```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

 
 OVERSIGHT HEARING ON FISCAL YEAR 2013 BUDGET OF THE VETERANS BENEFIT 
 ADMINISTRATION, NATIONAL CEMETERY ADMINISTRATION, AND RELATED AGENCIES

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON DISABILITY ASSISTANCE
                          AND MEMORIAL AFFAIRS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                      THURSDAY, FEBRUARY 16, 2012

                               __________

                           Serial No. 112-44

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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73-289                    WASHINGTON : 2013
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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

CLIFF STEARNS, Florida               BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado               CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida            SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana          LINDA T. SANCHEZ, California
BILL FLORES, Texas                   BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
JEFF DENHAM, California              JOE DONNELLY, Indiana
JON RUNYAN, New Jersey               TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan               JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York          RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
MARK E. AMODEI, Nevada
ROBERT L. TURNER, New York

            Helen W. Tolar, Staff Director and Chief Counsel

                                 ______

       SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

                    JON RUNYAN, New Jersey, Chairman

DOUG LAMBORN, Colorado               JERRY McNERNEY, California, 
ANN MARIE BUERKLE, New York          Ranking
MARLIN A. STUTZMAN, Indiana          JOHN BARROW, Georgia
ROBERT L. TURNER, New York           MICHAEL H. MICHAUD, Maine
                                     TIMOTHY J. WALZ, Minnesota

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                           February 16, 2012

                                                                   Page

Oversight Hearing On Fiscal Year 2013 Budget Of The Veterans 
  Benefit Administration, National Cemetery Administration, And 
  Related Agencies...............................................     1

                           OPENING STATEMENTS

Chairman Jon Runyan..............................................     1
    Prepared Statement of Chairman Runyan........................    34
Hon. Jerry McNerney, Ranking Democratic Member...................     3
    Prepared Statement of Hon. Jerry McNerney....................    35

                               WITNESSES

Ms. Diana Rubens, Deputy Under Secretary for Field Operations, 
  Veterans Benefits Administration, U.S. Department of Veterans 
  Affairs........................................................     4
    Prepared Statement of Ms. Rubens.............................    36
    Accompanied by:

      Mr. Jamie Manker, Chief Financial Officer, Veterans 
          Benefits Administration, U.S. Department of Veterans 
          Affairs
Hon. Steven Muro, Under Secretary for Memorial Affairs, National 
  Cemetery Administration, U.S. Department of Veterans Affairs...     6
    Prepared Statement of Hon. Muro..............................    42
    Accompanied by:

      Mr. Ron Walters, Acting Principal Deputy Under Secretary 
          for Memorial Affairs, Deputy Under Secretary for 
          Finance and Planning, National Cemetery Administration, 
          U.S. Department of Veterans Affairs
Hon. Max Cleland, Secretary, American Battle Monuments Commission    16
    Prepared Statement of Hon. Cleland...........................    45
    Executive Summary of Hon. Cleland............................    48
Hon. Bruce E. Kasold, Chief Judge, United States Court of Appeals 
  for Veterans Claims............................................    22
    Prepared Statement of Hon. Kasold............................    49
    Executive Summary of Hon. Kasold.............................    52
Jeffrey Hall, Assistant National Legislative Director, Disabled 
  American Veterans..............................................    27
    Prepared Statement of Mr. Hall...............................    52
    Executive Summary of Mr. Hall................................    59
Diane Zumatto, National Legislative Director, AMVETS.............    29
    Prepared Statement of Ms. Zumatto............................    60
    Executive Summary of Ms. Zumatto.............................    62

                        QUESTIONS FOR THE RECORD

Letter and Post-Hearing Questions From: Hon. Jerry McNerney, 
  Ranking Democratic Member, Subcommittee on Disability 
  Assistance and Memorial Affairs - To: Ms. Diana Rubens, Deputy 
  Under Secretary for Field Operations, Veterans Benefits 
  Administration, U.S. Department of Veterans Affairs............    63
Post-Hearing Questions From: Hon. Michael H. Michaud, Member, 
  Subcommittee on Disability Assistance and Memorial Affairs - 
  To: Ms. Diana Rubens, Deputy Under Secretary for Field 
  Operations, Veterans Benefits Administration, U.S. Department 
  of Veterans Affairs............................................    65
Post-Hearing Response From: Ms. Diana Rubens, Deputy Under 
  Secretary for Field Operations, Veterans Benefits 
  Administration, U.S. Department of Veterans Affairs To: Hon. 
  Jerry McNerney, Ranking Democratic Member, Subcommittee on 
  Disability Assistance and Memorial Affairs and Hon. Michael H. 
  Michaud, Member, Subcommittee on Disability Assistance and 
  Memorial Affairs...............................................    65

 OVERSIGHT HEARING ON FISCAL YEAR 2013 BUDGET OF THE VETERANS BENEFIT 
 ADMINISTRATION, NATIONAL CEMETERY ADMINISTRATION, AND RELATED AGENCIES

                              ----------                              

                      Thursday, February 16, 2012

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Disability Assistance
                                      and Memorial Affairs,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:07 a.m., in 
Room 334, Cannon House Office Building, Hon. Jon Runyan, 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Runyan, Lamborn, Buerkle, 
Stutzman, Turner, McNerney, Barrow, Michaud, and Walz.

            OPENING STATEMENT OF CHAIRMAN JON RUNYAN

    Mr. Runyan. Good morning, everyone and I want to welcome 
everyone to this hearing on the budget for fiscal year 2013 as 
it pertains to the Veterans Benefit Administration, National 
Cemetery Administration, the U.S. Court of Appeals for Veterans 
Claims, and American Battle Monuments Commission.
    Last year this Subcommittee held its first hearing of the 
112th Congress and I made my intentions and hopes clear that as 
Chairman of this Subcommittee, my priority would be a laser 
focus on tackling the size of the backlog of claims for 
disability benefits.
    Over the past year, the VA has demonstrated their desire 
and commitment to be partners in bringing the VA into the 21st 
Century, as reflected in the 2013 budget. I support the VA's 
goal of completing 1.4 million disability compensation and 
pension claims, marking an increase of 36 percent over 2011.
    I can assure the administration that this Subcommittee will 
vigorously pursue the necessary oversight to ensure this goal 
becomes a reality for all of our Nation's veterans.
    In these uncertain and turbulent economic times, it is the 
duty of all of us here and those that we represent to ensure 
that benefits earned by our Nation's heroes are administered as 
efficiently and timely as possible.
    Justice delayed is justice denied and benefits delayed are 
benefits denied. To this end, I note the forthcoming role out 
of the VBMS program, which I believe signifies a turning point 
for the claims backlog. In addition to the VBMS program, the VA 
has also recently launched several pilot programs, and 
consolidated its pension and fiduciary programs.
    However, technology alone will not solve the issues 
pertaining to the backlog. It is our solemn responsibility to 
remain vigilant. We will continue to oversee these programs to 
ensure that they are operating efficiently, while also serving 
the needs of our Nation's veterans.
    Although VA continues to emphasize its initiatives in the 
area of people, progress, and technology, it is important that 
VA follow through on these programs while not forgetting its 
primary goal of providing timely, quality benefits to our 
veterans.
    A second major area I'd like to discuss involves the final 
resting grounds of our Nation's veterans. The National Cemetery 
Administration provides the invaluable role of serving veterans 
and their families during this burial process and maintaining 
our national shrines and cemeteries.
    However, like every human institution, mistakes and 
oversights are made from time to time. In November, the NCA 
self-reported to this Committee of misalignment of a row of 
head stones at the Fort Sam Houston National Cemetery. Families 
of those affected were notified and a nationwide audit began.
    Initial reports from the audit, which are still ongoing, 
have identified similar issues of at least five other national 
cemeteries in just the first phase of the audit. These errors 
appear to have a common origin that they all occurred during 
raise and realignments projects performed by outside 
contractors.
    The reason this is relevant to a budget hearing is because 
in most of these cases, the contractors' work was approved and 
payment made without adequate oversight of review to ensure the 
quality and accuracy of the work done. Because of an omission 
of fiscal oversight, the work has to be done right the second 
time, and a nationwide audit at great expense.
    Statistically, less than 60 percent of discrepancies 
reported after auditing almost 1.5 million grave sites computes 
to a tiny fraction of one percent. The NCA, however, is not in 
the business of percentages and statistics. They're in the 
business of providing the final resting place of honor and 
dignity for our national heroes.
    While I commend the NCA's initiative and quick response in 
identifying and addressing the situation, I must reiterate my 
resolve that no mistake going forward will be acceptable. We 
owe it to our veterans and their families to get it right the 
first time, every time. Anything less, regardless of the 
statistics, is unacceptable.
    Toward this end, I want to ensure that America's most 
valuable memorials to its honored dead have the necessary 
amount of resources and institutional oversight going forward 
to prevent such problems from occurring. While we must do so 
mindful of the budget deficit crisis we have at hand, we must 
continue to ensure that the sacred grounds are well prepared 
for current and future generations of veterans and their 
families.
    Finally, it is my hope that the NCA continues to move 
closer to near universal veteran access to burial options 
around this Nation.
    This hearing will also take a look at the budgets of the 
Court of Appeals for veterans claims and the American Battle 
Monuments Commission. While I do not anticipate many 
controversial issues within these budgets, I would like to 
express my hope that they too reflect the trying times we face, 
and will strive for increased efficiency over waste and better 
performance over tradition solely for tradition's sake.
    And I appreciate everyone's attendance at this hearing and 
I will now call on the Ranking Member, Mr. McNerney, for any 
opening comment.

    [The prepared statement of Chairman Jon Runyan appears in 
the Appendix]

           OPENING STATEMENT OF HON. JERRY MCNERNEY, 
                   RANKING DEMOCRATIC MEMBER

    Mr. McNerney. Should I try the mic? Good morning. It's 
still pretty loud. Is that acceptable?
    Well, good morning and welcome to our hearing this morning. 
Thank you all for extending both panels and the witnesses. I 
want to thank the Chairman for holding this hearing today. The 
goal to these hearings is to examine the various fiscal--it's 
kind of echoing in here--to examine the various fiscal year 
2013 budget requests of the agencies over which the Disability 
Assistance and Memorial Affairs Subcommittee has jurisdiction 
of those organizations who were identified by the Chairman.
    But they also receive many major benefit services and 
protections for our Nation's veterans, their families and 
survivors, raising from pension compensation and burial 
benefits to ensuring appellate rights to maintaining our 
national shrine requirements both here and abroad.
    I look forward to hearing how these benefits and services 
will be administered with the optimum level of efficiency and 
effectiveness within the new budget request. Today's hearing is 
an important one. As all of you know, Congress is working hard 
to balance our budget and reduce the deficit, while at the same 
time provide earned and needed benefits to our veterans and 
their families.
    The overall fiscal 2013 VA budget requested is $143 
million, of the totals, department budget requests, 76.3 
million or 54.4 percent is designated for mandatory funding to 
pay for and administer benefits to veterans, their families, 
and survivors.
    So this Subcommittee has the largest stack of the VA pie. 
This represents a 16.2 increase in the 2012 level of $70.6 
billion. This shows the administration is committed to 
supporting our troops and our veterans. It's not just a slogan.
    Like many of the DSOs and other stakeholders who represent 
our veterans, one of my top priorities is to continue to 
address the glacial nature of the claims processes and 
suspended challenges of accuracy and accountabilities. It's a 
disgrace that we have such a large claims backlog, and it's an 
insult to the veterans who have served our Nation. And we're 
going to continue to work with the VA to make sure that we 
reduce that backlog. There's no valid reason why we are still 
processing claims with 20th Century technology and paradigms. 
And I really mean early 20th Century technology.
    I agree with Secretary Shinseki, that we need to get our 
claims processing under control to deliver these benefits in 
the 21st Century in a better and focused manner. Getting the 
claims right the first time and don't sacrifice quality for 
quantity.
    The VA reports that it's making progress on this front, and 
the budget seems to support that commitment, particularly on 
the IT front. However, I don't want to confuse activities on 
the one hand with progress on the other. Further, I don't want 
the VA to place the problems of new technology at the top of a 
flawed system, because that will just make--that will just 
result in inaccuracies being rendered more quickly. 
Comprehensive reform is what we need here.
    Finally, I also want to know more about the budgetary 
implications of the contacts with the ACS Incorporated to 
develop hundreds of thousands of pending claims. With that, I 
look forward to hearing from all the witnesses today. And I 
particularly want to thank the VSO members of the independent 
budget for your diligence, commitment in helping to ensure that 
the VA's budget is sufficient to meet the needs of our 
veterans. I welcome the opportunity to work closely with all of 
you, and with all of my colleagues, to make sure that the needs 
of our veterans, those returning from Iraq and Afghanistan and 
those that are in previous conflicts are met. Thank you, Mr. 
Chairman, I yield back.

    [The prepared statement of Hon. Jerry McNerney appears in 
the Appendix]

    Mr. Runyan. We're going to try and get these mics working. 
One, two, three, four. Is that good? Thank you.
    At this time, I'd like to welcome the first panel to the 
table. First, we have Ms. Diana Rubens, the Deputy Under 
Secretary for Field Operations for the Veterans Benefits 
Administration. She is also accompanied by Mr. Jamie Manker, 
the CFO of the Veterans Benefits Administration.
    And next, we welcome the Honorable Steve Muro, the Under 
Secretary for Memorial Affairs of the National Cemetery 
Administration. And he is accompanied by Mr. Ronald Walters, 
the Acting Principal Deputy Under Secretary for Finance and 
Planning in the National Cemetery Administration.
    All of your complete written statements will be entered 
into the hearing record, and with that, Ms. Rubens, we will 
start with you for your oral testimony.

  STATEMENT OF DIANE RUBENS, DEPUTY UNDER SECRETARY FOR FIELD 
     OPERATIONS FOR THE VETERANS BENEFITS ADMINISTRATION, 
     ACCOMPANIED BY JAMIE MANKER, CFO OF VETERANS BENEFITS 
  ADMINISTRATION; HONORABLE STEVEN MURO, UNDER SECRETARY FOR 
   MEMORIAL AFFAIRS OF THE NATIONAL CEMETERY ADMINISTRATION, 
  ACCOMPANIED BY RONALD WALTER, ACTING PRINCIPAL DEPUTY UNDER 
  SECRETARY FOR FINANCE AND PLANNING IN THE NATIONAL CEMETERY 
                         ADMINISTRATION

                   STATEMENT OF DIANE RUBENS

    Ms. Rubens. Chairman Runyan, Ranking Member McNerney, 
Members of the Subcommittee, thank you for the opportunity to 
discuss the fiscal year budget for the Veterans Benefits 
Administration. As you mentioned, Chairman Runyan, I'm 
accompanied by Jamie Manker, our Chief Financial Officer.
    Under the leadership of Secretary Shinseki, we're working 
to transform VA into a 21st Century organization, that is 
people centric, results driven and forward looking. We've 
disciplined ourselves to understand that successful execution 
of our vital mission requires that we continually improve our 
stewardship of the resources entrusted to us by Congress.
    Accountability and efficiency are practices consistent with 
our philosophy of leadership and management. Approximately 97 
percent of the nearly 77 billion in appropriated funds 
requested for VBA are for direct payments to veterans, their 
dependents, and their survivors. The remaining three percent is 
dedicated to administering VBA's benefits programs.
    VBA's budget request also directly supports VA's three key 
priorities: Improving access to benefits and services, 
eliminating the claims backlog and improving decision accuracy 
to 98 percent, and ending veteran homelessness in 2015.
    The disability claims workload from the newest generation 
of returning war veterans, as well as from veterans of earlier 
periods, continues to increase. The growth of disability claims 
volume is driven by a number of factors, including our 
successful outreach efforts, increased demand as a result of 
ten years at war, and improved access to benefits through joint 
VA and DoD pre-discharge programs.
    Other major factors include the Agent Orange presumptive 
disabilities, the aging of our veteran population, new 
regulations for processing certain claims related to Gulf War 
service, traumatic brain injuries, Post-Traumatic Stress 
Disorder, and the impact of a difficult economy.
    The complexity of that workload also continues to rapidly 
increase as veterans claim greater numbers of disabilities, and 
the nature of those disabilities become increasingly complex.
    Last year, the number of disabilities claimed by veterans 
who had served in Iraq and Afghanistan averaged 8.5 issues per 
claim, a dramatic difference when we look at veterans of 
earlier eras. Wherein, in World War II, we saw veterans claim 
an average of 2\1/2\ disabilities, and even the more recent 
Gulf War conflict veterans who claimed 4.3 disabilities per 
claim.
    I would tell you that even with this unprecedented workload 
increase, VBA has achieved a 15 percent increase in output over 
the last four years, completing over one million disability 
claims in each of the past two years.
    VBA recognizes that it must do all it can to simplify and 
expedite the claims process for our veterans and beneficiaries. 
We're committed to and are actively pursuing comprehensive 
improvements to the process, to the systems used to access and 
for our employees to deliver those benefits and services. We 
know we must do better, and that's why we're undergoing this 
large scale transformation.
    In 2013, general operating expense budget request of $2.2 
billion is vital to that transformation strategy that will 
drive our performance improvements. VBA does plan to process a 
record 1.4 million compensation claims in 2013, and we're 
pursuing transformational changes that will enable us to meet 
those emerging needs of veterans and their families.
    This transformation plan is a series of tightly integrated 
people, process and technology initiatives. The people focused 
initiatives recognize that our employees are the key to the 
success, that we're strengthening the expertise of our 
workforce by changing the way we are organized and trained to 
do the work.
    A new standardized operating model is being implemented in 
all regional offices, beginning this year, that incorporates a 
case management approach to claims processing. Additionally, 
process improvement initiatives have been pursued through a 
design team concept to support the transformation of business 
processes.
    Using design teams, VBA is conducting rapid development and 
testing of process changes, automated processing tools, and 
innovating incentives in the workplace to ensure that the 
changes will be actionable and effective before they're 
implemented nationally.
    Some initial process improvements include quality review 
teams, a simplified rating and notification process, rules 
based calculators, and disability benefits questionnaires.
    We're also pursuing technology initiatives, key to our 
transformation, ending the reliance on the out-moded paper 
intensive process, that often thwart timely and accurate claims 
processing. VBA will deploy technology solutions that improve 
access, drive automation, reduce variance and enable faster and 
more efficient operations.
    Our transformation plan includes the following major 
technology initiatives: The Veterans Relationship Management 
initiative, our eBenefits Portal, and the Veterans Benefits 
Management System.
    We appreciate the opportunity to provide additional 
information on the budget request, and to share with you the 
progress we are making in transforming the delivery of benefits 
and services for our veterans, their families, and survivors. 
We recognize there's still a tremendous amount of work to be 
done. I assure you of our commitment to achieving fundamental 
and dramatic improvements that will expedite the delivery of 
benefits; improve quality; and ensure we're providing timely, 
accurate, and comprehensive information and assistance to all 
those we serve.
    I'm happy to respond to any questions you or Members of the 
Subcommittee might have.

    [The prepared statement of Diana Rubens appears in the 
Appendix]

    Mr. Runyan. Thank you, Ms. Rubens, and with that, we'll 
recognize the Under Secretary, Mr. Muro for his oral testimony.

                    STATEMENT OF STEVE MURO

    Mr. Muro. Thank you, Chairman Runyan, Ranking Member 
McNerney, and Members of the Subcommittee. Thank you for asking 
me to provide an overview of the fiscal year 2013 budget for 
the National Cemetery Administration.
    A hundred and fifty years ago this July, Congress 
authorized President Abraham Lincoln to purchase grounds for 
the use of national cemeteries. From that day to this, we, and 
all the cemeterians who preceded us have considered ourselves 
the keepers of a sacred trust. Our mission of honoring veterans 
and their families with a final resting place and national 
shrines has not changed significantly since President Lincoln's 
time, but the technology, and the expectation of operations of 
national cemeteries certainly have.
    Currently, we are conducting a self-initiated audit of the 
entire inventory of 3.1 million grave sites. Phase I of the 
examination of 1.4 million grave sites is underway in sections 
where raise and realign projects were completed by contractors. 
As a result, we have reset or replaced 119 headstones and 
markers, and relocated eight remains. We acknowledged this 
problem immediately, we reached out to the affected families, 
and we corrected the errors.
    We then set forth Phase II of the audit, to examine 1.7 
million of the rest of the grave sites. We expect to complete 
this review in 2012, and we will share our findings with you.
    I will make no excuses for these mistakes, but I would like 
to tell you about the procedures we have and are putting in 
place to minimize these types of errors.
    First, we have implemented stricter accountability 
procedures for remains introduced this last spring. Secondly, 
we are requiring the contractors to keep the headstones and 
markers at the grave sites during renovation. And third, we are 
hiring contracting officer representatives at each of our five 
memorial service network offices to provide additional 
oversight.
    I want to again express our regret over these errors, and I 
emphasize our continuous commitment to providing excellent 
service to the veterans and their families. And that brings me 
to the budget for FY13.
    The President's budget request of 372 million for NCA's 
discretionary programs, allows us to meet an increasing demand 
for benefits and services while maintaining outstanding 
customer service.
    Of this amount 258 million is included for operation and 
maintenance. This includes nearly 32.9 million for projects to 
raise, realign, and clean headstones and markers, and repair 
sunken graves. 9.6 million is requested for major construction 
and 58 million for minor construction.
    The requested budget moves us down the path towards our 
2015 target of providing nearly 95 percent of the veterans with 
a burial option in a national, state, or tribal veteran's 
cemetery within 75 miles of their home. The budget continues 
our initiative to build columbarium-only satellite cemeteries 
in five urban locations. We are requesting funding for the New 
York City area in FY13.
    The budget provides for a new rural burial initiative, that 
will provide 132,000 currently unserved veterans in eight 
states with a convenient burial option. These National 
Veteran's Burial Grounds will be in public or private 
cemeteries, but owned and managed by the National Cemetery 
Administration. The budget request also includes 46 million for 
the Veterans Cemetery Grants Program to construct and improve 
state and tribal cemeteries.
    In support of the goal to end veteran's homelessness, NCA 
will provide employment opportunities through a new paid 
apprenticeship program for our homeless veterans. We also 
remain committed to hiring veterans returning from Iraq and 
Afghanistan.
    Since 2009, we have hired 257 veterans from these 
conflicts. Today, 73.5 percent of NCA employees and 80 percent 
of my cemetery directors are veterans. NCA's budget request for 
2013 will help end homeless veterans, and increase veteran's 
access to benefits they have earned. Your continued support 
will enable us to build on recent improvements, and the 
appearance and operation of our national cemeteries, and to 
serve our veterans as well as they have served us. Thank you 
and I'm ready for any questions.

    [The prepared statement of Steve Muro appears in the 
Appendix]

    Mr. Runyan. Thank you very much and we'll begin the 
questioning round.
    Mr. Muro, since 2001, with the raise and realignment and in 
the contracts and/or they were paid for by ACE NCA, how many of 
those were contracted and/or paid for, and how many of them 
have been completed since `01?
    Mr. Muro. We have about 90 cemeteries that had raise and 
realign projects, and of those 90, I would say about 40 percent 
of them have a completed project, and we've audited those and 
are double-checking the audit to make sure we're accurate with 
what we did.
    We have ongoing projects right now that we are managing and 
reviewing, and we're actually revising some of the procedures 
to ensure that they don't take the headstones off the grave.
    Mr. Runyan. That was my next question, to make sure you 
were implementing lessons learned----
    Mr. Muro. Yes.
    Mr. Runyan. --in that manner.
    Ms. Rubens, other than encouraging our VSOs to reach out to 
our veterans by making some of its own initiatives to encourage 
veterans enroll in eBenefits, what has the VA done to help 
bolster that sign-up?
    Ms. Rubens. Chairman Runyan, we've actually taken a number 
of initiatives to pursue access to eBenefits. Obviously we're 
very much partnered up with our VSOs. But we have also worked 
with hiring opportunities and job fairs that we've held to 
encourage applicants to sign up for eBenefits.
    As part of our national call center script, when veterans 
call looking for information about their claims, we will also 
encourage them to take advantage of the opportunity that 
eBenefits has, and actually have the ability now to enroll 
callers into our eBenefits system there on the phone. At every 
opportunity where we do outreach efforts, stand-downs, we do 
those same kinds of efforts to ensure that they're signing up 
for eBenefits.
    And, of course, as part of the VOW Act, as we begin to 
implement that, coming through a TAP Program will be mandatory 
for all servicemembers as they're departing from service. 
That's actually the easiest and fastest way for us to enroll 
them. We will be working to encourage them and require them to 
also put that CAC Card in the reader and get them assigned up 
for an eBenefits account right there before they ever get out 
of service.
    Mr. Runyan. Is there a current reach back to the DoD to get 
our current veterans transitioning or is that part of the 
process already?
    Ms. Rubens. That's part of the process, as they're coming 
through and getting any kind of transition briefing, we'll 
encourage them to sign up. We are also using our Servicemembers 
Group Life Insurance sign-up as the opportunity for when 
they're going in and establishing that, to also establish their 
eBenefits account.
    And we're very closely engaged with every bit of outreach, 
DoD and ensuring that we have opportunities to get them access 
to eBenefits.
    Mr. Runyan. I know the Ranking Member commented a little 
bit on continuing to hire people, and making sure that we're 
not repeating the same mistakes that we have in the past. But 
other than the VBMS, how is the VA planning to achieve its goal 
of 1.4 million compensation claims in 2013? Because that's a 
big number you're trying to tackle. I believe we've said we're 
going to actually process more than we take in this year?
    Ms. Rubens. Our goal is to begin to process more than we 
take in, yes, sir. Ranking Member McNerney's points, I think 
were right on and lined up with our transformation plan, in 
terms of, you can't just automate the process we've got. We 
recognize we need to make changes in the process.
    That is why the component around the process, changes are 
so important, looking for things that we can change, ensuring 
that they are, if you will, lined up to take even better 
advantage of technology, but recognizing we can't just automate 
the way we do business today and expect a better outcome.
    Mr. Runyan. Thank you. That's all I have right now for this 
witness. I'll recognize the Ranking Member.
    Mr. McNerney. Thank you, Mr. Chairman. Ms. Rubens, you 
mentioned early in your testimony that there's eight disability 
claims, eight disabilities per claim, whereas in past 
conflicts, there were four in the earlier Gulf War and two in 
World II, what do you mean by eight disabilities per claim? 
What is that? What would an example of that be?
    Ms. Rubens. Certainly. So it may be that at the end of 
World War II when a serviceman or a veteran when they were 
applying got out, they might have applied for two separate 
conditions, a knee condition and a shoulder condition.
    Our discharging Iraq and Afghanistan veterans are now, when 
they apply, coming in and claiming, an average of 8\1/2\ 
conditions. And so it may be that knee and that shoulder, but 
it also might include a TBI and PTSD and an ankle and a back. 
And so there are a lot more individual decisions on each 
veteran's claim, that as we review their records, we're having 
to make in terms of identifying the occurrence in service, 
connecting the occurrence to the current condition and 
providing a disability rating.
    Mr. McNerney. And so you have to make decisions on each 
disability independently basically?
    Ms. Rubens. Yes, sir.
    Mr. McNerney. That's a lot of work. So the independent 
budget recommends that the VA add forty FTEs to the Board of 
Appeals. As you know the BVA has its own backlog which looks 
like 800 days or 880 days, yet the VA's budget flatlines the 
general administration account for the VBA.
    In light of the recent CVAC's Freeman versus Shinseki 
decision, it's going to allow beneficiaries to appeal the VBA's 
appointment of a fiduciary, which is going to add to that 
backlog. So I'm a little concerned about that.
    Are more FTEs needed or how are we going to address this 
critical backlog?
    Ms. Rubens. Sir, I'm going to tell you that as we look at 
the Freeman decision, the first part of that appeal will come 
to the Veterans Benefits Administration to make a decision. I 
will take, for the record, the need of the Board to add any FTE 
because I'm not familiar with what their current staffing needs 
might be.
    We've not yet seen within VBA tremendous influx from that 
Freeman decision, but are watching very closely to ensure we're 
attuned to what we might get from those appeals.
