Since the 1940s, VA has provided vocational rehabilitation assistance to veterans with service-connected disabilities. In 1980, Congress enacted the Veterans’ Rehabilitation and Education Amendments, which mandated a change in the mission of VA’s vocational rehabilitation program from primarily providing training to helping veterans find and maintain employment, or achieve independence in their daily lives if employment is not currently feasible. VA reported that VR&E served 90,600 participants in fiscal year 2007 at a cost of $722 million. There are 57 VA regional offices—roughly about 1 in each state—and about 1,000 VR&E staff who work in these regional offices and at the program’s central office in Washington, D.C. VR&E regional office personnel include rehabilitation counselors, employment coordinators, and management and support staff who provide personal, face-to-face services to veterans. VR&E services can include vocational counseling, vocational evaluation, case management, education and training, job placement assistance, and independent living services. VR&E can also pay tuition, subsistence, and other expenses for veterans pursuing education and training. An allowance is provided to veterans who have completed training programs for up to 2 months as they seek employment. When necessary, VR&E can also direct veterans to other vocational and employment counselors and specialists who perform services under contract. To receive VR&E services, veterans with disabilities generally must have a 20 percent disability rating and an employment handicap. Veterans with a 10 percent disability rating may also be entitled to receive services if they have a serious employment handicap. In addition, injured servicemembers may be eligible for VR&E services before being discharged from the military if they request a memorandum rating from VA and are found to have one or more service-connected disabilities that are 20 percent or higher. VR&E vocational rehabilitation counselors determine entitlement to services, which generally provides a 12-year period of eligibility and up to 48 months of benefits. VR&E is one of many federal and state programs available to veterans with disabilities in their transition from the military to civilian life and work. Injured servicemembers can receive medical treatment from the Department of Defense (DOD) military treatment facilities or Veterans Health Administration facilities, such as polytrauma centers, which may also provide vocational rehabilitation services. Within VA, the Compensated Work Therapy program primarily helps veterans with mental health diagnoses by integrating vocational rehabilitation into their overall medical treatment plan and placing them in jobs. In addition, VA works with DOD and the Department of Labor (Labor) to provide presentations to servicemembers being discharged about veterans’ benefits and services through the Transition Assistance Program and Disabled Transition Assistance Program. Labor’s Veterans’ Employment & Training Service (VETS) also provides services to veterans. Labor and VA have historically worked together to help veterans with service-connected disabilities transition to the civilian workforce. Labor administers the VETS program through grants to state workforce agencies, whose staff provide veterans with reemployment services, such as job search and placement assistance and also market veterans to employers. In addition, VR&E works with state vocational rehabilitation agencies that receive grants from the Rehabilitation Services Administration at the Department of Education to prepare individuals with disabilities for employment through vocational rehabilitation services. For more than 25 years, we, along with others who have reviewed the program, veteran service organizations, and VA, have found shortcomings in the VR&E program. These reviews generally concluded that the program had not fulfilled its primary purpose, which is to ensure that veterans obtain suitable employment. In 1996, we reported that the program primarily emphasized providing training and did not place enough emphasis on providing employment services. Additionally, the 1999 Congressional Commission on Servicemembers and Veterans Transition Assistance found that VR&E had not achieved its statutory purpose and noted that “employment assistance is the most valuable service the Nation can provide to personnel transitioning from active duty to the civilian workforce.” In 2003, we designated federal disability programs, including those at VA, as high risk because they had difficulty managing their programs and were in need of transformation. In response to recommendations from the 2004 Task Force, VR&E has implemented the Five-Track Employment Process and strengthened the program’s focus on employment. However, VR&E’s incentive structure for veterans remains primarily aligned with education and training programs, with no financial incentive for those seeking immediate employment. In response to the 2004 Task Force report, VR&E implemented the Five- Track process by delineating its existing services into five distinct tracks to provide a stronger focus on employment early in the rehabilitation process. The delineation of program services into five tracks is designed to accommodate the different needs of veterans, such as those who need immediate employment as opposed to those who need training to meet their career goal. Figure 1 provides details on each of the five tracks. After veterans apply to the program and are found eligible for services, they are