for VWIP.
Employment Rights and Veterans' Preference
    The Uniformed Services Employment and Reemployment Rights Act 
(USERRA) protects civilian job rights and benefits of veterans and 
members of the Armed Forces, including National Guard and Reserve 
soldiers. USERRA also prohibits employer discrimination due to military 
obligations and provides reemployment rights to returning 
servicemembers. VETS administers this law, conducts investigations for 
USERRA and Veterans' Preference cases, conducts outreach and education, 
and investigates complaints by servicemembers.
    Since September 11, 2001, nearly 600,000 National Guard and Reserve 
soldiers have been activated for military duty. During this same 
period, DOL-VETS has provided USERRA assistance to over 410,000 
employers and servicemembers.
    Veterans' Preference is authorized by the Veterans' Preference Act 
of 1944. The Veterans' Employment Opportunity Act of 1998 (VEOA) 
extended certain rights and remedies to recently separated veterans. 
VETS was given the responsibility to investigate complaints filed by 
veterans who believe their Veterans' Preference rights have been 
violated and to conduct an extensive compliance assistance program.
    Numerous Federal agencies and government contractors and 
subcontractors are unlawfully circumventing Veterans' Preference. The 
use of multiple certificates in the hiring process is unjustly denying 
veterans opportunity for employment. Whereas figures show a decline in 
claims by veterans of OEF/OIF compared to Gulf War I, the reality is 
that employment opportunities are not being broadcast. Federal agencies 
as well as contractors and subcontractors are required by law to notify 
OPM of job opportunities but more often than not these vacancies are 
never made available to the public. VETS program investigates these 
claims and corrects unlawful practices.
    The American Legion also supports the strongest Veterans' 
Preference laws possible at all levels of government. The American 
Legion is deeply concerned with the protection of the veteran and the 
prevention of illegal and egregious hiring practices. Currently, 
veterans are filing corrective action claims after the non-compliance 
employment event occurs and therefore may become financially 
disadvantaged. Concurrent measures and continuous oversight must be 
emplaced to protect veterans from unfair hiring practices, not just 
reactionary investigations. The American Legion recommends funding of 
$61 million for program management that encompasses USERRA and VEOA.
Veteran-/Service-Connected Disabled Veteran-Owned Businesses
    The American Legion views small businesses as the backbone of the 
American economy. It is the driving force behind America's past 
economic growth and will continue to be the major factor for growth as 
we move further into the 21st Century. Currently, more than nine out of 
every ten businesses are small firms, which produce almost one-half of 
the Gross National Product. Veterans' benefits have always included 
assistance in creating and operating veteran-owned small businesses.
    The impact of deployment on self-employed National Guard and 
Reserve soldiers is severe with a reported 40 percent of all veteran-
owned businesses suffering financial losses and in some cases 
bankruptcies. Many other small businesses have discovered they are 
unable to operate and suffer some form of financial loss when key 
employees are activated. The Congressional Budget Office in its report, 
``The Effects of Reserve Call-Ups on Civilian Employers,'' Stated that 
it ``expects that as many as 30,000 small businesses and 55,000 self-
employed individuals may be more severely affected if their Reserve 
soldier employee or owner is activated.'' Additionally, the Office of 
Veterans' Business Development within the Small Business Administration 
(SBA) remains crippled and ineffective due to a token funding of 
$750,000 per year. This amount, which is less than the office supply 
budget for the SBA, is expected to support an entire nation of veteran 
entrepreneurs. The American Legion feels that this pittance is an 
insult to American veteran business owners, undermines the spirit and 
intent of the Veterans Entrepreneurship (TVC) and Small Business 
Development Act of 1999 (Pub. L. 106-50) and continues to be a source 
of embarrassment for this country.
    The American Legion strongly supports increased funding for the 
Small Business Administration's Office of Veterans' Business 
Development to provide enhanced outreach and community-based assistance 
to veterans and self-employed members of the Reserves and National 
Guard.
    Additionally, the American Legion supports allowing the Office of 
Veterans' Business Development to enter into contracts, grants, and 
cooperative agreements to further its outreach goals. The Office of 
Veterans' Business Development must be authorized to develop a 
nationwide community-based service delivery system specifically for 
veterans and members of Reserve components of the United States 
military.
    The American Legion further recommends that funding for the SBA 
Office of Veterans' Business Development be increased to $2.3 million 
in fiscal year 2009.
                               conclusion
    The American Legion is extremely concerned about the budgetary 
process when Congress does not pass appropriations bills before the 
start of the new fiscal year. The failure to pass a proper budget has a 
significant impact on the veterans' community and the health care 
delivery provided to veterans. As a result of the failure of Congress 
to pass VA appropriations in a timely manner, all long- and short-range 
planning is adversely affected. VA medical facility administrators are 
asked to use a ``crystal ball'' to make prudent management decisions--
not knowing when and how much funding they will have available to 
finish the fiscal year. Such fiscal irresponsibility spawns gross 
mismanagement decisions, rationing of care, and unacceptable delays and 
backlogs across the program areas--medical care, facility maintenance, 
administration, construction, and State grants programs. It is our hope 
that Congress will move to quickly pass this budget so that we can 
properly take care of our troops and our veterans.
    The American Legion appreciates the opportunity to present its 
views and estimates on programs that will affect veterans, 
servicemembers and their families. We ask that this Committee take into 
consideration the recommendations of The American Legion as your 
colleagues formulate the fiscal year 2009 Budget Resolution. We also 
ask the Committee not to forget the sacrifices and contributions made 
by America's veterans and their families as the budget priorities are 
determined for fiscal year 2009.

    Chairman Akaka. Thank you, Mr. Gaytan.
    Mr. Rowan.