    Mr. McNerney. Well, I'm going to follow-up on this 
fiduciary issue a little bit. I was at the hearing last week, 
and it was just very stark. And I know that there's no 
maleficence, it's just that there's a miscommunication or 
something.
    One of the things that came up was the effectiveness of the 
Western Hub centralization effort, excuse me, and the ethicacy 
of the VA's audit process, it seems that this program gets 
short-shrift at the VA, and the results due to the 
beneficiaries. What is the level of funding of the VA's 
fiduciary program?
    Ms. Rubens. Mr. McNerney, I'm going to defer that to my 
friend, the CFO, Jamie Manker.
    Mr. McNerney. Well, when you're looking that up, what are 
the performance measures of the VA fiduciary program?
    Ms. Rubens. Yes, thank you. I can talk to the performance 
measures for our fiduciary program.
    As our responsibility for oversight for that veteran who 
may be incompetent to handle his or her funds, it is proposed 
by a rating specialist, as a result of the information we 
received from the medical doctors, we will provide them due 
process, and make a final determination that they'll be in need 
of a fiduciary. And then the fiduciary hub in Salt Lake, for 
instance, will get the final decision that the veteran needs to 
have a fiduciary established.
    They have 45 days to do an initial visit and assign and 
appoint an initial fiduciary. When we do that, we will have 
already released the initial payment. If there's a retroactive 
payment due to that veteran, we'll wait until we get a 
fiduciary appointed to ensure those funds are appropriately 
disbursed.
    Excuse me. We also have a process that requires follow-on 
field exams from every one to three years, to ensure that 
fiduciary continues to adequately disburse those funds.
    During that time, we'll also conduct an annual accounting 
of the records to ensure the funds are being appropriately 
disbursed. And so we've got the 45 day mark for an initial 
appointment, and the follow-up field exams within 120 days.
    For the annual----
    Mr. McNerney. These aren't qualitative or quantitative 
performance measures that you're describing? You're describing 
how the system works, and I think that's great, it's a--you 
know, I need to know that as well. But how--is there any way in 
place to judge the quality of the performance of the 
fiduciaries?
    Ms. Rubens. I would tell you that our annual accounting 
reviews is set to look at the quality, if you will, of the 
disbursement that that fiduciary does on behalf of that 
veteran.
    And so if we find discrepancies within the bank accounts 
from the veteran and the expenditures as we have set up for how 
those funds should be disbursed, we will raise that to a higher 
lever review.
    I will also tell you that the accounting reviews that we 
do, looking at how that fiduciary is managing that money, is 
also reviewed by a quality review staff from the Pension and 
Fiduciary Service to ensure as we're doing oversight to the 
fiduciaries, we're looking to make sure that they are applying 
the appropriate rules to ensure those funds are disbursed 
appropriately.
    Mr. McNerney. Okay. Well, what I would recommend is a 
systematic quality review program, so that you can come in here 
and say, well, here's our quality measures next year when you 
give us this presentation.
    Ms. Rubens. Absolutely. And I will tell you that the 
Pension and Fiduciary Service, having been stood up last year, 
is working closely with us out in the field to ensure that 
we've got the best guidance, the best training, and make sure 
that we're focused on the best quality outcomes to protect that 
veteran.
    Mr. Manker. Mr. McNerney, to answer your question, we have 
roughly 673 FTE dedicated to the fiduciary program, as well as 
three million dollars in non-pay activity for that, so the pay 
associated was 673 FTE and then three million additional 
dollars.
    Mr. McNerney. Okay. Well, we need--continue to need to work 
on revising this program.
    Ms. Rubens. And, sir, we'd be happy to come in and talk 
with your staff at any time about the quality review process 
that we've got in place to ensure a good oversight of the 
veterans' funds as well as a review of our process.
    Mr. McNerney. Okay. Thank you.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman. And thank you to you 
all for your work and what you do. And it's obviously very, 
very important for our veterans, as well as for our country.
    But I'd like to talk just a little bit or ask a couple of 
questions about--to Mr. Muro. Is that--that's a bad echo, is 
there a way to--it's still too loud? All right. I'm just going 
to turn the microphone off.
    Mr. Muro, the situation in--at Fort Sam Houston, National 
Cemetery in Texas, you obviously were over it, you ordered the 
audit, and what went with the original raise and realignment 
done there? And who did that project?
    Mr. Muro. Thank you for the question, Congressman. The 
project was started in 2001 or 2002, by a contractor that was 
hired to do the raise and realign work in a flat marker 
section. We had staff that was overseeing the contract, to 
ensure the work was done, and it appears that they missed 47 
stones that were placed one off in that row.
    Mr. Stutzman. So the misalignment of headstones, that was 
discovered in 2001?
    Mr. Muro. No, it was discovered in October of 2011.
    Mr. Stutzman. 2011?
    Mr. Muro. Yes. The new director that arrived at Fort Sam 
Cemetery was auditing the sections with the new maps and 
updating them, and he came across the error and he immediately 
notified us. And then we put a plan in place to notify Congress 
and the family members, and we made the corrections.
    Mr. Stutzman. When was that correction actually taken? And 
has that been completed?
    Mr. Muro. Yes. It was completed, I believe, in October. We 
contacted the family members and we hired a funeral director to 
be present if the family so desired to do the relocation of the 
full remains.
    The remains were actually second interments that were 
completed after the renovation. And all of that has been 
corrected.
    Mr. Stutzman. Thank you. Ms. Rubens, what feedback have you 
received on the use of the disabilities benefits questionnaires 
thus far?
    Ms. Rubens. Thus far, there are largely DBQs being used 
internally by VHA doctors. At this point, we've got a limited 
number of them that have been out and released from the public 
for any length of time.
    Over the last year, we did over 500,000 DBQs within VHA and 
have seen an improvement of five days in terms of the 
timeliness to return exams. VBA and VHA did some joint training 
last Fall to ensure the awareness of the DBQs, the how to use 
them has been out there.
    Largely, I would tell you that they've been received 
favorably, and any kind of, I'll say, constructive criticism, 
we've worked to incorporate into making improvements, not only 
to the paper forms, but as we look to find a way to get them 
into an electronic environment as well.
    Mr. Stutzman. What kind of--how do you encourage veterans 
to--how do they know that the DBQs are available? Do you have a 
doctor, do you have other ways they communicate to them? And 
also, is there an on-line access for them?
    Ms. Rubens. We are. So for the first three DBQs that were 
made available, they were associated with the three new 
presumptive conditions that we did last year as part of the 
Agent Orange addition of ischemic heart disease, Parkinson and 
the Leukemias. They were incorporated into the external facing 
Fast Track System that was out there for any Vietnam era 
veteran that wanted to apply for one of those three 
disabilities, as a result of the exposure to Agent Orange.
    As we move forward, we are looking at how best to 
incorporate those into our electronic environment, which will 
also be available then through eBenefits, and our on-line 
application process as we look forward to the spring to get 
VONAPP Direct Connect established and incorporated to that on-
line accessibility.
    Mr. Stutzman. Are you seeing any interest from veterans 
using eBenefits?
    Ms. Rubens. We are seeing interest in veterans using 
eBenefits. We have over 1.3 million users signed up today. I 
will tell you that we look at not only eBenefits as an access 
channel, but also our telephone structure.
    What we've seen since `09 is an increase in contacts, up 
from over 9 million to up over 14 million, whether it's on-line 
access through eBenefits, whether it's through our telephone 
system. And so we are seeing more contact from veterans.
    Mr. Stutzman. Thank you. I yield back.
    Mr. Runyan. Thank you, Mr. Stutzman. Mr. Barrow?
    Mr. Barrow. I thank the chair. First off, I want to 
apologize to the witnesses and to my colleagues in my tardiness 
this morning, it's because I'm double booked this morning. And 
unlike a United States Senator, I can't be in two places at 
once. I'm still trying to work on tri-location, much less bi-
location.
    Second, I want to acknowledge the presence of our next 
panel of a real American hero, and a hero of mine, and a fine 
public servant, the Secretary of the American Battle Monuments 
Commission, former Senator Max Cleland, a great friend of mine. 
I would be remiss if I didn't--he's a panel all unto himself 
coming up. And with that, Mr. Chairman, what I want to do is 
yield the balance of my time to the Ranking Member of the 
Subcommittee in deference to his rank, and the fact that he's 
been here from the beginning of this hearing.
    Mr. Runyan. Well----
    Mr. McNerney. I thank the gentleman from Georgia, I didn't 
know it was that rank, sir.
    Ms. Rubens, I'd like to explore the claims processing 
initiative involving the ACS, Incorporated, which is a private 
contractor.
    A recent project on government oversight, also known as 
POGO, had a study that issued--that it issued on 9/11--on 9/13/
11 indicating that contractors cost more than Federal 
employees. On average, it says the contractors are paid 1.83 
times as much as Federal employees. And, in fact, the claims 
processing contractors are the most expensive, in this case, 
for claims assistance and examination work at 57,000 compared 
to 75,000 for contractors doing the same job.
    So why is it necessary for us to go to private contractors 
for this sort of work, and could you elaborate on that, please?
    Ms. Rubens. Ranking Member McNerney, I will profess my 
ignorance about the study to which you refer, but I will tell 
you that the ACS contract for us, really is to help us address 
the backlog as VBA is working through several items.
    I would point to the increasing receipts that we are 
continuing to see; the fact that we have this burgeoning 
workload, and quite frankly, the opportunity for us to use a 
short-term help as we move through a transformation to offset 
any training deficit that we see, as we build new skill sets in 
our own employees.
    It's meant to do a rapid development of roughly 300,000 
claims from increased claims for benefits, to initial 
compensation claims, pension claims, as well as dependency 
issues.
    We are also taking advantage of this contract to encourage 
veterans to sign up for eBenefits. We are also using ACS to 
look at our processes to ensure that we're using the most 
efficient process. And so it is around several areas that we 
think that the short-term one year contract will help us as we 
move through transformation to encourage our resources to be as 
effective and efficient as they can, in an effort to most 
timely and accurately serve veterans.
    Mr. McNerney. So it sounds like you're looking at this as a 
temporary situation?
    Ms. Rubens. Yes, sir.
    Mr. McNerney. And you mentioned a number, 300,000 claims, 
so that's sort of your goal, and I'd like to see that number 
remain, that number--or get smaller, not get bigger.
    Ms. Rubens. And that actually is a high water mark, sir, as 
we work with ACS to get that development done in those four 
areas. We are looking for an opportunity to help as we move 
through transformation to see what kinds of technology they 
use, to see what good ideas they might have, and incorporate 
that into the system that we have. This is only a one year shot 
in the arm, if you will.
    Mr. McNerney. And during that time, you're going to be 
training--it's kind of almost like out-sourcing, you're going 
to ask them to train our--your employees, your Federal 
employees; is that right?
    Ms. Rubens. No, sir. They're doing the development for us. 
We provided them some initial training, to help them understand 
our process, and have had one person on the ground with ACS to 
ensure quality reviews are done of the work that they're 
completing. But they are then going to provide those ready-for-
decision claims back to us, and our employees will make those 
decisions using our systems, using our own technology.
    Mr. McNerney. But you're not--you said you're using them as 
an opportunity to look at what technology might be used to 
improve your own processes.
    Ms. Rubens. And use any ideas that they might have 
developed to help improve our VBMS system, and our VRM system 
to ensure that we've got the best tools in the hands of our 
employees.
    Mr. McNerney. So you're training them, and then they're 
going to train our folks as well. Is there any reverse 
training? Are they going to be training our folks at all?
    Ms. Rubens. No, sir. And we train them in our process. They 
largely built their own system. We've got somebody on the 
ground to make sure that the development work, the gathering of 
evidence, if you will, that they're doing in association with 
these claims, meets the quality and the requirements that we 
need then to make a good decision for our veteran.
    Mr. McNerney. Okay. Well, we're going to keep an eye on 
that. That's----
    Ms. Rubens. Yes, sir.
    Mr. McNerney. There's a lot of opportunity there for abuse 
and there's a lot of opportunity for gain as well. So thank 
you, Mr. Chairman.
    Mr. Runyan. Thank you. And I think I have a few more 
questions. So we'll start a second round pertaining to VBMS. Do 
you have an approximate date of the nationwide roll-out coming 
this year, or excuse me, in `13?
    Ms. Rubens. Thank you, Chairman Runyan. We will begin--as 
you know, we've got Phase I that was released in Providence, 
and we've got Phase II that went to Salt Lake last Fall. Phase 
III is scheduled for release in May of this year. We will then 
begin a phased roll-out to the Nation in July, after we finish 
testing, user acceptance testing, make sure it does all that we 
would like it to do.
    Because of the concern about the volume of work that we've 
got, we want to make sure that we don't throw everybody into a 
state of change at once, and so it will be a phased roll-out 
through the end of 2012, and through 2013, as we get it into 
each and every regional office.
    Mr. Runyan. Thank you. And my next question again is for 
the Under Secretary Muro. There's two categories that both 
receive increases in your budget. I'd like you to define what 
they are. You have personal services and other accounts, and 
the rationalization behind them?
    Mr. Muro. The increases in our budget are for increased 
workload. We're increasing FTE, to cover the expected interment 
workload and contract funding for the expansion and maintenance 
of the amount of graves that we're going to maintain.
    We completed 117,000 burials this past year. We expect to 
do 119,000 plus in 2013, so there is a growth in acreage 
maintained, and a growth of graves maintained. With all that 
maintenance, and with all the workload, we're only increasing 
by 4 FTE.
    Mr. Runyan. Well, and talking about workload, obviously the 
audit you're undertaking is a tremendous lift. Where is that 
fitting into your budget? And are we going to have to address 
this again next year as you continue to dig through that 
process?
    Mr. Muro. No, because the workload s picked up by the 
cemetery directors as part of their oversight responsibilities. 
We're requiring the directors to actually go out with their 
foremen with maps, and the ledgers, and walk all the graves. So 
it's not an increased FTE or workload, we're doing the audit 
completely in-house.
    Mr. Runyan. Okay. That's all I have. Mr. McNerney, do you 
have anything else?
    Mr. McNerney. Yes, Mr. Chairman, I have one single 
question.
    Concerning the use of flat-fast track for the Agent Orange 
claims, is this being effective, is it--how much does it cost, 
and do you plan on using it for any other purpose? Ms. Rubens?
    Ms. Rubens. Yes, sir, Ranking Member McNerney, I will have 
to take the costs for the record and come back to you with that 
information.
    Mr. McNerney. Sure.
    Ms. Rubens. We have seen a great deal of our Nehmer Agent 
Orange Veterans utilize that Fast Track System. I will need to 
bring you the specific numbers for the record.
    Mr. McNerney. Are they finding it satisfactory?
    Ms. Rubens. I think that they are. The challenge, of 
course, is it's--when they bring all the things that we need 
and they put it into the electronic system, it'll go much more 
quickly. If they, for instance, still require a medical 
examination, we'll still need to do that for them, to ensure 
that we've got all the relevant information to make the 
decision.
    Mr. McNerney. And do you plan on sort of expanding the use 
of that system if it's successful in the operating----
    Ms. Rubens. The concepts behind the Fast Track System have 
been incorporated in a lot of ways to, I would say not only our 
VBMS system, but our Veterans Relation Management System, as it 
incorporates the VONAPP Direct Connect on-line application 
process, enhancing the ability for a veteran or a servicemember 
as we get ready to roll out that compensation application later 
this spring, that we'll put it into a, I'm going to use, 
TurboTax-like environment that is a question and answer, to 
ease the burden of applying for benefits.
    So that if there are sections of an application, that they 
don't need to complete, it will skip those and walk them 
through only the information that we need.
    Mr. McNerney. Thank you, Mr. Chairman, I yield back.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Barrow, do you 
have anything further?
    Well, with that, on behalf of the Subcommittee, I thank all 
of you for your testimony and we do look forward to working 
with you as we take care of our national heroes, whether 
they're fallen and deceased, or they're currently with us in 
the administration. So I thank you and you're excused.
    I'd like to ask our second panel to come to the table. We 
welcome the Honorable Max Cleland, the Secretary of the 
American Battle Monuments Commission.

                    STATEMENT OF MAX CLELAND

    Mr. Cleland. Thank you, Mr. Chairman.
    Mr. Runyan. Sir, thank you very much for being here, and 
you are recognized for your oral testimony.
    Mr. Cleland. Thank you, Mr. Chairman, and thank you for 
those kind words from the gentleman from Georgia. We thank you 
very much. Thanks.
    I thought I was going to be on a panel with the DAV. I was 
going to say that the DAV gave a half a million dollars to our 
World War II Memorial fund-raising campaign, and I thought the 
AMVETS were going to be here. If they're in the audience, I'd 
just like to recognize them for their national service 
foundation contribution. They give a carillon each year to each 
one of our commemorative cemeteries abroad.
    I would like to also say that--echoing the comments of the 
Ranking Member that I was head of the VA in the 20th Century, 
back when putting claims processing, the GI Bill compensation 
and pension benefits on a computer was a new idea. I'm kind of 
glad hearing the challenges of our VA friends, that I'm not the 
head of the VA now. I'm glad I'm a former head of the VA.
    I'm the Secretary of America's commemorative agency, the 
American Battle Monuments Commission. We commemorate through 
commemorative cemeteries and markers in fourteen different 
Nations, American battles from the Mexican War, the Spanish 
American War, World War I, and World War II, that's basically 
our mission.
    We maintain commemorative cemeteries, 24 of them, and we 
maintain 25 markers throughout the world. We have three markers 
or memorials in the United States. One is the East Coast 
Memorial, marking the names of the missing from World War II in 
the coastal waters of the Atlantic. That's located in Battery 
Park in Manhattan.
    We have a commemorative memorial marking the loss of life 
of the names of the missing, and the names of the missing from 
the Pacific waters, the coastal waters of the United States. 
And we have a memorial at the Punch Bowl Cemetery. The cemetery 
is run by the VA, but we have a memorial there.
    And we have the names of the missing from the Nimitz 
theater of operations from World War II, Korea, and Vietnam. 
Soon we'll be dedicating the battle maps and pavilions for the 
Vietnam War. We will be dedicating this year a marker, a 
memorial, in Pusan, Korea marking the American participation in 
the Korean War, sixty years after the truce. So we are still 
engaged in marking America's battles.
    Our budget has declined about five percent over the last 
couple of years, so we're losing money and people. We're still 
able to do our job of commemoration, but it's getting tighter 
and tighter. So with that, Mr. Chairman, I'd like to open the 
discussion for questions.

    [The prepared statement of Max Cleland appears in the 
Appendix]

    Mr. Runyan. Thank you, and I guess I'll start right there, 
and I know I asked you this question last year, and I commend 
you for your leadership again, because I know you're requesting 
a $2 million cut in your overall FY13 budget. And I commend you 
for that aspect of being fiscally conservative, but at the same 
light, are we--again, I'll ask quick, are we able to maintain 
this in the long term or are we creating a bigger problem down 
the road?
    Mr. Cleland. We're not severely conservative. We can----
    Mr. Runyan. But again, you just said you had budget 
shortfalls.
    Mr. Cleland. We can do our job. But this can't go on 
forever, Mr. Chairman. I told our appropriations Subcommittee 
on the House side last year, that when it came to that point 
where we couldn't do our job, then I would be ranting and 
raving on his desk and on yours about that. Because I can't be 
a participant, and you can't be a participant in something 
where the American Battle Monuments Commission can't do its 
job.
    But there are ways with which we can tighten up and we're 
doing that. I think in terms of, shall we say, deferred 
maintenance, we have a better handle on what we need to do with 
our memorial--commemorative memorial cemeteries and our markers 
than we've ever had, and we're able to deal with that. We have 
controls put in place for major construction projects that only 
I can approve, and we are also very sensitive about not messing 
up what has already been there. We call it our historical 
assets program. Making sure that we don't paper over or screw 
up history.
    So we're all right. We're okay. But this five percent cut 
every two years can't go on forever, because ultimately we 
wouldn't be able to do our work.
    Mr. Runyan. And going down that same line, and you want to 
talk about the foreign currency fluctuations account, obviously 
with the volatility of the dollar against other currencies, are 
we in the same boat on that line also?
    Mr. Cleland. We're okay. We don't know whether the European 
Union is going to disband. We don't know whether the euro is 
going to explode. That's why we have about, I don't know, a 10 
to $15 million foreign currency account with the Department of 
Treasury, so that if a really great weirdness breaks out in 
France, Luxemburg, Belgium, Italy, the Netherlands, and so 
forth, we can handle it. We can adjust it. So we have about 15 
million in the foreign currency account.
    The dollar seems to be okay. It's the euro that's in 
trouble now, so. But we were able to monitor that, and we have 
flexibility to handle that, so I think we're good in terms of 
the foreign currency account. I really don't anticipate any 
problem with that.
    Now, if the euro just goes belly up, all those European 
Nations start their own currency, if we get in trouble, we'll 
be back to you.
    Mr. Runyan. In dealing with modernizing how we do this, 
what kind of resources are you doing, say Web site, mobile 
phone apps to, I guess, educate the people?
    Mr. Cleland. Well, you put your finger on it. One of the 
problems of growing up in the 20th Century is that you're 
pretty much stuck in the 20th Century. So I, myself, have had 
to adjust to the 21st Century, and the incredible technology 
available out there, the worldwide technology, through the 
Internet, Facebook, Twitter and so forth, in which you 
communicate or can communicate with people.
    So we have brought on, in terms of telling our story, what 
I call a Web guru, someone who--a young person who really 
understands that world, and I'm getting educated.
    We have a Facebook page, and as we monitor that Facebook 
page daily, we get our usage going up, more and more people are 
hearing about us. We're also going into interactive videos, 
where right now we have up on our Web site, an interactive 
video about the Normandy Invasion and the taking of the cliffs 
at Pointe du Hoc. But we hope to have over the next few years, 
about forty some odd interactive videos.
    So that if you're sitting somewhere in the world and have 
access to the Internet, you can access our Web site, and learn 
the story of these American battles in forty different 
locations.
    We have the, shall we say, the timeline, or the theme of 
World War I already coming up in the next few months on our Web 
site. And we have the commemoration of World War I, which is 
big in Europe, it may not be big here, but it's big in Europe. 
World War I started a hundred years ago come August 2014. So we 
are heavily engaged with those countries that were heavily 
engaged in that, France, Belgium, and England, with our World 
War I commemorations, and our World War I commemorative 
cemeteries.
    We are more and more putting stuff online, on Facebook, and 
more and more reaching out to people. That is the cutting edge 
of what we're trying to do. So we can--we're doing that, we're 
able to do that, and that's an initiative we're able to 
execute.
    Mr. Runyan. I have one final question, and it seems that at 
some point, there's going to be people pounding on the table 
like yourself saying we need help. I ask that question right 
here, in the anticipation and creation of the United States 
memorial at the UN Cemetery in Korea, what do you anticipate 
coming down the pipeline there as a cost factor?
    Mr. Cleland. Well, it's just about $300,000, we can handle 
that. We've already got the design. We're planning it for a 
dedication some time this summer. We've got that one in our 
budget, we're okay on that.
    Mr. Runyan. Thank you very much.
    Mr. Cleland. It'll be at Pusan, Korea, as a matter of fact, 
sir. And the only UN cemetery that the United Nations has. Out 
of the eleven Nations that fought the Korean War, ten have a 
memorial there. We don't. And we want to correct that, and 
that's what we do, and we will do that this summer, and we can 
handle it within our budget. We've already planned for it.
    Mr. Runyan. Thank you very much. Mr. McNerney?
    Mr. McNerney. Thank you, Mr. Chairman. I want to join my 
colleague in--from Georgia in congratulating the current 
panelist for your service and current service as well. And I'm 
also glad to hear that you're not severely conservative.
    So at our budget hearing last year, you mentioned that the 
American Battle Monuments Commission had an effort to 
standardize its operations across all the cemeteries. Can you 
give us a little update on that effort?
    Mr. Cleland. The gut part of that, sir, is what we call our 
new financial management system. If anybody says to you, we're 
going to put in a new computer plan, run. Don't walk, run. But 
we had to because the other financial management system really 
wasn't a financial management system. It was held together by 
adhesive tape and chewing gum, and it was going to pot real 
fast.
    So we have a brand new financial management system, which 
is standardizing our financial management at every one of our 
locations, whether it's central office here in Arlington or our 
commemorative cemeteries.
    So, you know, garbage in/garbage out. The challenge of this 
new system is that we make sure that people know how to use it, 
so we have to become a little bit more user-friendly with it, 
but that happens with any computer system. Ultimately, however, 
that becomes the backbone by which we manage effectively and 
efficiently, and in terms of accountability, the entire 
worldwide system. So that's the backbone of it.
    I would say another part of it, too, is that we have 
centralized, I have centralized the operations in Paris with 
the implementation of five regional directors, which then 
relate to our twenty-four superintendents, all of which happen 
to be, believe it or not, retired military veterans.
    So we feel that organizationally, we pretty much got a 
handle on it now. And financially, we've got a world class 21st 
Century financial management system now. And as we go through 
the peaks and valleys of bringing both those new systems in, 
we'll get better and better, and we're able to account to you 
and to the country better.
    Mr. McNerney. Thank you. You've mentioned the time spans of 
fifteen to twenty years to get projects completed. What's your 
target timeline to fully complete the renovations to 
accommodate the state-of-the-art interpretive exhibits?
    Mr. Cleland. Our whole focus on that has been adjusted due 
to the access to the Internet which we're now doing. We are 
going to do some interpretive centers, like at Cambridge, 
England, and at Sicily--Rome in Italy. I would say we'll 
complete about five of those over the next four or five years. 
However, in two years, we should have all of our commemorative 
cemeteries up with some interpretive capability.
    For instance, we don't have to build brand new, shall we 
say boxes at a particular cemetery, we can use some of the 
existing buildings. For instance, at Meuse-Argonne, which is 
the biggest cemetery in Europe from World War I, we're using an 
existing building and making sure we provide some interpretive 
capability there. The French like that because they want to 
capitalize on the tourism coming for the World War I 
Centennial.
    But at most other sites, we don't need a big box, we don't 
need even a minor adjustment, we just need to make sure that 
there's some interpretive capability there.
    So I would say, sir, that in the space of two years, all of 
our commemorative cemeteries will have some capability of 
interpreting the battles and why that cemetery is there. And 
within the space of five years, we should have all of our 
boxes, all of our major new interpretive centers up and 
running.
    Mr. McNerney. Thank you. I'm going to yield back.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Walz.
    Mr. Walz. Thank you, Mr. Chairman.
    Mr. Runyan. We've been having that problem all day.
    Mr. Walz. Thank you. It wasn't just me. Well, thank you for 
coming, and as I'm sure my colleagues said, I'll echo those 
sentiments, thank you to your service----
    Mr. Cleland. Thank you.
    Mr. Waltz. --both in uniform and as we've said here, and I 
would like to point out I know we certainly--began the flagship 
of the VA health care system since that multi-trauma center in 
Minneapolis, Minnesota that was built during your time as VA 
Secretary. So as someone who understands legacy, someone who 
understands many years later and several wars later, that that 
facility has continued to serve our veterans. And so I, for 
one, certainly rest assured knowing you're out there protecting 
the sacred grounds for our families and for future generations.
    Mr. Cleland. Thank you, sir.
    Mr. Walz. I also appreciate listening to the Chairman's 
questions, Senator, your candidness about making this work, and 
I think that at least helps us know where the line is at, to 
know that when you tell us you can't sustain this for years, 
because looking at your plan of 15 to 20 year projects, 
whatever, we've got to make sure there's a consistency in that 
funding to allow you to do that.
    Mr. Cleland. Right.
    Mr. Walz. So I for one, I have no questions, other than 
just to say thank you for this, leave it to your expertise and 
I--having you as the guardian certainly makes me sleep well at 
night, so----
    Mr. Cleland. Thank you.
    Mr. Walz. --with that, I yield back.
    Mr. Cleland. Thank you, sir.
    Mr. Runyan. Thank you, Mr. Walz, and I do have one more 
question, and we'll go through the Members again if they do. 