introduced to the Five-Track process through a program orientation. During orientation, VR&E shows a video that explains the process to veterans and emphasizes that the goal of the program is to obtain employment or to achieve independent living if employment is not immediately feasible. At the sites we visited, we found that VR&E staff also verbally reinforced to veterans during orientation that the primary goal of the program is employment. Following orientation and evaluation, veterans are assisted by VR&E staff in selecting a track that meets their needs and employment goals. Some of the rehabilitation counselors we interviewed told us the factors they consider when evaluating veterans for track selection include veterans’ transferable job skills, results on various vocational tests, and how the veterans’ disabilities affect their ability to do the work they did in the past. Of the almost 24,000 veterans with a documented track selection who began a plan of services from January 2007 to early May 2008, we found that more than three-quarters chose to pursue employment through the long-term services track, which includes education and training, while less than one-tenth chose more immediate employment through the reemployment or rapid access to employment tracks, and slightly more than one-tenth entered the independent living track. Very few veterans chose self-employment (less than 1 percent). See figure 2 for the percentages of veterans who entered each of the five tracks. lso as part of the Five-Track process, VR&E established an employment A coordinator position and job labs to assist veterans with preparing for andfinding employment. Employment coordinators assess veterans’ readiness to seek employment, develop relationships with employers, and help place veterans in jobs. VR&E’s job labs provide computers with employment- related software that VR&E staff and veterans can use for activities such as developing job search plans, preparing for interviews, and writing resumes. Though the Five-Track Employment Process was intended to modernize the program and increase VR&E’s emphasis on employment, VR&E did no update its financial incentive structure to align with its mission. Specifically, the program offers a monthly subsistence allowance those veterans who are enrolled in education or training, but not to those who receive employment services only. For example, a veteran who has two dependents and enrolls in a full-time education or training program receives approximately $760 in monthly assistance. That veteran would continue to receive this allowance for 2 months following training while or she seeks employment. One rehabilitation counselor we spoke with noted that many veterans who have completed their training rely on this money during the job search phase. In contrast, veterans who receive employment services only do not receive a monthly allowance while th look for employment. Our prior work has noted the need to consider basic program design, particularly those features that affect individual work incentives and supports, when modernizing disability programs for the 21st century. Based on our prior work, we are concerned that without properly aligned incentives and supports, veterans who need assistance finding immediate employment may not seek out VR&E services and others may not choose the track that is best suited for them. In our discussions with senior VR&E officials, they acknowledged that offe ring financial incentives for veterans receiving employment services could be beneficial, and noted that they may review the internal incentive structure ey as part of a program evaluation in fiscal year 2009. Additionally, in September 2008, VA released a study on overall veterans’ compensa payments that included several options for changing the subsistence allowance for VR&E participants. to align incentives with the program’s employment mission. Over the last few years, VR&E has increased its capacity to serve veterans by engaging in a number of collaborative initiatives with other organizations and by adding staff to its central and regional offices. Nevertheless, the program continues to face challenges ensuring it h right number of staff with the right skills, and its workforce planning has not strategically addressed these issues. VR&E has increased its collaboration with other organizations such as federal and state agencies, as well as private and nonprofit employers through initiatives to help injured servicemembers and disabled veterans transition to the civilian workforce. Initiatives with DOD focus on intervention and employment services for injured servicemembers their recovery process, while VR&E’s partnership with VA’s Compensated Work Therapy (CWT) program addresses the vocational rehabilitation needs of veterans who may have mental illnesses or traumatic brain inju In addition, VR&E’s collaborative efforts with Labor, state vocational rehabilitation agencies, and employers provide employment services to veterans who are ready to enter the job market. VR&E’s recent efforts to collaborate with these organizations are highlighted below. ry. Economic Systems Inc., A Study of Compensation Payments for Service-Connected Disabilities, a special report prepared at the request of the Department of Veterans Affairs, September 2008. In fiscal year 2005, VR&E created a standardized presentation for the Disabled Transition Assistance Program (DTAP), which informs disabled servicemembers of the full range of benefits and services available to them once they leave active duty.