 STATEMENT OF JOHN ROWAN, NATIONAL PRESIDENT, VIETNAM VETERANS 
                           OF AMERICA

    Mr. Rowan. Good afternoon, Chairman Akaka and Ranking 
Member Burr.
    You have our testimony and I do not want to go into too 
much, but it is interesting to be able to sit in the back and 
listen for the last two and one-half hours to people going back 
and forth between the Senators and the Secretary and his aides 
and some of the other comments made.
    I would just like to say some reactions to some of the 
things I heard. First of all, let me say that the VVA supports 
the Independent Budget. They have done a lot of really good 
work; and the detail in their report is unbelievable. We really 
commend them for their work.
    We also agree that the budget, while significantly 
increased over the last several years, is still not sufficient 
to do the work the VA needs to do; and we specify details in 
the statement.
    We also want to thank this Committee for pushing the 
National Vietnam Veterans Longitudinal Study to finally get 
that work done, which is long overdue. Congress had mandated 
the VA to do it years ago. We certainly encourage you to now 
start a similar project with the new veterans coming home, so 
that they can be tracked over the years to see what happens to 
them as they progress further; to find out who knows what pops 
up 40 years later, as happened to Vietnam veterans.
    Reacting to some things that Senator Burr said earlier with 
regard to students on the campuses: I remember the old days 
when the Feds used to fund money and they used to send money 
out to the campuses for the veterans' programs; and they used 
to reward campuses that increased the percentage of veterans 
applying and actively showing up on their campuses. If we did 
that with an overlay of maybe some extra business with Post 
Traumatic Stress Disorder, perhaps we might be able to put that 
back into action again--maybe some funding along those lines, 
as well.
    Of course, a new GI Bill might be useful. That is something 
the school administrators would love to be able to have.
    That money went to create a very interesting group of folks 
over the years; and, frankly, there is an old boy network of 
Vietnam veterans out there who started on the campuses many 
years ago, and they are still functioning today.
    We also want to talk about the whole issue of PTSD that the 
Senator mentioned earlier and you are correct that there is an 
issue of getting people well rather than just giving them a 
check. It would be nice to do that.
    The problem we have unfortunately with the Vietnam 
veterans, it is often too late and we have been just done for 
too many years and the reason why it keeps going from 30 to 60 
to 30 to 70 to 100 is because of unfortunately just 
deterioration.
    The construction issue has been mentioned earlier and we 
want to share our concerns with that, particularly with regards 
to Puerto Rico. I was there in December 2006. My secretary just 
came back from a tour December 2007, and the American Legion 
had a very nice article about that as well. And we all had the 
same concurrence.
    You are trying to stuff a new project into an unusable 
situation. You are trying to build a new hospital in a place 
that just does not work. I think, really, they need to go back 
to the drawing boards and take a look at the whole thing. It is 
not functioning. They are not going to ever make it work. They 
are going to have a problem with parking and distribution; 
people getting in and out. It is just a horror.
    Priority 8s. The one thing I would say about Priority 8s, 
in my opinion, today's Priority 8 is tomorrow's service-
connected veteran in many instances. One of the problems, we 
believe, is that many veterans are not aware, particularly 
Vietnam veterans, of their rights and their rights to 
compensation for certain disabilities that they are now getting 
in their 50's and 60's.
    The prostate cancers, the cancers, the diabetics, all of 
those folks are now unfortunately not aware that they are 
entitled to compensation and I am sure all of my colleagues 
here have service officers who tell the sad story about how 
they are finally getting to talk to the widow of the guy who 
died from a cancer from 7 years ago who did not know it was 
service-connected.
    I do not know how we rectify that, other than doing a 
massive outreach program, which we are frankly trying to do 
with the pharmaceuticals and other organizations in the health 
industry to try to get the health people out there and the 
private sector to understand veterans health.
    I also want to throw in, contrary to Bill O'Reilly's 
presumptions, homeless veterans are real. They have been real. 
I have been working in that program for 28 years now. It is a 
real problem. It is continuing to be a problem. It will always 
be a problem. PTSD helps to create these folks, and 
unfortunately the inability to get decent housing in most areas 
today for reasonable amounts of money just only exacerbates the 
situation.
    Last but not least, I am very glad to hear that we are 
finally moving ahead hopefully with an RFI with the computers 
at VBA. If we do not computerize VBA and bring it into the 21st 
century, all of the additional people in the world will not 
change that system and that is the bottom line.
    So, again, we thank you for having these hearings. We hope 
you keep their feet to the fire and we know you will.
    Thank you.
    [The prepared statement of Mr. Rowan follows:]
         Prepared Statement of John Rowan, National President, 
                      Vietnam Veterans of America
    Chairman Akaka, Ranking Member Burr and distinguished Members of 
the Committee, on behalf of the Board of Directors, and members, I 
thank you for giving Vietnam Veterans of America (VVA) the opportunity 
to testify today regarding the President's fiscal year 2009 budget 
request for the Department of Veterans Affairs. VVA thanks each of you 
on this distinguished panel, on both sides of the aisle, for your 
strong leadership on issues and concerns of vital concern to veterans 
and their families.
    I want to thank you for recognizing that caring for those who have 
donned the uniform in our name is part of the continuing cost of the 
national defense. Caring for veterans, the essential role of the VA 
and, for specific services other Federal entities such as the 
Department of Labor, the Small Business Administration, and the 
Department of Health and Human Services, must be a national priority. 
This is poignantly clear when we visit the combat-wounded troops at 
Walter Reed Army Medical Center and Bethesda Naval Hospital.
    VVA wishes to note at the outset that the annual exercise of 
debating the merits of the President's proposed budget is flawed. 
Medical Center directors should not have to be held in limbo as 
Congress reworks and adjusts this budget and perhaps misses, yet again, 
the start of the next Federal fiscal year. These public servants can be 
more effective, more efficient, and better managers of the public trust 
if they can properly plan for the funding they need to carry out their 
mission of caring for their patients. We hope that this can be avoided 
this year and ask that you seriously consider an immediate alternative 
to the broken system we currently have and reaching our goal of assured 
funding.
    To rectify this situation, VVA and the other members of The 
Partnership for Veterans' Health Care Budget Reform are developing a 
proposal that would give the VA leeway its managers need to properly 
plan for the requisites of their patient load. We will have more for 
you as this proposal is tightened up.
                                overview
    Concerning the proposal at hand, the President's fiscal year 2009 
budget for the VA, we must again take exception to the attempt by the 
Administration to tax Priority 7 and 8 veterans with an annual fee just 
for signing into the VA health care system; and for almost doubling the 
co-payment for prescription pharmaceuticals. To us this is further 
evidence of the attempt to rid the system of as many ``higher income'' 
veterans as possible. We trust that you will see the folly in this, and 
will reject outright any attempt to enact these measures into the law 
of the land.
    We are pleased, however, that the Administration has again 
refrained from citing phantom ``management efficiencies'' in the 
numbers in this budget proposal. Managers are in general well-paid. 
Effective, caring managers should take rightful pride in the jobs they 
do. Inefficient managers need to be sanctioned and, if necessary, 
transferred or removed.
    We are less than sanguine, however, about the claim that ``one of 
VA's highest priorities in 2009 will be to continue an aggressive 
research program to improve the lives of veterans returning from 
service in [Iraq and Afghanistan by devoting $252 million] to research 
projects focused specifically on veterans returning'' from service in 
these two hot spots. It is our understanding that data collecting on 
maladies and diseases troops are returning with is not happening. It's 
almost as if our government does not want to know about these ailments 
so that it won't be burdened with Dependency Indemnity Compensation 
(DIC) payments.
    We are pleased that the spirit of cooperation between the VA and 
the Department of Defense may actually be bearing fruit. In 2009, VA 
and DOD will complete the pilot of a new disability evaluation system 
for wounded returnees at major medical facilities in the Washington, 
DC, area. We hope that what results from this effort ``to eliminate the 
duplicative and often confusing elements of the current disability 
process of the two departments'' will lead to less confusion and a 
single, viable disability rating determined by the VA.
    We are concerned, however, that there still will not be enough 
resources to deal with the flood of troops and veterans returning to 
our shores and presenting with a range of mental health issues. The VA 
ramped down for several years the numbers of mental health 
professionals it employed. Now, seeing the error of its ways, it is 
hurriedly hiring clinicians. The question is: Will there be enough of 
them to meet the challenge?
    We are more than a little skeptical that, at the VA touts, the 
budget will provide resources ``to virtually eliminate the patient 
waiting list by the end of 2009.'' When have we heard this before?
    On the benefits side of the ledger, we find it ludicrous to believe 
that this budget ``will allow VA to improve the timeliness with which 
compensation and pension claims are processed.'' Are VA planners 
perhaps a bit overly optimistic that they can reduce the average time 
it takes to process a claim to 145 days, 32 days quicker than the 
average 177 days it currently takes? No, the Veterans Benefits 
Administration requires a complete overhaul, one that introduces a new 
way of thinking about vetting veterans who make claims for Compensation 
& Pension benefits.
    On the whole, this budget proposal is a better start than we have 
had in many a year, but the overall request for additional resources 
are just too low. With concerted work however it can be the most viable 
budget and appropriations document we have had in many years, of which 
we all can be proud.
                     veterans health administration
    Last year, VVA recommended an increase of $6.9 billion to the 
expected fiscal year 2007 appropriation for the medical care business 
line. Congress was very generous and we actually came close to that 
figure if one includes the supplemental funding of about $1.8 billion 
for veterans' health care. We recognize that the budget recommendation 
VVA is making again this year is also extraordinary, but with troops 
still in the field, years of under-funding of health care 
organizational capacity, renovation of an archaic and dilapidated 
infrastructure, updating capital equipment, and several cohorts of war 
veterans reaching ages of peak health care utilization, these are 
extraordinary times.
    VVA asks that you continue ramping up the resources available to 
rebuild the organizational capacity to the point where the VA can 
really meet the needs of an increasing workload. Frankly, we believe 
that VA has (again) underestimated the projected workload for the next 
fiscal year. Instead of a growth of about 40,000 new veterans of the 
Global War on Terror (GWOT), VVA estimates that the increase will be at 
least equal to last year's increase of 90,000 new veterans entering the 
system, and probably will be in excess of 100,000 new GWOT veterans, 
particularly if the VA starts doing a better job of outreach, reduces 
wait times as called for in their plan, and continues to make gains in 
adding needed staff capacity.
    In contrast to what is clearly needed, we believe the 
Administration's fiscal year 2009 request for $2.34 billion more than 
the fiscal year 2008 appropriation is not adequate.
    The increase the Administration has requested for medical care does 
not quite keep pace with inflation (due to increased energy costs, 
rising pharmaceutical costs, and other costs VA cannot control), but it 
will not allow VA to continue the needed pace of enhancing its health 
care and mental health care services for returning veterans, restore 
needed long-term care programs for aging veterans, or allow working-
class veterans to return to their health care system. VVA's 
recommendation of a $5.24 Billion increase over fiscal year 2008 would 
accommodate these goals.
    The advances of VA in recent years in improving the veterans' 
health care system are well known, and often elucidated by all of us, 
particularly VA officials. However, these advances have come with a 
cost. For years, the veterans' health care system has been falling 
behind in meeting the health care needs of some veterans. At the 
beginning of 2003, the former Secretary of Veterans Affairs made the 
decision to bar so-called Priority 8 veterans from enrolling. In most 
cases, these veterans are not the well-to-do--they are working class 
veterans or veterans living on fixed incomes who earn as little as 
$28,000 a year. It is not uncommon to hear about such veterans choosing 
between getting their prescription drug orders filled and paying their 
utility bills. The decision to ``temporarily'' bar these veterans is 
still standing, and it is still troubling to thoughtful Americans. As 
of this week, VA officials estimated that as many as 250,000 additional 
veterans are shut out of the system until they become indigent or 
eventually are granted service connection for one or more of their 
conditions that originated in military service. No one knows the size 
of the ``migration'' from the wilderness of Priority 8 to a category 
where these veterans can enter the system at some point when they are 
much sicker and/or poorer, because the VA has not tried to track it (at 
least not in a public way that we know of). However, VVA believes that 
it is a significant number.
    It is time to live up to the promise and obligation and to ``Leave 
No Veteran Behind'' by restoring access to so-called Priority 8 
veterans who are now on the outside and looking in. Of the recommended 
increase, $1.3 billion is for restoration of the Priority 8 veterans by 
the end of the second quarter of fiscal year 2009. It will take VA at 
least 3 to 6 months to add the organizational capacity to ensure that 
the system is not overwhelmed all at once.
    Congress is to be commended for turning back many legislative 
requests for enrollment fees and outpatient cost increases in the past, 
which would have jeopardized access to care for hundreds of thousands 
of veterans. Hard-fought Congressional add-ons, such as the $3.6 
billion added to veterans' health care for fiscal year 2007, and the 
more than $11 billion all told in calendar year 2008, now place us at a 
position where it is not only feasible to re-open the system to all 
veterans who have earned the right to access to this care, but it would 
be wrong to continue to shut them out.
                            medical services
    For medical services for fiscal year 2009, VVA recommends $44.3 
billion including collections. This is approximately $3.1 billion more 
than the Administration's request for fiscal year 2009. VVA is making 
its budget recommendations based on re-opening access to the millions 
of veterans disenfranchised by the Department's policy decision of 
early 2003 that was supposed to be ``temporary.'' The former ranking 
member of the House Committee on Veterans Affairs, Lane Evans, 
discovered that a quarter million Priority 8 veterans had applied for 
care in fiscal year 2005. Similar numbers of veterans have likely 
applied in each of the years since their enrollment was barred. Our 
budget allows 1.5 million new Priority 7 and 8 veterans to enroll for 
care in their health care system. While this may sound like too great a 
lift for the system, use rates for Priority 7 and 8 veterans are much 
lower than for other priority groups. Based on our estimates, it may 
yield only an 8 percent increase in demand at a cost of about $1.9 
billion to the system for additional personnel, supplies and 
facilities.
 mental health--need to restore organizational capacity for substance 
                            abuse treatment
    VVA urges that language be inserted in the Appropriations bill 
before Congress to express concern that substance abuse disorders among 
our Nation's veterans are not being adequately addressed by the 
Veterans Health Administration (VHA). The relatively high rate of drug 
and alcohol abuse among our Nation's veterans (much of which is self-
medication to deal with untreated PTSD), especially those returning 
from service in Operation Enduring Freedom and Operation Iraqi Freedom, 
is causing significant human suffering for veterans and their families.
    These folks can and will be stronger for their experience if we 
only will deliver the effective care they need when they need it in a 
way they will accept.
    Further delay in moving to restore effective mental health and 
substance abuse services will lead to poorer health and more acute 