But concerning some of our cemeteries in places like Tunisia 
and Mexico City, what is the state of security for those that 
are interred there, our American veterans that are buried 
there?
    Mr. Cleland. Tunisia. I never thought that I would have to 
give an award for courage to a foreman who kept a cemetery 
going when the tanks and machine guns were right outside the 
gate. And he kept it going, and he kept the employees paid, and 
I've personally given him an award for courage and merit for 
keeping that going. I never thought I'd ever have to do that in 
terms of a cemetery foreman. But in that case, in Tunisia, I 
did.
    We are actually not only in good shape in Tunisia, with a 
great leadership team, but we are actually doing about a 
million dollar's worth of improvements there in Tunisia. During 
the, shall we say, the revolution, we were okay. As a matter of 
fact, we worked closely with the State Department because if 
the State Department had to evacuate, they were going to land 
their helicopters on our grounds. So I never realized that I'd 
ever have to plan for an evacuation of anybody, but in Tunisia, 
we had to go through all that process.
    Our grounds were not invaded. They were not put upon, and 
our foreman and our team there kept it all together, and for 
which, we've honored them.
    In terms of Mexico City, we had to reduce not because of 
any disturbance or whatever, but it went from about two acres 
to one acre, we consolidated our operations. And we lean on the 
background information from the Army that took it over in 1851 
after the Mexican War, then it was run by the State Department, 
then we took it over.
    So we are okay in terms of Mexico City. They'll soon have 
in the next couple of years, some interpretive capability. And 
these are soldiers, a small number of soldiers, 750 in 
commingled remains there from the Mexican War, but we have a 
good cemetery and a good cemetery leader there.
    Mr. Runyan. Thank you for that. Mr. McNerney, anything 
further?
    Mr. McNerney. I have nothing else.
    Mr. Runyan. Mr. Walz?
    Mr. Walz. No.
    Mr. Runyan. Well, Mr. Secretary, I thank you for your 
service on every level. I appreciate you coming in and being 
honest and straight-forward and giving us the heads up that 
you'll be pounding on that table some time in the near future 
so----
    Mr. Cleland. Thank you, sir.
    Mr. Runyan. --thank you and you're excused.
    Mr. Cleland. Thank you, sir.
    Mr. Runyan. I now would like to welcome Chief Justice Bruce 
Kasold of the United States Court of Appeals for Veterans 
Claims. We appreciate your attendance today and you are now 
recognized for five minutes for your oral testimony.

                  STATEMENT OF BRUCE E. KASOLD

    Mr. Kasold. Thank you, Mr. Chairman. It's a pleasure to be 
before you today and your Committee. I will present a summary 
of my testimony here and at the same time submit my written 
statement for the record.
    The fiscal year 2013 budget request by the United States 
Court of Appeals for Veterans' Claims is $32,480,000. It comes 
in two separate parts. If you'll recall, one part is for the 
courts' operations, which is $29,754,000, and the other part is 
for the veterans consortium pro bono program, which is 2.7 
million, and that's just a flow-through our budget and 
appropriation.
    The overall request is 1.7 million above the FY12 
appropriation. The court is one of the busiest Federal 
appellate courts based on the number of appeals filed and 
decided per judge. We currently have six active judges with one 
permanent and two temporary authorizations still vacant. We 
have six senior judges, all of whom have been recalled to serve 
this past year, and they perform about a quarter of the 
workload of the rest of the judges.
    In response to our heavy case load, we've identified ways 
to gain efficiency, while preserving for all veterans the right 
to a full and fair decision on their appeals. The measures we 
have employed include making administrative adjustments and 
hiring some temporary staff to assist chambers in providing 
prompt judicial review; and adjusting the tasks assigned to our 
central legal staff attorneys to allow them to concentrate 
their efforts on the pre-briefing conferencing that was 
established by my predecessor, Chief Judge Greene, and to 
assist our recalled senior judges.
    We streamlined the decision process for cases where the 
parties are both represented by counsel and are fully briefed, 
and we continue to adapt our electronic case management case 
filing system.
    Above all, I can assure you that being down three judges, 
it's the tireless effort and focus of our active judges, our 
six senior judges, and everybody at the court, that has allowed 
us to continue to function as efficiently as we have.
    We continue to encourage the appointment of a commission to 
evaluate the costs and benefits of the unique two-tiered 
Federal appellate review system that we have for veteran's 
benefit decisions, and I've said more in my statement that I 
submitted, and I can answer questions as we go further.
    We remain the only Federal appellate court in a leased 
commercial office building, to my knowledge. We are, however, 
mindful of the budget constraints faced by Congress and this 
Committee, however, we strongly urge that if Federal 
courthouses are going to be built, that the Committee authorize 
and ultimately appropriate funds for our courthouse, but we 
understand the dynamics perhaps of this year, and we'll stay on 
top of that as best we can.
    One thing I would like to report on to you, I have 
mentioned before, that there were two areas of unprogrammed 
delay that I identified fairly soon after becoming chief judge. 
One was the number of cases that were in the chambers and how 
long it was taking to get them out, and I'm pleased to report 
that that number is significantly down. Virtually all cases are 
being decided within 30 days of going to chambers, unless 
they're at panel, or stayed for cases at panel.
    The other area was the number of cases that had finished 
the briefing, finished the conferencing, and were waiting for 
our central legal staff to prepare the memorandum that went 
with the case to chambers. That number was in the neighborhood 
of 700, and that's down below 400 now. So we've made some 
improvements on that. Also, the number of cases in the court 
over 18 months is significantly down. The total number of cases 
actually in the court is also down somewhat.
    So, we've identified some areas that we could work on. I 
think we're finally squeezing out as much as we can though. We 
know that there are two nominees pending; there were three, as 
you know--one pulled out. I believe they're going to have a 
hearing in March, and we anxiously await their appointment. And 
with that, Mr. Chairman, I'll turn it over for questions.

    [The prepared statement of Chief Justice Bruce E. Kasold 
appears in the Appendix]

    Mr. Runyan. Thank you. The one, and you probably anticipate 
this being the first question, but nearly all of the additional 
funding you've requested is for the contribution of the court's 
retirement fund.
    Can you explain in more detail why you feel that such a 
substantial increase to the fund is necessary?
    Mr. Kasold. Yes. First, in preparing my first budget as 
Chief Judge I went back and looked at the requests made for the 
fund in our budget requests--and at the end of the year, there 
was always a million or odd dollars being added. As you know, 
we have statutory authorization to use funds that have not been 
expended, to keep the retirement fund at a fully funded level. 
This past year, we ended up adding a little bit more than a 
million dollars.
    With that--and I mentioned last year that we'd taken a look 
at the process and noted that the actuaries are required to 
evaluate the amount of money in the fund, and compute increases 
over the future at a five percent rate. We're actually getting 
a .025, rate increase. This means that on $20 million, a little 
bit more than that, but about $20 million, you have a million 
dollar shortfall at the beginning of the next fiscal year every 
single time that happens.
    The second thing we did was review the number of estimates 
that were used to determine the participants in the program. We 
discussed them, and we refined them to try and reduce the 
amount of money that would go in at the end of the year to 
bring the retirement fund up to full funding.
    Now, full funding basically means that at the end of the 
fifteen-year term of a judge, what would be the amount of money 
necessary to pay the judges' retirement until their death. It 
will continue to adjust over time, obviously, depending on the 
death rate, whether there are survivor benefits, whether there 
are increases to salaries, whether there's inflation or not 
inflation, so it will continue to adjust depending on the full 
funding picture at that time.
    So over the fifteen-year term, you put in the funds to 
bring it to that point for full funding. And there are 
adjustments. I'm just trying to bring transparency to the 
budget, if you will, to identify the amount that it takes to 
keep the retirement fund at full funding, and reduce the amount 
needed at the end of the year.
    It doesn't mean we won't need more funding at the end of 
the year, because there are a whole lot of estimates that go 
into this. So we will look again at the end of the year, but 
I'm anticipating that at the end of 2013--actually I'm 
anticipating at the end of this year, any shortfall will be 
less, because I think last year we were already adjusting for 
the five percent interest rate differential.
    And I'm anticipating at the end of 2013 that we would have 
a much significant smaller number to transfer over, if 
anything.
    Mr. Runyan. What steps has the court taken to promote more 
efficiency in the operations to help cut costs?
    Mr. Kasold. Well in the costs?
    Mr. Runyan. And to help cut costs.
    Mr. Kasold. To help cut costs. One example would be in its 
expenses. The court had been on a three-year program of 
replacing its computer equipment. We delayed that one year. So 
there's an area where somewhere in the neighborhood of $300,000 
to $400,000 has been delayed.
    At the same time, however, we have additional expenses that 
we've identified in the COOP Arena. Our COOP Arena is not 
programmed to permit participation off site, and on site--it 
only allows for fourteen people. So, to take care of the COOP 
issue, we have asked for funding. Is that an area you could 
delay? You could, I suppose--it depends on how much you want to 
support the COOP program.
    So you had some offset, some savings in the computer arena, 
some offsets in the other arena. I think the increase that you 
see in here for the court, outside of the judge's fund, is 
about a half a million dollars as I recall, and it's directly 
related to the compensation for the employees and the normal 
step increases, the participation that might occur in the 
Thrift Savings Program, which is an estimate you have to make, 
and just the normal increases, the health insurance, any cost 
that could go with that. There is no other increase in this 
budget, other than that judge's fund.
    Mr. Runyan. And one last question. In your capacity as the 
Chief Judge, what are your observations about the overall 
efficiency of the veteran's consortium pro bono program?
    Mr. Kasold. I can speak to the program in that I think it's 
helpful. Over 60 percent of the cases filed at court are still 
pro se. But about 25 percent are pro se as it goes through the 
process, and the pro bono consortium, I believe, is responsible 
for assisting on that.
    On actual dollars, I don't get into or look at that. It 
flows through our budget over to legal services, if I'm not 
mistaken, down into the consortium, and I defer to them coming 
in and explaining their particular program. But I think that 
they have been very helpful in that the number of pro se cases 
goes from 60% down to 20%.
    I know they have an extensive training program because all 
the judges--we support that, and they have training programs 
throughout the Nation. Some of our travel expenses, by the way, 
are for judges going out to the training program to speak to 
them, to let them know how important the program is.
    Mr. Runyan. Okay. Thank you. Mr. McNerney.
    Mr. McNerney. Well, thank you. Thank the witness for 
appearing before us today.
    You noted a down tick in appeals of at least 400 cases, 
fewer than last year. Could you explain that reduction?
    Mr. Kasold. I think it's a consequence of the number of 
decisions at the Board, and the number, in particular, of 
denials at the Board. I haven't gone into the actual Board 
numbers to study them, but there appears to be a direct 
relation to those decisions from the Board that are negative, 
obviously, and the appeals to the court.
    Whether or not there was a greater--we've talked 
analytically--whether or not there's a greater effort by the 
Board to remand before they come up to court, I don't know that 
for sure. In fact, I've got a meeting tentatively scheduled in 
March with the Secretary and members of the Bar and the court, 
to discuss some of those particular issues. But I believe it's 
the number at the Board.
    They also had, if I'm not mistaken, a hiring freeze at the 
Board, and I think they were reduced a team or two, and that 
would affect the numbers of decisions that they produce.
    Mr. McNerney. Is the Court still remanding 50 to 60 
percent?
    Mr. Kasold. About--well----
    Mr. McNerney. I think----
    Mr. Kasold. I think it's higher than that overall. The 
conferencing program that was established two or three years 
ago is working very, very well, resulting in a remand of about 
50 percent of all the cases where you have representation of 
counsel and the matter goes through that conferencing program. 
On top of that, you have the cases remanded by a judge. So it's 
about 70, 75 percent by the end of the day.
    We have about a 50 percent remand rate, which is agreed to 
by the parties, by the Secretary who reviews it and agrees to a 
remand. The Secretary, well actually his representative, his 
counsel agrees to those remands, and they go back.
    Then you have the rest of the cases that go into chambers 
and you have a number of them. And the total number remanded, I 
believe, is still around 70 percent. I didn't specifically look 
at it before coming, but I believe it's still around 70 percent 
of the overall cases.
    Mr. McNerney. So that number hasn't changed in the last few 
years?
    Mr. Kasold. I'll get back to your staff to confirm it, but 
I believe it's still about 70 percent. The 50 percent has not 
changed, that one I do know, and I believe the chambers are 
still about the same. So the total is about 70, but I will 
confirm it back with staff, sir.
    Mr. McNerney. Well, with the down tick in appeals, do you 
still believe that it's necessary to add two additional judges 
as currently authorized?
    Mr. Kasold. My understanding is that the request for judges 
and the need for judges was premised on the continued growth of 
claims at VA, which I understand is going to 1.4 million. If 
those claims get appealed to the Board, and the Board gets the 
staffing to make the decisions, you get increased decisions 
from the Board, and I would anticipate that the appeals to the 
court would continue to grow.
    I'll also say that we cannot do what we're doing now 
without the recall of our senior judges. When you look at that 
particular program--they actually are retired, but we have 
recalled them all. If you take them off the table, the numbers 
that I've given you are going to go up significantly.
    Part of the program changes that we made and that I 
mentioned before--about the unprogrammed delays--was a 
reduction in the type of briefing that was done internally by 
our central legal staff before sending cases into the chambers. 
That shift allowed a number of our central legal staff to 
assist the senior judges and prepare the cases that they have. 
And we've also directed them to review these cases ahead of 
time, so that when the senior judges come on board, they're 
ready to go and process cases. And so that's been an efficiency 
also that we've added.
    But it really comes down to one of those policy calls. When 
you have a senior judge who is retired, as long as they 
continue to come back, you're going to get productivity from 
them--about a quarter of the case load. If they were to retire, 
we've lost----
    Mr. McNerney. They will retire.
    Mr. Kasold. We have six active judges. We absolutely need 
seven, in my view. And then if we get any increase in these 
cases, the additional judges that are authorized, I believe, 
will be needed.
    Now, that, as you recall, is a temporary authorization. 
They have to be filled by the end of this year. And even if 
filled, they will go away when the next two judges retire from 
the court, and that, as I understand it, was for the court and 
the Committee to review the continued need of nine judges 
versus the seven that are permanently authorized.
    So I think it's a good plan. And I think if we get the two 
judges--I know definitely the one filling the permanent 
position--if we get the two, I think it'll be good for the 
court.
    We still have about 4,000 cases in the court. Now, a lot of 
those in the court are in the processing phase. But before 
judges, we have about 400 cases pending.
    And so if you think the flow is kind of steady now, you're 
going to have about 400 cases in that pending decision arena, 
and each judge does in the neighborhood of 200 to 250 per year 
give or take, depending on how difficult they are.
    Mr. McNerney. Okay. Well, thank you. Yield.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Walz, nothing?
    Mr. Walz. Nothing.
    Mr. Runyan. I actually have one more question, just going 
back to talking about the two additional justices being 
authorized.
    Aside from staff, and obviously their position, is there 
any other fluctuation in the court's budget by bringing them 
on?
    Mr. Kasold. We have budgeted for the last two years, if I'm 
not mistaken, for these additional chambers. Judge Greene 
retired the year before, so we were budgeting for two 
additional chambers. Frankly, this past year, we budgeted for 
three chambers that have not been filled.
    You're talking about three judges, three secretaries, and 
four clerks, so it's eighteen people, and we returned about 
three and a half million dollars from our budget last year. So 
the budget is there for the fully staffed chambers.
    Obviously, this fiscal year, we will be returning funds 
again because we'll have half of the year or maybe two-thirds 
of a year or maybe three-quarters of a year or maybe a whole 
year where we don't fund those particular chambers. So we have 
requested the funding for them.
    Mr. Runyan. Thank you. Anything further?
    I guess that's all we have. Again, thank you for your 
testimony. We thank you for your service in making sure we get 
our veterans taken care of, and appreciate you coming and your 
testimony here today. So you're excused.
    Mr. Kasold. Thank you very much. On behalf of the Board of 
Judges, and all the court, we really appreciate the support 
from Congress. It's been very good. Thank you very much.
    Mr. Runyan. Thank you.
    And finally, I would like to invite the witness of our last 
panel to the table. First, we have Mr. Jeffery Hall, who's the 
Assistant National Legislative Director for Disabled American 
Veterans, who will be followed by Ms. Diane Zumatto, the 
National Legislative Director for AMVETS. Mr. Hall, we will 
start with you. You're recognized for five minutes for your 
statement.

   STATEMENT OF JEFFREY HALL, ASSISTANT NATIONAL LEGISLATIVE 
  DIRECTOR FOR DISABLED AMERICAN VETERANS, AND DIANE ZUMATTO, 
            NATIONAL LEGISLATIVE DIRECTOR FOR AMVETS

                   STATEMENT OF JEFFREY HALL

    Mr. Hall. Thank you, Mr. Chairman. Good morning to you and 
Ranking Member McNerney, and other Members of the Subcommittee. 
On behalf of the DAV and it's 1.4 million members, I'm pleased 
to be here today to offer DAV's views and recommendations 
regarding the budget for FY2013 as it relates to veterans' 
benefits programs, judicial review, and the Veterans Benefits 
Administration.
    Mr. Chairman, VBA is now in the third year of their latest 
effort to transform its outdated and inefficient claims 
processing system into a modern rules-based digital system.
    Over the next year, we will begin to see whether their 
strategies to transform the people, processes, and technologies 
will finally result in a cultural shift away from focusing on 
speed and production, to a business culture of quality and 
accuracy. Which is the only way to truly get the backlog under 
control.
    Although we have been very pleased with VBA's increased 
collaboration with VSO stakeholders, we urge this Committee to 
provide constant and aggressive oversight of the many 
transformation activities taking place throughout this year.
    Perhaps the most important initiative is the new Veterans 
Benefits Management System, or VBMS, which will begin rolling 
out in June with full deployment planned to occur by the end of 
2013. As VBA works to complete, perfect, and deploy this vital 
new IT system, it is absolutely crucial that sufficient 
resources are provided and protected.
    We note that the budget for VBMS drops down from $148 
million in FY2012 to $128 million in FY2013. We hope the 
Committee will thoroughly examine whether that level of funding 
is sufficient.
    In order to sustain VBA's transformation efforts during 
FY2013, DAV recommends maintaining current staffing levels in 
most business lines. Given the large increases in claims 
processors over the past few years, we believe that VBA's focus 
should now be on properly training new and existing employees, 
which is why we're concerned about recent reports from the 
field, indicating that VBA is already short on training 
dollars, and cutting back on challenge training done through 
its centralized academy.
    Yet, at the same time, we've heard that VBA is instituting 
a new round of mandatory overtime for compensation service 
employees, which at time and a half would have significant cost 
implications. We hope the Committee shares our concerns and 
will look into these reports to ensure that VBA's focus remains 
on quality and accuracy and not just production.
    Mr. Chairman, the VR&E budget proposal for FY2013 does 
request funding for approximately 150 new counselors designated 
for expansion into the integrated disability evaluation system, 
and for the VetSuccess on campus program. And we support both 
of these increases and programs. However, in order to reach the 
target of having one counselor for 125 veterans served, they 
will need approximately 195 additional counselors for FY2013, 
in order to meet the projected workload increase.
    DAV also recommends a staffing increase for the Board of 
Veterans Appeals. Although the Board is currently authorized to 
have 544 full-time employee equivalents, its adopted budget for 
FY2012 only supports 532. And for FY2013, the budget requests 
would further reduce that to 527 full-time employee 
equivalents.
    In looking at historical appeal rates, and the rising 
number of original compensation claims, DAV recommends that the 
Board of Veterans Appeals be given sufficient funding for an 
authorized workforce in FY2013 of at least 585 full-time 
employee equivalents.
    Mr. Chairman, DAV also recommends that Congress this year 
finally enact legislation to repeal the inequitable requirement 
that veterans military longevity retirement paid be offset by 
an amount equal to their disability compensation if rated less 
than 50 percent.
    We also recommend that Congress eliminate the SBP and DIC 
offset. This offset is inequitable because there is no 
duplication of benefits since payments under the SBP and DIC 
programs are made for different purposes.
    And finally, Mr. Chairman, DAV strongly recommends that 
Congress and VA come together to determine the most practical 
and equitable manner of providing compensation for non-economic 
loss and loss of quality of life suffered by service-connected 
disabled veterans, and then move expeditiously to implement 
this new component.
    The Institute of Medicine, congressionally mandated 
Veterans Disability Benefits Commission, as well as the Dole-
Shalala Commission all recommended the current disability 
benefit system be reformed, and include non-economic loss and 
quality of life loss as factors in compensation.
    Both the Canadian and Australian disability compensation 
programs already do that, and it is time that we did the same 
for the brave Americans who have suffered permanent 
disabilities affecting their entire lives in service to this 
great Nation. Mr. Chairman, this concludes my statement, I'll 
be happy to answer any questions.

    [The prepared statement of Jeffrey Hall appears in the 
Appendix]

    Mr. Runyan. Thank you, Mr. Hall. Ms. Zumatto, you're now 
recognized for five minutes for your statement.

                   STATEMENT OF DIANE ZUMATTO

    Ms. Zumatto. Good morning, Chairman Runyan, Ranking Member 
McNerney, and Congressman Walz. I thank you for this 
opportunity to share AMVETS' recommendations in what we believe 
to be the most financially responsible way while ensuring the 
quality and integrity of the care and benefits earned by 
American veterans.
    In light of this Nation's unresolved fiscal crisis, AMVETS 
has concerns about the potential reductions in VA spending, 
which will seriously impact our veterans, their families, and 
survivors. That being said, my main focus today will be the NCA 
or National Cemetery Administration.
    The single most important obligation of the NCA is to honor 
the memory, achievements, and sacrifices of our veterans, who 
so nobly served in this Nation's armed forces. These acts of 
self-sacrifice by our veterans obligate America to preserve, 
rehabilitate, and expand our national cemetery system as 
necessary.
    These venerable and commemorative spaces are part of 
America's historic material culture. They are museums of art 
and American history. They are fields of honor and hallowed 
grounds, and they deserve our most respectful stewardship.
    The sacred tradition of our national cemeteries spans 
roughly 150 years back to the time when the earliest military 
graveyards were situated at battle sites, at field, or general 
hospitals, and at former prisoner-of-war sites.
    The NCA currently maintains stewardship of 131 of the 
Nation's 147 national cemeteries, as well as 33 soldiers' lots. 
Since 1862, when President Lincoln signed the first legislation 
establishing the National Cemetery concept, more than three 
million burials have taken place in national cemeteries, which 
are currently located in 39 states and Puerto Rico.
    As of late 2010, there were more than 20,021 acres of 
historic landscape, funerary monuments and other architectural 
features included within established NCA sites. VA estimates 
that of the roughly 22.4 million veterans alive today, that 
approximately 14.4 percent of them will choose a national or 
state veteran's cemetery as their final resting place.
    With the transition of an additional one million 
servicemembers into veterans status over the next twelve 
months, this number is expected to continue rising until 
approximately 2017.
    The NCA, which is the Nation's largest cemetery system 
invested an estimated $31.4 million into the national shrine 
initiative from 2011 funding in its efforts to improve the 
appearance of our national cemeteries. While a NCA survey 
conducted in October 2011, indicated that progress continues to 
be made in reaching its performance measures, more needs to be 
done.
    In order to adequately meet the needs for interment, grave 
site maintenance and related essential elements of separate 
cemetery operations, AMVETS recommends $280 million for the 
NCA's operation and maintenance budget in FY13 with an annual 
increase of 20 million until the national shrine commitment 
goals regarding the height and alignment of headstones and 
markers and the appearance of grave sites are reached.
    Finally, AMVETS calls on the administration and Congress to 
provide the resources needed to meet the sensitive and critical 
nature of the NCA's mission, and to fulfill the Nation's 
commitment to all veterans, who have served their country so 
honorably and faithfully.
    The State Cemetery Grants Program compliments the NCA's 
mission by establishing grave sites for veterans in areas 
unable to fulfill veteran burial needs. In FY2011, the State 
Grants Program budget was $46 million, and it funded sixteen 
cemeteries, including establishing five new ones. AMVETS 
recommends an increase to $51 million for 2013, in order to 
meet the rising demands, which should peak in 2017.
    Since burial benefits were first introduced in 1917, they 
have continually evolved, and this process needs to continue in 
order to--in order for this benefit to meet 21st Century needs 
and expenses. Benefits should be split into two categories, 
veterans within the accessibility model, and those outside the 
accessibility model.
    Plot allowances as well as burial benefits for both service 
and non-service-connected veterans need to be increased to meet 
rising costs. And that's the end of my statement.

    [The prepared statement of Diane Zumatto appears in the 
Appendix]

    Mr. Runyan. Thank you very much and I'll begin the round of 
questioning with Mr. Hall actually.
    In your experience, is it true that it takes a new VSR a 
full two years to be able to work independently with both the 
speed and accuracy, and is this because of inadequacies in VA's 
training program, or the complexity of the subject matter?
    Mr. Hall. I believe--yes, it takes approximately two years 
for that person to become at the fully trained level to perform 
those duties, an additional two years for an RVSR. But looking 
specifically, I believe it's a combination, but the complexity 
of the material, there's a lot that goes into being a VSR, a 
lot that goes--a lot more that goes into being an RVSR.
    So I would say that while it's shared jointly between the 
complexity of the job itself, and the training, we just want to 
ensure the training that is being provided is adequate and 
appropriate, one, for the position, and two, for the level of 
experience of the individual.
    Mr. Runyan. Thank you. And I know we've brought this up in 
a few hearings in the last month in talking about metrics and 
how we measure a lot of different things. What factors would 
you ask the VBA to emphasize if they were to initiate a 
scientific study to determine the workforce necessary to 
effectively manage its rising workload? What are those factors? 
Because obviously both sides of the equation have different 
responses to that.
    Mr. Hall. Well, we--they have to look at people and 
processes first. And again, there's a lot of things going on in 
transformation in VBA right now. A lot of good initiatives 
going on.
    If they're going to measure it, they have to be able to 
have a system. We think VBMS will do this later on down the 
road to be able to aggregate data and best practices, things 
like that, discovery of error, the STAR program is another 
major aspect to a quality review to be able to identify error 
trends and such.
    The quality review team, something that we're learning 
something more about now, will also be able to help VBA 
identify those problem areas.
    Mr. Runyan. And as we roll out VBMS, do you believe there 
will be a significant effect on the backlog and what warning 
signs would you give the VA as this happens. What do you see 
coming down the road as we try to roll this out in this 
transitional period?
    Mr. Hall. First, let me say that we really appreciate the 
collaboration that VBA has demonstrated towards the VSOs, 
especially with something as important, probably the most 
important initiative going on in VBA right now, which is the 
VBMS.
    We will--we hope that they continue that outreach and 
collaboration with the VSOs. Do we think that it'll have an 
immediate impact on the backlog? Probably not, not an immediate 
one. Because it's such a complex system. And again, remember, 
we are talking about completely changing how they approach 
claims and how they process claims. VBMS being a paperless 
system, there's so many things that are involved with that.
    So I would say first and foremost, they must always have 
the stakeholders, VSO and stakeholders involved into the 
collaboration process, whether it's during the development and 
implementation periods as they have been doing. We can offer 
expertise along the way to help them in problem areas or 
identify certain things that might be able to be changed before 
it gets to the full implementation phase, and then maybe not be 
able to be changed.
    Mr. Runyan. Thank you. Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. Mr. Hall, what do 
you think of the VA's goal of 125 days at 98 percent accuracy?
    Mr. Hall. It's an ambitious goal.
    Mr. McNerney. Do you think it's achievable?
    Mr. Hall. But it's an attainable goal, I think.
    Mr. McNerney. You think it's achievable--attainable?
    Mr. Hall. I think it's--it is achievable. There's just so 
many things that can affect what is going on right now. Because 
we're pushing VA to reduce the backlog of claims. Our clients, 
your constituents, the veterans they serve, everybody's 
concerned about the backlog, let's reduce the backlog. And it's 
not as simple as reducing the backlog.
    There's no one in VBA right now that doesn't want to reduce 
the backlog. However, having an ambitious goal in front of you 
of 125 days when I think it's in the past year, that's 
increased or out of the roughly 900,000 claims that are pending 
right now, roughly 600,000 are over 125 days. That's not far 
off of where we were from a year ago.
