[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
VA's Fiscal Year 2007 Budget Request for the 
Compensation and Pension Programs of the Veterans Benefits Administration

Thursday, February 16, 2006

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON DISABILITY ASSISTANCE AND 
MEMORIAL AFFAIRS, COMMITTEE ON VETERANS' AFFAIRS, Washington, D.C.

	The Subcommittee met, pursuant to call, at 2:00 p.m., in Room 340, Cannon 
House Office Building, Hon. Jeff Miller [Chairman of the Committee] presiding.

	Present:  Representatives Jeff Miller, Tom Udall.

	MR. MILLER.  This hearing will come to order.  Good afternoon, everybody.  
Thank you so much for being here on -- this is Thursday, isn't it -- Thursday 
afternoon.
	Last week, we heard testimony from Secretary Nicholson on the VA-wide 
budget request for fiscal year 2007, and today we are meeting to review the 
request for the compensation, pension, and burial programs.  VA estimates it 
will provide nearly $35 billion in compensation, pension, and burial benefits to 
almost 3 million veterans and survivors in fiscal year 2006.  The number of 
veterans filing claims for compensation and pension has grown by more than 36 
percent from 578,773 in fiscal year 2000, to over 788,000 in fiscal year 2005.  
This increase can be attributed to a variety of factors, including the global 
war on terrorism, improved outreach activities, and the general aging of the 
veteran population.
	The Veterans Benefits Administration projects it will receive more 
than 910,000 claims in 2006; over 98,000 of them the result of the six-state 
targeted outreach program that was mandated in the Military Quality of Life 
and Veterans Affairs Appropriation Act of 2006.
	Of particular concern to me is how VBA is going to handle this influx 
of claims.  Under Admiral Cooper's command, timeliness and accuracy of claims 
has indeed improved.  In fiscal year 2005, it took on average 167 days to 
process a claim, and the VBA's accuracy rate was 84 percent.  While these 
numbers represent an improvement over fiscal year 2002 numbers, the year the 
Admiral was confirmed, they represent a slight decline over fiscal year 2004, 
and we are always looking to improve them further.
	One way to improve claims processing is through additional full-time 
employees, or FTEs.  While more FTE will help, it is not a cure-all.  And 
furthermore, it takes time to train those new employees, so the full benefit 
of additional FTE will not be realized at least for a couple of years. 
	Our Subcommittee will continue to review the adjudication process in 
an attempt to identify and eliminate inefficiencies.  President Bush is 
requesting $38 billion in mandatory funding to provide service-connected 
compensation, dependency and indemnity compensation, pension and burial 
benefits. This represents an increase of $3 billion, or nine percent, over 
fiscal year 2006.  And in addition, the President requests $924 million in 
budget authority discretionary funding to cover the VBA's operating costs 
items like salary, infrastructure, and contract medical examinations.
	I am pleased that the President's budget includes additional funding 
for 176 FTE within VBA, but I am disheartened to know that the bulk of the 
FTEs will be assigned to vocational rehabilitation and education claims.  
There's actually a decrease, I think, in direct compensation FTEs of 149.  The 
Committee is assessing the methodologies used to insure this request is a 
sufficient one.
	[The opening statement of Chairman Miller appears on p. 16]

	MR. MILLER.  Before I turn to Mr. Udall, who is sitting in for the 
Ranking Member, Ms. Berkley, I'd like to let everyone know that unfortunately 
we don't have a whole lot of time today.  The full Committee is meeting at 
3:00 to further discuss the President's budget request.
	Mr. Udall?
	MR. UDALL.  Thank you, Chairman Miller.
	Thank you for holding this hearing today, and I welcome Admiral Cooper 
and his staff at the VBA, and Mr. Lawrence of the Disabled American Veterans 
organization.  I am hopeful this hearing will help us come to a clearer 
understanding regarding the fiscal year 2007 Veterans' Affairs budget, and 
some of the concerns being expressed by members of this Committee.
	One particular area of concern, as it has been every year, is ensuring 
the timeliness and accuracy of claims processing.  Admiral Cooper, you were 
before the Subcommittee not four months ago when we discussed the necessity to 
prepare a fiscal year 2007 VA budget that would address claims processing 
needs.
	In reading the budget request now being submitted to Congress for 
fiscal year 2007, there is an expected increase in original claims, an 
expected increase in appeals, an expected increase in overall workload, 
particularly from those men and women returning from the battlefields of 
Afghanistan and Iraq.  Yet this request includes a decrease in FTEs working on 
compensation claims.  There would be 149 fewer FTEs at a time when the 
workloads in this area are only intensifying.  I would echo Mr. Lawrence in 
saying that this request is perplexing, and I hope today's hearing will allow 
for further discussion.
	The need to lower the number of backlog claims must be addressed, and 
it must be addressed now.  Thank you again for those witnesses that are 
testifying.  With 180,000 veterans in my district, these are issues of great 
importance to me, and I hope we can properly address each of these concerns.  
Thank you, Mr. Chairman.
	[The opening statement of Mr. Udall appears on p. 17]

	MR. MILLER.  I thank you very much, Mr. Udall.  Our first witness is 
Admiral Daniel Cooper, the Under Secretary for Benefits, and I understand you 
have a busy schedule as well.  We thank you for being here.  Accompanying the 
Admiral today is Mr. Jack McCoy, Associate Deputy Under Secretary for Policy 
and Program Management; Mr. Michael Walcoff, Associate Deputy Under Secretary 
for Field Operations; Ms. Renï¿½e Szybala, Director of the Compensation and 
Pension Service; and Mr. James Bohmbach, Director of the Office of Resources Management.
	Admiral Cooper, please proceed.