health care utilization in the out years, not to mention economic 
opportunity cost to the Nation and needless suffering by these 
veterans, and their families.
    Specifically, VVA urges the Congress to direct the Secretary to 
make concerted efforts to reduce the overall incidence of drug and 
alcohol abuse and dependence among enrollees in the Veterans Health 
Administration by meeting the performance measurements included in ``A 
Comprehensive VHA Strategic Plan for Mental Health Services,'' VA's 
current and adopted plan to reform its mental health programs, with the 
hallmark of recovery. To its credit, VA has developed a strategy to 
``restore VHA's ability to consistently deliver state-of-the-art care 
for veterans with substance abuse disorders,'' as a milestone within 
that reform plan, but to date has yet to fulfill the promise of its 
commitment to recovery, and establishing the goal of every veteran 
being able to obtain and sustain meaningful employment at a living wage 
as the ultimate goal for all VA mental health programs, including its 
substance use disorder programs.
    Further, VVA urges the Congress to direct the Secretary to provide 
quarterly reports beginning with a baseline report by each Veterans 
Integrated Service Network (VISN) on the initiatives set forth in the 
VHA Strategic Plan for Mental Health Services, specifically to improve 
VA's treatment of substance use disorders. These reports will provide 
an ongoing indication of VHA's progress in the implementation of its 
adopted Strategic Plan as described in section 1.2.8 of ``A 
Comprehensive VHA Strategic Plan of Mental Health Services'', May 2, 
2005. In addition to baseline information, at minimum these reports 
should include: the current ranking of networks on their percentage of 
substance abuse treatment capacity along with plans developed by the 
lowest quartile of networks to bring their percentage up to the 
national average; and, the locations of VA facilities that provide 5 
days or more of inpatient/residential detoxification services, either 
onsite, at a nearby VA facility, or at a facility under contract to 
provide such care; and, the locations of VA health care facilities 
without specialized substance use disorder providers on staff, with a 
statement of intentions by each such facility director of plans to 
employ such providers or take other actions to provide such specialized 
care.
    The decade long diminishment of VA mental health programs that we 
experienced in the 1990's did level out by 2001, and VA all too slowly 
started to rebuild capacity that has been accelerated in recent years. 
However, we must continue to restore capacity to deal with mental 
disorders, particularly with Post Traumatic Stress Disorder and the 
often attendant co-morbidity of substance abuse. In particular, 
substance abuse treatment needs to be expanded greatly, and be more 
reliant on evidence based medicine and practices that are shown to 
actually be fruitful, and be held to much higher standards of 
accountability, as noted above. The 21 day revolving door or the old 
substance abuse wards is not something we should return to, but rather 
treatment modalities that can be proven to work, and restore veterans 
of working age to the point where they can obtain and sustain 
meaningful employment at a living wage, and therefore re-establish 
their sense of self-esteem.
                       national centers for ptsd
    VVA also urges that additional resources explicitly be directed in 
the appropriation for fiscal year 2009 to the National Centers for PTSD 
for them to add to their organizational capacity under the current fine 
leadership. The signature wounds of this war may well be PTSD and 
Traumatic Brain Injury and a complicated amalgam of both conditions. 
VVA believes that if we provide enough resources, and hold VA managers 
accountable for how well those resources are applied, that these fine 
young veterans suffering these wounds can become well enough again to 
lead a happy and productive life.
    Up until recently, VA has not made enough progress in preparing for 
the needs of troops returning from Iraq and Afghanistan--particularly 
in the area of mental health care. In addition to the funds VVA is 
recommending elsewhere, we specifically recommend an increase of an 
additional $500 million dollars over and above the $3.9 Billion that VA 
now says they will allocate to assist VA in meeting the mental health 
care needs of all veterans. These funds should be used to develop or 
augment with permanent staff at VA Vet Centers (Readjustment Counseling 
Service or RCS), as well as PTSD teams and substance use disorder 
programs at VA medical centers and clinician who are skilled in 
treating both PTSD and substance abuse at the CBOC, which will be 
sought after as more troops (Including demobilized National Guard and 
Reserve soldiers) return from ongoing deployments. VVA also urges that 
the Secretary be required to work much more closely with the Secretary 
of Health and Human Services, and the States, to provide counseling to 
the whole family of those returning from combat deployments by means of 
utilizing the community mental health centers that dot the Nation. 
Promising work is now going on in Connecticut in and possibly elsewhere 
in this regard that could possibly be a model. In addition, VA should 
be augmenting its nursing home beds and community resources for long 
term care, particularly at the State veterans' homes.
     To allow the staffing ratios that prevailed in 1998 for its 
current user population, VA would have to add more than 15,000 direct 
care employees--MDs, nurses, and other medical specialists--at a cost 
of about $2 billion. This level, because the system can and should be 
more efficient now, would allow us to end the shame of leaving veterans 
out in the cold who want and are in vital need of health care at VA, 
and who often have no other option.
blind and low vision veterans need much greater resources and attention
    The President's request contains a significant reduction in the 
efforts to strengthen services for blind veterans. With the number of 
blind and very low vision veterans of the Nation's latest wars in need 
of services now, VVA strongly recommends the Congress explicitly direct 
an additional $30 million for fiscal year 2009 to increase staffing and 
programming at the VA's Blind and Visually Impaired Service Centers, 
and to add at least one new center.
    Further, VVA recommends that the Congress directs the Secretary to 
implement an employment and independent living project modeled on the 
highly successful ``Project Amer-I-Can'' that so successfully placed 
blind and visually impaired veterans into work and other situations 
that resulted in them becoming much more autonomous and independent. 
That program was a cooperative venture of the New York State Department 
of Labor, the Veterans Employment & Training Service (VETS), and the 
Blind Veterans Association.
                              vet centers
    VA received an additional $20 million dollars in the Supplemental 
Appropriation for the war that was signed into law on March 7, 2007 
specifically to increase the number of staff in the Readjustment 
Counseling Service (RCS) by 250 FTEE. Whether it was VHA or OMB that 
held these funds back, the funds were not released to the RCS to hire 
additional staff for the VA Vet Centers until mid-August. The Vet 
Centers are the most cost effective, cost efficient program operated by 
VA, but which just plain does not have enough staff. Because of the 
late arrival of the money the RCS could not hire any new staff, but 
used the funds for other things, such as vehicles to do rural outreach.
    The additional 250 staff members for the previously existing Vet 
Centers are still very much needed, over and above the 100 peer 
counselors and approximately 50 mental health professionals they have 
already hired as additional staff in the past 2 years.
                           medical facilities
    For medical facilities for fiscal year 2009, VVA recommends a level 
of commitment that is at least equal to fiscal year 2008. Maintenance 
of the health care system's infrastructure and equipment purchases are 
often overlooked as Congress and the Administration attempt to correct 
more glaring problems with patient care is good, but needs to be 
sustained and if anything increased above the fiscal year 2008 level of 
resources level. We urge the Congress to continue the process of 
upgrading the physical plant of medical facilities at least at the rate 
funding at the fiscal year 2008 level for the next several years.
    In a system in which so much of the infrastructure would be deemed 
obsolete by the private sector (in a 1999 report GAO found that more 
than 60 percent of its buildings were more than 25 years old), this has 
and may again lead to serious trouble. We are recommending that 
Congress provide an additional $1.5 billion to the medical facilities 
account to allow them to begin to address the system's current needs. 
We also believe that Congress should fully fund the major and minor 
construction accounts to allow for the remaining CARES proposals to be 
properly addressed by funding these accounts with a minimum of the 
remaining $2.3 billion.
                    medical and prosthetic research
    For medical and prosthetic research for fiscal year 2008, VVA 
recommends $500 million. This is approximately $50 million more than 
the Administration's request for fiscal year 2009. VA research has a 
long and distinguished portfolio as an integral part of the veterans' 
health care system. Research funding serves as a means to attract top 
medical schools into valued affiliations and allows VA to attract 
distinguished academics to its direct care and teaching missions.
    VA's research program is distinct from that of the National 
Institutes of Health because it was created to respond to the unique 
medical needs of veterans. In this regard, it should seek to fund 
veterans' pressing needs for breakthroughs in addressing environmental 
hazard exposures, post-deployment mental health, Traumatic Brain 
Injury, long-term care service delivery, and prosthetics to meet the 
multiple needs of the latest generation of combat-wounded veterans.
    Further, VVA brings to your attention that VA Medical & Prosthetic 
Research is not currently funding a single study on Agent Orange or 
other herbicides used in Vietnam, despite the fact that more than 
300,000 veterans are now service-connected disabled as a direct result 
of such exposure in that war. This is unacceptable.
    Mr. Chairman, finally I thank this Committee and the Appropriations 
Committee for using the power of the purse in the fiscal year 2008 
Appropriations act to compel VA to obey the law (Public Law 106-419) 
and conduct the long-delayed National Vietnam Veterans Longitudinal 
Study. VVA asks that you schedule a hearing and/or a Members briefing 
for the second half of March for VA to outline their plan as to how 
they are going to complete this much needed study for delivery of the 
final results to the Congress by April 1, 2010, as a comprehensive 
mortality and morbidity study of Vietnam veterans, the last large 
cohort of combat veterans prior to those now serving in OEF/OIF.
    Further, VVA strongly urges the Congress to mandate and fund 
longitudinal studies to begin virtually immediately, using the exact 
same methodology as the NVVRS, for the following cohorts: (a) Gulf War 
of 1991; (b) Operation Iraqi Freedom; and (c) Operation Enduring 
Freedom.
    Please take action now so that these young veterans are not placed 
into the same predicament Vietnam veterans find ourselves today.
                           homeless veterans
    Homelessness is a significant problem in the veterans' community 
and veterans are disproportionately represented among the homeless 
population. While many effective programs assist homeless veterans to 
become productive and self-sufficient members of their communities and 
Congress must ensure that the Department of Veterans Affairs has 
adequate funding to meet the needs of the over 194,000 homeless 
veterans who served this country so proudly in past wars and veterans 
of our modern day war. VVA recommends the following increase in VA 
fiscal year 2009 budget for homeless programs.
              homeless provider grant and per diem program
    The Department of Veterans Affairs Homeless Grant & Per Diem 
Program has been in existence since 1994. These programs address the 
needs of homeless veterans and support the development of transitional, 
community-based housing and the delivery of supportive services. 
Because financial resources available to HGPD are limited, the number 
of grants awarded and the dollars granted are restrictive and hence 
many geographic areas in need suffer a loss that HGPD could address.
    The Consolidated Appropriations Act of 2008, Public Law 110-161 
provides $130 million, the fully authorized level, to be expended for 
the GPD program. Based on GAO's findings and VA's projected needs for 
additional GPD beds, VVA is concerned about the $138 million 
authorization for fiscal year 2009 and believes a $200 million 
authorization is required. An increase in the funding level for the 
next several years would help ensure and expedite VA's program 
expansion targets. It would provide critical funding for service, or 
drop-in, centers--the primary portal that links veterans in need with 
the people who can help them. It would guarantee continued declines in 
veteran homelessness, and provide for scaling back the funding as 
warranted by the VA's annual Community Homelessness Assessment, Local 
Education and Networking Group (CHALENG) reports
                                hud-vash
    The HUD-VASH program was established as a partnership between the 
Departments of Veterans Affairs and Housing and Urban Development to 
combine permanent housing with supportive medical services. VVA 
supported passage of Public Law 110-161 which included $75 million for 
7,500 Section 8 vouchers for homeless and disabled programs. Under this 
program, VA must provide funding for supportive services to veterans 
receiving rental vouchers. The fiscal year 2009 VA budget must reflect 
a significant increase in funding these services.
    VVA believes the $7.8 million in the fiscal year 2009 VA budget 
proposal was agreed upon before the HUD-VASH vouchers were enacted into 
law. Based on historical data that shows each housing voucher requires 
approximately $5,700 in supportive services--such as case management, 
personal development and health services, transportation, etc.--we 
estimate approximately $45 million will be needed to adequately serve 
7,500 or more clients in HUD-VASH housing units. Rigorous evaluation of 
this program indicates this approach significantly reduces the 
incidence of homelessness among veterans challenged by chronic mental 
and emotional conditions, substance abuse disorders and other 
disabilities.
                    veterans benefits administration
    The Veterans Benefits Administration (VBA) continues to need 
additional resources and enhanced accountability measures. VVA 
recommends an additional 300 over and above the roughly 700 new staff 
members that are requested in the President's proposed budget for all 
of VBA.
                         compensation & pension
    VVA recommends adding one hundred staff members above the level 
requested by the President for the Compensation & Pension Service (C&P) 
specifically to be trained as adjudicators. Further, VVA strongly 
recommends adding an additional $60 million dollars specifically 
earmarked for additional training for all of those who touch a 
veterans' claim, institution of a competency based examination that is 
reviewed by an outside body that shall be used in a verification 
process for all of the VA personnel, veteran service organization 
personnel, attorneys, county and State employees, and any others who 
might presume to at any point touch a veterans' claim.
                       vocational rehabilitation
    VVA recommends that you seek to add an additional two hundred 
specially trained vocational rehabilitation specialists to work with 
returning servicemembers who are disabled to ensure their placement 
into jobs or training that will directly lead to meaningful employment 
at a living wage. It still remains clear that the system funded through 
the Department of Labor simply is failing these fine young men and 
women when they need assistance most in rebuilding their lives.
    It is also unclear as to whether VA actually added several hundred 
of these employment placement specialists for disabled veterans 
specifically called for in last year's funding measure, and whether 
they are effective in assisting disabled veterans, particularly 
profoundly disabled veterans to obtain decent jobs.
    VVA has always held that the ability to obtain and sustain 
meaningful employment at a living wage is the absolute central event of 
the readjustment process. Adding additional resources and much greater 
accountability to the VA Vocational Rehabilitation process is essential 
if we as a nation are to meet our obligation to these Americans who 
have served their country so well, and have already sacrificed so much.
                        accountability at the va
    There is no excuse for the dissembling and lack of accountability 
in so much of what happens at the VA. It is certainly better than it 
used to be, but there is a long way to go in regard to cleaning up that 
corporate culture to make it the kind of system that it can be with 
existing resources, and even largely the same personnel as they 
currently have on board. It can be cleaned up and done right the first 
time, if there is the political will to hold people accountable for 
doing their job properly.
    Thank you again, Mr. Chairman, for allowing VVA to be heard at this 
forum. We look forward to working with you and this distinguished 
Committee to obtain an excellent budget for the VA in this fiscal year, 
and to ensure the next generation of veterans' well being by enacting 
assured funding. I will be happy to answer any questions you and your 
colleagues may have.