    So--but I also know that it's not as simple as looking at 
it saying well you haven't made any progress on the backlog. 
The accuracy is equally important. If VA--if VBA puts it out 
there and says 125 days, 98 percent accuracy, we believe that 
they can achieve it. But right now it's just simply too 
difficult to tell where they're going to be a year from now 
without the full implementation of things like VBMS, which is 
going to have a major impact, eBenefits, VRM, those things will 
all have a major impact. So right now it's just too soon to 
tell where they're going to be.
    Mr. McNerney. Is the funding in the budget adequate to 
continue to improve that backlog?
    Mr. Hall. Overall. I think the biggest concern as I had 
mentioned earlier, the biggest concern is in the transformation 
process. I'm not sure about the overall budget, whether it's 
adequate or it's not adequate. But the VBMS or the IT really, I 
don't want to just limit it to VBMS, because it's the overall 
IT.
    But looking, if there's any cuts in that or a reduction I 
should say in the budget, we would encourage you as well, we're 
going to be looking at it. We just received it. To look and see 
where--why that money's been reduced and is that going to have 
a significant impact, especially adversely on the ability to 
complete these IT initiatives, which will then come back to 
whether or not the backlog can be reduced.
    Mr. McNerney. Do you have any final recommendations for 
what the VA should be doing to reform and modernize its claim 
processing system?
    Mr. Hall. We think that they're doing a lot of great 
things, as I mentioned. So I think they need to keep moving 
forward. With so many--again, with so many different things 
that they do have in motion right now, a simple recommendation 
would be to continue working, primarily working towards their 
goal, but also including VSO stakeholders into the process at 
the earliest stage and throughout the process, and not just 
picking certain aspects of where they reach out to us. Because 
it has a major affect again on whether or not that we can offer 
guidance, advice, expertise in the process.
    And again, I would just say that VBA leadership, while we 
appreciate their collaboration that they're demonstrating at 
this particular level at the headquarters level, we want to 
ensure that that also occurs all the way down to the VA 
regional office level.
    And just finally on that, speed and production in this 
cultural shift, it must happen. Equal weight has got to be 
given, at least equal weight has to be given to quality and 
accuracy, as it is being given to speed and production. 
Otherwise, they may just end up with short-term gains, but miss 
out on the long-term reform necessary.
    Mr. McNerney. Ms. Zumatto, thank you for your contribution 
in the independent budget, and for your in-depth analysis of 
the National Cemetery Administration. Do you believe the NCA 
has sufficient funds to carry out its mission?
    Ms. Zumatto. I certainly hope that they do. We are 
recommending some increases. I--as you probably know, I don't 
have a wealth of expertise. I'm fairly new in this area, and it 
might be more beneficial to step back and perhaps provide a 
more in-depth answer, you know, to you in writing after the 
fact.
    Mr. McNerney. That's acceptable. I yield back.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Walz, do you have 
anything?
    I actually have one more question for Ms. Zumatto. 
Pertaining to your statistical analysis of the grave sites that 
we're going to need, and you'll probably have to respond to 
this in writing also, but as the Under Secretary said in his 
testimony, they like to keep them close to home, in a kind of 
a--on a more regional basis.
    Where are we lacking in those abilities? And obviously 
yours was nationwide, and I'm sure there's some areas that, you 
know, we could look into, where we could really give direction 
to the Cemetery Administration to really look at that as you 
can anticipate through your VSOs and knowing where people live 
and where they reside, and where they would actually like to 
be--would like to be buried. So I'd appreciate if you could get 
that to us.
    Ms. Zumatto. Okay. I can do that.
    Mr. Runyan. Thank you very much. Mr. McNerney, anything 
further?
    Mr. McNerney. Yeah. I'd like to reserve the right to submit 
questions to the VA for later response.
    Mr. Runyan. Without objection, so moved.
    Do you have a closing statement?
    Then on behalf of the Subcommittee, I would thank both of 
you for your testimony, and we look forward to working with you 
on the future on these issues. And you are both excused.
    I would like to conclude this budget hearing by recognizing 
the reality of times laid before us. We face a deficit crisis 
and we must act to be prudent stewards of our budget for 
generations yet born to ensure the survival of our common 
American values. But this should not and will not come at the 
expense of our Nation's heroes and the sacrifices they made to 
ensure we remain strong and the freest country on the face of 
the Earth. I'll stand ready to work with both sides of the 
aisle fulfilling this commitment, as we move forward for the 
remainder of this session.
    I ask unanimous consent that all Members have five 
legislative days to revise and extend their remarks, and 
include extraneous material. Hearing no objection, so ordered.
    I thank the Members for their attendance today and this 
hearing is now adjourned.

    [Whereupon, at 11:59 a.m. the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

            Prepared Statement of Hon. Jon Runyan, Chairman

    Good morning. I want to welcome everyone to this hearing on the 
budget for fiscal year 2013 as it pertains to the Veterans Benefit 
Administration, National Cemetery Administration, the U.S. Court of 
Appeals for Veterans Claims, and American Battle Monuments Commission.
    Last year this Subcommittee held its first hearing of the 112th 
Congress and I made my intentions and hopes clear that as Chairman of 
this Subcommittee my priority would be a laser focus on tackling the 
size of the backlog of claims for disability benefits.
    Over the past year VA has demonstrated their desire and commitment 
to be partners in bringing the VA into the 21st century, as reflected 
in the 2013 budget. I support VA's goal of completing 1.4 million 
disability compensation and pension claims, marking an increase of 36% 
over 2011. I can assure the administration that this Subcommittee will 
vigorously pursue the necessary oversight to ensure this goal becomes a 
reality for all of our Nation's veterans.
    In these uncertain and turbulent economic times, it is the duty of 
all of us here and those we represent to ensure benefits earned by our 
Nation's heroes are administered as efficiently and timely as possible. 
``Justice delayed is justice denied'' and benefits delayed, are 
benefits denied. To this end, I note the forthcoming roll out of the 
VBMS program, which I believe signifies a turning point for the claims 
backlog. In addition to the VBMS program, VA has also recently launched 
several pilot programs, and consolidated its pension and fiduciary 
programs.
    However, technology alone will not solve the issues pertaining to 
the backlog. It is our solemn responsibility to remain vigilant. We 
will continue to oversee these programs to ensure that they are 
operating efficiently while also serving the needs of our Nation's 
veterans. Although VA continues to emphasize its initiatives in the 
area of people, process, and technology; it is important that VA follow 
through on these programs while not forgetting its primary goal of 
providing timely, quality benefits to veterans.
    A second major area I'd like to discuss involves the final resting 
grounds of our Nation's veterans. The National Cemetery Administration 
provides the invaluable role of serving veterans and their families 
during the burial process and maintaining our National shrines and 
cemeteries.
    However, like every human institution, mistakes and oversights are 
made from time to time. In November NCA self reported to this Committee 
the misalignment of a row of head stones at the Ft. Sam Houston 
National Cemetery. Families of those affected were notified and a 
nationwide audit was begun. Initial reports from that audit, which is 
still ongoing, have identified similar issues at at-least 5 other 
National Cemeteries in just the first phase of this audit. These 
``errors'' appear to have a common origin in that they all occurred 
during raise and realignments projects performed by outside 
contractors.
    The reason this is relevant to a budget hearing is because in most 
cases the contractors' work was approved and payment made without 
adequate oversight or review to ensure the quality and accuracy of the 
work done. Because of an omission of fiscal oversight the work has to 
be done right the second time and a nationwide audit at great expense 
conducted. Statistically, less than 60 discrepancies reported after 
auditing almost 1.5 million grave sites computes to be a tiny fraction 
of 1%.
    NCA however is not in the business of percentages and statistics; 
they are in the business of providing a final resting place of honor 
and dignity for our Nation's heroes.
    While I commend the NCA's initiative and quick response in 
identifying and addressing the situation, I must reiterate my resolve 
that no mistake going forward will be acceptable. We owe it to our 
veterans and their families to get it right the first time, every time. 
Anything less, regardless of the statistics, is unacceptable.
    Towards this end, I want to ensure that America's most valuable 
memorials to its honored dead have the necessary amount of resources 
and institutional oversight going forward to prevent such problems from 
reoccurring. While we must do so mindful of the budget deficit crisis 
at hand, we must continue to ensure these sacred grounds are well 
prepared for current and future generation of veterans and their 
families. Finally, it is my hope that NCA continues to move closer to 
near universal veteran access to burial options around this Nation.
    This hearing will also be taking a look at the budgets of the Court 
of Appeals for Veterans Claims and the American Battle Monuments 
Commission (ABMC). While I do not anticipate many controversial issues 
within these budgets, I would like to express my hopes that they too 
reflect the trying times we face and that will strive for increased 
efficiency over waste and better performance over tradition solely for 
tradition's sake.

                                 
              Prepared Statement of Hon. Jerry McNerney, 
                       Ranking Democratic Member

    Thank you, Mr. Chairman. I would like to thank you for holding 
today's hearing.
    The goal of today's hearing is to examine the various FY2013 budget 
requests of agencies over which the Disability Assistance and Memorial 
Affairs Subcommittee exercises jurisdiction, including the U.S. 
Department Veterans Affairs' Veterans Benefits Administration (VBA) and 
National Cemetery Administration (NCA); the Court of Appeals for 
Veterans Claims (CAVC); and the American Battle Monuments Commission 
(ABMC).
    These organizations oversee many major benefits, services and 
protections for our Nation's veterans, their families, and survivors--
ranging from providing compensation, pension and burial benefits to 
ensuring appellate rights, to maintaining our National Shrine 
requirements both here and abroad. I look forward to hearing how these 
benefits and services will be administered with the optimal levels of 
efficiency and effectiveness with the new budget request.
    Today's hearing is an important one. As all of you know, Congress 
is working hard to balance our budget and reduce the deficit while at 
the same time provide earned and needed benefits to veterans and their 
families.
    The overall FY2013 VA budget request is $140.3 billion. Of the 
total Department Budget request, $76.3 billion (54.4%) is designated 
for mandatory funding to pay and administer benefits to Veterans, their 
families and survivors. This represents 16.2% increase from the 2012 
level of $70.6 billion. This Administration has shown that supporting 
the troops and our veterans is not just a slogan--it's a commitment.
    Like many of the VSOs and other stakeholders who represent our 
veterans, one of my top priorities is to continue to address the 
glacial nature of the claims process and the systemic challenges of 
accuracy and accountability. It is a disgrace that we have such a large 
claims backlog, and it is an insult to the veterans who have served our 
Nation. There is no valid reason that we are still processing claims 
with 20th Century technology and paradigms.
    I agree with Secretary Shinseki that we need to get our claims 
process under control to deliver these benefits in a 21st century, 
veteran-focused manner. Get the claim right the first time, and don't 
sacrifice quality for quantity.
    The VA reports that it is making progress on this front and the 
budget seems to support its commitment, particularly on the IT front. 
However, I don't want VA to confuse activity with progress. Further, I 
don't want VA to place the promise of new technologies on top of flawed 
systems because that will just result in inaccurate decisions rendered 
more quickly. Comprehensive reform is in order. Finally, I also want to 
know more about the budgetary implications of the contract with ACS, 
Inc. to develop hundreds of thousands of pending claims.
    With that, I look forward to hearing from all of our witnesses 
today. I particularly thank the VSO members of the Independent Budget 
for your diligence and commitment in helping to ensure the VA's budget 
is sufficient to meet the needs of our Veterans.
    I welcome the opportunity to work closely with you and all of my 
colleagues to make sure that the needs of our Veterans, those returning 
from Iraq and Afghanistan, and those of the Veterans from our previous 
conflicts, are met.
    Thank you Mr. Chairman, I yield back.

                                 
                   Prepared Statement of Diana Rubens

    Chairman Runyan, Ranking Member McNerney, and members of the 
Subcommittee: Thank you for the opportunity to discuss the fiscal year 
(FY) 2013 budget for the Veterans Benefits Administration (VBA). I am 
accompanied today by Mr. Jamie Manker, VBA's Chief Financial Officer. 
We appreciate the strong collaboration and partnership between VBA and 
this Subcommittee, the full Committee and the entire Congress. We look 
forward to continuing our joint efforts to enhance the delivery of 
benefits and services to our Nation's Veterans.
    The employees of the Veterans Benefits Administration are 
privileged to have the incredibly important mission of helping 
Americans fulfill the Nation's commitment to our Servicemembers and 
Veterans, who so courageously serve and sacrifice on our behalf. In 
carrying out its responsibilities, VBA has adopted and embraced the 
Department's newly established core values of Integrity, Commitment, 
Advocacy, Respect, and Excellence - appropriately captured in the 
phrase ``I CARE''. Our workforce includes more than 20,000 employees, 
50 percent of whom are Veterans themselves, and 30 percent of whom have 
service-connected disabilities.
    VBA manages an integrated program of benefits and services, 
administered through a nationwide network of 57 regional offices, 
including offices in Puerto Rico and the Philippines. The benefits 
include compensation for Veterans with service-connected disabilities; 
dependency and indemnity compensation for certain Veterans' survivors; 
pension for war-time Veterans and their survivors; vocational 
rehabilitation and employment services; educational and training 
assistance; home-loan assistance; fiduciary activities providing estate 
protection services for Veterans unable to manage their own funds; 
information and assistance through personalized contacts and outreach 
programs to separating Servicemembers and other special groups of 
Veterans; and life insurance programs.
    Under the leadership of Secretary Shinseki, we are working to 
transform VA into a 21st Century organization that is people-centric, 
results-driven, and forward-looking. We have disciplined ourselves to 
understand that successful execution of our vital mission requires that 
we continually improve our stewardship of the resources entrusted to us 
by the Congress. Accountability and efficiency are practices consistent 
with our philosophy of leadership and management.
    Of the Department's $140.3 billion budget request for 2013, 53 
percent, or nearly $75 billion, is designated for mandatory funding of 
benefits programs administered by VBA. Our request supports these 
programs and identifies the performance levels expected to be achieved, 
ensuring that every dollar of the budget is being used wisely and 
effectively to help improve the lives of Veterans, their families, and 
their survivors.
    Approximately 97 percent of the approximately $77 billion in 
appropriated funds requested for VBA are for direct payments to 
Veterans and their dependents and survivors. The remaining three 
percent is dedicated to administering VBA's benefits programs. VBA's 
budget request also directly supports VA's three key priorities: 
improving access to benefits and services; eliminating the claims 
backlog (defined as claims pending longer than 125 days) and improving 
decision accuracy to 98 percent in 2015; and ending Veteran 
homelessness in 2015.
    VBA recognizes it must do all it can to simplify and expedite the 
claims process for our Veterans and beneficiaries. We are committed to 
- and actively pursuing - comprehensive improvements to the processes 
and systems Veterans use to access and employees to deliver those 
benefits and services. We know we must do better - that's why we are 
undergoing this large-scale transformation.
    The 2013 General Operating Expense budget request of $2.2 billion 
is vital to the transformation strategy that drives our performance 
improvements. Technology resources include $92 million to support the 
Veterans Benefits Management System (VBMS), a comprehensive solution 
that integrates a business transformation strategy to address people 
and process with a paperless claims processing system. Technology 
resources also include $111 million to support the Veterans 
Relationship Management initiative, including development of self-
service and technology-enabled interactions that provide access to 
information and the ability to execute transactions at the place and 
time convenient to the Veteran in every aspect of benefits and services 
we deliver to Veterans.
    VBA plans to process a record 1.4 million compensation claims in 
2013, and we are pursuing transformational changes that will enable us 
to meet the emerging needs of Veterans and their families. Through the 
resources provided in the President's 2013 Budget, VA is committed to 
improving the quality of life for our Nation's Veterans, their 
dependents, and survivors.

VBA Transformation Plan
    VBA's transformation is demanded by a new era, emerging 
technologies, the latest demographic realities, and our renewed 
commitment to today's Veterans. In the face of dramatically increasing 
workloads, VBA must deliver first-rate and timely benefits and services 
- and they must be delivered with greater efficiency. VBA is 
aggressively pursuing its Transformation Plan, a series of tightly 
integrated people, process, and technology initiatives designed to 
improve Veterans' access, eliminate the claims backlog, and achieve our 
goal of processing all claims within 125 days with 98 percent accuracy 
in 2015.
    VBA's Transformation Plan is based on more than 600 ideas solicited 
from our employees, Veterans Service Organization partners, and other 
stakeholders, including this Subcommittee and your staffs. After 
evaluating a multitude of innovative ideas, we focused on the 40 most 
promising, tested, and measured initiatives for inclusion in our 
Transformation Plan. As we design, test, further evaluate, and 
implement these initiatives, VBA is closely tracking current metrics 
(e.g., number of claims pending over 125 days, claims production, 
quality of rating decisions, decision timeliness, etc.) to assess 
results and, if necessary, adjust our efforts. We are also working to 
expand what we measure to more clearly show the impact of the 
Transformation Plan, both at local and national levels. VBA's 
Implementation Center, established at VBA headquarters as a program 
management office, is streamlining the process of transformation by 
ensuring new ideas are approved through a governance process, and that 
implementation and training are carefully planned and executed 
utilizing a comprehensive change management approach. This allows us to 
focus on implementing initiatives that will achieve the greatest gains, 
without degrading current performance.

People-Focused Initiatives
    Our employees are the key to our success. We are strengthening the 
expertise of our workforce by changing the way we are organized and 
trained to do the work. A new standardized operating model is being 
implemented in all regional offices beginning this year that 
incorporates a case-management approach to claims processing. Distinct 
processing lanes are being established based on the complexity and 
priority of the claims and employees are assigned to the lanes based on 
their experience and skill levels. Integrated, cross-functional teams 
work claims from start to finish, facilitating the quick flow of 
completed claims and allowing for informal clarification of claims 
processing issues to minimize rework and reduce processing time. More-
easily rated claims move quickly through the system in a designated 
lane, and the quality of our decisions improves by assigning our more 
experienced and skilled employees to the more complex claims. The new 
operating model also establishes an Intake Processing Center at every 
regional office, adding a formalized process for triaging claims and 
enabling more timely and accurate distribution of claims to the 
production staff in their appropriate lanes. We predict that our 
people-focused initiatives will contribute to a 15-20 percent 
improvement in productivity and 4 percent improvement in quality.
    At VBA we are increasing the productivity of our workforce and the 
quality of our decisions through national training programs and 
standards. Our redesigned and expanded 8-week centralized Challenge 
Training Program for new claims processors has achieved dramatic 
results. On completion of the training, employees work significantly 
faster and at a higher quality level. Trainees from the most recent 
class averaged 1.33 cases per day with 98 percent accuracy, compared to 
the legacy Challenge curriculum, following which trainees averaged one-
half case per day and 60 percent accuracy. Our training and technology 
skills programs continue to deliver the knowledge and expertise our 
employees need to succeed in a 21st Century workplace.

Process-Improvement Initiatives
    VBA has established a ``Design Team'' concept to support the 
transformation of its business processes. Using Design Teams, VBA is 
conducting rapid development and testing of process changes, automated 
processing tools, and innovative incentives in the workplace to assure 
that changes will be actionable and effective before they are 
implemented. The goal of our Design Teams is to implement, execute, and 
measure an improved facet of our operating model with a mindset toward 
increasing productivity and improving quality towards our goal of 98 
percent accuracy. We are focusing on streamlining processes and 
eliminating repetition and rework in the claims process while 
delivering optimal service. We expect our process initiatives to 
contribute to a 15-20 percent increase in productivity and a minimum 
four percent improvement in claims quality as it relates to current 
processing initiatives. As we continue to find new, promising 
initiatives, these estimates could change.

    Initial process improvements include:

    Quality Review Teams: We are transforming our local quality 
assurance process, establishing dedicated teams of quality review 
specialists at each regional office. These teams will evaluate decision 
accuracy at both the regional office and individual employee levels, 
and perform in-process reviews to identify and eliminate errors at the 
earliest possible stage in the claims process. The quality review teams 
are comprised of personnel trained by our national quality assurance 
(Statistical Technical Accuracy Review or ``STAR'') staff to assure 
local reviews are consistently conducted according to national 
standards. An initial focus of these teams is to reduce medical 
examination errors, which currently represent 36 percent of our benefit 
entitlement quality errors. In addition to quality improvements, the 
need for reexaminations will be minimized, thereby reducing claims 
processing time in 39-day increments for every reexamination avoided.
    Simplified Rating Decision and Notice: In January 2012, we 
implemented a new claims processing initiative developed by our first 
Design Team that will result in meaningful improvements in the service 
we provide to our clients. The new decision notification process will 
streamline and standardize the communication of claims decisions. 
Veterans will receive one simplified notification letter in which the 
substance of the decision, including a summary of the evidence 
considered and the reason for the decision, are all rendered in a 
single document. Design-Team testing of this initiative at the St. Paul 
Regional Office resulted in productivity increases of 31 percent, while 
sustaining a 90-percent accuracy rate, and reductions of 14 days in 
average processing time.
    Rules-Based Calculators: This initiative provides a new automated 
employee job-aid that uses rules-based programming to assist decision 
makers in assigning an accurate service-connected evaluation. These new 
calculators will significantly contribute to improvements in rating 
quality and consistency. Calculators that are currently being used by 
claims processors include:

       1. Hearing loss calculator: Generates stand-alone paragraphs for 
use in rating decisions.
       2. Special monthly compensation (SMC) calculator: Determines the 
total SMC award based on disabilities input by the decision-maker.
       3. Evaluation builder: Helps assign correct evaluations and 
generates text to explain a disability grant as well as criteria for 
the next higher rating.

    Disability Benefits Questionnaires: This month we plan to release 
68 more Disability Benefits Questionnaires (DBQs) to the public, 
bringing the total number of DBQs publicly available to 71. DBQs are 
templates that solicit the medical information necessary to evaluate 
the level of disability for a particular medical condition. Currently 
used by Veterans Health Administration examiners, the release of these 
DBQs to the public will allow Veterans to take them to their private 
physicians, facilitating submission of fully developed claims packages 
for expedited processing.
    VBA will continue reviewing the initial 600 ideas for process 
improvements to ensure all potentially valuable transformation actions 
are evaluated. We will also continue our quest for additional new and 
innovative ideas to further transform our claims processes.

Technology Initiatives
    Key to VBA's transformation is ending the reliance on the outmoded 
paper-intensive processes that thwart timely and accurate claims 
processing. VBA will deploy technology solutions that improve access, 
drive automation, reduce variance, and enable faster and more efficient 
operations. VBA's planned digital, paperless environment will also 
enable greater exchange of information and increased transparency to 
Veterans, the workforce, and our stakeholders. We know that 73 percent 
of our Veterans prefer to interact with VA online. We are therefore 
taking a multichannel approach to improving access that includes online 
communications, social media, and telecommunications, to ensure 
Veterans get the information and assistance they need. Our strategy 
includes active stakeholder participation (Veterans Service Officers, 
State Departments of Veterans Affairs, County Veterans Service 
Officers, and Department of Defense (DoD)) to provide digitally ready 
electronic files and claims pre-scanned through online claims 
submission. This will be accomplished through electronic data sharing 
and utilizing a stakeholder portal.
    Our Transformation Plan includes the following major technology 
initiatives that are expected to improve access and contribute to an 
additional 15-20 percent increase in productivity and a four percent 
improvement in claims quality.
    Veterans Relationship Management Initiative (VRM): VRM engages, 
empowers and serves Veterans and other claimants with seamless, secure, 
and on-demand access to benefit and service information. VRM is 
transforming VBA's National Call Centers through the introduction of 
new Veteran-friendly technologies and features. In October 2011, VA 
deployed Virtual Hold technology. During periods of high call volumes, 
this system enhancement allows callers to leave their name and phone 
number instead of waiting on hold for the next available operator, and 
the system automatically calls them back in turn. Over 800,000 return 
calls have been made through the Virtual Hold system since November 
2011. This represents an acceptance rate for callers of 47 percent, 
exceeding the industry standard of 30 percent, and our successful re-
connect rate is 92 percent.
    Since launching Virtual Hold, the National Call Centers have seen a 
31 percent reduction in the dropped-call rate. In December 2011, VA 
deployed Scheduled Callback technology, allowing callers to make an 
appointment with us to call them at a specific time. Since deployment, 
over 200,000 scheduled callbacks have already been processed. The J.D. 
Power and Associates client-satisfaction scores for our National Call 
Centers indicated a nine-point uptick in overall satisfaction for those 
callers that utilized the Virtual Hold option (from 731 to 740). In 
addition, there was a 15 percent uptick in the ``promptness in speaking 
to a person'' attribute score for the month of December 2011.
    VRM also deployed a pilot of our new ``Unified Desktop'' 
technology. This initiative will provide National Call Center agents 
with a single, unified view of VA clients' military, demographic, and 
contact information and their benefits eligibility and claims status 
through one integrated application, versus the current process that 
requires VA agents to access up to 13 different applications. This will 
help ensure our Veterans receive comprehensive and accurate responses.
    eBenefits Portal: eBenefits, the joint VA/DoD client-services 
portal for life-long engagement with Servicemembers, Veterans, and 
their families, is a fundamental component of the VRM initiative. Our 
life-long engagement begins with the Servicemember's entry into 
military service and extends throughout his or her lifetime - and 
includes access for Veterans' survivors. The eBenefits portal provides 
users with self-service options and greater access to VA information at 
the time and method of their choosing. In September 2011, VA and DoD, 
in a collaborative partnership, registered its one-millionth user on 
eBenefits. Current eBenefits enrollment exceeds 1.2 million users, 
representing a 450-percent increase since January 2011. This year, DoD 
is making enrollment in the eBenefits portal mandatory for all 
Servicemembers upon entry into military service.
    The eBenefits portal provides an online capability to check the 
status of a claim or appeal; review the history of VA payments; request 
and download military personnel records; secure a certificate of 
eligibility for a VA home loan; generate letters to verify Civil 
Service employment preference eligibility; and numerous other benefit 
actions. We continue to aggressively expand and update on-line self-
service and access capabilities. We are engaging our Veterans Service 
Organization partners in registering Veterans for eBenefits accounts. 
In 2012, Servicemembers will complete their Servicemembers' Group Life 
Insurance applications and transactions through eBenefits. Enhancements 
scheduled in 2012 will also allow Veterans to view their scheduled VA 
medical appointments, file benefits claims online in a ``Turbo Claim'' 
like approach and upload supporting claims information that feeds our 
paperless claims process. In 2013, funding supports enhanced self-
service tools for the CHAMPVA and VetSuccess programs, as well as the 
Veterans Online Application for enrolling in VA healthcare. eBenefits 
can be accessed via https://www.ebenefits.va.gov.
    Veterans Benefits Management System (VBMS): VBA will implement VBMS 
- the cornerstone of VA's claims transformation - beginning in 2012 and 
plans to complete its nationwide deployment to all regional offices in 
2013. It is a comprehensive solution achieved through a business 
transformation strategy for process and people within a paperless 
claims processing system. Achieving a paperless claims processing 
system will result in higher quality, greater consistency, and faster 
claims decisions. The system will also achieve significant cost savings 
through the reduction of manual and paper-based processing 
requirements. VBMS will move VBA's internal, paper-based process to an 
automated system that integrates streamlined claims processes, rules-
based processing, and Web-based technology. In January 2011, VA began 
processing some claims using VBMS and a pilot team at the Providence 
Regional Office. VA expanded VBMS to a team working at the Salt Lake 
City Regional Office in May 2011, and added functionality to support 
more claims and more claim types. This expansion also added system 
users and provided access to local VA Medical Centers and Veterans 
Service Organizations. This testing clearly demonstrated the value of 
the paperless VBMS process, reducing claims processing time to an 
average of 115 days. During 2012, VBA plans to deploy VBMS to 
additional regional offices. Funding requested in the 2013 budget 
supports expansion of VBMS to all regional offices and development and 
deployment of enhanced functionalities.