    Chairman Akaka. Thank you very much, Mr. Rowan.
    Before we begin with the questions, I want to note that 
Secretary Peake and his top VA leaders remained to listen to 
this panel.
    Mr. Rowan. Yes, we thank them.
    Chairman Akaka. Yes. And I do really appreciate that 
attention to the views of the veterans service organizations.
    So, my first question is to all of you on this panel. I 
know some of you have mentioned parts of this in your 
testimony. Is there enough funding in this budget to allow VA 
to wage a much more serious and aggressive outreach campaign to 
bring in all veterans who need VA care and services?
    Mr. Blake. Well, Senator Akaka, I will be the first to 
admit that outreach is not my expertise. I concur entirely with 
John Rowan's points about outreach. PVA is actually taking on a 
similar program to reach out to a number of severely disabled 
veterans that are out there and we are also considering doing 
an outreach campaign as it relates to Traumatic Brain Injured 
veterans, as well.
    I do not know that you could ever put a dollar figure on 
how much outreach should be done and how much it should cost, 
but I would hasten to say that it is probably not adequate in 
terms of the number of veterans that still do not come to the 
VA.
    Chairman Akaka. Mr. Baker.
    Mr. Baker. Well, like Mr. Blake, I am no expert on 
outreach, but I believe that you simply cannot put a dollar 
figure on the veterans that are still suffering out there that 
are getting no benefits.
    As long as there are those, and there are numerous ones 
like that, I think we need to do everything we can to make sure 
they get into the system and they get the help that they need.
    Chairman Akaka. Mr. Kelley.
    Mr. Kelley. I concur also that outreach is the key in every 
aspect of transitioning servicemembers to becoming a veteran, 
whether that is for medical health care or for educational 
benefits. There needs to be better outreach so they understand 
what is out there for them and that they utilize it properly.
    Chairman Akaka. Mr. Needham.
    Mr. Needham. I certainly would agree that more outreach 
needs to be done. There are two issues I would like to see 
addressed with respect to that. Outreach for women veterans, so 
that they fully understand their mental health issues; but also 
the health care that they are entitled to.
    And along with that also, VA also provides some services 
for families as well, particularly through the Vet Centers. And 
as long as we have more outreach in a proper and stable family 
structure, we think that will help with the veterans and their 
transitioning as well.
    Chairman Akaka. Mr. Gaytan.
    Mr. Gaytan. It is the American Legion's hope that Secretary 
Peake and his staff do identify the need for increased 
outreach. The American Legion has taken steps to help fill that 
gap, to smooth that seamless transition, and cause that to 
become a reality.
    In our ``Heroes to Hometown'' program, the American Legion 
has a staff member that works directly with the recovery 
coordinators and the service specific staff who help those 
transitioning servicemembers who go from active duty to 
civilian life, from DOD health care to VA health care.
    So, the American Legion's Heroes to Hometown program picks 
them up right away when they are returning, and we help to 
explain what their benefits are. We help them address the needs 
that they have as newly-injured servicemembers and veterans who 
are coming back and having to navigate that often confusing 
landscape of benefits and understand how to access those 
through the Department of Veterans Affairs.
    So, the American Legion identifies the problem and wants to 
be part of the solution as well.
    Chairman Akaka. Mr. Rowan.
    Mr. Rowan. There is no outreach program. Nobody is talking 
to anybody. The new kids may be getting some information when 
they come home in a fairly standard format now, and that is a 
good thing, and they are trying to do some programs with them. 
But for anybody else before then, nothing.
    So, all of my Vietnam veterans, when they come down with 
prostate cancer, unless they happen to belong to one of us and 
read our magazines--which is another thing that would be nice 
if they did, though many of them do not--most of them do not go 
to the VA. They do not belong to us; and they do not know that 
they are entitled to things.
    The VA presently, I believe, is compensating about a 
quarter million diabetics--Vietnam veterans primarily--from 
service in Vietnam and Agent Orange. That is about less than 10 
percent of the folks that stepped foot in Vietnam who qualify. 
We believe that number is probably twice that, if not more.
    So, that means a quarter million possibly or more people 
are out there who are diabetics today entitled to compensation 
who are not getting it. Nobody knows about it.
    We are trying to work with the private sector medical 
community to get the necessary education programs out there so 
that when they come across people at their desk, they ask the 
question, are you a veteran, and then go from there. And we 
think that will have a major, major impact.
    And it is not just the Vietnam veteran. Desert Storm 
veterans, too. You know that is a long time ago already since 
Desert Storm, 17 years ago already and people forget that. And 
they have the highest rate of disability of any group yet--I 
think it is 30-some-odd--38 percent, I think. I forget the 
exact percentage of their numbers who are already getting 
disability. And we believe that could be higher and they are 
coming up with all kinds of strange things over time, too.
    So, unfortunately, you know, we allocate billions of 
dollars probably in the Army to be all you can be and Army 
strong. They do not tell you about veteran weak.
    Chairman Akaka. Thank you, Mr. Rowan.
    I now turn to our Ranking Member, Senator Burr, for his 
questions.
    Senator Burr. Thank you, Mr. Chairman, and more 
importantly, thank you to each one of you for not just your 
willingness to come and share with us what I think is some 
valuable information but to the commitment that all the 
organizations and you as individuals make as part of that 
organization.
    John, I agree with most everything you said. I would love 
to think that we could go back to Vietnam veterans, change the 
course of treatment for mental health issues and reasonably 
expect a different outcome tomorrow. And we all know that is 
probably unachievable, though the pharmaceutical industry has 
provided us with some tools that I believe the VA is 
incorporating that did not exist 20 years ago. That may help to 
make life a little bit better. I hope and I believe that we are 
doing that within the VA today.
    As it relates to homelessness, I agree with you totally. 
The challenging thing is that we, as a country, provide a roof 
pretty effectively over somebody's head. From a standpoint of 
veterans and others we do not do a great job with the wrap-
around services that we need to take a veteran to permanent 
housing.
    We get the occasional help that is needed, but without 
those wrap-around services, they always slip back into a 
homelessness situation; and I think this is something, quite 
frankly, that we need to tackle together. And it is not just 
limited to veterans. It is a population of folks that, for a 
multitude of reasons, find themselves not able to stay in 
permanent housing even with what I think are some great 
programs targeted for them.
    I see the VA of the future focused in two areas as it 
relates to the delivery of health care specifically. One focus: 
to maintain the services to a population that had been promised 
and has been in the system; enhancing the care that is 
delivered as it is appropriate and technologically available.
    And then two: to focus on today's warrior, to learn from 
the past where, in fact, we might not have designed the 
treatment the most effective way, and to learn where 
technologies have now provided us things like prosthetics that 
accomplish a level of quality that 20 years ago, quite frankly, 
we never believed we could achieve.
    I want to use the balance of my time not to ask a question, 
but I guess I will sort of be the guinea pig, not to defend the 
Administration, but to remind all of us of the past.
    In 1996, the Senate Committee on Veterans' Affairs held a 
hearing on veterans health care eligibility priorities. I want 
to read for you some selective questions and responses of some 
or all of the VSOs that are represented here.
    Chairman Simpson asked, ``which veterans should receive 
free medical care?''
    ``Answer: I believe anyone who in the service of their 
country was injured or disabled in any way that needs medical 
treatment once they leave military service. If they were 
injured and disabled in the line of duty, which does not 
necessarily mean combat, it could be training accidents, should 
be entitled to some type of health care once they leave the 
service without any expense to themselves.
    ``Chairman Simpson. If you say expanded and improved VA 
health benefits will not open the flood gates, then are you 
saying to us that veterans will not seek free care?
    ``Answer: Although all these veterans may be eligible for 
care and they are all eligible for care now, our proposal does 
not in any way stipulate or even imply that their care would 
not be paid for by somebody.
    ``The service-connected veteran and the Category A veterans 
as defined in the bill would continue to be provided care with 
the appropriate dollars as it should be, but everyone else who 
comes to the system, Mr. Chairman, is going to have to pay 
their own way as they would in any other system through either 
co-payments, deductibles or private insurance.
    ``So, if there is an assumption on the cost of this bill 
being predicated upon all these new veterans coming into the 
system and not paying for their care, then it is a faulty 
assumption and one that drives the cost up.
    ``Last question and last answer.''
    ``Senator Rockefeller. To what extent do you think it is 
important that access to VA care be provided (a) higher income 
veterans with no service-connected disabilities; (b) dependents 
of veterans?
    ``Two answers: In the Independent Budget, DAV proposes, 
along with AMVET, PVA and VFW, that the Secretary have the 
discretion to treat these parties at their own expense. We do 
not request that they be entitled to VA medical care. We 
believe that it would be in the best interest to veterans and 
the VA to allow these parties to use VA care at their own 
expense.
    ``Additional answer: The American Legion believes that 
higher income, non-service-connected veterans and certain 
dependents of eligible veterans should be permitted to access 
the VA health care system by paying premiums, co-pays and 
deductibles. These additional revenue streams would help to 
ensure the long-term viability of the VA health care system. 
The normal appropriations process would ensure funding for 
Category A veterans and the conversion of VA to a market-based 
managed care system would attract other paying customers.''
    Senator Burr [continuing]. Now, again, I am not here to 
object to what you are saying because I firmly believe the 
Congress will throw out the Administration's proposal. We have 
done so with great frequency and little conscience, but I want 
to make the record straight.
    No group has always said, no, do not do this. And my only 
plea to each one of you is that if we want to go through this 
annual Kabuki dance that we do, where you ask for more money, 
the Administration tries to do something, we have political 
differences up here, and the outcome is the same for veterans, 
then we have all failed.
    At the end of the day, the question is, coming out the 
other end are people better off? Have they gotten what we 
promised? More importantly, have we used all the tools that are 
available to us, whether they are technological or anything 
else, to enhance their future in a positive way?
    So, though I am in agreement with you that now is not the 
time to talk about this, as we expand the system, one only has 
to believe that somebody has to pay for it. If we collectively 
believe that it should be the taxpayer, let me suggest to you, 
if you look at any system or any health care system in the 
world, as it begins to grow like that, it will implode at some 
point. If your belief--and there is some disagreements on this 
Committee, this is an observation I am sharing of my own. 
Bernie----
    [Laughter.]
    But I appreciate the chuckle.
    And, the fact is that each one of you, as representatives 
of service organizations, will have to search back in your 
history and remember that you made statements based upon your 
belief that the integrity of this delivery system long-term was 
the single most important thing.
    I believe that is the responsibility we have. I believe the 
responsibility of our representatives, the Secretary and his 
colleagues from VA, is to take what we have provided, to 
understand their mission, and carry it out in a way that 
provides the highest quality to the most people. And when there 
is not enough, to say there is not enough.
    I want to say this in ending. I have been in a lot of 
congressional hearings in the House and the Senate. Rarely do I 
see a Government witness testify and stay to hear what the next 
panel says. Not only is the Secretary here listening to what 
you are saying, every person he brought from the VA is here 
listening to your testimony, listening to our questions. I 
think that says, more than anything I can imagine, how 
interested they are at doing their job.
    Mr. Chairman, I thank you.
    Chairman Akaka. Thank you very much, Ranking Member Burr.
    And now, Senator Sanders.
    Senator Sanders. I apologize again, Mr. Chairman. It has 
been one of those days and I keep running in and out.
    It seems to be fairly clear that if you ask the American 
people whether or not we have a moral obligation to make sure 
that all of the men and women who put their lives on the line 
defending this country should have the promises made to them 
kept--even though, of course, as Senator Burr indicates, it is 
going to cost us money. I think the answer is, yes.
    I think that is what people will say. And, Senator, any 
time that you would like to debate the issue of whether or not 
we give tax breaks to billionaires or put money into the VA, I 
would love to do it any place in the country; and most people 
will agree with me. Because you are right, it costs money. 
There is no question about it. But the question is one of 
national priority.
    The second point that I would make is, I believe there is a 
will in this country that we have a moral obligation to take 
care of those people who put their lives on the line defending 
this country.
    The second point, we have made and both of you will 
remember, Secretary Nicholson was before us on more than one 
occasion talking about the cost-effectiveness of the VA. Am I 
correct on that?
    He talked about it as a high quality system where study 
after study indicated that it was cost effective. And I think 
that is what the evidence is. I think the evidence is, 
obviously there are exceptions with this, that when these guys 
get the money to do their job--they cannot do it if they do not 
have the money--that they do it pretty well.
    The argument that we keep hearing is, when people get into 
the system they are happy with the care that they get. The 
problem is that too often there are waiting lines; too often 
there is inadequate staffing because they do not have the money 
to do their job.
    I apologize for not having heard the testimony. The last 
point that I would say to Senator Burr, the indication, there 
is a difference; there is a philosophical difference. The last 
time around under Senator Akaka's leadership, we worked with 
many of your organizations. And for the first time in recent 
history, we actually implemented most of the measures that were 
in the Independent Budget. I think that was the right thing to 
do.
    And as I mentioned to the Secretary, who is kindly here 
right now, my main concern right now is that with so much 
influx, with so many new people coming into the system with so 
many needs, are they going to have the organizational 
capability to make sure that money is spent wisely and that 
they are hiring the right people and doing that as efficiently 
and as quickly as possible.
    May I ask a question, Mr. Chairman?
    Chairman Akaka. Yes.
    Senator Sanders. To whoever wants to answer, do you have 
concerns? Or how do you see progress being made? We gave the VA 
more money. We worked with many of your organizations. Are you 
satisfied with the beginning--and it is just the beginning, of 
course--utilization of that money to address long-standing 
needs; and also the very pressing problems for our Iraq and 
Afghanistan veterans?
    Who wants to comment on that?
    Mr. Gaytan. On behalf of the American Legion, I do want to 
comment on some of the main concerns that we have in regards to 
spending the funds that are provided to the Department of 
Veterans Affairs. And one, which is outlined in our testimony, 
as you have seen, is concern over cutting the research, medical 
and prosthetic research when you have TBI and PTSD as a major 
concern of these veterans who are coming back.
    VA needs to be prepared to provide that service, not just 
now, but PTSD can manifest itself years down the road. VA needs 
to be capable of doing that.
    Another commitment that VA needs that will require 
budgetary increases is long-term care. You cannot ignore the 
era of veterans who are turning to long-term care needs right 
now and VA needs to be capable of doing that as well.
    One other area I just want to mention is the construction, 
and that was mentioned in our testimony as well. We cannot 
ignore the recommendations of the CARES report in terms of 
construction and those needed VA medical facilities.
    Senator Sanders. Do you think that the budget that the 
President presented will be able to do all of those things?
    Mr. Gaytan. It is our hope that it will.
    Senator Sanders. Other people like to comment on that?
    Mr. Blake. Senator, I would just like to say that--I think 
one of my colleagues mentioned--we certainly appreciate 
everything the Congress did during the first session of the 
110th Congress with regards to the funding for the VA.
    We certainly cannot argue with the fact that most, if not 
all, of the recommendations in the budget were met when it 
comes to budget figures for the fiscal year 2008 appropriation.
    I do not think it can be emphasized enough, however, that 
certainly our concern is spending that money wisely; and the 
fact that the VA did not receive its money or was not enacted 
from the President until January, puts the VA at quite a 
disadvantage at ensuring that it is wise with its dollars. 
Notwithstanding the fact that the VA has learned to live with 
this for 13 or 14 years now and knows how to plan around it, 
the simple fact is: you cannot put the VA in that kind of a 
position and expect them to spend $40 billion plus just on the 
discretionary side appropriately and not have some heartache 
with some things they do.
    Senator Sanders. Anybody else want to comment on it?
    Yes, sir.
    Mr. Rowan. Yes. I would concur. I think the whole issue of 
lag time is a real problem--no question--with regard to the 
budget, which is why we would like to see the whole process 
changed and brought into something a little bit more effective.
    And yes, there have been changes in staffing, but probably 
not enough. We are concerned about the losses, particularly in 
the VBA side. There are a lot of people retiring in the VA 
system. A lot of my Vietnam veteran colleagues have taken their 
pensions and leaving, which is creating problems of a brain 
drain as much as anything else. It is enough to say, yes, we 
are going to hire a bunch of FTEs, but if it takes you 2 years 
to train somebody or 3 years to get people up to snuff, it is 
going to take a while.
    We are concerned, too, about salaries. We are concerned 
about the ability--the whole health care system in this country 
is, you know, in a crisis; and we do not have anywhere near 
enough doctors and nurses or anything for anybody, never mind 
the VA.
    So, if we are competing against everybody else, frankly, 
the only saving grace we have got is the VA hospital's 
affiliation with all of these wonderful medical schools, which 
have provided us with a lot of folks.
    I just happened to recently use the emergency room at the 
Manhattan VA Hospital and everybody I talked to was an NYU 
doctor, which was fine by me. They have some of the best 
medical people in the country.
    But, unfortunately, also other systems--when I go to 
clinics, for example, it takes a little while and I am a person 
who bounces in and out of both systems. I use the VA and I 
still have a private system from my retirement as a city 
employee. And, frankly, they are in the same strain we are. Let 
me tell you. They are all under the same system. Again, they do 
not have enough doctors. When you go to a regular private 
doctor, you better be prepared to wait because you may take 2 
hours before he sees you and that is normal.
    Senator Sanders. Unfortunately it is normal.
    Mr. Rowan. We need more doctors.
    Senator Sanders. We just had a hearing on that, a 3-hour 
hearing on that issue yesterday as a matter of fact.
    And I know it is very early in the game, and it is hard to 
make a judgment. But do you have a sense that the VA is moving 
aggressively, in the midst of that very difficult national 
climate, to hire of doctors, nurses, psychiatrists, 
psychologists? Do you think they understand the severity of the 
problem?
    Mr. Baker. I cannot answer that question with respect to 
the health care side. But with respect to the claims processing 
on the VBA side, having not been in the legislative business 
very long, I know that there has been a lot of increase in 
staffing in the VBA side, and I think that is going to help 
tremendously. And we certainly hope that it serves its purpose.
    I do not think staffing is the only problem. I hope VA gets 
up to speed with their staff, but at the same time we put forth 
a lot of policy initiatives. Some of them are small, some of 
them are inexpensive, some of them will save money.
    But, they all will chip away at the claims backlog. They 
will all improve the claims process. And I hope that, you know, 
those can be looked at in the future by VA and by the 
Committee. I hope that we do not have a sense to make so much 
change to a system that has evolved little bit by little bit 
into a very good system, that we scrap it and start over and 
have none of those safeguards in place that took so long to 
get.
    I would just like the Committee to consider that.
    Mr. Rowan. I would just like to add that I think that the 
division directors are trying to do as much as they can as 
quickly as they can, but it is a tough system out there, 
generally. And so, they are under the same strains as everybody 
else.
    And again, as far as the VBA is concerned, I can only state 
that until they get the computers up and running, all the FTEs 
in the world are not going to solve that problem.
    Senator Sanders. My last question. I am a fan of--I do not 
know what the formal title is--but the outreach clinics. We 
have four of them, I think, in the State. My impression is they 
work quite well and it has been one of the very positive 
innovations that we have seen at the VA in recent years.
    Is it your impression that these outreach clinics are doing 
what they are supposed to be doing, Peter?
    Mr. Gaytan. Yes, sir. Actually, I am glad you brought that 
up. If we look at the improvements over the past couple of 
decades in VA health care, the quality of care that VA is 
providing, in hearing that praise for VA by the actual veterans 
who are going there and receiving the care, how it has changed 
from the Vietnam era of warehousing patients and how it has 
increased in terms of quality and delivering that access, it 
has a lot to do with not only the CBOCs, as you mentioned, the 
Community-Based Outpatient Clinics providing that care, but 
also the change in VA health care from inpatient to outpatient.
    That change has been dramatic and we have seen it in 
results of quality and delivery of health care. And the 
veterans that are walking in and out of those VA hospitals are 
the first ones to tell you that the quality of care that they 
are receiving at VA is outstanding.
    What the American Legion wants to do is ensure that VA is 
provided with a budget that will allow them to continue that 
quality and delivery of care.
    Senator Sanders. That is my impression that the veterans 
feel very positively about the CBOCs.
    Mr. Gaytan. The only negative, if there is a negative, is 
the fact that oftentimes when we get into specialties--when we 
get beyond clinical place and somebody asks to go for a 
specialty issue--and I have a friend of mine who went through a 
whole hip thing and had to get a hip replacement.
    When you start getting into that system, then it can bog 
down a bit because, again, you are really hitting the crunch 
now with way too many patients and not near enough medical 
care. It is ability; it is not that the doctors are not any 
good.
    I mean, I had a guy and he just said I had enough and he 
went and got it done somewhere else because he just did not 
want to wait 6 months to get it done in the VA. That is going 
to take a long time before they build it back up in that part 
of the system.
    I would also like to take a shot at, while you mentioned 
clinics, mention the other outreach programs, the veterans 
outreach centers which were created back in my day and helped a 
lot of Vietnam veterans survive, frankly.
    Those programs are so great. They need to get to these new 
kids and I think that is going to be an interesting thing; and 
maybe some of us Vietnam vets who have been through the process 
can help them out a little bit.
    But, if we look elsewhere, you know, we are not the only 
ones that deal with veterans in this world. My colleagues in 
Australia for years who have had similar outreach centers where 
veterans go for mental health counseling, they take the whole 
family and they take the kids, and they will treat them, 
because there is such a thing called secondary PTSD (which 
nobody ever wants to talk about), which is still going on 
today.
    When we talk about the guy and the girl who comes home and 
beats up the husband or wife or whatever and the kids get into 
the middle of it all. And with all of these folks coming back 
today who have families, many of them with children that we 
never had in my generation in the numbers they have today.
    So, I think they need to expand that program to include the 
family to do real family counseling which is what any good 
psycho-social service would definitely want to do.
    Senator Sanders. You would be interested to know in 
Vermont, we got some money for the VA and for the National 
Guard to do just that, to do an outreach program which involves 
the whole family.
    I have gone over my time, Mr. Chairman, I apologize. Do you 
want to comment, sir?
    Mr. Kelley. Yes. I just wanted to build off of what Mr. 
Rowan was saying about the Vet Centers. And I think, 
particularly the Expanded Family Access, because what we are 
seeing with a lot of these issues is that the families are 
impacted. And the key challenge that we have seen with the Vet 
Centers over the last few years is not so much the location of 
them, but the staffing. We are concerned that the staffing 
levels are not sufficient to fully meet the demands, 
particularly as we have seen with the increasing numbers of 
OEF/OIF veterans returning. So, that is certainly something we 
have got our eye on and something that probably needs to be 
addressed.
    Senator Sanders. Let me conclude by thanking all of you. I 
think by working together we have made some real progress. 
Obviously there are some enormous challenges facing us. These 
are very, very difficult times--not just in health care, in 
terms of the number of people coming back, sick or wounded.
    We have got a lot of work in front of us that I look 
forward, Mr. Chairman, that we will be able to continue working 
with these service organizations to make some real progress.
    Thank you.
    Chairman Akaka. Thank you very much, Senator Sanders.
    We have many more questions. I know some of the Committee 
Members do also. Let me end with two questions.
    This question is for all of you. Earlier I told Secretary 
Peake and Admiral Cooper that there are high expectations for 
VBA to increase the quality of claims decisions. And this has 
to do with timing, not only for claims, but also for health--to 
provide care in a timely manner. I now turn to you for your 
quick views.
    The question is, what more could Congress do for VBA to 
decrease the backlog and increase timeliness and accuracy?
    Mr. Baker. It sounds like a benefits question. It is a very 
good question and it is one that simply does not have one 
answer.
    Congress has done a great thing already, I believe, in 
providing enough staffing for more employees at VBA almost to 
the point that we suggested in the Independent Budget. Though a 
little bit short, I believe we were fairly close.
    Now, I believe the key is to utilize that staffing to its 
best advantage. It is going to take some time to get some 
training to the brand new people, and I think that is one area 
the VA has to focus on a lot--training.
    I believe quality is an area that VBA has to focus on. The 
STAR program right now, I believe, is insufficient. It does not 
hold individuals accountable. It looks at about 10 cases per 
large VA regional office and I think that they have some plans 
to increase that. Yet, if you have an office that is putting 
out 1,000 claims a month, that is not even 1 percent; and you 
cannot even track a trend with that.
    I believe we need to tie accountability to quality, at 
least as much as you do production, on an even level. I believe 
Congress could look at what we suggested in the Independent 
Budget. We tried to structure some things around the benefit 
side, like I said earlier, that are not expensive or that 
actually save resources.
    We would be more than welcome to work with the agency to 
hone any differences that there may be in some of those 
recommendations.
    That is probably the best answer I can give you off the 
cuff.
    Mr. Gaytan. If I can speak for the American Legion. In 
terms of addressing the backlog, what Mr. Baker said is true, 
and I want to emphasize the fact that focus needs to be given 
to the quality of the rating, as opposed to the quota.
    You cannot expect the quota to be met and expect the 
quality to be met as well, because that is just recycling the 
claim back into the system. Quality has to be a focus, and not 
so much a stress on the quota and the amount that are being 
done. If the quality of that claims review is met, then we will 
address the backlog through that process.
    Chairman Akaka. Mr. Rowan.
    Mr. Rowan. Yes. First, I think the Congress needs to be 
prepared in that they are going to be hit with a fairly 
substantial bill somewhere down the line--hopefully sooner 
rather than later--for the computer system that they are going 
to need. And that is going to be a super budget dollar number. 
Whatever that comes out to, that is going to have to be 
probably a one-shot deal or maybe a couple of year deal.
    The Disability Commission talked about a lot of different 
things, too. They need regulations and laws to change some of 
the way we look at things. And I am not so sure how they do it. 
It has been, unfortunately, a couple of years since I have 
actually been in the grind doing service rep work, so I am not 
sure how they reorganized it on the ground.
    But, one of the challenges you are asking people to meet: 
you are asking people to do musculoskeletal stuff; you are 
asking them to do endocrinology; you are asking them to become 
psychologists in their ratings. And, trying to get all that 
stuff in a reference book that says, you got this and you do 
not move this much, you get ``X'' percentage. If you do not 
move that much, you get a bigger percentage. It gets a lot more 
difficult than dealing with PTSD cases.
    And I think the problem may be that the raters are not 
necessarily able to specialize as well as they could, so that, 
maybe, the more difficult cases could go to the senior rater, 
the person who would understand that stuff better.
    I also think that we talked earlier about getting rid of 
some of this stuff--that if the doctor comes in and writes on 
his note paper, that I am a diabetic; take that and run with it 
and do not bother to bring me in for a C&P exam. And I am not 
saying they do, but when it comes to other things, we can speed 
that process up significantly in the early stages of some of 
those really slam-dunk claims, as many of my colleagues would 
say.
    I mean, when we get into some other cases and we have to 
dig out things, the idea of getting into this whole issue of: 
if you served in a combat zone, you served in a combat zone 
whether you were a cook or a grunt. And, you know, maybe your 
disability is not as severe or whatever--your PTSD may not be 
as bad--but, you probably got some of it. We ought to just 
write that off; and I agree with the idea that you are in a 
combat zone, you are in a combat zone, period.
    And, you know, let us stop trying to create 43 new medals. 
The Air Force just came out with one. The Army came out with a 
combat action badge, but not everybody is going to get it. Oh, 
please. I mean, we get into all this nonsense. Which is not to 
denigrate anything that the folks with the point of the spear 
do; but, those of us who have sat in the back and got bombed 
regularly or mortared regularly or whatever, it was just a 
little disconcerting to say the least.
    And so, you know, we should be considered having served in 
a combat zone. And, today we noted that the worst job in the 
world now is the truck driver; and that was the truth in 
Vietnam, as well. But the truck drivers did not get medals; and 
try to prove their PTSD claim.
    Chairman Akaka. Thank you for those responses.
    Let me just say, before I ask my final question--Mr. Baker, 
since you mentioned it, too--I want you to know I appreciate 
your thoughts on the need for a presumption for combat service. 
My bill, S. 2309, would do just that, and I hope to bring that 
measure to the full Senate later this year.
    My final question to each of you is, I strongly believe 
that cutting the IG is not wise. Do you believe the Department 
can adequately police itself while funding for the IG is cut at 
the same time?
    Mr. Rowan. I will jump in.
    Chairman Akaka. Mr. Rowan.
    Mr. Rowan. No, I do not think they should cut the IG 
budget. However, we must understand something: the IG budget 
talks about corruption; the IGs worry about people stealing 
things. They do not necessarily tell you whether our division 
director is a very good manager, or whether your clinician is a 
good clinician, or the nurses are actually good nurses.
    They go in and they look at systems, and they look at 
certain things; but they are more concerned about whether or 
not people are walking out the door with something than they 
are about the effectiveness of delivery of services. And that 
is, unfortunately, the job of the Congress. Maybe GAO can get 
more involved in looking at some of the operations in the VA, 
as far as oversight is concerned.
    But I still do not think the IG budget should be cut 
because there are real concerns when you are talking about a 
$90 billion budget. I come from an old investigator's 
background so I have a real problem with that.
    Mr. Gaytan. The American Legion does not support the cut in 
the IG budget, sir.
    Chairman Akaka. Any other comments?
    Mr. Blake.
    Mr. Blake. Senator, I would say that we certainly, our 
recommendations reflect the fact that we believe that the IG's 
budget should actually be increased.
    It is interesting that there was a line of questions along 
this idea in the House Committee hearing last week. While I 
will not comment one way or the other on some of the ideas 
brought up, it kind of makes you squirm when you consider what 
was being projected for what the IG should be responsible for, 
and outcomes that occurred because they did or did not conduct 
a particular investigation.
    I think their role is too important to cut their budget, 
though. I think they can always use a little bit more, 
especially with a department this big.
    Chairman Akaka. Thank you very much.
    Any further thoughts on that?
    Mr. Baker. I was going to say, Mr. Chairman, one, thank you 
for mentioning my testimony. My time in the field has brought 
me close to way too many people that have fallen through that 
loophole--that we were in combat and could not prove a specific 
incident--and so I appreciate your mentioning that.
    As to your question, I think all we really have to do is 
look at the incidents that are going in Marion, IL, at the VA 
medical center. That will tell us we cannot cut the IG budget. 
If we do that, those very things could go on in other centers 
and there just might not be enough staff to investigate them 
fully, to prevent those things from happening in the future. I 
think that is a good example.
    Chairman Akaka. Thank you. I have many more questions for 
you, but I will submit them for the record at this time.
    So, in closing, I want to again thank all of our witnesses 
for appearing today. And I want to thank the Secretary and his 
leaders who are still here. Thank you so much for doing this. 
Your input on these issues is valuable to the Committee as we 
consider our budget recommendations.
    With that, let me say, thank you very much; and this 
hearing is now adjourned.
    [Whereupon, at 12:58 p.m., the Committee was adjourned.]
                            A P P E N D I X