Homeless Veterans Outreach and Initiatives
    VBA is actively contributing to VA's plan to prevent and end 
Veterans' homelessness by 2015. VBA currently has 20 full-time Homeless 
Veterans Outreach Coordinators (HVOCs). In 2013, VBA will hire 200 
additional HVOCs to support this priority goal. The role of the 
additional HVOCs will be twofold: 1) Provide case-management services 
to homeless Veterans and assure expedited processing of their claims; 
and 2) Conduct extensive outreach to at-risk Veterans and their 
families in a proactive effort to prevent homelessness.
    It is projected that the increased staff in 2013 will accelerate 
services for an estimated 43,000 Veterans and their families by 
decreasing the frequency and duration of their episodes of 
homelessness. The resources will also assist Veterans and their family 
members maintain safe and permanent housing, get connected to 
employment opportunities, and improve their overall healthcare status.
    VBA is also actively engaged in ending Veteran homelessness through 
its Loan Guaranty Program, which makes VA properties available for 
permanent housing and shelter for homeless Veterans and Veterans at 
risk for homelessness. Under the Homeless Shelter Program, we have made 
over 200 properties available to non-profit and faith-based 
organizations since inception of the program in 1991 - including four 
homes sold to shelters in 2011, two of which serve only homeless female 
Veterans. VBA recently launched two new homeless initiatives. 
Properties Available to Non-Profits and Veterans allows homeless 
Veterans and non-profit organizations to purchase VA-acquired 
properties at a discount (up to 75 percent) for permanent or 
transitional housing. The Distressed Homes Initiative offers VA 
properties that require extensive repairs to qualified non-profits at 
an even steeper discount (up to 90 percent).

Compensation and Pension Programs
    Seventy-eight percent of the total mandatory funding supports 
monthly disability compensation and ancillary benefit payments to 
Veterans, their families, and their survivors. In addition to providing 
benefits to compensate Veterans' for their service-connected 
disabilities, the compensation program provides monthly payments to 
surviving spouses, dependent children, and dependent parents of 
Servicemembers and Veterans who die as a result of injuries or 
illnesses related to their military service. In 2013, funding for 
compensation for an estimated 4.0 million Veterans and survivors is 
projected at nearly $59 billion.
    Additionally, VBA will provide an estimated $3.2 billion in income-
based pension benefits to wartime Veterans who are permanently and 
totally disabled due to non-service-connected causes or are age 65 or 
older. Pension benefits to income-eligible surviving spouses and 
dependent children of deceased wartime Veterans who die as a result of 
a disability unrelated to military service are projected to total $1.7 
billion. More than 517,000 Veterans and survivors will receive pension 
benefits in 2013.

Incoming Disability Claims Workload
    The disability claims workload from the newest generation of 
returning war Veterans, as well as from Veterans of earlier periods, 
continues to increase. VBA's annual claims receipts increased 48 
percent over the last four years, from 888,000 in 2008 to 1.3 million 
in 2011. Receipts in 2011 include nearly 231,000 claims for new Agent 
Orange presumptive disabilities. We anticipate total claims receipts 
will be 1.2 million in 2012 and 1.25 million in 2013.
    The growth in disability claims volume is driven by a number of 
factors, including our successful outreach efforts, increased demand as 
a result of 10 years at war, and improved access to benefits through 
the joint VA and DoD Pre-Discharge Programs: Integrated Disability 
Evaluation System (IDES), Benefits Delivery at Discharge (BDD), and 
QuickStart. Other major factors include Agent Orange presumptive 
disabilities for Veterans who served in the Republic of Vietnam; the 
aging of our Veteran population; new regulations for processing certain 
claims related to Gulf War service, traumatic brain injuries, and post-
traumatic stress disorder (PTSD); and the impact of a difficult 
economy.
    IDES ensures seamless service delivery for our wounded, ill, and 
injured Servicemembers by addressing the duplicate, time-consuming, and 
often confusing and overlapping elements of the VA and DoD disability 
processes. Last year, IDES expanded from 21 sites to 139 sites. VBA 
currently dedicates 94 Veterans Service Representatives and Military 
Services Coordinators to full-time IDES processing, and we 
significantly increased rating resources dedicated to IDES (from 45 
Rating Veterans Service Representatives (RVSRs) assigned to IDES at the 
start of FY 2011 to 126 RVSRs currently assigned). This level of 
staffing represents four times the FTE devoted to claims that are 
processed under our traditional model. We made major improvements in 
service delivery, decreasing processing time in areas of VA 
responsibility from 186 days to 104 days. We are on track to reach our 
target of processing IDES claims in 100 days. We are also in the 
process of integrating vocational rehabilitation and employment (VR&E) 
counselors into the IDES process to provide enhanced transition 
services. The 2012 budget supports 110 VR&E counselors to be placed at 
the busiest IDES sites around the country, and the 2013 budget provides 
an additional 90 counselors. In 2013, these counselors will serve 
22,000 Servicemembers.
    In 2011, VBA allocated significant resources to processing the 
approximately 231,000 Agent Orange presumptive claims received, 
dedicating our 13 resource centers exclusively to readjudicating over 
90,000 previously denied claims for the new presumptive conditions 
under the stipulations of the Nehmer court decision. The complexity of 
the Nehmer claims processing significantly reduced employee output, as 
1,100 Veterans Service Representatives (VSRs) and nearly 1,200 raters 
worked these Agent Orange claims in 2011, and their average decision 
output was reduced from 2.5 cases per day to one case per day. To date, 
over 114,000 Veterans and survivors received over $3 billion in 
retroactive benefits for the new Agent Orange presumptives. Although we 
are nearing completion of the Nehmer workload, we expect a residual 
impact on claims processing timeliness into 2012. Our focus on 
processing these complex claims had slowed processing of other claims 
and contributed to a larger claims backlog, but it remains the right 
thing to do for our Vietnam Veterans, many of whom have waited a long 
time for these benefits.
    The complexity of the workload also continues to rapidly increase, 
as Veterans claim greater numbers of disabilities and the nature of the 
disabilities (such as PTSD, combat injuries, diabetes and related 
conditions, and environmental diseases) become increasingly complex. 
Last year, the number of disabilities claimed by Veterans who served in 
Iraq and Afghanistan averaged 8.5, a dramatic difference from Veterans 
of earlier eras (e.g., World War II Veterans claimed 2.5 disabilities, 
Gulf War Veterans claimed 4.3 disabilities). Even with the 
unprecedented workload increases, VBA has achieved a 15 percent 
increase in output over the last four years, completing over one 
million disability claims in each of the past two years. VBA expects 
production levels to continue to increase each year through 
transformational process changes and technological advances.

Pension Programs
    VA's needs-based pension programs provide economic security to more 
than 313,000 wartime Veterans who are permanently and totally disabled 
as a result of disability not related to service or are age 65 or 
older, and to more than 203,000 survivors. In FY2013, VA expects to pay 
over $4.9 billion in pension benefits to these beneficiaries.
    VA's consolidation of pension program operations at three Pension 
Management Centers (PMCs) in Philadelphia, Milwaukee, and St. Paul, 
with a workforce of nearly 1,200 employees, enables it to provide 
consistent, high-quality decisions on pension claims. As a result of 
the consolidation and other initiatives, the quality of pension 
decisions has steadily increased from 2008 to 2011. During this period, 
the national accuracy rate for pension entitlement claims improved from 
87 percent to 98 percent, while the national accuracy rate for pension 
maintenance claims improved from 93 percent to 98 percent. In addition 
to maintaining a high quality rate, the PMCs demonstrate the advantages 
of moving toward a paperless work environment. In this future work 
environment, claims will be imaged and stored in an electronic format, 
eliminating the need for hard copy folders, allowing work to be 
completed without regard to the physical location of the decision 
maker, and allowing multiple individuals simultaneous access to the 
electronic record regardless of location.

Fiduciary Program
    VA administers a comprehensive fiduciary program for our most 
vulnerable beneficiaries who are unable to manage their own funds. VA 
appoints and provides oversight of fiduciaries to ensure that 
beneficiaries receive the benefits and services they need.
    VA has seen a steady increase in the number of beneficiaries who 
need fiduciary services. From 2008 to 2011, the number of beneficiaries 
in the program increased by 20 percent, and from 2010 to 2011 alone, 
beneficiaries in the program increased by over 10 percent. Today, there 
are more than 121,000 beneficiaries in the program with a combined 
estate value of more than $3.3 billion. This growth has resulted in a 
corresponding increase in VBA's fiduciary workload. Since 2008, VA 
experienced a 30 percent increase in field examinations, a 22 percent 
increase in accounting audits, and a 26 percent increase in the number 
of miles traveled by field examiners to conduct initial and follow-up 
fiduciary appointment investigations.
    In early 2009, VBA initiated a pilot project, under which it 
consolidated 14 of its fiduciary activities into the Western Area 
Fiduciary Hub, which operates in a near paperless environment. VBA 
found that consolidation had a significant positive impact on the 
timeliness and quality of fiduciary appointments. Timeliness of initial 
appointment field examinations increased by 40 percent, while quality 
increased by 8 percent. The hub concept also allowed VBA to more 
efficiently allocate resources, resulting in a 6-percent decrease in 
miles traveled per field examination. Based upon the pilot results, VBA 
deployed the hub concept nationwide, with further consolidation into a 
near paperless environment occurring at five new hubs at regional 
offices. Full consolidation of VBA's fiduciary activities should be 
complete in June 2012. VBA's efforts to convert its fiduciary 
activities into regional, paperless processing centers demonstrate the 
potential of its ongoing transformation initiatives, which will build 
upon these early initiatives.
    We continue to identify and develop methods to improve service to 
this vulnerable population of beneficiaries. These efforts include 
deploying a standardized field examination application, increasing 
fiduciary staffing according to a model that ensures that VBA 
efficiently deploys its field examiner workforce, developing a new 
information technology system for managing VBA's fiduciary workload and 
tracking fiduciary activity, development of standardized training for 
fiduciary personnel, and development of certification requirements and 
internet resources for fiduciaries. VBA has also initiated a complete 
revision of its fiduciary regulations to ensure that it has the rules 
it needs to meet its oversight obligations.

Concluding Remarks
    We appreciate the opportunity to provide additional information on 
VBA's 2013 budget request and to share with you the progress we are 
making in transforming the delivery of benefits and services for our 
Veterans and their families and survivors. We recognize there is still 
a tremendous amount of work to be done. I assure you of our commitment 
to achieving fundamental and dramatic improvements that will expedite 
the delivery of benefits, improve quality, and ensure we are providing 
timely, accurate, and comprehensive information and assistance to all 
those we serve.
    We will continue to promote efficient spending practices, and we 
acknowledge the importance of good stewardship of taxpayer dollars to 
achieving our mission. We are confident we are on the right path and 
making the investments necessary to accomplish the aggressive goals set 
for us by Secretary Shinseki.
    This concludes my remarks. I am happy to respond to any questions 
from you or other Members of the Subcommittee.

                                 
                  Prepared Statement of Steve L. Muro

    Chairman Runyan, Ranking Member McNerney and members of the 
Subcommittee, I am pleased to provide an overview of the Fiscal Year 
(FY) 2013 budget for the National Cemetery Administration (NCA). Within 
the Department of Veterans Affairs (VA), NCA is responsible for 
administering burial and memorial programs to meet the needs of 
Veterans, their families and survivors. Our responsibilities include: 
managing 131 national cemeteries and 33 soldiers' lots and monuments; 
furnishing headstones, markers and medallions for the graves of 
Veterans around the world; administering the Presidential Memorial 
Certificate program; executing the First Notice of Death Program; and, 
overseeing the Federal grants program for construction of state and 
tribal Veterans cemeteries.
    As we move forward into the next fiscal year, we project our 
workload numbers will continue to increase. For FY 2013, we anticipate 
conducting over 119,000 interments of Veterans or their family members, 
maintaining and providing perpetual care for over 3.3 million 
gravesites, maintaining 8,700 developed acres, and processing 
approximately 350,000 headstone and marker applications. We plan to 
meet this demand while maintaining our high level of customer service 
to our clients. We are proud of the fact that for the fourth time in a 
10-year period, NCA was ranked the best over the Nation's top 
corporations and other federal agencies in an independent survey of 
customer satisfaction.
    VA's burial and memorial programs are funded from both 
discretionary and mandatory accounts. Mandatory funding is provided 
from the Compensation and Pension account, managed by the Veterans 
Benefits Administration (VBA). These funds are used to purchase 
headstones, markers, medallions and burial crypts. I will focus my 
comments today on the discretionary funding, administered by NCA. The 
President's 2013 budget request includes a total of $372 million for 
NCA's discretionary programs. Of this amount, $258 million is included 
for operations and maintenance of our national cemeteries; $9.6 million 
is requested for our Major Construction program; $58 million for Minor 
Construction; and $46 million for the Veterans Cemetery Grants program. 
The budget request will permit NCA to hire an additional 4 FTE to 
address expected increases in burials and to provide contract funding 
for additional maintenance requirements.
    VA's Fiscal Year 2013 budget outlines the Department's priorities 
and NCA continues to move forward to support the Department in 
achieving the specific goals of expanding access for our Veterans and 
ending Veteran homelessness.
    With respect to increasing Veteran access to a burial option, the 
FY 2013 budget will enable VA to provide almost 90 percent--or close to 
20 million--of the Veteran population with a burial option in a 
national, state or tribal Veterans cemetery within 75 miles of their 
homes. The budget will allow NCA to continue progress to establish new 
national and columbarium-only satellite cemeteries, support states and 
tribes in establishing Veterans cemeteries, and implement a new policy 
aimed at reaching unserved rural Veterans.
    In FY 2011, VA reduced the minimum Veteran population threshold 
requirement for building new national cemeteries from 170,000 to 80,000 
within 75 miles of a proposed site. As a result of this policy change, 
NCA is planning to establish five new national cemeteries in the areas 
of Central East Florida; Omaha, Nebraska; Western New York; 
Tallahassee, Florida; and Southern Colorado. NCA is actively searching 
for land at these locations and expects to request related construction 
funding in future budgets. With available resources, NCA will continue 
with land acquisition efforts and preliminary design for the five 
cemeteries in FY 2013.
    The budget also continues to support our urban initiative. NCA 
plans to build columbarium-only satellite cemeteries in five urban 
locations: Chicago, Indianapolis, Los Angeles, New York and San 
Francisco. Construction of these facilities will better serve the urban 
core and address concerns raised by NCA's customers regarding time and 
distance challenges associated with accessing national cemeteries. 
Funding was provided for Los Angeles, San Francisco (design) and 
Chicago in prior years. The FY 2013 budget includes funding for the New 
York City area and Indianapolis will be included in a future budget 
request.
    In addition, the FY 2013 budget request will allow NCA to implement 
a new policy aimed at reaching unserved Veterans in rural areas that do 
not qualify for a national cemetery and where the construction of a 
state cemetery is not likely. The budget includes an initiative to 
establish a national cemetery presence in eight rural areas where the 
Veteran population is less than 25,000 within a 75-mile radius service 
area. These National Veteran Burial Lots would be NCA-owned and managed 
lots in public or private cemeteries. As a result of this initiative, 
an additional 132,000 Veterans will have convenient access to a burial 
option in the following states: Idaho, Maine, Montana, Nevada, North 
Dakota, Utah, Wisconsin and Wyoming.
    NCA will continue its close partnership with the states in FY 2013. 
The budget request provides $46 million for the Veterans Cemetery 
Grants Program. The grants program provides an important complement to 
VA's national cemeteries by further expanding burial access to 
Veterans, especially those living in rural areas. FY 2013 funds will 
allow NCA to support states in collaboratively meeting high priority 
projects that serve Veterans, including those projects submitted by 
tribal governments. As part of this program, VA will continue to offer 
operating grants to assist states and tribes in achieving and 
maintaining standards of appearance commensurate with national cemetery 
shrine status. States and tribes are also able to continue their high 
level of service to Veterans with the recent Congressional action to 
increase the plot allowance to $700, and the subsequent adjustments 
based on the Consumer Price Index. These funds, which are administered 
by VBA, are available to the states and tribes when they bury a Veteran 
and are used to offset operating costs.
    Regarding the goal to end Veteran homelessness, NCA will provide 
employment opportunities through the establishment of a new, paid 
Apprenticeship Training Program serving Veterans who are homeless or at 
risk of homelessness. The program will be based on current NCA training 
for positions such as Cemetery Caretakers and Cemetery Representatives. 
Veterans who successfully complete the program at national cemeteries 
will be eligible for full-time permanent employment at a national 
cemetery or may choose to pursue employment in the private sector.
    The 2013 budget will allow NCA to continue to achieve exceptionally 
high performance results. We will process 90 percent of headstone and 
marker applications for Veterans buried in locations other than VA 
national cemeteries (e.g., private cemeteries, state and tribal 
Veterans cemeteries) within 20 days of receiving the request. Ninety-
five percent of gravesites in national cemeteries will be marked within 
60 days of an interment.
    NCA is committed to maintaining its high level of customer 
satisfaction. NCA achieved the top national rating four times in ten 
years on the prestigious American Customer Satisfaction Index (ACSI) 
established by the University of Michigan. The Index is the only 
national, cross-industry measure of satisfaction in the United States. 
We surpassed over 100 other federal agencies, and industry leaders like 
Ford, FedEx, and Coca Cola. NCA's internal customer survey confirms 
this exceptional level of performance. In FY 2011, 98 percent of 
respondents rated the appearance of national cemeteries as excellent 
and 95 percent rated the quality of service as excellent. Our 2013 
targets for cemetery appearance and quality of service are 99 and 98 
percent, respectively.
    NCA attributes our success to the development and application of 
rigorous operational standards and measures that promote transparency 
and accountability, a national focus on training and strategic 
planning, as well as the continued support of the President and 
Congress. The FY 2013 budget reflects the sustained and significant 
investments in national cemeteries provided over the past several 
years. The base budget for operations includes nearly $32.9 million for 
projects to raise, realign and clean headstones and markers and repair 
sunken graves, as part of our ongoing effort to maintain national 
cemeteries as national shrines worthy of Veterans' service and 
sacrifice. My personal expectation of each employee in NCA is that they 
will provide Veterans and their families with outstanding customer 
service.
    All employees at the National Cemetery Administration are the 
custodians of a sacred trust. We strive to be the model of excellence 
in the delivery of burial benefits and we are proud of our 
unprecedented customer satisfaction scores. We have created a culture 
of accountability and continuous management improvement. We know we 
have just one chance to get it right. When we make a mistake, we 
address it immediately and openly. As you know, we recently became 
aware of headstones that were set one gravesite off at Ft. Sam Houston 
National Cemetery in Texas that resulted from a contracted gravesite 
renovation project. The discovery of these errors, for which we take 
full responsibility, led me to direct a system wide audit of all VA 
national cemeteries that have undergone gravesite renovations in the 
past 10 years. As part of this audit and other due diligence, NCA has 
reviewed an estimated 1.3 million gravesites as of January 23, 2012. In 
total, 115 headstones and markers were identified as being offset by 
one gravesite and needed to be reset, four headstones needed to be 
ordered and placed on unmarked gravesites, and eight caskets or urns 
needed to be reburied. We have contacted the affected families where 
possible, extended our sincere apologies and made the appropriate 
corrections. We will review the remaining 1.8 million gravesites at VA 
national cemeteries by the end of calendar year 2012, and report our 
findings to the Committee. To minimize these errors in the future, we 
have improved procedures for the accountability of remains and will 
hire certified contracting officer representatives at each of our 
Memorial Service Network (MSN) offices to oversee future gravesite 
renovation projects.
    Our veteran-focused work ethic is no surprise, given that 73.5 
percent of NCA employees are Veterans and 80 percent of our cemetery 
directors are Veterans. Since January 2009, NCA has hired more than 250 
Operation Enduring Freedom/Operation Iraqi Freedom Veterans--almost 50 
were hired since June 2011. NCA is also committed to contracting with 
small businesses, especially businesses owned by Veterans and service-
disabled Veterans. In FY 2011, NCA far exceeded the Secretary's goals 
for awards to small businesses: NCA awarded 77 percent of contracts to 
service-disabled Veteran owned small businesses, which was 
significantly above the Secretary's target of 10 percent. In addition, 
NCA met all goals in every contracting set-aside. We expect to achieve 
similar results in FY 2013.
    Building upon our success, we look toward the future and the needs 
our Veterans will have in the years to come. In 2011, NCA initiated an 
independent study of emerging burial practices including ``green'' 
burial techniques, such as biodegradable urns, underwater cremation 
reefs and other environmentally sensitive options, to identify those 
that may be appropriate and feasible for planning purposes. The study 
will be completed in 2012 and will include a survey of Veterans to 
ascertain their preferences and expectations for new burial options. 
The completed study will provide comprehensive information and analysis 
for leadership consideration of new burial options.
    The VA's 2013 Office of Information and Technology (OIT) budget 
includes approximately $10 million for operation and maintenance and 
$11 million for development projects in support of NCA. These funds 
will enable NCA to not only maintain its current network and data 
center, but to continue to upgrade its major information technology 
systems and processes that will improve quality, minimize the 
possibility of error and reduce the time needed to deliver burial and 
memorial benefits. As part of our oversight responsibilities and 
commitment to transparency, NCA instituted enhanced accountability 
measures and maintained our focus on workforce training. NCA shared 
these aspects of our success with Arlington National Cemetery and 
recently requested that a planning meeting be scheduled to establish 
the joint working group recommended by the Government Accountability 
Office (GAO). We look forward to sharing best practices with our 
Department of Defense partners.
    Mr. Chairman, this concludes my remarks. I appreciate your and the 
subcommittee's continued support of NCA and its mission as the 
custodians of a sacred trust. I am happy to answer any questions. Thank 
you.

                                 
                   Prepared Statement of Max Cleland

Introduction
    Mr. Chairman and Members of the Subcommittee . . .
    Thank you for this opportunity to discuss the American Battle 
Monuments Commission's Fiscal Year 2013 Appropriation Request.

    ``Time will not dim the glory of their deeds''

    Those words of our first chairman, General of the Armies John J. 
Pershing, have served as our mantra and are the foundational 
inspiration of our strategic plan.
    Honoring our Nation's fallen overseas has been our purpose since 
the Commission's creation in 1923. We perform this mission by 
commemorating service and sacrifice worldwide--at sites entrusted to 
our care by the American people. It is our responsibility to honor 
America's war dead and missing in action, where they have served 
overseas.
    ABMC's core mission is one of commemoration - honoring service and 
sacrifice by maintaining memorial shrines to our Nation's war dead and 
preserving their stories so that time, indeed, does not dim the glory 
of their deeds. It is not geography that defines the American Battle 
Monuments Commission--it is purpose.
    And we execute that mission by providing historical context for why 
our overseas monuments and cemeteries were established, why those 
memorialized within them died, and the values for which they died.
    Those whom we honor deserve nothing less.
    We must ensure that the words of British citizen Thomas Gorden were 
not prophetic, when he wrote:

    Gods and soldiers we adore
    In times of danger not before
    The danger past and all things righted
    God's forgotten and soldiers slighted

Telling Their Story
    Maintaining our monuments and cemeteries is and will remain the 
Commission's core mission and top priority. But we also have a 
responsibility to tell the stories of those we honor.
    We have three visitor center projects we expect to award this year 
that will enable us to better tell stories of service and sacrifice at 
Cambridge American Cemetery in England, Sicily-Rome American Cemetery 
in Italy, and at the Pointe du Hoc Ranger Monument in Normandy, France.
    At the same time, we recognize our responsibility to prudently 
match our interpretive program efforts to fiscal and visitation 
realities.
    Normandy American Cemetery, whose visitor center was dedicated in 
2007, is our most visited site, with one million visitors annually. 
Pointe du Hoc receives nearly 500,000 visitors a year. Cambridge and 
Sicily-Rome, with their proximity to the major tourist destinations of 
London and Rome, have visitation growth potential. Most of our 
cemeteries, however, receive far fewer visitors.
    We also are sensitive to the Commission's responsibility to 
preserve the historic fabric of our sites, in keeping with their status 
as important national heritage assets. At sites such as Meuse-Argonne 
cemetery in France and Flanders Field cemetery in Belgium, rather than 
program new facilities, we will renovate the existing visitor buildings 
to accommodate state-of-the-art interpretive exhibits.
    Experience also has demonstrated that facility and exhibit design 
is a multi-year process--many of our sites might wait 15 to 20 years 
before we are able to provide full interpretive services to their 
visitors. That is not acceptable.
    To ensure that all of our cemeteries have basic interpretive 
information available much sooner, we are producing ``temporary'' 
exhibits that will be deployed within the next 18 months. This is 
particularly important for our World War I sites, as we approach the 
August 2014 beginning of the World War I Centennial.
    Unfortunately, most American and foreign citizens will never have 
the opportunity to walk the hallowed grounds of our overseas sites. For 
them, our website must become a virtual visitation experience.
    Over the next five years, we will produce 18 educational 
interactive programs on major U.S. campaigns of the world wars to 
supplement the Normandy Campaign and Battle of Pointe du Hoc programs 
available now. And this year we will produce a mobile phone app for a 
tour of the Pointe du Hoc battlefield that will also be produced in a 
web version, the first of many such virtual tours we want to make 
available to the public.
    We must continue to adapt our message and our products to the 
interests and demands of younger generations, for whom these important 
heritage sites and timeless lessons must remain relevant. We are 
devoting resources to do just that.
    Let me now turn to a brief discussion of the work we are doing, and 
the work we need to do, in the Pacific.
UN Cemetery Memorial in Korea
    The United Nations Memorial Cemetery in Korea (UNMCK) is located in 
Pusan, Korea. This site is the only UN military cemetery in the world. 
The Korean government has given the United Nations the use of the land 
for the cemetery in perpetuity.
    Eleven countries have members of their armed forces interred at the 
cemetery, including the United States. Most of those nations have 
memorials in the cemetery honoring their armed forces--the U.S. does 
not.
    In 2010, the Commission received an inquiry about creating a United 
States Memorial at this UN cemetery. Our Commissioners approved the 
project and we will take a design concept to the Commission of Fine 
Arts for approval next month. We hope to dedicate the memorial this 
summer.
Pacific Memorials
    We also will restore four of our existing Pacific memorials.

    Honolulu Memorial

    The Honolulu Memorial is located within the National Memorial 
Cemetery of the Pacific. The memorial and cemetery are located in 
Puowaina Crater, an extinct volcano referred to locally as the 
Punchbowl because of its shape. The Commission erected the Honolulu 
Memorial in 1964 and it was dedicated on May 1, 1966. The Department of 
Veterans Affairs administers the cemetery; our Commission administers 
the memorial.
    With 2010 and 2011 funding, we installed lifts at the memorial to 
provide full accessibility, and we are working on a Vietnam battle maps 
project we expect to dedicate in November on Veterans Day. Additional 
renovation and infrastructure work is budgeted in FY 2012 and FY 2013s.

    Cabanatuan Memorial

    The Cabanatuan Memorial in the Philippines is located at the site 
of the camp and honors those who died during internment. The 
Commission, recognizing the significance of this memorial, accepted 
responsibility for its operation and maintenance in 1989.
    Because it was built as a private memorial, the design was not 
approved by the Commission of Fine Arts. We will renovate the memorial 
to replace and upgrade cladding materials, address deficiencies in the 
memorial text, and make site improvements to include the outbuilding 
and restrooms.

    Guadalcanal Memorial

    The Guadalcanal Memorial was built through the joint efforts of 
ABMC and the Guadalcanal-Solomon Islands Memorial Commission. It honors 
Americans and Allies who lost their lives during the Guadalcanal 
Campaign of World War II (August 1942 to February 1943).
    Problems with the memorial are related to its foundation and 
encroachment. The Solomon Islands experience intense seismic activity 
causing degradation of the granite, gaps at the joints, and cracks and 
breakage of the granite tiles. Vandalism is rampant because of the lack 
of a fence on the property line. Fencing is required to bring this site 
up to ABMC standard.

    West Coast Memorial

    The West Coast Memorial is located on the grounds of the Presidio 
overlooking the entrance to San Francisco Bay. The memorial was erected 
in memory of those who met their deaths in the American coastal waters 
of the Pacific Ocean during World War II. On the wall are inscribed the 
names of 412 Americans whose remains were never recovered or 
identified.