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   Prepared Statement of the National Coalition for Homeless Veterans
    The National Coalition for Homeless Veterans (NCHV) appreciates the 
opportunity to submit testimony to the House Veterans' Affairs 
Committee regarding the U.S. Department of Veterans Affairs (VA) budget 
request for fiscal year 2009.
    Established in 1990, NCHV is a nonprofit organization with the 
mission of ending homelessness among veterans by shaping public policy, 
promoting collaboration, and building the capacity of service 
providers. NCHV is the only National organization wholly dedicated to 
helping end homelessness among America's veterans.
    The majority of NCHV members, which includes nearly 280 
organizations in 48 States, the District of Columbia, Puerto Rico and 
Guam, provide the full continuum of care to homeless veterans and their 
families, including emergency shelter, food and clothing, primary 
health care, addiction and mental health services, employment supports, 
educational assistance, legal aid and transitional housing.
    In 2007, VA reported that about 196,000 veterans are homeless on a 
given night and 400,000 veterans experience homelessness at some time 
during the year. The VA reports its homeless veteran programs serve 
100,000 veterans annually, and NCHV member community-based 
organizations (CBOs) serve another 150,000.
    VA officials report that the partnership between the VA and 
community-based organizations has substantially reduced the number of 
homeless veterans each night by more than 25 percent since 2003--a 
commendable record of achievement that must be continued if this Nation 
is to provide the supportive services and housing options necessary to 
prevent homelessness among the newest generation of combat veterans 
from Operations Enduring Freedom and Iraqi Freedom (OEF/OIF).
              fy 2009 va budget--homeless veteran programs
    Congress has established a number of programs within VA to address 
homelessness among veterans. The primary goal for these programs is to 
return homeless veterans to self-sufficiency and stable independent 
living. The major homeless veterans programs administered by the VA 
include the Homeless Providers Grant and Per Diem (GPD) program, which 
includes transitional housing, supportive services centers, special 
needs grants, GPD program liaisons, and Stand Down support; the HUD-
Veterans Affairs Supported Housing (HUD-VASH) program; the Multifamily 
Transitional Housing Loan Guarantee Program; and the Compensated Work 
Therapy Transitional Residence program. Homeless veterans also receive 
primary medical care, mental health and substance abuse services at VA 
medical centers and community-based outpatient clinics (CBOCs) through 
the Health Care for Homeless Veterans (HCHV) program.
    The landmark Homeless Veterans Comprehensive Assistance Act of 2001 
(Pub. L. 107-95) established new program authorities and reauthorized 
long-standing homeless programs within the VA. While the authorization 
law set explicit funding levels for many of the VA homeless programs 
and authorities, actual annual spending levels are set by the VA 
Secretary via allocation of funds from the VA medical services account, 
which are appropriated by Congress.
    VA homeless veteran programs function not only as a safety net for 
homeless veterans unable or hesitant to access emergency shelter, 
transitional housing or supportive services organized for the general 
population, they also function as a safety valve when other VA programs 
fail to reach veterans at a high risk of homelessness, such as veterans 
with chronic mental illnesses, addictions and extreme economic 
hardships.
    Our testimony will focus on these homeless veteran assistance 
initiatives, most of which owe their effectiveness and successes to the 
leadership of this committee. We have testified many times about the 
need for transitional housing and services for veterans in crisis, and 
celebrate the reduction in homelessness among these deserving men and 
women during the last 5 years. As we continue that legacy, we must also 
provide supports that will prevent homelessness among OEF/OIF veterans 
returning from war.
Homeless Provider Grant and Per Diem Program
    The Homeless Provider Grant and Per Diem Program (GPD) is the 
Nation's largest VA program to help address the needs of homeless 
veterans and supports the development of transitional, community-based 
housing and the delivery of supportive services. The program's goals 
are to help homeless veterans achieve residential stability, increase 
their skill levels and income, and achieve greater self-determination. 
The GPD Program provides competitive grants to community-based, faith-
based and public organizations to offer transitional housing and 
service centers for--homeless veterans. The GPD program is an essential 
component of the VA's continuum of care for homeless veterans, assuring 
the availability of social services, employment supports and direct 
treatment or referral to medical treatment. The program also funds GPD 
liaisons who provide program oversight, inspections and outcomes 
reporting essential to the success and efficiency of grant recipients.
    In September 2007 the General Accountability Office (GAO) presented 
testimony before the Subcommittee on Health of this Committee regarding 
homeless veterans programs, and reported that an additional 11,100 
transitional housing beds are needed to meet the demand presented by 
current VA estimates of the number of homeless veterans in need of 
assistance. This need does not yet include the increased requests for 
services expected from OEF/OIF veterans over the next 3 to 5 years.
    The Consolidated Appropriations Act of 2008, which became Public 
Law 110-161 on December 26, 2007, provided for $130 million, the fully 
authorized level, to be expended for the GPD program. Based on GAO's 
findings and VA's projected needs for additional GPD beds, NCHV has 
concerns about the $138 million authorization for fiscal year 2009 and 
believes a $200 million authorization is needed. An increase in the 
funding level for the next several years would help ensure and expedite 
VA's program expansion targets. It would provide critical funding for 
service or drop-in centers--the primary portal that links veterans in 
need with the people who can help them. It would guarantee continued 
declines in veteran homelessness, and provide for scaling back the 
funding as warranted by the VA's annual Community Homelessness 
Assessment, Local Education and Networking Group (CHALENG) reports. The 
GPD program has evolved into a homelessness prevention network as much 
as a proven intervention care and treatment collaborative partner with 
the VA.
Special Needs Grants
    The VA provides grants to VA health care facilities and existing 
GPD recipients to assist them in serving homeless veterans with special 
needs including women, women who have care of dependent children, 
chronically mentally ill, frail elderly and terminally ill veterans. 
Initiated in fiscal year 2004, VA has provided special needs funding to 
29 organizations totaling $15.7 million. The VA Advisory Committee on 
Homeless Veterans 2007 report States the need and complexity of issues 
involving women veterans who become homeless are increasingly 
unexpected. Recognizing women veterans are one of the fastest growing 
homeless populations, the Committee recommended future notices of 
funding availability target women veteran programs including special 
needs grant offerings. Pub. L. 109-461 authorizes appropriations of $7 
million for fiscal year 2007 through fiscal year 2011 for special needs 
grants. The increased risks of homelessness among each of these 
populations warrants funding for special needs grants above the 
currently authorized level. Additional funding for the Grant and Per 
Diem Program would address this need.
HUD-VASH
    The joint HUD-VA Supported Housing Program (HUD-VASH) provides 
permanent housing and ongoing treatment services to harder-to-serve 
homeless veterans with chronic mental health, emotional and substance 
abuse issues. NCHV was pleased that Pub. L. 110-161 included $75 
million to be used for 7,500 Section 8 vouchers for homeless and 
disabled programs. Under this program, VA must provide funding for 
supportive services to veterans receiving rental vouchers. The fiscal 
year 2009 VA budget must reflect a significant increase in funding 
these services.
    We believe the $7.8 million in the fiscal year 2009 VA budget 
proposal was agreed upon before the dramatic increase in HUD-VASH 
vouchers became law. Based on historical data that shows each housing 
voucher requires approximately $5,700 in supportive services--such as 
case management, personal development and health services, 
transportation, etc.--we estimate approximately $45 million will be 
needed to adequately serve 7,500 or more clients in HUD-VASH housing 
units. Rigorous evaluation of this program indicates this approach 
significantly reduces the incidence of homelessness among veterans 
challenged by chronic mental and emotional conditions, substance abuse 
disorders and other disabilities.
Multifamily Transitional Housing Loan Guarantee Program
    This initiative authorizes VA to guarantee 15 loans with an 
aggregate value of $100 million for construction, renovation of 
existing property, and refinancing of existing loans to develop 
transitional housing projects for homeless veterans and their families. 
First authorized in 1998, only two projects have survived beyond the 
initial planning stages--in Chicago and San Diego--and only St. Leo's 
in Chicago has been developed.
    While we believe this program seemed promising in its original 
design and intent, the real-life difficulties in long-term coalition 
building, planning and economic hardships developers have encountered 
to date strongly suggest a much more practical and streamlined program 
should be developed to address the critical supportive housing needs of 
homeless veterans and those at serious risk of homelessness due to 
chronic health problems and poverty.
    A congressionally mandated analysis of 2000 U.S. Census data in 
fiscal year 2006 revealed approximately 1.5 million veterans are living 
below the Federal poverty level. The GAO and VA's own reports indicate 
an immediate need for more than 11,000 additional transitional housing 
beds for homeless veterans. And combat veterans from Iraq and 
Afghanistan--now in the fourth year of their repatriation--are 
requesting assistance in increasing numbers at VA and community-based 
service providers. The need for increased service capacity is 
immediate, and many community-based providers have successfully 
developed additional transitional and longer-term residential 
opportunities for their clients. We believe the resources earmarked for 
the Multifamily Transitional Housing Loan Guarantee Program might be 
better allocated to support projects that can be developed and brought 
on-line more swiftly.
Compensated Work Therapy/Transitional Residence (CWT/TR) Program
    In VA's Compensated Work Therapy/Transitional Residence (CWT/TR) 
Program, disadvantaged, at-risk, and homeless veterans live in CWT/TR 
community-based supervised group homes while working for pay in VA's 
Compensated Work Therapy Program (also known as Veterans Industries). 
Veterans in the CWT/TR program work about 33 hours per week, with 
approximate earnings of $732 per month, and pay an average of $186 per 
month toward maintenance and up-keep of the residence. The average 
length of stay is about 174 days. VA contracts with private industry 
and the public sector for work done by these veterans, who learn new 
job skills, relearn successful work habits, and regain a sense of self-
esteem and self-worth. We are pleased to see the additional funding 
provided for in the fiscal year 2009 proposed budget.
Mental Health Programs
    Virtually every community-based organization that provides 
assistance to veterans in crisis depends on the VA for access to 
comprehensive health services, and without exception their clients 
receive mental health screenings, counseling and necessary treatment as 
a matter of course. These services are well documented, and case 
managers report this information to the VA as prescribed in their grant 
reports. Follow-up services--counseling, substance abuse treatments, 
outpatient therapies, medication histories and family support 
initiatives--are also monitored closely and reported in client case 
files.
    Despite significant challenges and budgetary strains, the VA has 
quadrupled the capacity of community-based service providers to serve 
veterans in crisis since 2002, a noteworthy and commendable expansion 
that includes, at its very core, access to mental health services and 
suicide prevention. The development of the VA Mental Health Strategic 
Plan from 2003 through November 2004, and its implementation over the 
last 3 years with additional funding this committee fought for, has 
increased the number of clinical psychologists and other mental health 
professionals at VA medical centers, community-based outpatient clinics 
(CBOCs) and VA Readjustment Counseling Centers (Vet Centers). We 
believe the VA budget proposal would facilitate further implementation 
of the Mental Health Strategic Plan.
    We strongly recommend, however, that more attention be directed to 
simplifying and expanding access to community mental health clinics for 
OEF/OIF veterans in communities not well served by VA facilities. 
Current regulations allow a veteran to apply for authorization to 
access services at non-VA facilities, but the process is often 
frustrating and problematic, particularly for a veteran in crisis. 
Protocols should be developed to allow the VA and community clinics to 
process a veteran's request for assistance directly and immediately 
without requiring the patient to first apply at a VA medical facility. 
In the interest of maximizing the immediate benefit of mental health 
supports and minimizing the risk of harmful and even suicidal responses 
by a veteran to debilitating pressures--perceived or real--this 
initiative should be universal and well publicized.
Conclusion
    The National Coalition for Homeless Veterans thanks this committee 
for its service to America's veterans in crisis. It has been a long and 
difficult campaign, but hundreds of thousands of lives have been 
restored and thousands of lives have been saved. We are honored to work 
alongside the Congress, the Administration, our Federal partners, and 
the service provider network that has transformed policy into hope and 
redemption for these deserving men and women. What we have learned in 
the last 20 years is the greatest promise we can offer the new 
generation of combat veterans coming home from Iraq and Afghanistan--we 
are prepared to honor your service, help heal your wounds, and ensure 
you enjoy the blessings of the freedom you have preserved.
                                 ______
                                 
         Prepared Statement of Friends of VA Medical Care and 
                         Health Research (FOVA)
FY 2008 Appropriation--$480

FY 2009 President's Proposal--$442

FY 2009 FOVA Recommendation--$555

    On behalf of the Friends of VA Medical Care and Health Research 
(FOVA)--the diverse coalition representing more than 80 national 
academic, medical, and scientific societies; voluntary health and 
patient advocacy groups; and veteran-focused organizations--thank you 
for your continued support of the Department of Veterans Affairs (VA) 
Medical and Prosthetic Research Program. We are deeply concerned about 
the President's proposed fiscal year 2009 budget for the VA research 
program. A time of war is not the time to cut research on the grievous 
injuries being suffered by veterans of the Afghanistan and Iraq wars.
    FOVA Recommendations: For fiscal year 2009, FOVA recommends an 
appropriation of $555 million for VA Medical and Prosthetic Research 
and an additional $45 million for necessary research facilities 
upgrades appropriated via the VA Minor Construction account.
    Prior Year Support: FOVA thanks the Committee for its strong 
support of VA research as evidenced by your fiscal year 2008 views and 
estimates with regard to the VA Medical and Prosthetic Research 
Program. The Committee's recommendation--$500 million--was an $89 
million increase over the previous fiscal year and the President's 
fiscal year 2008 proposal. Your support for the program undoubtedly 
encouraged both chambers to adopt a significant increase in the 
program's final appropriation. FOVA encourages you to develop a views 
and estimates statement for fiscal year 2009 that reflects this same 
strong commitment to biomedical research for the benefit of veterans, 
and ultimately, all Americans.
    VA Research Improves Veterans' Lives: The VA Medical and Prosthetic 
Research Program is one of the Nation's premier research endeavors, 
attracting high-caliber clinicians to deliver care and conduct research 
in VA health care facilities. The VA research program is patient-
oriented and focused entirely on prevention, diagnosis, and treatment 
of conditions prevalent in the veteran population. Recent successes to 
which VA has contributed include the implantable cardiac pacemaker, a 
new vaccine for shingles, and Stateof-the-art prosthetics, including a 
new bionic ankle.
    President's Budget Request Falls Short: Considering the proven 
success of the VA research program, FOVA is disappointed with the 
President's proposal of $442 million for VA research in fiscal year 
2009. The proposal fails to maintain funding at the level appropriated 
in fiscal year 2008. If enacted, the proposed $38 million (8 percent) 
cut will lead to significant programmatic reductions and will impede 
research advances in diseases and injuries that impact the veteran 
population. According to the President's proposal, VA will cut funding 
for research in central nervous system injury by 20 percent; acute and 
traumatic injury, military occupations and environmental exposure, and 
substance abuse by 18 percent; and mental illness by 15 percent. The 
cuts are counter to the Committee's report language calling for VA to 
``expand its research into the areas of neurotrauma, sensory loss, and 
Post Traumatic Stress Disorder with a focus on developing clinical 
practices using evidenced-based medicine.'' The President's budget 
request assumes the cut in the VA research account will be made up by 
large increases in Federal funding from other agencies, nonprofits, and 
private industry. We are skeptical these sources will be able to 
materialize such gains in VA.
    Research Advances Require Sustained Investment: While FOVA 
appreciates the significant increase in funding approved last year, a 
one-time investment in research will not lead to the medical advances 
required to improve the lives of the Nation's veterans. VA research 
grants are awarded on a 3- to 5-year cycle; funding must be maintained 
over the grant cycle to sustain the investigator's research. Cuts in 
funding require VA to cut award levels for ongoing projects, thus 
diminishing productivity and output. In addition, funding fluctuation 
may limit the number of investigators willing to enter--and remain in--
the VA system. The VA research program offers a dedicated funding 
source to attract and retain high-quality physicians and clinical 
investigators to the VA health care system, who in turn provide first-
class health care to our Nation's veterans. FOVA encourages the 
Committee to consider the long-term needs of veterans and VA 
investigators when promoting future funding allocations for the 
program. The coalition encourages Congress to support planned growth 
for the VA research budget over the course of the next 3 years to 
continue the upward trajectory of the program in an orderly fashion.
    Thank you for considering our views.
                      the fova executive committee
John M. Bradley III
Veterans Service Organizations Liaison
703-244-3652
[email protected]

Gary Ewart
American Thoracic Society
202-296-9770
[email protected]

Allison Haupt
Alliance for Academic Internal Medicine
202-861-9351
[email protected]
  
  

Heather Kelly, Ph.D.
American Psychological Association
202-336-5932
[email protected]

Matthew Shick
Association of American Medical Colleges
202-828-0525
[email protected]

Barbara West
National Association of Veterans' Research and Education Foundations
301-656-5005
[email protected]

  