    A project has been approved to address Americans with Disabilities 
Act upgrades and landscaping improvements in FY 2013. Additionally, 
consideration is being given to adding an outdoor interpretive panel to 
provide historical context for the memorial to visitors.
Manila American Cemetery
    The Manila American Cemetery in the Philippines is the Commission's 
largest cemetery and our only commemorative cemetery in the Pacific. It 
contains 17,201 graves of our military dead of World War II, most of 
whom lost their lives in operations in New Guinea and the Philippines. 
The headstones, aligned in 11 plots, are set among a wide variety of 
tropical trees and shrubbery.
    The chapel, enriched with sculpture and mosaics, stands near the 
center of the cemetery. In front of it on a wide terrace are two large 
hemicycles. Twenty-five mosaic maps recall the achievements of the 
American armed forces in the Pacific, China, India and Burma. On 
rectangular limestone piers within the hemicycles are inscribed the 
Tablets of the Missing containing 36,285 names. Carved in the floors 
are the seals of the American states and territories.
    During FY 2010 and 2011, ABMC invested in horticulture projects to 
modify existing irrigation and pump systems and replace landscape and 
horticulture features. The Manila cemetery requirements beginning in FY 
2012 are two-fold: improve the infrastructure of the cemetery and 
establish an enhanced interpretation program.
    In order to combine interpretation and infrastructure efforts in a 
thoughtful process, a master plan was funded in FY 2011 to evaluate the 
need for major facility upgrades and to assess current conditions and 
infrastructure priorities. The master plan is not complete, but early 
indications are that the Commission needs to address serious cemetery 
requirements. Two of those requirements will be addressed in FY 2013:

    Perimeter Wall: There are serious encroachment and boundary issues 
at the cemetery. To protect the cemetery and to address security 
concerns, the Commission will replace the current chain link fence 
around the site with a robust perimeter wall. Unless marked by a 
substantial ``permanent'' wall, local culture ascribes a ``temporary'' 
definition to the boundary that will continue to subject our 
commemorative site to degradation by such intrusions as local highway 
projects and infiltration by squatters. The new perimeter wall will be 
constructed in FY 2013 and should protect ABMC land from future 
intrusion.
    Quarters: The existing two quarters are aging and are deficient in 
structure (walls are not insulated) and air conditioning (low 
efficiency window units). There has been a significant change in the 
cemetery environment as a result of high rise building construction, 
creating a less desirable living environment. The buildings overlook 
the quarters leaving no privacy to the families. Major renovation of 
the existing quarters will be costly and unsatisfactory due to this 
environment. The two quarters will be moved to a vacant area of the 
cemetery grounds, away from the high rise buildings. Quarters design 
will be funded in FY 2013.
    Interpretation: Although we will not address the interpretive 
program at Manila cemetery in FY 2013, I want to mention it briefly. 
Manila is the only ABMC cemetery in the Far East where we have the 
ability to tell the story of the war in the Pacific. The cemetery 
honors by burial and by name on tablets of the missing more than 53,000 
service men and women, nearly 24 percent of the 225,000 individuals 
honored at ABMC commemorative sites worldwide. The site also provides 
the Commission its best opportunity to feature accounts of the 
competence, courage and sacrifice of United States Navy and Marine 
Corps forces. Our Manila cemetery is an important venue for telling the 
World War II story in the Pacific.

    Our requirements in the Pacific are extensive. Manila American 
Cemetery and our memorials in the Pacific are important elements of 
ABMC's worldwide commemorative mission and must receive appropriate 
attention and care, as that provided to our sites in Europe. We are 
committed to correcting the problems at these Pacific sites in future 
budgets.

Appropriation Request
    To execute this mission, our Fiscal Year 2013 request is for 
$73,600,000 in total budget authority and a 400 Full-Time Equivalent 
(FTE) employment level.
    The $58.4 million we request for Salaries and Expenses supports 
Commission requirements for compensation and benefits; rent and 
utilities; maintenance, infrastructure, and capital improvements; 
contracting for services; procurement of supplies and materials; and 
replacement of equipment. Our Salaries and Expenses request is $2.7 
million below the funding provided for FY 2012.
    The request to replenish our Foreign Currency Fluctuations Account 
under ``such sums as may be necessary'' language is estimated to be 
$15,200,000, a reduction of $800,000 from FY 2012. The $15.2 million 
will be used to defray losses resulting from changes in the value of 
foreign currencies against the U.S. Dollar. The ability to maintain 
purchasing power in an uncertain financial environment is critical when 
60 percent of our annual appropriation is spent overseas.
    We have taken a balanced approach to the projected reduction in our 
Salaries and Expenses account. Just over $2.0 million of the $2.7 
million reduction will be taken in our Engineering & Maintenance and 
Interpretation programs. The other $700,000 reduction will be taken in 
Travel and in Services, Supplies and Equipment. This decrease also 
implements the Office of Management and Budget Director's September 12, 
2011 guidance regarding ``Eliminating Excess Conference Spending and 
Promoting Efficiency in Government.''
    The Commission requests no increase for Salaries & Benefits. The 
reduction in FTE is in line with our actual personnel requirements in 
FY 2011, our anticipated requirements for FY 2012, and reflects one of 
the results of the Secretary's reorganization plan to streamline the 
Commission in 2009. The reduction permits the Commission to fully fund 
mandatory overseas compensation expense increases that we incur without 
being constrained by Federal pay guidance, and an estimated 0.5 percent 
pay increase under the Administration's FY 2013 pay assumptions.

Conclusion
    The essence of the Commission's mission success does not change 
from year to year: (1) keep the headstones white; (2) keep the grass 
green; and (3) tell the story of those we honor.
    The Commission's $73,600,000 request will provide the resources 
needed to accomplish those core mission requirements, to a level that 
our war dead deserve and that the American people have come to expect.
    With the support of the Administration and the Congress, we strive 
do our part to meet the challenge posed by the poet Archibald 
MacLeish--words I have shared with you before but which forever ring 
true:

    `` . . . We leave you our deaths: give them their meaning ...''

    Mr. Chairman, Members of the Sub-Committee, I hope that you have 
the opportunity during your travels to visit our commemorative sites. 
Those that do never forget the inspiration, the humility--the 
gratitude--they felt as they walked those hallowed grounds.
    Thank you for allowing me to present this summary of our mission 
operations and our appropriation request.

Executive Summary
    Total Budget Authority Requested for Fiscal Year 2013

    The American Battle Monuments Commission requests $73,600,000 in 
total budget authority for fiscal year (FY) 2013 to provide funding for 
Salaries and Expenses and the Foreign Currency Fluctuation Account. The 
FTE reduction is in line with the actual personnel requirements in FY 
2011, anticipated requirements for FY 2012, and reflects one of the 
results of the Secretary's 2009 reorganization plan to streamline the 
Commission.

----------------------------------------------------------------------------------------------------------------
                                        FY 2011             FY 2012                             FY 2012-FY 2013
          ($ in thousands)           Appropriation       Appropriation     FY 2013  Request         Change
----------------------------------------------------------------------------------------------------------------
Salaries & Expenses                         $64,072             $61,100             $58,400            ($2,700)
Foreign Currency                            $16,000             $16,000             $15,200              ($800)
        Total                               $80,072             $77,100             $73,600            ($3,500)

FTE Authorized                                  409                 409                 400                 (9)
FTE Actual/Estimated                            396                 400                 400                   0
----------------------------------------------------------------------------------------------------------------

    Salaries and Expenses Request

    The Commission's FY 2013 budget request for salaries and expenses 
of $58,400,000 is $2,700,000 below the funding provided by the 
Consolidated Appropriations Act (Public Law 112-74) for FY 2012. 
Adjustments to the Commission's budget request are shown below:

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

----------------------------------------------------------------------------------------------------------------
FY 2012 Appropriation                                                                               $61,100,000
Adjustments:                                                      Notes
  Rent and Utilities, net increase                                    1             $87,000
  Travel                                                                         ($504,000)
  Services, Cemetery Supplies, Equipment, net                         2          ($237,000)
 decrease
  Maintenance and Infrastructure Programs, net                        3        ($2,046,000)
 decrease
Total Adjustments                                                                                  ($2,700,000)
FY 2013 Budget Request                                                                              $58,400,000
----------------------------------------------------------------------------------------------------------------

    Notes:

    \1\  Increase per GSA office space rent estimate net of Utilities 
adjustments.
    \2\  Net decrease in requirements for Services, Supplies and 
Equipment.
    \3\  Decrease in Maintenance and Infrastructure Programs at ABMC 
cemeteries and monuments due to reduced number of projects in FY 2013.

    Foreign Currency Fluctuations Account Request

    The Commission's FY 2013 budget request to replenish its Foreign 
Currency Fluctuations Account under ``such sums as may be necessary'' 
language is estimated to be $15,200,000, a reduction of $800,000. This 
funding estimate is required to retain the Commission's buying power 
against currency losses, primarily against the European Euro.

                                 
               Prepared Statement of Hon. Bruce E. Kasold

    MR. CHAIRMAN AND DISTINGUISHED MEMBERS OF THE SUBCOMMITTEE:
    I am pleased to appear before you again and to present testimony on 
the fiscal year (FY) 2013 budget request and performance plans of the 
United States Court of Appeals for Veterans Claims. My remarks today 
will (1) summarize our budget request, (2) provide an update on the 
Court, its caseload, and its Operation Plan, and (3) touch on two 
important initiatives I have mentioned in the past - a broad 
examination of the structure of federal appellate review of veterans 
benefits decisions, and the Veterans Courthouse project.

                           I. Budget Request

    The Court's FY 2013 budget request totals $32,480,700. This request 
is comprised of two parts - the Court's necessary operating expenses of 
$29,754,700, and a request by the Veterans Consortium Pro Bono Program 
(Pro Bono Program) for $2,726,000. Since FY 1997, the Pro Bono 
Program's budget request has been provided to Congress as an appendix 
to the Court's budget request. Accordingly, I offer no comment on that 
portion of our budget request.
    As to the Court's operating expenses, our FY 2013 request reflects 
an increase of $1,710,700 over our FY 2012 appropriation. This increase 
results primarily from (1) an increase of $1.443M in the statutorily 
required contribution to the Court of Appeals for Veterans Claims 
Retirement Fund (Retirement Fund or Fund) (see 38 U.S.C. Sec.  7298); 
(2) an increase of $455K in payroll compensation and benefits; and (3) 
a decrease of almost $190K in the Court's other operation expenses.
    As to the Retirement Fund expense, as I noted in my testimony on 
the budget last year, upon becoming Chief Judge in 2010 I initiated a 
review of the Fund and the Court's past contributions. I noted that our 
internal budgeting for this expense routinely had been underestimated, 
resulting in an insufficient appropriations request and requiring funds 
originally planned for other activities, but not ultimately expended 
for those purposes, to be contributed to the Fund at the end of the 
year to reduce the unfunded liability pursuant to 38 U.S.C. Sec.  7298. 
One reason for the past-years under-budgeting was that estimates were 
based on an anticipated average 5% growth in the Fund. In reality, 
there was less than .25% growth (the funds are invested in Treasury 
instruments), and that alone accounted for a guaranteed shortfall of 
about $1M at the end of the fiscal year. The same will occur each year 
that the actual interest return is less than the projected.
    This low growth performance was taken into consideration in our FY 
2012 budget request, although that was only a partial fix. Since 
submission of last year's request, with the assistance of the Court's 
actuary, we have further refined what is necessary to maintain the 
statutorily required funding with the goal of significantly reducing 
the need for end-of-year funding from appropriations provided for other 
purposes but not used. Our FY 2013 budget request of $3.8M reflects the 
funding necessary to maintain, on an actuarial basis, full funding 
through FY 2013.
    For FY 2013 the Court requests $18.318M for Personnel Compensation 
and Benefits, an increase of $455K from FY 2012. The number of full 
time employees remains at 127, unchanged from FY 2012. The Court's 
appropriations request covers anticipated expenses for employees 
including salary, health benefits, insurance, and employee matching 
contributions to the Thrift Savings Plan, as well as routine 
promotions.
    For FY 2013 the Court requests $7.637M for all other operation 
expenses (``Other Objects''), a decrease of nearly $190K from FY 2012. 
These funds are used to satisfy the Court's daily operations needs, and 
cover such expenses as rent, contract services, communication and 
utility expenses, equipment, furniture, supplies, subscriptions, travel 
and transportation, and printing expenses. These funds will also 
support enhancements to our capability to sustain continued operations 
in accordance with changes in the Court's Continuation of Operation 
Program (COOP) plan.

            II. The Court, its Caseload, and its Operations

    Since its creation in 1988, the Court has become one of the busiest 
federal appellate courts based on the numbers of appeals filed and 
decided per judge.
    Over the past five years approximately 4,500 appeals and petitions 
have been filed annually at the Court, although last year the number of 
appeals and petitions dropped to just over 4,000. This likely is 
reflective of fewer Board decisions denying benefits, as our history of 
appeals generally tracks the rise and fall in the number of Board 
decisions that deny benefits. In addition to appeals and petitions 
filed, the Court receives hundreds of motions each month, each 
requesting that the Court take some action.
    In FY 2011, on top of the significant number of motions, the Court, 
as a whole, disposed of over 7,500 matters, including over 4,600 
appeals, over 2,500 applications for attorney fees and expenses, over 
160 petitions, and hundreds of requests for reconsideration or panel 
review. Although short one permanent judge due to retirement, and two 
additional judges who are authorized if appointed by the end of this 
year, the Court has managed to decide more cases than ever before. This 
has been the result of 1) tremendous focus and effort by the active and 
senior judges and Court staff, 2) additional, temporary hires, and 3) 
managerial adjustments to streamline and facilitate the review process.
    As I have testified to before, on becoming Chief Judge I examined 
our review process and noted two areas of un-programmed delay. One was 
the time it took to decide cases once they were assigned for judicial 
review, and second was the time it took our Central Legal Staff (CLS) 
to prepare case summary and research memoranda in advance of forwarding 
cases for judicial review.
    With regard to judicial review, it must be recognized that quality 
significantly trumps quantity. With a continuous eye on quality, we 
also have focused this past year on the number of cases in chambers 
pending decision. We made some administrative adjustments and hired 
some temporary staff, and I am pleased to report that virtually all 
cases assigned to chambers are now being decided within 90 days of that 
assignment, not including cases sent to panel or stayed pending 
decision in another case that might govern the result.
    With regard to the time to prepare cases for judicial review, we 
initiated an aggressive review of all pending cases where there was 
representation; those with issues fully and adequately briefed were 
promptly transferred for judicial review without the case summary and 
research memoranda that traditionally had been prepared by CLS 
attorneys. I am pleased to report that this has reduced the number of 
cases pending preparation for judicial review from a high of over 800 
to under 400 by the end of calendar year 2011, and we continue to work 
toward a goal of forwarding cases for judicial decision no more than 30 
days after the matter is fully briefed by the parties.
    With fewer case summary and research memoranda, additional CLS 
support was shifted to our Senior Judges. CLS attorneys prepare and 
draft cases and orders for the Senior Judges and are able to maintain a 
steady flow of work so that the Senior Judges are as productive as 
possible throughout their 90-day recall period. At the same time, we 
have continued our very successful mandatory conferencing process for 
all cases where the appellant is represented. This focus on resource 
allocation has proven to be tremendously helpful in reducing the 
overall number of cases pending decision by a judge or panel - from 709 
at the end of FY 2010 to 388 at the end of FY 2011, and reducing the 
number of appeals at the Court over 18 months that are pending judicial 
decision from 709 to 170.
    We also continue to use and adapt our innovative electronic case 
management/electronic case filing system (CM/ECF), which allows us to 
receive most documents and issue most orders and decisions 
electronically. CM/ECF permits remote 24-hour filing access, reduced 
storage space needed for record retention, the opportunity for multiple 
users to access records, efficient electronic notification procedures, 
and reduced mailing/courier costs - all useful and time saving features 
for case processing and management. We still do have paper filing and 
orders for self-represented appellants, who in fiscal year 2011 
accounted for 54% of the number of appeals at the time of filing, and 
24% at termination.
    Although our managerial adjustments have been very helpful, I 
cannot stress enough the extra effort that all judges and Court staff 
have made, and are making, to decide cases. There are limits to how 
long one can continue ``game-day'' performance on a daily basis. 
Without question, if the number of Board decisions denying benefits 
grows significantly, and our appeals do the same, the time to process 
an appeal will grow, and only grow faster if our judicial vacancies are 
not filled.

   III. Examination of the Structure of Federal Appellate Review of 
    Veterans Benefits Decisions, and the Veterans Courthouse Project

    In October 2009, and again in early 2010, I testified before our 
authorizing committees and this subcommittee regarding a proposal to 
establish a commission to evaluate the process of appellate review of 
veterans benefits decisions and to make recommendations on how to 
improve that system. Because such an independent commission may well 
identify beneficial changes to the current appellate structure that 
could result in reduced time to decide an appeal, as well as reduced 
time to adjudicate claims below, I again make that recommendation.
    Under the unique system of judicial review we currently have, a 
party dissatisfied with a decision from our Court may appeal, as of 
right, to yet another appellate court before seeking review at the U.S. 
Supreme Court. The Court continues to believe that the time is right 
for a working group to review this system, critically examine its 
strengths and weaknesses, and identify measures that could benefit the 
overall appellate process. Specifically, we support and encourage a 
commission to weigh the costs and benefits of the unique, two-tiered 
federal appellate review system in place for veterans benefits 
decisions. With more that two decades of experience in appellate review 
of veterans benefits claims, and the resultant seasoned body of case 
law, it is time to consider the added value of the second layer of 
federal appellate review now in place.
    I also want to follow up on the Veterans Courthouse Project. The 
United States Court of Appeals for Veterans Claims remains, to my 
knowledge, the only federal appellate court housed in a leased 
commercial office building. We were very close to receiving 
appropriations for the Courthouse in our FY 2010 appropriation, but 
circumstances combined to warrant delay. Specifically, the General 
Services Administration's estimated cost virtually doubled from the 
time of our FY 2010 budget testimony before this committee and passage 
of the FY 2010 appropriations bill, and at the same time the Nation's 
fiscal crisis was becoming better understood. We remain sensitive to 
budget constraints and understand that priorities must be set by 
Congress. However, we stand with Congress in its intent to build a 
``dedicated courthouse [ ] symbolically significant of the high esteem 
the Nation holds for its veterans [that would] express the gratitude 
and respect of the Nation for the sacrifices of those serving and those 
who have served in the Armed Forces, and their families'' (H.R. 3936) 
or ``to provide the image, security, and stature befitting a court that 
provides justice to the veterans of the United States'' (S. 1315). And, 
we also stand with the many Veterans Service Organizations and veterans 
at large who believe if any federal courthouses are to be funded for 
construction, their courthouse should be one of them.

IV. Conclusion

    On behalf of the judges and staff of the Court, I express my 
appreciation for your past and continued support, and for the 
opportunity to provide this testimony today.
Executive Summary
      The fiscal year (FY) 2013 budget request of the United 
States Court of Appeals for Veterans Claims (Court) totals $32,480,700, 
which is made up of two separate and distinct parts: (1) $29,754,700 
for the Court's necessary operating expenses, and (2) $2,726,000 sought 
by the Veterans Consortium Pro Bono Program. This request reflects an 
increase of $1,710,700 over the FY 2012 appropriation.
      The Court is one of the busiest federal appellate courts 
based on the number of appeals filed and decided per judge. The Court 
currently has six active Judges, with one permanent and two temporary 
authorizations vacant. In response to its heavy caseload, the Court has 
worked to identify ways to gain efficiency while preserving for all 
veterans the right to a full and fair decision on their appeals. The 
measures we have employed toward this end include: making 
administrative adjustments and hiring temporary staff to assist 
chambers in providing prompt judicial review; adjusting the tasks 
assigned to our central legal staff attorneys to allow them to 
concentrate their efforts on our very successful pre-briefing dispute 
resolution program and to assisting our recalled Senior Judges; 
streamlining the decision process for cases where the parties both have 
legal representation; continuing to adapt our electronic case 
management/electronic case filing system; and above all else, relying 
on the tireless effort and focus of our active judges, our six recall-
eligible Senior Judges, and each and every member of the Court's staff.
      The Court continues to encourage appointment of a 
commission to evaluate the costs and benefits of the unique two-tiered 
federal appellate review system we have for veterans benefits 
decisions.
      The Court remains the only federal appellate court housed 
in a leased commercial office building. The Court is mindful of budget 
constraints but strongly urges that if any federal courthouses are to 
be funded for construction, a courthouse for our Nation's veterans 
should be among them.

                                 
                 Prepared Statement of Jeffrey C. Hall

    Chairman Runyan, Ranking Member McNerney and Members of the 
Subcommittee:
    On behalf of the Disabled American Veterans (DAV) and our 1.2 
million members, all of whom are wartime disabled veterans, I am 
pleased to be here today to offer our views regarding the fiscal year 
(FY) 2013 budget in the area of veterans' benefits.
    Mr. Chairman, we are now in the third year of the Veterans Benefits 
Administration's (VBA's) latest effort to transform its outdated, 
inefficient, and inadequate claims processing system into a modern, 
automated, rules-based, and paperless system. VBA has struggled for 
decades to provide timely and accurate decisions on claims for veterans 
benefits, especially veterans disability compensation, and there have 
been numerous prior reform attempts that began with great promise, only 
to fall far short of success. Over the next year we will begin to see 
whether their strategies to transform the people, processes and 
technologies will finally result in a cultural shift away from focusing 
on speed and production to a business culture of quality and accuracy, 
which is the only way to truly get the backlog under control.

RESOURCE RECOMMENDATIONS
Adequate Staffing for the Veterans Benefits Administration
    In order to sustain the transformation efforts underway at VBA, the 
DAV, as part of The Independent Budget for FY 2013 generally recommends 
maintaining current staffing levels in the VBA, with only modest 
increases for the Vocational Rehabilitation and Employment Service and 
the Board of Veterans Appeals. Due to substantial support from 
Congress, VBA's Compensation Service experienced significant staffing 
increases between fiscal years 2008 and 2010, which supported an 
increase in the number of claims processed each of those years. 
Unfortunately, however, an even larger increase in new and reopened 
claims volume contributed to a rising backlog. Historically, it takes 
approximately two years for a new Veterans Service Representative (VSR) 
to acquire sufficient knowledge and experience to be able to work 
independently with both speed and accuracy. It takes an additional 
period of at least two years of training to become a Rating Veterans 
Service Representative (RVSR) with the skills to accurately complete 
most rating claims. As such, the full productive capacity of the 
employees hired in recent years are only now becoming evident.
    This year VBA will roll out a new operating model for processing 
claims for disability compensation, which will change the roles and 
functions of thousands of VSRs and RVSRs at Regional Offices across the 
country. VBA is also planning to launch new IT systems, including the 
Veterans Benefits Management System (VBMS) and expand the functionality 
of their e-Benefits system. Together these transformations are expected 
to have a significant effect on the productive capability of VBA's 
workforce. While these changes are being fully implemented, and the 
effect on workforce requirements analyzed, the Independent Budget 
veterans service organizations (IBVSOs) do not recommend an increase in 
staffing for VBA's Compensation Service for FY 2013. However, we do 
recommend that VBA initiate a scientific study to determine the 
workforce necessary to effectively manage its rising workload in a 
manner that produces timely and accurate rating decisions.
    Moving forward, should there be a decline in personnel dedicated to 
producing rating decisions, an increase in claims or the backlog, or 
should any of the long-awaited VBA information technology initiatives 
fail to produce the projected reductions in processing times for 
claims, Congress must be prepared to act swiftly to intervene with the 
additional staffing resources.

Staffing Increase for Vocational Rehabilitation and Employment Service
    The IBVSOs do recommend that funding for VA's Vocational 
Rehabilitation and Employment Service (VR&E) be increased to 
accommodate at least 195 additional full-time employees for the VR&E 
Service for FY 2013 and at least nine new full-time employees to manage 
its expanding campus program.
    The Government Accountability Office (GAO) conducted a study in 
2009 to assess VR&E's ability to meet its core mission functions. GAO 
found that 54 percent of VBA's 57 regional offices reported they had 
fewer counselors than needed, 40 percent said they have fewer 
employment coordinators than needed and 90 percent reported that their 
caseloads have become more complex since veterans began returning from 
Afghanistan and Iraq.
    VBA's current caseload target is one counselor for every 125 
veterans served; however, feedback received by the IBVSOs from 
counselors in the field suggested an actual workload as high as one to 
145. Based on comparisons with state vocational rehabilitation programs 
and discussions with VR&E personnel, even the 1:125 ratio may be too 
high to effectively manage VR&E's workload, particularly in providing 
service to seriously disabled veterans. However, to reach the 1:125 
standard, VR&E needs approximately 195 new staff counselors.
    The VA VetSuccess on Campus program places a full-time Vocational 
Rehabilitation Counselor and a part-time Vet Center Outreach 
Coordinator on college campuses to help the transition from military to 
civilian and student life. The President's 2012 budget submission 
requested funding to support further expansion of the program beyond 
the eight existing sites to nine more campuses: the University of South 
Florida, Cleveland State University, San Diego State University, 
Community College of Rhode Island, Arizona State University, Texas A&M, 
Central Texas, Rhode Island College, and Salt Lake Community College. 
The Independent Budget recommends that Congress provide funding for at 
least nine additional full-time employees in FY 2013 to manage this 
expanding campus program.

Staffing Increase for the Board of Veterans Appeals
    The Independent Budget also recommends a staffing increase at the 
Board of Veterans' Appeals of at least 40 full-time employee 
equivalents (FTEE) for FY 2013. Based on historical trends, the number 
of new appeals to the Board averages approximately five percent of all 
claims received, so as the number of claims processed by VBA is 
expected to rise significantly, so too will the Board's workload rise 
commensurately. With the number of claims processed at VBA having risen 
to over one million, and projected to rise even higher, it is virtually 
certain that the Board's workload will begin to rise even faster.
    The Board is currently authorized to have 544 FTEEs; however, its 
budget in FY 2011 could only support 532 FTEEs. Expected workload 
projections by the Board indicate that the authorized level for FY 2013 
should be closer to 585 FTEEs. We are concerned that unless additional 
resources are provided to the Board, its ability to produce timely and 
accurate decisions will be constrained by an inadequate budget, and 
either the backlog will rise or accuracy will fall. Neither of these 
outcomes is acceptable. At a minimum, Congress should increase funding 
to the Board in order to sustain 585 FTEE in FY 2013.

Dedicated Courthouse for the Court of Appeals for Veterans Claims
    Mr. Chairman, I would also like to highlight a recommendation in 
this year's Independent Budget concerning the United States Court of 
Appeals for Veterans Claims. During the 24 years since the Court was 
formed in accordance with legislation enacted in 1988, it has been 
housed in commercial office buildings, making it the only Article I 
court that does not have its own courthouse. The IBVSOs believe that 
the Veterans Court should be accorded at least the same degree of 
respect enjoyed by other appellate courts of the United States. 
Congress previously acted on this in fiscal year 2008 by allocating $7 
million for preliminary work on site acquisition, site evaluation, 
preplanning for construction, architectural work, and associated 
studies and evaluations for the construction of the courthouse. It is 
time for Congress to provide the funding necessary to construct a 
permanent courthouse in a location of honor and dignity befitting the 
Veterans Court and the veterans it serves.

VETERANS BENEFITS RECOMMENDATIONS
    The Veterans Benefits Administration provides an array of benefits 
to our nation's veterans, including disability compensation, dependency 
and indemnity compensation, pensions, vocational rehabilitation, 
education benefits, home loan guarantees, and life insurance. 
Unfortunately, the failure to regularly adjust benefit rates or to tie 
them to realistic annual cost-of-living adjustments (COLAs), can 
threaten the effectiveness of these other benefits. For example, the 
annual COLAs do not take into account the rising cost of some basic 
necessities, such as food and energy. In addition to prudent increases 
in a number of specific benefits programs to meet today's rising costs 
of living, The Independent Budget includes a number of recommendations 
designed to make several existing benefits more equitable for all 
veterans, particularly disabled veterans.