                                 ______
                                 
 Prepared Statement of Iraq and Afghanistan Veterans of America (IAVA)
    Mr. Chairman and Members of the Senate Veterans' Affairs Committee, 
on behalf of Iraq and Afghanistan Veterans of America and our tens of 
thousands of members nationwide, I thank you for the opportunity to 
testify today regarding the VA budget request for 2009.
    From April 2003-February 2004, I served as a First Lieutenant and 
Infantry Platoon Leader in Iraq. When I returned home, I quickly became 
concerned about the lack of real support for returning troops and 
veterans. In the early years of the wars, issues like Traumatic Brain 
Injury, Post Traumatic Stress Disorder, and homelessness received far 
too little attention.
    But times have changed. Last year, this Congress showed tremendous 
commitment to our Nation's veterans, providing the VA with its single 
largest budget increase in 77 years. On behalf of the millions of 
veterans who rely on VA health care, including almost 300,000 troops 
newly home from Iraq and Afghanistan, we hope you will continue to show 
your support for veterans' health care. IAVA is one of the over 60 
organizations who have endorsed the Independent Budget, and we endorse 
it again for fiscal year 2009.
    As the war in Iraq continues into its fifth year, this generation 
of troops and veterans faces new and unique problems. Today, IAVA is 
releasing our annual Legislative Agenda. Our Legislative Agenda covers 
the entire warfighting cycle--before, during and after deployment--and 
outlines practical solutions to the most pressing problems facing Iraq 
and Afghanistan veterans. Our Legislative Agenda is available at IAVA's 
website, www.iava.org.
    The cornerstone of our 2008 Legislation Agenda is a new GI Bill. 
After World War II, nearly eight million servicemembers took advantage 
of GI Bill education benefits. A veteran of WWII was entitled to free 
tuition, books and a living stipend that completely covered the cost of 
education.
    Today we have the opportunity to renew our social contract with our 
servicemen and women, and help rebuild our military. IAVA supports 
reinstating a World War II-style GI Bill that will cover the true cost 
of education and will fairly reward all combat veterans of Iraq and 
Afghanistan. We have endorsed S. 22.
    Critics have said the GI Bill is too expensive. The fact is: a new 
GI Bill is a bargain. The current GI Bill cost the Veterans' Affairs 
Department $1.6 billion in 2004. Even if a World War II-style GI Bill 
were to double that cost, it would be about what we spend in a week in 
the War on Terror. And the GI Bill is more than a veterans' benefit. It 
is also an effective tool to stimulate the economy and to improve 
military readiness.
    The GI Bill helped rebuild this country's economy after World War 
II. A 1988 Congressional study proved that every dollar spent on 
educational benefits under the original GI Bill added seven dollars to 
the national economy in terms of productivity, consumer spending and 
tax revenue.
    Many of our Nation's leaders got their start thanks to the GI Bill, 
including Presidents Gerald Ford, George H.W. Bush, and Senators Bob 
Dole, George McGovern, and Pat Moynihan. The GI Bill also educated 14 
Nobel Prize winners and two dozen Pulitzer Prize winners, including 
authors Joseph Heller, Norman Mailer, and Frank McCourt.
    Veterans of Iraq and Afghanistan, however, receive only a fraction 
of the support offered to the Greatest Generation. For many, including 
my good friend Sgt. Todd Bowers, the burden of student loans and 
mounting debt can simply become too great.
    When Sgt. Bowers was activated for his second deployment to Iraq, 
he was forced to withdraw from his classes at George Washington 
University, racking up an extra semester's debt without receiving 
credit for his coursework. While he was deployed to Iraq, Bowers was 
wounded when a sniper's round penetrated his rifle scope and sent 
fragments into the left side of his face. He was awarded the Purple 
Heart and Navy Commendation medal with ``V'' device for Valor. But when 
Bowers returned home, he was not greeted as a hero by his university 
and credit lenders. His student loans had been sent to collection, and 
his credit rating was ruined. Struggling to keep up with payments, 
Bowers was eventually forced to leave school.
    The GI Bill is also an important recruitment tool. For years, the 
military has been lowering recruitment standards and increasing 
bonuses. We now spend more than $4 billion annually on recruitment, but 
we're still struggling to meet recruiting goals. The GI Bill is the 
military's single most effective recruitment tool; the number 1 reason 
civilians join the military is to get money for college. A new GI Bill, 
one that put college within reach of a new generation of veterans, 
would be a tremendous boon to recruitment and would help rebuild our 
military after years of war.
    Above all, a World War II-style GI Bill would thank this generation 
of combat veterans for their service and their sacrifice. As President 
Roosevelt said in his signing statement to the original GI Bill: ``[The 
GI Bill] gives emphatic notice to the men and women in our Armed Forces 
that the American people do not intend to let them down.''
    For all of these reasons, IAVA is calling for a new GI Bill to be 
funded in this year's budget.
    Thank you for your time.
            Respectfully Submitted,
                                            Paul Rieckhoff,
                                                Executive Director.
                                 ______
                                 
                       Idaho Division of Veterans Services,
                                      Boise, ID, February 11, 2008.
Hon. Larry E. Craig,
U.S. Senate, Washington, DC.
    Dear Senator Craig: In the 109th Congress, on June 6, 2006, you 
introduced Senate Bill 3421, which would amend title 38, United States 
Code to improve the following veterans' benefits:

        To amend title 38, United States Code, to repeal certain 
        limitations on attorney representation of claimants for 
        benefits under laws administered by the Secretary of Veterans 
        Affairs, to expand eligibility for the Survivors' and 
        Dependents' Educational Assistance Program, to otherwise 
        improve veterans' benefits, memorial affairs, and health care 
        programs, to enhance information security programs of the 
        Department of Veterans Affairs, and for other purposes.

    Under the provisions of section 1745 of Senate Bill 3421, the 
following benefits are stated:

        `Sec. 1745. Nursing home care and medications for veterans with 
        service-connected disabilities
        `(a)(1) The Secretary shall pay each State home for nursing 
        home care at the rate determined under paragraph (2), in any 
        case in which such care is provided to any veteran as follows:
        `(A) Any veteran in need of such care for a service-connected 
        disability.
        `(B) Any veteran who--
        `(i) has a service-connected disability rated at 70 percent or 
        more; and
        `(ii) is in need of such care.
        `(2) The rate determined under this paragraph with respect to a 
        State home is the lesser of--
        `(A) the applicable or prevailing rate payable in the 
        geographic area in which the State home is located, as 
        determined by the Secretary, for nursing home care furnished in 
        a non-Department nursing home (as that term is defined in 
        section 1720(e)(2) of this title); or
        `(B) a rate not to exceed the daily cost of care, as determined 
        by the Secretary, following a report to the Secretary by the 
        director of the State home.
        `(3) Payment by the Secretary under paragraph (1) to a State 
        home for nursing home care provided to a veteran described in 
        that paragraph constitutes payment in full to the State home 
        for such care furnished to that veteran.'.
        (2) PROVISION OF PRESCRIPTION MEDICINES--Such section, as so 
        added, is further amended by adding at the end the following 
        new subsection:
        `(b) The Secretary shall furnish such drugs and medicines as 
        may be ordered on prescription of a duly licensed physician as 
        specific therapy in the treatment of illness or injury to any 
        veteran as follows:
        `(1) Any veteran who--
        `(A) is not being provided nursing home care for which payment 
        is payable under subsection (a); and
        `(B) is in need of such drugs and medicines for a service-
        connected disability.
        `(2) Any veteran who--
        `(A) has a service-connected disability rated at 50 percent or 
        more;
        `(B) is not being provided nursing home care for which payment 
        is payable under subsection (a); and
        `(C) is in need of such drugs and medicines.'.
        (3) CONFORMING AMENDMENTS--
        (A) CRITERIA FOR PAYMENT--Section 1741(a)(1) is amended by 
        striking `The' and inserting `Except as provided in section 
        1745 of this title, the'.
        (B) ELIGIBILITY FOR NURSING HOME CARE--Section 1710(a)(4) is 
        amended--
        (i) by striking `and' before `the requirement in section 1710B 
        of this title'; and
        (ii) by inserting `, and the requirement in section 1745 of 
        this title to provide nursing home care and prescription 
        medicines to veterans with service-connected disabilities in 
        State homes' after `a program of extended care services'.
        (4) CLERICAL AMENDMENT--The table of sections at the beginning 
        of chapter 17 is amended by inserting after the item relating 
        to section 1744 the following new item:
        `1745. Nursing home care and medications for veterans with 
        service-connected disabilities.'.
        (5) EFFECTIVE DATE_The amendments made by this subsection shall 
        take effect 90 days after the date of the enactment of this 
        Act.
        (b) Identification of Veterans in State Homes--Such chapter is 
        further amended--
        (1) in section 1745, as added by subsection (a)(1) of this 
        section, by adding at the end the following new subsection:
        `(c) Any State home that requests payment or reimbursement for 
        services provided to a veteran under this section shall provide 
        to the Secretary such information as the Secretary considers 
        necessary to identify each individual veteran eligible for 
        payment under such section.'; and
        (2) in section 1741, by adding at the end the following new 
        subsection:
        `(f) Any State home that requests payment or reimbursement for 
        services provided to a veteran under this section shall provide 
        to the Secretary such information as the Secretary considers 
        necessary to identify each individual veteran eligible for 
        payment under such section.'

    On December 9, 2006, the President of the United States signed 
Public Law 109-461, which enacted your legislation. As of today, 
February 11, 2008, fifteen months after enactment, the Idaho State 
Veterans Homes can not received reimbursement from the Department of 
Veterans Affairs for these veterans because they have not implemented 
the law. We have several veteran residents who face making the 
difficult decision to leave their Veterans Home and enter into a 
private facility where the Department of Veterans Affairs can reimburse 
private long-term care facilities and not State Veterans Homes. It is 
an injustice to our veterans that wish to remain residents of a State 
Veterans Home and cannot because this law has not been implemented.
    We request your assistance in encouraging the Department of 
Veterans Affairs to put in place Public Law 109-461. We also request 
that reimbursements be retroactive to March 9, 2007, since the 
implementation of Public Law 109-461 was to be in effect 90 days after 
enactment.
    I want to thank you for all you have done for the veterans of this 
country and especially Idaho. Without someone fighting for our rights 
in Washington, DC, we would not have the benefits we enjoy today.
            Respectfully,
                                         David E. Brasuell,
                                                     Administrator.
                                 ______
                                 
                                       Boise, ID, February 8, 2008.
Senator Larry E. Craig,
Senator Mike Crapo,
Representative Bill Sali,
Representative Mike Simpson,
The Idaho Congressional Delegation
    My father, Francis J. Hess Sr. is a veteran of WWII and an ex-POW. 
He is 90 years old and residing at the Idaho State Veterans Home in 
Boise. He has a 100 percent service-connected disability.
    When discussing admission with the Idaho State Veterans Home over a 
month ago they assured me that they were in negotiations with the 
Department of Veterans Affairs to be one of the contractors in the 
Boise area that would provide nursing home care to veterans with a 70-
100 percent service-connected disability and likely those negotiations 
would be complete by March 2008.
    A bomb was dropped on my father, myself and my entire family today 
when we were informed by the Veterans Home that the Secretary of 
Veterans Affairs, Dr. Peake, has decided to halt negotiations until 
next year. This will cost my family and all the other families affected 
approximately $4300 per month. Our personal situation is even more 
precarious because our stepmother is suffering from cancer and has huge 
costs associated with that.
    What was to be a blessing for our entire family has turned into a 
nightmare. How could I possibly move my 90-year-old father to another 
facility when he has been experiencing the best care available at the 
Idaho State Veterans Home? Why would Dr. Peake stop negotiations with 
the finest nursing home for veterans in the State of Idaho?
    My entire family is praying that you will be able to prevail upon 
Dr. Peake to complete the negotiations now with the Idaho State 
Veterans Home.
    Please help and thank you for all that you do for Idaho.
            Respectively,
                                        Francis J. Hess Jr.

                                  
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