Eliminate Remaining Concurrent Receipt Penalties
    Today, many veterans retired from the armed forces based on 
longevity of service must forfeit a portion of their retired pay, 
earned through faithful performance of military service, before they 
can receive VA compensation for service-connected disabilities. This is 
inequitable: military retired pay is earned by virtue of a veteran's 
career of service on behalf of the nation, careers of usually more than 
20 years. Entitlement to compensation, on the other hand, is paid 
solely because of disability resulting from military service, 
regardless of the length of service. Most nondisabled military retirees 
pursue additional careers after serving in order to supplement their 
income, thereby justly enjoying a full reward for completion of a 
military career with the added reward of full civilian employment 
income. In contrast, military retirees with service-connected 
disabilities do not enjoy the same full earning potential.
    In order to place all disabled longevity military retirees on equal 
footing with nondisabled military retirees, there should be no offset 
between full military retired pay and VA disability compensation. 
Congress has previously removed this offset for veterans with service-
connected disabilities rated 50 percent or greater. Congress should 
enact legislation to repeal the inequitable requirement that veterans' 
military longevity retired pay be offset by an amount equal to their 
disability compensation if rated less than 50 percent.

Repeal the DIC - SBP Offset
    The current requirement that the amount of an annuity under the 
Survivor Benefit Plan (SBP) be reduced on account of and by an amount 
equal to dependency and indemnity compensation (DIC) for survivors of 
disabled veterans is inequitable and should be repealed.
    A veteran disabled in military service is compensated for the 
effects of service-connected disability. When a veteran dies of 
service-connected causes, or following a substantial period of total 
disability from service-connected causes, eligible survivors or 
dependents receive DIC from the Department of Veterans Affairs. This 
benefit indemnifies survivors, in part, for the losses associated with 
the veteran's death from service-connected causes or after a period of 
time when the veteran was unable, because of total disability, to 
accumulate an estate for inheritance by survivors.
    Survivors of military retirees have no entitlement to any portion 
of the veteran's military retirement pay after his or her death, unlike 
many retirement plans in the private sector; however, they may 
participate in the survivor benefit plan (SBP), which makes deductions 
from their spouses military retirement pay to purchase a survivors' 
annuity. Upon the military retiree's death, the annuity is paid monthly 
to eligible beneficiaries under the plan. If the veteran died of other 
than service-connected causes or was not totally disabled by service-
connected disability for the required time preceding death, 
beneficiaries receive full SBP payments. However, if the veteran's 
death was a result of military service or after the requisite period of 
total service-connected disability, the SBP annuity is reduced by an 
amount equal to the DIC payment. When the monthly DIC rate is equal to 
or greater than the monthly SBP annuity, beneficiaries lose all 
entitlement to the SBP annuity.
    This offset is inequitable because there is no duplication of 
benefits since payments under the SBP and DIC programs are made for 
different purposes. Under the SBP, coverage is purchased by a veteran 
and paid to his or her surviving beneficiary at the time of the 
veteran's death. On the other hand, DIC is a special indemnity 
compensation paid to the survivor of a service member who dies while 
serving in the military, or a veteran who dies from service-connected 
disabilities. In such cases, DIC should be added to the SBP, not 
substituted for it. Surviving spouses of federal civilian retirees who 
are veterans are eligible for DIC without losing any of their purchased 
federal civilian survivor benefits. The offset penalizes survivors of 
military retirees whose deaths are under circumstances warranting 
indemnification from the government separate from the annuity funded by 
premiums paid by the veteran from his or her retired pay. Congress 
should fully repeal the offset between dependency and indemnity 
compensation and the Survivor Benefit Plan.

Adaptive Housing and Automobile Grants
    Service-connected disabled veterans who have impairments or loss of 
use of at least one of their hands, feet or eyes may be eligible for 
several grants to adapt their housing or automobiles, including the 
Specially Adapted Housing Grant and the Automobile and Special Adaptive 
Equipment Grants. However, when veterans who have already received 
these grants are forced to move to a new home, or stay temporarily in 
someone else's home, or need to replace an outdated automobile, they 
are restricted in accessing the full benefits of this program. To 
remedy this, Congress should establish a supplementary housing grant 
that covers the cost of new home adaptations for eligible veterans who 
have used their initial, once in-a-lifetime grant on specially adapted 
homes they no longer own and occupy. A separate grant should be 
provided for special adaptations to homes owned by family members in 
which veterans temporarily reside. VA should also be authorized to 
provide a supplementary auto grant to eligible veterans in an amount 
equaling the difference between their previously used one-time 
entitlement and the increased amount of the grant.

Compensation for Quality of Life and Noneconomic Loss:
    Mr. Chairman, our nation's 3.2 million service-disabled veterans 
rely greatly on VA's disability compensation program as an essential 
source of financial support for themselves and their families. However, 
a number of recent studies and commissions have all agreed that VA's 
disability compensation program does not do enough and should be 
revised to compensate for the loss of quality of life and other non-
economic losses that result from permanent disabilities suffered while 
serving in the armed forces.
    In 2007, the Institute of Medicine (IOM) published a report 
entitled, ``A 21st Century System for Evaluating Veterans for 
Disability Benefits,'' recommending that the current VA disability 
compensation system be expanded to include compensation for noneconomic 
loss and loss of quality of life. The IOM report stated that, ``... 
Congress and VA have implicitly recognized consequences in addition to 
work disability of impairments suffered by veterans in the Rating 
Schedule and other ways. Modern concepts of disability include work 
disability, nonwork disability, and quality of life (QOL) . . . ''
    The congressionally-mandated Veterans Disability Benefits 
Commission (VDBC), established by the National Defense Authorization 
Act of 2004 (Public Law 108-136), in 2007 also recommended that the, 
``... veterans disability compensation program should compensate for 
three consequences of service-connected injuries and diseases: work 
disability, loss of ability to engage in usual life activities other 
than work, and loss of quality of life.'' That same year, the 
President's Commission on Care for America's Returning Wounded 
Warriors, chaired by former Senator Bob Dole and former Health and 
Human Services Secretary Donna Shalala, also agreed that the current 
benefits system should be reformed to include noneconomic loss and 
quality of life as a factor in compensation.
    The IBVSOs concur with all these recommendations and calls on 
Congress to finally address this deficiency by amending title 38, 
United States Code, to clarify that disability compensation, in 
addition to providing compensation to service-connected disabled 
veterans for their average loss of earnings capacity, must also include 
compensation for their noneconomic loss and for loss of their quality 
of life. The Canadian Veterans' Affairs disability compensation program 
and the Australian Department of Veterans' Affairs disability 
compensation program already do just that. It is now time for our 
Congress and VA to determine the most practical and equitable manner in 
which to provide compensation for noneconomic loss and loss of quality 
of life and then move expeditiously to implement this updated 
disability compensation program.

CLAIMS PROCESSING REFORM RECOMMENDATIONS
    Over the past decade, the number of veterans filing claims for 
disability compensation has more than doubled, rising from nearly 
600,000 in 2000 to over 1.4 million in 2011. This workload increase is 
the result of a number of factors over the past decade, including the 
wars in Iraq and Afghanistan, an increase in the complexity of claims 
and a downturn in the economy causing more veterans to seek VA 
assistance. Furthermore, new presumptive conditions related to Agent 
Orange exposure (ischemic heart disease, B-cell leukemia and 
Parkinson's disease) and previously denied claims, resulting from the 
Nehmer decision added almost 200,000 new claims this year; leading to a 
workload surge that will level off in 2012. During this same decade, 
VBA's workforce grew by about 80 percent, rising from 13,500 FTEE in 
2007 to over 20,000 today, with the vast majority of that increase 
occurring during the past four years.
    Yet despite the hiring of thousands of new employees, the number of 
pending claims for benefits, often referred to as the backlog, 
continues to grow. As of February 4, 2012, there were 891,402 pending 
claims for disability compensation and pensions awaiting rating 
decisions by the VBA, an increase of more than 114,000 from one year 
ago, and almost double the 487,501 that were pending two years prior. 
The number of claims pending over 125 days, VBA's official target for 
completing claims, reached 591,243, which is a 66 percent increase in 
one year and more than double the 185,040 from two years ago.
    But more important than the number of claims processed is the 
number of claims processed correctly. The VBA quality assurance program 
is known as the Systematic Technical Accuracy Review (STAR) and is now 
available publicly on VA's ASPIRE Dashboard. The most recent STAR 
measure for rating claims accuracy for the one-year period ending 
September 2011 is 84 percent, about the same level as one year prior, 
and slightly lower than several years earlier. However, the VA Office 
of Inspector General (VAOIG) reported in May 2011 that based on 
inspections of 45,000 claims at 16 of the VA's 57 regional offices 
(VAROs), claims for disability compensation were correctly processed 
only 77 percent of the time. This error rate would equate to almost 
250,000 incorrect claims decisions in just the past year.

Cultural Change Needed to Fix Claims-Processing System:
    Under the weight of an outdated information technology system, 
increasing workload and growing backlog, the VBA faces a daunting 
challenge of comprehensively transforming the way it processes claims 
for benefits in the future, while simultaneously reducing the backlog 
of claims pending within its existing infrastructure. While there have 
been many positive and hopeful signs that the VBA is on the right path, 
there will be critical choices made over the next year that will 
determine whether this effort will ultimately succeed. It is essential 
that Congress provide careful and continuing oversight of this 
transformation to help ensure that the VBA achieves true reform and not 
just arithmetic milestones, such as lowered backlogs or decreased cycle 
times.
    One of the more positive signs has been the open and candid 
attitude of VBA leadership over the past several years, particularly 
progress towards developing a new partnership between VBA and veterans 
service organizations (VSOs) who assist veterans in filing claims. The 
IBVSOs have been increasingly consulted on a number of the new 
initiatives underway at VBA, including disability benefit 
questionnaires (DBQs), Veterans Benefit Management System (VBMS), and 
many, but not all business process pilots, including the I-LAB at the 
Indianapolis Regional Office. Building upon these efforts, VBA must 
continue to the reach out to its VSO partners, not just at central 
office, but also at each of the 57 regional offices.
    In order to drive and sustain its transformation strategies 
throughout such a massive organization, VBA must change how it measures 
and rewards performance in a manner designed to achieve the goal of 
getting claims decided right the first time. Unfortunately, most of the 
measures that VBA employs today are based primarily on production 
goals, rather than quality. This bias for speed over accuracy has long 
been VBA's cultural norm, and it is not surprising that management and 
employees today continue to feel a tremendous pressure to meet 
production goals first and foremost. While accuracy has been and 
remains one of the performance standards that must be met by all 
employees, new performance standards adopted over the past two years 
appear to have done little to create sufficient incentives to elevate 
quality above production.
    Over the next couple of crucial years, it will be particularly 
important for VBA and Congress to remain focused on the principal goal 
of enhancing quality and accuracy, rather than focusing on reducing the 
backlog. VBA should change the way it measures and reports progress so 
that there are more and better indicators of quality and accuracy, at 
least equal in weight to measures of speed and production. In addition, 
VBA should develop a systematic way to measure average work output for 
each category of its employees in order to establish more accurate 
performance standards, which will also allow the VBA to better project 
future workforce requirements.

Implementing a New Operating Model for Processing Claims:
    As the Veterans Benefits Administration begins to implement a new 
operating model for processing claims for disability compensation, it 
must give priority to ``best practices'' that have been validated to 
increase quality and accuracy, not just speed and production. VBA has 
conducted more than 40 different pilot programs and initiatives looking 
at new ways of establishing, developing, rating, and awarding claims 
for benefits. Dozens of other ideas flowed from individual employees 
and regional offices, leadership retreats, and an internal ``innovation 
competition,'' leading to new initiatives such as quick pay, walk-in 
claims, and rules-based calculators.
    In order to test how best to integrate these and other pilots and 
initiatives conducted over the past two years, VA established the I-LAB 
at the Indianapolis Regional Office to develop a new end-to-end 
operating model for claims processing. The I-LAB settled on the 
segmentation of claims as the cornerstone principle for designing the 
new operating model. The traditional triage function was replaced at 
the I-LAB with an Intake Processing Center, staffed with an experienced 
claims processor, whose responsibility was to divide claims along three 
separate tracks; Express, Core, and Special Ops. The Express lane is 
for simpler claims, such as fully developed claims, claims with one or 
two contentions, or other simple claims. The Special Ops lane is for 
more difficult claims, such as those with eight or more contentions, 
longstanding pending claims, complex conditions, such as traumatic 
brain injury and special monthly compensation, and other claims 
requiring extensive time and expertise. The Core lane is for the 
balance of claims with between three and seven contentions, claims for 
individual unemployability (IU), original mental health conditions, and 
others.
    VBA has seen some early indications that productivity could 
increase through the use of the new segmentation strategy at the I-LAB; 
however, it may still be too soon to judge whether such results would 
be reproduced if applied nationally. While the VBA certainly needs to 
reform its claims-processing system, it must first ensure that proper 
metrics are in place in order to make sound decisions about the 
elements of its new operating model.
    By the end of 2011, the VBA stood up an Implementation Team to 
develop a strategy and plan for implementing the new operating model 
for processing claims. With the Secretary's ambitious goal of 
processing all claims in less than 125 days with an accuracy rate of 98 
percent by 2015, VBA's strategy calls for 2012 to be a year of 
transition; full implementation of the new operating model is planned 
for 2013; in 2014, the VBA anticipates stabilization and assessment of 
the new system; and 2015 is planned as the year of ``centers of 
excellence,'' an apparent reference to a future state that will 
centralize some VBA activities or functions.
    Critical to the success of this implementation strategy will be the 
choices made by VBA this year. It will also be absolutely essential for 
Congress to provide strong oversight to ensure that the enormous 
pressures on VBA to show progress toward eliminating or reducing the 
claims backlog does not result in short term gains at the expense of 
long-term reform.

Stronger Training, Testing and Quality Control
    Mr. Chairman, training, testing, and quality control must be given 
the highest priority within the Veterans Benefits Administration if the 
current claims processing reform efforts are to be successful. Training 
is essential to the professional development of individuals and tied 
directly to the quality of work they produce, as well as the quantity 
they can accurately produce. However, the IBVSOs remain concerned that 
under the rising pressure of increasing workload and backlogs, VBA 
managers and employees often choose to cut corners on training in order 
to focus on production at all costs. It is imperative that efforts to 
increase productivity not interfere with required training of 
employees, particularly new employees who are still learning their job.
    Furthermore, after employees have been trained it is important that 
they are regularly tested to ensure that they have the knowledge and 
competencies to perform their jobs. A GAO report published in September 
2011 found that a nationwide training curriculum for VBA's Decision 
Review Officers (DROs) did not exist despite the fact that 93 percent 
of regional managers interviewed supported such a national training 
program, as did virtually every DRO interviewed. We would note that 
following a recent DRO examination in which a high percentage failed to 
achieve acceptable results, the VBA required all DROs to undergo a one-
week training program to enhance their knowledge and job skills. This 
is exactly the type of action that should regularly occur within an 
integrated training, testing, and quality control program.
    In 2008, Congress enacted Public Law 110-389, the Veterans' 
Benefits Improvement Act of 2008, which required VBA to develop and 
implement a certification examination for all claims processors and 
managers. While tests have been developed and conducted for VSRs, 
RVSRs, and DROs, the tests for supervisory personnel and coaches have 
yet to be completed. VBA cannot accurately assess its training or 
measure an individual's knowledge, understanding, or retention of the 
training material without regular testing. The IBVSOs believe it is 
essential that all VBA employees, coaches, and managers undergo regular 
testing to measure job skills and knowledge, as well as the 
effectiveness of the training. At the same time, VBA must ensure that 
certification tests are developed that accurately measure the skills 
and knowledge needed to perform the work of VSRs, RVSRs, DROs, coaches, 
and other managers.
    One of the most promising developments over the past year is VBA's 
new initiative to stand up Quality Review Teams (QRTs) in every 
regional office. Developed from a review of the best practices used at 
certain high-performing regional offices, the QRT program will assign 
full-time, dedicated employees whose sole function is to seek out and 
correct errors in claims processing. QRTs will also work to develop in-
process quality control measures to prevent errors before decisions are 
made. The IBVSOs strongly support this program and recommend that VBA 
make service in a QRT unit a career path requirement for those seeking 
to rise to senior positions in Regional Offices or at VBA's 
headquarters in Washington, DC.
    Mr. Chairman, the only way the VBA can make and sustain long-term 
reductions in the backlog is by producing better quality decisions in 
the first instance. The only way to institutionalize such a cultural 
shift within the VBA is by developing and giving priority to training, 
testing and quality control programs.

New Information Technology Systems
    After two years of development, VBA's Veterans Benefits Management 
System (VBMS) is planned to be rolled out nationally beginning in June 
of this year. The VBMS is designed to provide a comprehensive, 
paperless, and rules-based method of processing and awarding claims for 
VA benefits, particularly disability compensation and pension. The 
IBVSOs have been especially pleased with VBA efforts to incorporate the 
experience and perspective of our organizations throughout the VBMS 
development process. Understanding the important role that VSO service 
officers play in the claims process, VBA proactively sought frequent 
and substantive consultation with VSOs, both at the national VBMS 
office and at the pilot locations. We are confident that this promising 
partnership will strengthen VBMS for VBA, VSOs, and most importantly, 
veterans seeking VA benefits.
    As VBA turns the corner on VBMS development leading to deployment, 
it is imperative that Congress provide full funding to complete this 
essential IT initiative. In today's difficult fiscal environment, there 
are concerns that efforts to balance the federal budget and reduce the 
national debt could result in reductions to VA programs, including IT 
programs. Over the next year Congress must ensure that the funding 
required and designated for the VBMS is protected from cuts or 
reprogramming, and spent as Congress intended.
    Another key IT component is e-Benefits, VA's online portal that 
allows veterans to apply for, monitor, and manage their benefits over 
the Internet. With more than 2 million users registered, e-Benefits 
provides a web-based method for veterans to file claims for disability 
and other benefits that will ultimately integrate that information 
directly into the VBMS to adjudicate those claims. As with VBMS, it is 
crucial that Congress and the VBA provide e-Benefits full funding in 
order to support the ongoing transformation of the claims processing 
system.
    Additionally Mr. Chairman, the IBVSOs remain concerned about VBA's 
plans for transitioning legacy paper claims into the new VBMS work 
environment. While VBA is committed to moving forward with a paperless 
system for new claims, it has not yet determined how to handle reopened 
paper claims; specifically whether, when or how they would be converted 
to digital files. Because a majority of claims processed each year are 
for reopened or appealed claims and because files can remain active for 
decades, until all legacy claims are converted to digital data files, 
VBA could be forced to continue paper processing for decades. Requiring 
VBA employees to learn and master two different claims processing 
systems--one that is paper-based and the other digital--would add 
unnecessary complexity and could negatively affect quality, accuracy, 
and consistency.
    While there are very difficult technical questions to be answered 
about the most efficient manner of transitioning to all-digital 
processing, particular involving legacy paper files, we believe the VBA 
should do all it can to shorten the length of time this transition 
takes to complete, and should provide a clear roadmap for eliminating 
legacy paper files, one that includes clear timelines and resource 
requirements. While this transition may require significant upfront 
investment, it will pay dividends for the VBA and veterans in the 
future.
    Mr. Chairman, that concludes my statement and I would be happy to 
answer any questions from you or other members of the Subcommittee.

Executive Summary

VBA AND GOE RESOURCE RECOMMENDATIONS
    In order to sustain the transformation efforts underway at VBA, the 
DAV and The Independent Budget recommends generally maintaining current 
staffing levels for FY 2013 in the Veterans Benefits Administration, 
with modest increases for the Vocational Rehabilitation and Employment 
Service (VR&E) and the Board of Veterans Appeals.

      Increase funding for VR&E to allow 195 new counselors to 
reach proper staffing ratios
      Increase funding to the Board to allow 585 total FTEE to 
keep up with rising workload.
      Provide the funding necessary to construct a permanent 
courthouse for the United States Court of Appeals for Veterans Claims.

VETERANS BENEFITS REOMMENDATIONS
      Congress should enact legislation to repeal the 
inequitable requirement that veterans' military longevity retired pay 
be offset by an amount equal to their disability compensation if rated 
less than 50 percent.
      Congress should fully repeal the offset between 
dependency and indemnity compensation (DIC) and the Survivor Benefit 
Plan (SBP).
      Congress and VA should determine the most practical and 
equitable manner to provide compensation for noneconomic loss and loss 
of quality of life for service connected disabled veterans and move 
expeditiously to implement this new component.

CLAIMS PROCESSING REFORM RECOMMENDATIONS
      Congress must provide close and continuing oversight of 
VBA's transformation of their claims processing system in order to 
ensure that it is built on the principal of enhancing quality and 
accuracy, rather than simply reducing the backlog by any means.
      Congress must fully fund VBA's new IT systems, 
particularly the Veterans Benefits Management System (VBMS) and e-
Benefits.
      All VBA employees, coaches, and managers should undergo 
regular training and testing to measure job skills and knowledge, as 
well as the effectiveness of the training.

                                 
                 Prepared Statement of Diane M. Zumatto

    Chairman Runyan, Ranking Member McNerney, Congressman Walz and 
distinguished members of the subcommittee, as an author of The 
Independent Budget (IB), I thank you for this opportunity to share with 
you the IB's recommendations in what we believe to be the most fiscally 
responsible way of ensuring the quality and integrity of the care and 
benefits earned by Americans veterans.
    The Department of Veterans' Affairs (VA) National Cemetery 
Administration (NCA) maintains 131 of the nation's 147 national 
cemeteries, as well as 33 soldiers' lots. The 131 NCA operated 
cemeteries are composed of approximately 3.1 million gravesites and are 
located in 39 states and Puerto Rico. As of late 2010, there were more 
than 20,021 acres within established installations in the NCA.
    VA estimates that approximately 22.4 million veterans are alive 
today and with the transition of an additional 1 million service 
members into veteran status over the next 12 months, this number is 
expected to continue to rise until approximately 2017. On average, 14.4 
percent of veterans choose a national or state veterans' cemetery as 
their final resting place. As new national and state cemeteries 
continue to open and as our aging veterans' population continues to 
grow, we continue to be a nation at war on multiple fronts. The demand 
for burial at a veterans' cemetery will continue to increase.
    The single most important obligation of the NCA is to honor the 
memory of America's brave men and women who have selflessly served in 
this nation's armed forces. Many of the individual cemeteries, 
monuments, grave stones, grounds and related memorial tributes within 
the NCA system are richly steeped in history and represent the very 
foundation of these United States.
    The Independent Budget veterans service organizations (IBVSOs) 
would like to acknowledge the dedication and commitment demonstrated by 
the NCA leadership and staff in their continued dedication to providing 
the highest quality of service to veterans and their families. It is in 
the opinion of the IBVSOs that the NCA continues to meet its goals and 
the goals set forth by others because of its true dedication and care 
for honoring the memories of the men and women who have so selflessly 
served our nation. We applaud the NCA for recognizing that it must 
continue to be responsive to the preferences and expectations of the 
veterans' community by adapting or adopting new interment options and 
ensuring access to burial options in the national, state and tribal 
government-operated cemeteries. We also believe it is important to 
recognize the NCA's efforts in employing both disabled and homeless 
veterans.

NCA Accounts
    In FY 2011 the National Cemetery Administration operated on an 
estimated budget of $298.3 million associated with the operations and 
maintenance of its grounds. The NCA had no carryover for FY 2011. The 
NCA was also able to award 44 of its 48 minor construction projects and 
had four unobligated projects that will be moved to FY 2012. 
Unfortunately, due to continuing resolutions and the current budget 
situation, the NCA was not able to award the remaining four projects.
    The IBVSOs support the operational standards and measures outlined 
in the National Shrine Commitment (PL 106-117, Sec. 613) which was 
enacted in 1999 to ensure that our national cemeteries are the finest 
in the world. While the NCA has worked diligently improving the 
appearance of our national cemeteries, they are still a long way from 
where they should be.
    The NCA has worked tirelessly to improve the appearance of our 
national cemeteries, investing an estimated $39 million into the 
National Shrine Initiative in FY 2011. According to NCA surveys, as of 
October 2011 the NCA has continued to make progress in reaching its 
performance measures. Since 2006, the NCA has improved headstone and 
marker height and alignment in national cemeteries from 67 percent to 
70 percent and has improved cleanliness of tombstones, markers and 
niches from 77 percent to 91 percent. Although the NCA is nearing its 
strategic goal of 90 percent and 95 percent, respectively, for height 
and alignment and cleanliness, more funding is needed to continue this 
delicate and labor-intensive work. Therefore, the IBVSOs recommend the 
NCA's Operations and Maintenance budget to be increased by $20 million 
per year until the operational standards and measures goals are 
reached.
    The IBVSOs recommend an Operational and Maintenance budget of $280 
million for the National Cemetery Administration for FY 2013 so it can 
meet the demands for interment, gravesite maintenance and related 
essential elements of cemetery operations. This request includes $20 
million for the National Shrine Initiative.
    The IBVSOs call on the Administration and Congress to provide the 
resources needed to meet the critical nature of the NCA's mission and 
to fulfill the nation's commitment to all veterans who have served 
their country so honorably and faithfully.

State Cemetery Grant Programs
    The State Cemetery Grants Program (SCGP) complements the National 
Cemetery Administration's mission to establish gravesites for veterans 
in areas where it 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 establishing a new cemetery 
and expanding or improving an established state or tribal organization 
veterans' cemetery. New equipment, such as mowers and backhoes, can be 
provided for new cemeteries. In addition, the Department of Veterans' 
Affairs may also provide operating grants to help cemeteries achieve 
national shrine standards.
    In FY 2011 the SCGP operated on an estimated budget of $46 million, 
funding 16 state cemeteries. These 16 state cemeteries included the 
establishment or ground breaking of five new state cemeteries, three of 
which are located on tribal lands, expansions and improvements at seven 
state cemeteries, and four projects aimed at assisting state cemeteries 
to meet the NCA national shrine standards. Since 1978 the Department of 
Veterans' Affairs has more than doubled the available acreage and 
accommodated more than a 100 percent increase in burials through this 
program.
    With the enactment of the ``Veterans Benefits Improvement Act of 
1998,'' the NCA has been able to strengthen its partnership with states 
and increase burial services to veterans, especially those living in 
less densely populated areas without access to a nearby national 
cemetery. Through FY 2010, the state grant program has established 75 
state veteran's cemeteries in 40 states and U.S. territories. 
Furthermore, in FY 2011 VA awarded its first state cemetery grant to a 
tribal organization.
    The Independent Budget veteran's service organizations recommend 
that Congress fund the State Cemetery Grants Program at $51 million for 
FY 2013. The IBVSOs believe that this small increase in funding will 
help the National Cemetery Administration meet the needs of the State 
Cemetery Grant Program, as its expected demand will continue to rise 
through 2017. Furthermore, this funding level will allow the NCA to 
continue to expand in an effort of reaching its goal of serving 94 
percent of the nation's veteran population by 2015.

Veteran's Burial Benefits
    Since the original parcel of land was set aside for the sacred 
committal of Civil War Veterans by President Abraham Lincoln in 1862, 
more than 3 million burials have occurred in national cemeteries under 
the National Cemetery Administration.
    In 1973, the Department of Veterans' Affairs established a burial 
allowance that provided partial reimbursement for eligible funeral and 
burial costs. The current payment is $2,000 for burial expenses for 
service-connected deaths, $300 for nonservice-connected deaths and a 
$700 plot allowance. At its inception, the payout covered 72 percent of 
the funeral costs for a service-connected death, 22 percent for a 
nonservice-connected death and 54 percent of the cost of a burial plot.
    Burial allowance was first introduced in 1917 to prevent veterans 
from being buried in potter's fields. In 1923 the allowance was 
modified. The benefit was determined by a means test until it was 
removed in 1936. In its early history the burial allowance was paid to 
all veterans, regardless of their service connectivity of death. In 
1973, the allowance was modified to reflect the status of service 
connection.
    The plot allowance was introduced in 1973 as an attempt to provide 
a plot benefit for veterans who did not have reasonable access to a 
national cemetery. Although neither the plot allowance nor the burial 
allowance was intended to cover the full cost of a civilian burial in a 
private cemetery, the recent increase in the benefit's value indicates 
the intent to provide a meaningful benefit. The Independent Budget 
veterans service organizations are pleased that the 111th Congress 
acted quickly and passed an increase in the plot allowance for certain 
veterans from $300 to $700 effective October 1, 2011. However, we 
believe that there is still a serious deficit between the original 
value of the benefit and its current value.
    In order to bring the benefit back up to its original intended 
value, the payment for service-connected burial allowance should be 
increased to $6,160, the nonservice-connected burial allowance should 
be increased to $1,918 and the plot allowance should be increased to 
$1,150. The IBVSOs believe Congress should divide the burial benefits 
into two categories: veterans within the accessibility model and 
veterans outside the accessibility model.
    Congress should increase the plot allowance from $700 to $1,150 for 
all eligible veterans and expand the eligibility for the plot allowance 
for all veterans who would be eligible for burial in a national 
cemetery, not just those who served during wartime. Congress should 
increase the service-connected burial benefits from $2,000 to $6,160 
for veterans outside the radius threshold and to $2,793 for veterans 
inside the radius threshold.
    Congress should increase the nonservice-connected burial benefits 
from $300 to $1,918 for all veterans outside the radius threshold and 
to $854 for all veterans inside the radius threshold. The 
Administration and Congress should provide the resources required to 
meet the critical nature of the National Cemetery Administration's 
mission and to fulfill the nation's commitment to all veterans who have 
served their country so honorably and faithfully.

Executive Summary
    Introduction: The Department of Veterans Affairs (VA) National 
Cemetery Administration (NCA) maintains 131 of the nation's 147 
national cemeteries, as well as 33 soldiers' lots. The 131 NCA operated 
cemeteries are composed of approximately 3.1 million gravesites and are 
located in 39 states and Puerto Rico. As of late 2010, there were more 
than 20,021 acres within established installations in the NCA. Nearly 
60 percent are yet to be developed and hold the potential to provide 
approximately 5.5 million more gravesites, composed of 4.9 million 
casket sites and 600,000 in-ground cremation sites. Of these 131 
national cemeteries, 71 are open to all interments, 19 can accommodate 
cremated remains only, and 41 will perform only interments of family 
members in the same gravesite as a previously deceased family member.
    VA estimates that approximately 22.4 million veterans are alive 
today, and with the transition of an additional 1 million service 
members into veteran status over the next 12 months, this number is 
expected to continue to rise until approximately 2017. These veterans 
have served in both World Wars, the Korean War, the Vietnam War, the 
Gulf War, Operation Enduring Freedom, Operation Iraqi Freedom, 
Operation New Dawn, and hostile conflicts around the world and during 
times of peace. On average, 14.4 percent of veterans choose to be laid 
to rest in a national or state veterans' cemetery. As new national and 
state cemeteries continue to open, as our aging veterans' population 
continues to grow, and as we continue to be a nation at war on multiple 
fronts, the demand for burial at a veterans' cemetery will continue to 
increase.
    The most important obligation of the NCA is to honor the memory of 
America's brave men and women who have selflessly served in the armed 
forces. Therefore, maintaining NCA cemeteries as a national shrine 
dedicated to the memory of these men and women is a top priority. In 
fact, many of the individual cemeteries within the NCA system are 
steeped in history, and the monuments, markers, grounds, and related 
memorial tributes represent the very foundation of the United States.
    The Independent Budget veterans service organizations (IBVSOs) 
would like to acknowledge the dedication and commitment demonstrated by 
NCA leadership and staff in their continued dedication to providing the 
highest quality of service to veterans and their families. It is in the 
opinion of the IBVSOs that the NCA continues to meet its goals and the 
goals set by others because of its true dedication and care for 
honoring the memories of the men and women who have so selflessly 
served our nation. We applaud the NCA for recognizing that it must 
continue to be responsive to the preferences and expectations of the 
veterans' community by adapting or adopting new burial options and 
ensuring access to burial options in the national, state, and tribal 
government-operated cemeteries. We also believe it is important to 
recognize the NCA's efforts in employing disabled and homeless 
veterans.

    Topics to be discussed:

    1. NCA Accounts: The IBVSOs recommend an Operational and 
Maintenance budget of $280 million for the National Cemetery 
Administration for FY 2013 so it can meet the demands for interment, 
gravesite maintenance and related essential elements of cemetery 
operations. This request includes the $20 million for the National 
Shrine Initiative. The IBVSOs further call on the Administration and 
Congress to provide the resources needed to meet the critical nature of 
the NCA mission and fulfill the nation's commitment to all veterans who 
have served their country so honorably and faithfully.

    2. The State Cemetery Grants Program (SCGP): The Independent Budget 
recommends an appropriation of $51 million for the SCGP for FY 2013. 
This funding level will allow the SCGP to establish new cemeteries, at 
their current rate, that will provide burial options for veterans who 
live in regions that currently have no reasonable accessible state or 
national cemetery. The IBVSOs further believe this small increase in 
funding will help the National Cemetery Administration meet the needs 
of the State Cemetery Grant program, as its expected demand will 
continue to rise through 2017. Furthermore, this funding level will 
allow the NCA to continue to expand in an effort of reaching its goal 
of serving 94 percent of the nation's veteran population by 2015.

    3. Veterans' Burial Benefits: Congress should divide the burial 
benefits into two categories: veterans within the accessibility model 
and veterans outside the accessibility model. Congress should increase 
the plot allowance from $700 to $1,150 for all eligible veterans and 
expand the eligibility for the plot allowance for all veterans who 
would be eligible for burial in a national cemetery, not just those who 
served during wartime. Congress should increase the service-connected 
burial benefits from $2,000 to $6,160 for veterans outside the radius 
threshold and to $2,793 for veterans inside the radius threshold. 
Congress should also increase the nonservice-connected burial benefits 
from $300 to $1,918 for all veterans outside the radius threshold and 
to $854 for all veterans inside the radius threshold. Finally, the 
Administration and Congress should provide the resources required to 
meet the critical nature of the National Cemetery Administration's 
mission and fulfill the nation's commitment to all veterans who have 
served their country so honorably and faithfully. able

                                 
    February 9, 2012

    The Honorable Representative Jon Runyan, Chairman
    U.S. House of Representatives
    Committee on Veterans' Affairs
    335 Cannon House Office Building
    Washington, D.C. 20510

    Dear Chairman Runyan:

    Neither AMVETS nor I have received any federal grants or contracts, 
during this year or in the last two years, from any agency or program 
relevant to the February 16, 2012, House Veterans Affairs Committee 
hearing on the U.S. Department of Veterans Affairs Budget Request for 
Fiscal Year 2013.

    Sincerely,

    Diane M. Zumatto
    AMVETS National Legislative Director

                                 
                        Question For The Record

Letter and Post-Hearing Questions for Diana Rubens, Deputy Under 
        Secretary for Field Operations, Veterans Benefits 
        Administration, U.S. Department of Veterans Affairs From: Hon. 
        Jerry McNerney, Ranking Democratic Member, Veterans' Affairs, 
        Subcommittee on Disability Assistance and Memorial Services

    February 17, 2012

    Ms. Diana Rubens
    Deputy Under Secretary for Field Operations
    Veterans Benefits Administration
    U.S. Department of Veterans Affairs
    801 Vermont Avenue, NW
    Washington, DC 20420

    Dear Secretary Rubens:

    In reference to our Subcommittee on Disability Assistance and 
Memorial Affairs hearing entitled ``Budget Hearing FY 2013'' that took 
place on February 16, 2012, I would appreciate it if you could answer 
the enclosed hearing questions by the close of business on Friday, 
March 30, 2012.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
committee and subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Jian Zapata at [email protected], and fax your responses to 
Jian at 202-225-2034. If you have any questions, please call 202-225-
9756.

    Sincerely,

    JERRY MCNERNEY
    Ranking Democratic Member
    Subcommittee on Disability Assistance and Memorial Affairs

    KR/jz

    1. The Independent Budget recommends that VA add 40 FTEs to the 
Board of Veterans' Appeals. As you know, the BVA has its own backlog, 
with appeals averaging 883 days (over two years). Yet, VA's budget flat 
funds the General Administration account under which BVA receives its 
funding.

    a. In light of the CAVC's recent Freeman v Shinseki decision, which 
allows a beneficiary to appeal to the BVA the appointment of the 
fiduciary selected by VA (resulting in even more potential appeals), 
what is VA doing to address the backlog of appeals at the Board of 
Veterans' Appeals in its budget?

    b. Are more FTEs for BVA needed?

    2. Please elaborate on the claims processing initiative involving 
ACS, Inc., a private contractor. A recent POGO (Project on Government 
Oversight) study issued on 9/13/11, indicated that contractors cost 
more than federal employees. On average contractors are paid 1.83 times 
more than federal employees. In fact, claims processors are the most 
expensive contractors according to POGO, with average federal annual 
compensation for claims assistance and examining work at $57,292, 
compared to $75, 637 for contractors doing the same job.

    a. Why is this contract necessary?

    b. What are the costs associated with the contract with ACS, Inc. 
for claims development?

    c. How many claims will ACS develop or process?

    d. What will happen to current FTEs under the applicable C&P 
accounts?

    e. Please elaborate on how the contracted employees through ACS, 
Inc. are trained within a matter of a few months while VBA employees 
are trained over the span of two years?

    3. VBMS is slated to receive $128 million this budget cycle.

    a. Does this funding level represent a decrease, if so what is the 
reason for the decrease?

    b. Have all of VA's claims processing legacy systems been properly 
interfaced. How will VBMS interface with the Fiduciary Program's case 
management system?

    4. VA requested funding for additional IDES employees for FY 2013.

    a. Is this request level adequate given the amount of resources you 
disclose this process requires?

    b. Is it adequate given the expect influx of new Veterans returning 
from war and expected to file claims?

    5. What is the status of the Virtual Lifetime Electronic Record 
Initiative?

    a. What is the funding level requested?

    b. When is roll-out and implementation expected?

    6. Will VA continue to use the Fast Track system for Agent Orange 
claims?

    a. If so, how much will it cost during this budget cycle? Will it 
be used for any other purpose?

    7. Certain stakeholders informed the Committee that the VBA 
Training Academy may not be operational and training for claims 
processors has ceased.

    a. Is this true?

    b. Are VBA training needs adequately addressed in this budget?

    8. What is the Stakeholder Enterprise portal (allows VSOs access to 
some VA records)?

    a. Who has access to it? How is it funded?

    b. Will it be expanded to include access for other Veteran 
advocates/stakeholders?
Post-Hearing Questions for Diana Rubens, Deputy Under Secretary for 
        Field Operations, Veterans Benefits Administration, U.S. 
        Department of Veterans Affairs From: Hon. Michael H. Michaud, 
        Member, Veterans' Affairs, Subcommittee on Disability 
        Assistance and Memorial Services

    1. How often does the VA grant fiduciary power to a trusted family 
member who has power of attorney as opposed to a paid fiduciary?

Post-Hearing Response From Diana Rubens, Deputy Under Secretary for 
        Field Operations, Veterans Benefits Administration, U.S. 
        Department of Veterans Affairs To: Hon. Jerry McNerney, Ranking 
        Democratic Member, Veterans' Affairs, Subcommittee on 
        Disability Assistance and Memorial Services, and Hon. Michael 
        H. Michaud, Member, Veterans' Affairs, Subcommittee on 
        Disability Assistance and Memorial Services

Questions from Ranking Member McNerney (CA-11)

    Question 1: The Independent Budget recommends that VA add 40 FTEs 
to the Board of Veterans Appeals .As you know, the BVA has its own 
backlog, with appeals averaging 883 days (over two years). Yet,VA's 
budget flat funds the General Administration account under which BVA 
receives its funding.

    a. In light of the CAVC's recent Freeman v. Shinseki decision,which 
allows a beneficiary to appeal to the BVA the appointment of the 
fiduciary selected by VA (resulting in even more potential 
appeals),what is VA doing to address the backlog of appeals at the 
Board of Veterans' Appeals in its budget.

    b. Are more FTEs for BVA needed?

    Response: VA acknowledges the fiscal constraints facing all 
agencies in 2013 and appreciates Congress' approval of an increase in 
2012 funds to address the appeals claims workload. BVA historically 
receives an average of 5 percent of all compensation claims that VBA 
receives. In FY 2011, BVA issued approximately 90 decisions per FTE, 
which includes Veterans Law Judges (VLJ) , attorneys, and 
administrative support staff,for a total of 48,588 decisions . In FY 
2012, BVA projects issuing 47,600 decisions based on the current level 
of FTE supported . While additional FTE would result in additional 
decisions, VA must allocate its resources with consideration of needs 
across the entire Department.
    To meet the challenge of the growing appeals workload, BVA has 
implemented efficiencies in two key areas: hearings and remands. The 
Department also submitted several legislative proposals to improve the 
appeals process. These initiatives are discussed more fully below.
    With respect to hearings, approximately 25 percent of appellants 
before BVA request a hearing before a VLJ. The majority of appellants 
request an in-person hearing (e.g., 66 percent in FY 2011). An average 
of 75 percent of scheduled in person hearings in FY 2011 took place, 
meaning that 25 percent of those Veterans scheduled for hearings did 
not appear for the hearing. Data confirms that over the past five 
years, the national average show rate for field hearings is 73 percent. 
This leaves the VLJ who traveled to the field station with substantial 
down time.
    The annual hearing schedule depends on demand, and slots are 
allocated to field stations well in advance of the beginning of each 
fiscal year. In planning for the FY 2012 hearing schedule, BVA 
decreased the number of available field hearings offered by 25 percent 
in favor of increasing video teleconference (VTC) hearings, which take 
place between the VLJ in Washington, DC and the Veteran at his or her 
local Regional Office (RO). This results in both monetary and time 
savings for VA. VLJs will gain time in the office, with an anticipated 
increase in decisional output (ranging from 2 percent to 5 percent) 
over the next few years. Additionally, VA will save an estimated 
$864,000 in travel costs through 2015.
    Remands generate a substantial amount of rework for both VBA and 
BVA, which increases workload, while also greatly increasing the delay 
for Veterans. In FY 2011, BVA remanded 44 percent of appeals before the 
Board (21,464) to the Agency of Original Jurisdiction (AOJ), generally 
VBA. Historically, approximately 75 percent of all remands return to 
the Board. VLJs determined that 40 percent of FY 2011's remands (8,585) 
could have been avoided if the RO properly processed and reviewed the 
case in accordance with existing laws and regulations.
    BVA has analyzed the data from its Remand Reasons Database 
(collecting reasons for remands since 2004) and determined that the top 
reason for remand is inadequate medical examinations and opinions. To 
reduce the number of remands that are returned to the Board, BVA has 
partnered with the Veterans Health Administration (VHA) to develop 
training tools and provide direct training to VA clinicians to improve 
VA compensation and pension examinations. Additionally, BVA and VBA 
have agreed to a mandatory joint training program to aid in 
standardizing adjudication across the system, driven by the most common 
reasons for remand. BVA has established an interactive training 
relationship with VBA's key organizations involved in the appellate 
process, i.e., the Systemic Technical Accuracy Review (STAR) staff, 
Decision Review Officers, and the Appeals Management Center staff. The 
goal of these efforts is to reduce the number of avoidable remands in 
the system.
    VA has submitted legislative proposals to Congress that would 
streamline the appellate process. Specifically, VA has proposed a 
provision that would allow BVA to determine the most expeditious type 
of hearing for those appellants who requests a hearing before a VLJ. 
The proposal includes a ``good cause'' exception for those appellants 
who do not desire a video conference hearing. VA has also proposed an 
automatic waiver provision, establishing a presumption that an 
appellant, or his or her representative, has waived RO consideration of 
any evidence he or she files after filing the Substantive Appeal to the 
Board. This would eliminate readjudication of the appeal by the Ro in 
some cases, in favor of the Board directly addressing the evidence . 
Additionally ,VA has proposed reducing the time period to file a Notice 
of Disagreement (NOD) from 365 days to 180 days, to ensure timely 
processing of appeals and less rework due to stale evidence.

    Question 2: Please elaborate on the claims processing initiative 
involving ACS , Inc., a private contractor . A recent POGO (Project on 
Government Oversight) study issued on September 13,2011, indicated that 
contractors cost more than federal employees. On average contractors 
are paid 1.83 times more than federal employees. In fact, claims 
processors are the most expensive contractors according to POGO,with 
average federal annual compensation for claims assistance and examining 
work at $57,292,compared to $75,637 for contractors doing the same job.

    a. Why is this contract necessary?

    Response: The Veterans Benefits Management Assistance Program 
(VBMAP) contract was issued as a means to address the current backlog 
in VBA claims development workload. The contractor develops claims and 
returns them to VA for decision. Secondary purposes included increasing 
enrollment in eBenefits, and providing training to VBA employees on 
change management and Lean Six Sigma.
    VBMAP is a one-year professional services contract to perform 
disability claims development. This effort was developed and awarded on 
a firm-fixed price basis that only pays the contractor for claims 
returned at a 100 percent accuracy rate. The contractor is not paid for 
claims not meeting acceptance criteria , and the work is returned to 
normal VBA channels for correction or additionalfollow-up as necessary. 
The VBMAP contract does not specify the number or type of employees, 
but focuses on process automation, expedited actions,and transition/
maintenance in the electronic (vice paper) environment.

    b. What are the costs associated with the contract with ACS, Inc. 
for claims development?

    Response: The VBMAP contract is for $18.6 million for claims 
development, eBenefits enrollment , and training to VBA employees on 
change management and Lean Six Sigma. $16.4 million is focused on the 
claims development task.

    c. How many claims will ACS develop or process?

    Response: The maximum amount of claims is 357,600.

    d. What will happen to current FTEs under the applicable C&P 
accounts?

    Response: There will be no changes to FTE as a result of the VBMAP 
contract.

    e. Please elaborate on how the contracted employees through ACS, 
Inc. are trained within a matter of a few months while VBA employees 
are trained over the span of two years?

    Response: The VBMAP contract focuses only on claims development and 
only for a narrowly defined type of claims vice the entire scope of 
duties of typical VBA employees. Additionally, the VBMAP contractor 
breaks the claims development processes into small discrete tasks, and 
their employees focus on single segmented tasks that feed back into the 
automated work stream . Thus, contractor employees tend to know only 
parts of the claims development workflow process. Supervisors and a 
dedicated quality control team provide workflow monitoring and 
oversight to ensure accuracy of the final products.

    Question 3: VBMS is slated to receive $128M this budget cycle.

    a. Does this funding represent a decrease , if so what is the 
reason for the decrease?

    Response: Yes,this funding represents a decrease, which is 
attributable to higher levels of investment in VBMS' core 
infrastructure and claims processing capabilities completed prior to FY 
2013. FY 2013 funding requested will support continuation of national 
deployment, scanning, system enhancements, and defect repairs.

    b. Have all of VA's claims processing legacy systems been properly 
interfaced. How will VBMS interface with the Fiduciary Program's case 
management system?

    Response: VBMS currently interfaces with the Corporate Database and 
the VETSNET suite of applications . VBMS is initially focused on the 
establishment, development , and rating sections of the claims process. 
VA will evaluate interfaces with fiduciary and other programs as 
systems development and requirements gathering continue.

    Question 4: VA requested funding for additional IDES employees for 
FY 2013 .

    a. Is this request level adequate given the amount of resources you 
disclose this process requires?

    Response: VA is staffed to support the current level of separations 
,estimated at 27,000 claims per year. VA and the Department of Defense 
(DoD) continue to assess the impact of troop movement and drawdown of 
forces to the IDES program. We will continue to monitor resource needs 
as part of our overall evaluation of the program.

    b. Is it adequate given the expect influx of new Veterans returning 
from war and expected to file claims?

    Response: VA's estimate of claims receipts is based on available 
information. VA and DoD will continue to assess the impact of the 
drawdown of forces, as well as the impact of the recent VOW to Hire 
Heroes Act of 2011.

    Question 5: What is the status of the Virtual Lifetime Electronic 
Record Initiative?

    Response: Virtual Lifetime Electronic Record (VLER) enables VA and 
its partners to proactively provide the full continuum of services and 
benefits to Veterans through Veteran-centric processes made possible by 
effective, efficient, and secure standards-based information sharing. 
VLER is neither an IT program nor an information service provider. VLER 
is a multi-faceted business and technology initiative that includes a 
portfolio of health, benefits, and personnel information sharing 
capabilities ,with four over-arching goals that align to VA Strategic 
Plans. They are:

      Empower Veterans to securely access and control the use 
and dissemination of their health, benefits, and personnel information;
      Eliminate material and non-material barriers to 
information sharing across the VA enterprise and with external 
partners;
      Exploit information sharing innovations to ensure that 
the VA proactively delivers services and benefits; and
      Ensure that Veterans, their families , and other 
stakeholders are engaged to better understand their needs and increase 
participation in the development and use of VLER-enabled services.

    To achieve its goals, VLER efforts are managed in four VLER 
Capability Areas (VCAs):

      VCA 1- Exchange health information required to support 
clinical healthcare between VA , DoD and private providers;
      VGA 2 - Expand the exchange of health, benefits , 
military personnel and administrative data in order to support 
disability claims adjudication;
      VGA 3 - Exchange additional health, benefits, military 
personnel and administrative information required to proactively 
deliver the full spectrum of benefits and services including, but not 
limited to, compensation , housing, education, pension, insurance and 
memorials; and
      VCA 4 - Provide Service members and Vetera ns the ability 
to securely access and control the use and dissemination of their 
health, benefits, and personnel information via the eBenefits portal.

    a. What is the funding level requested?

    Response: VA's FY 13 budget request for VLER is for $52.939 
million.

    b. When is roll-out and implementation expected?

    Response: Each VLER capability area includes multiple projects in 
different stages of development. Some projects are in the early stages 
of development and will be implemented in FY 2013 and FY 2014. However, 
other VLER projects are already delivering valuable benefits. The 
following is a sample of VLER projects which have already made major 
impacts for millions of Service members and Veterans in numerous ways:

      More than 800,000 Servicemembers and Veterans use the 
VLER eBenefits portal (VCA-4) to manage their Servicemembers Group Life 
Insurance, obtain GI Bill Certificates of Eligibility and access more 
than 40 capabilities made available via eBenefits; new capabilities are 
being added to eBenefits on a quarterly basis.
      ``Blue Button'' has been implemented , providing online 
self-service downloads for on-demand access to personal health 
information to 750,000 active users.
      More than 1.6 million Veteran and Servicemember medical 
records have been shared via the VLER Bidirectional Health Information 
Exchange (BHIE) and Clinical Data Repository/Health Data Repository 
(CHOR) projects.
      Tens of thousands of Servicemembers and Veterans are 
taking advantage of DoD and VAparticipation in the nationwide health 
information network (NwHIN) being piloted in 13 areas across the 
country.
      VLER has impacted thousands of disabled Servicemembers , 
including our most severely wounded, ill, and injured by automating 
information management and sharing between DoD and VA in support of the 
Federal Recovery Coordinator and Integrated Disability Evaluation 
System.

    Planned VLER Deliverables:

      Making Blue Button self-service downloads of on-demand 
personal health information available via eBenefits .
      Expanding NwHIN nationwide starting in July 2012, making 
health information exchange between VA, DoD, and private sector 
available to all Veterans.
      Providing VA Compensation and Pension examiners direct 
access to existing/legacy DoD health record systems (AHLTA & TMDS).
      Incorporating career transition assistance behind 
eBenefits portal (resume building, job search, entrepreneurship and 
voe/tech training).
      Completing automation of the transfer of all required 
claims adjudication information between DoD and the VA.
      Helping reduce the backlog of disability claims, VLER is 
planning to deliver the following in the latter half of FY 2012 and FY 
2013:

      --  A ``TurboTax like'' web-based forms which 
facilitate the collection of specific disability rating schedule 
information from DoD, VAand private clinicians performing compensation 
and pension (C&P) examinations.
      --  Enabling and automating the electronic sharing of rating 
schedule information so that systems used by VAto determine a 
Servicemember 's or Veteran's eligibility for benefits, and
      --  Providing VA C&P clinicians access to the information they 
need (from DoD systems) to make it easier and less time consuming to 
perform C&P exams for initial applications from active duty and 
recently discharged Servicemembers (including mobilized national Guard 
and Reservists).

    Question 6: Will VA continue to use the Fast Track system for Agent 
Orange claims?

    Response: Yes,VBA will continue to use the Fast Track system for 
Agent Orange claims.

    a. If so, how much will it cost during this budget cycle? Will it 
be used for any other purpose?

    Response: The FY 2013 budget request includes $1.8 million annually 
for operations and maintenance. Fast Track will not be used for any 
other purpose beyond processing of Agent Orange claims.

    Question 7: Certain stakeholders informed the Committee that the 
VBA Training Academy may not be operational and training for claims 
processors has ceased.

    a. Is this true?

    Response: No - the Veterans Benefits Academy is in full operation. 
The Academy remains the main training site for VBA 's centralized 
training for new claims processor (Challenge). The FY 2013 budget 
request supports centralized training for more than 1,000 claims 
processors. The Academy is also the site of VBA's new supervisor 
training classes,which are also supported in the FY 2013 budget 
request.

    b. Are VBA training needs adequately addressed in this budget?

    Response: Yes, VBA's training needs are adequately addressed in the 
FY 2013 budget request.

    Question 8: What is the Stakeholder enterprise portal (allows VSOs 
access to some VA records)?

    Response: The Stakeholder Enterprise Portal (SEP) project supports 
the long term vision of a 21st Century VA ,which will enable convenient 
and seamless interactions between VA and Veterans . SEP will streamline 
access to self service capabilities and provide process improvements 
for identifying and granting access to VA's business partners and 
service providers. Essentially,VA business partners and service 
providers, including Veterans Service Organizations ,will be able to 
access VA benefits applications through a single online portal/access 
point.

    a. Who has access to it? How is it funded?

    Response: The portal is envisioned as the single entry point for 
all external, non-Veteran , stakeholders requiring access to VA self 
service applications . SEP is funded under the Veterans Relationship 
Management (VRM) Major Initiative.

    b. Will it be expanded to include access for other Veteran 
advocates/stakeholders?

    Response: Yes, expansion will allow access for Veteran advocates 
and stakeholders, including Veterans Service Organizations.

Question from Rep. Michaud (ME-2)
    Question 1: How often does the VA grant fiduciary power to a 
trusted family member who has power of attorney as opposed to a paid 
fiduciary?

    Response: VA's current workload management system does not track 
how many family members hold durable power of attorney (POA) for a 
beneficiary and also serve as the beneficiary's Federal fiduciary . 
However, VA's fiduciary appointment process always considers the 
beneficiary's preference first. If VA cannot qualify the beneficiary's 
preference,VA will consider a family member, custodian, care provider, 
or any other person willing to provide fiduciary services without 
charge. Thus, while the existence of a POA is not criteria for 
appointment, it is likely that some current fiduciaries ,the majority 
of whom are family members, also hold POA for the beneficiary.
    Relying on POAs alone as criteria for appointment of Federal 
fiduciaries could prove difficult. POAs often have an expiration date 
or other limiting terms, and VA might find it necessary to determine 
whether the beneficiary executed the document with full understanding 
of its effect. Such determination might unnecessarily complicate and 
delay the fiduciary appointment process. Accordingly ,absent the 
appointment of the beneficiary's preference, the current significance 
of a POA in VA's fiduciary program is that it may help identify an 
individual whom the beneficiary trusts regarding financial matters and 
might be best suited for appointment.
    Regarding paid fiduciaries , as of February 24, 2012, less than 
eight percent of the more than 123,000 beneficiaries in VA's fiduciary 
program have a paid fiduciary. VA's policy is to find the least 
restrictive and most effective method of payment, which is generally a 
family member who by law cannot charge a fee for fiduciary services.

                                 
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