STATEMENT OF DANIEL L. COOPER, UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS 
ADMINISTRATION; ACCOMPANIED BY JACK MCCOY, ASSOCIATE DEPUTY UNDER SECRETARY 
FOR POLICY AND PROGRAM MANAGEMENT, VETERANS BENEFITS ADMINISTRATION; MICHAEL 
WALCOFF, ASSOCIATE DEPUTY UNDER SECRETARY FOR FIELD OPERATIONS, VETERANS 
BENEFITS ADMINISTRATION; RENï¿½E SZYBALA, DIRECTOR OF THE COMPENSATION AND 
PENSION SERVICE, VETERANS BENEFITS ADMINISTRATION; AND JAMES BOHMBACH, 
DIRECTOROF THE OFFICE OF RESOURCES MANAGEMENT, VETERANS BENEFITS 
ADMINISTRATION

	ADMIRAL COOPER.  Thank you, Mr. Chairman.  Mr. Chairman and Mr. Udall, 
I respectfully request that my written statement be entered in the record.
	MR. MILLER.  Check and see if your mic is on, Admiral.  I am sorry.  
Or you might pull it a little closer if you can.  Looks like it is on, we just 
might need to get it a little closer.
	ADMIRAL COOPER.  Can you hear me now?
	MR. MILLER.  Yes, sir.
	ADMIRAL COOPER.  I respectfully request that my written statement be 
made a part of the record.
	MR. MILLER.  Without objection.
	ADMIRAL COOPER.  It is my pleasure to be here today to discuss the 
Department of Veterans' Affairs request for the C&P programs.  The Veterans' 
Benefits Administration is responsible for administrating a wide range of 
benefits and services for veterans, their families, and their survivors.  But 
at the heart of our mission are the disability compensation and pension 
programs.  We specifically provide benefits and services to over 3.5 million 
disabled veterans and other beneficiaries.  Since fiscal year 2000, VBA is 
experiencing an unyielding increase in workload in claims receipts, claims 
complexity, and more direct contact with increasing numbers of service members 
and veterans.  Disability claims from veterans, those returning from war as 
well as those from earlier periods, increased by, as you say, 36 percent from 
2000 to 2005.
	VBA remains absolutely committed to delivering benefits and services 
to eligible claimants in a timely, accurate, and compassionate manner.  To 
that end, we are requesting $1.24 billion in discretionary funds for the C&P 
program.  The requested FTE is essential to provide the level of service 
expected by our nation for those who have sacrificed so much in the defense of 
our freedom.
	With a workforce that is sufficiently supported and correctly 
balanced, VBA can successfully meet the needs of our veterans while ensuring 
proper stewardship of taxpayer funds.  We are requesting 7863 direct C&P FTE 
in fiscal year 2007.  This level will allow VBA to focus on the improvements 
in the quality and timeliness of claims processing, and also reduce the 
inventory of pending claims.  It will also allow for better management of the 
C&P program's other major work.  The other major work includes appeals account 
maintenance, activities for beneficiaries already receiving benefits, 
outreach, telephone and personal interview activity, and guardianship 
responsibilities.  These additional workloads also increase as disabled 
veterans and the number of beneficiaries on our rolls increase.
	We are committed to improving our outreach efforts.  We will continue 
the Seamless Transition program for service members who are medically 
separated or retired due to a traumatic injury.  In this program, we work 
closely with each individual, active-duty personnel, at the start of the 
military medical evaluation board process, which then leads to discharge.  We 
will also continue briefing the separating and retiring service members about 
VA benefits and services through their military organizations.  These services 
include formal transition assistance programs, co-sponsored by DOD and Labor.
	Outreach efforts are also targeted to meet the increasing needs of 
National Guard and Reservists.  Last year we held 8200 briefings.  Separating 
military personnel also receive enhanced benefits through our Benefits 
Delivery at Discharge program.  We have people at 140 discharge sites around 
the country.  Each of these endeavors reaches veterans in ways which encourage 
larger numbers of claims, but each is good for the veteran concerned.
	I would like to discuss for a minute the mandated special outreach.  
Section 228 of the Military Quality of Life and Veterans' Affairs 
Appropriations Act of 2006 stated that the Department of Veterans' Affairs 
shall conduct an information campaign in states with an average annual 
disability compensation payment of a less of an $7,300 per year.  This was the 
number, or the states according to the report issued by the Department of 
Veterans' Affairs IG last year, as you recall.
	This direction is meant to inform all veterans receiving disability 
compensation in the six specific states by direct mail, or to tell them by 
direct mail of the history of below-average disability compensation payments 
to veterans in those states, and to provide all veterans in those states, 
through broadcast and print advertising, with the historical information and 
instructions for submitting new claims.  The states meeting that specific 
criterion are Connecticut, Illinois, Indiana, Michigan, Ohio, and New Jersey.
	Based on our experience with prior targeted outreach efforts, we 
expect, as you mentioned, 98,000 additional claims this year.  No additional 
resources were allocated in that particular amendment to address those 
additional claims.  The number of veterans filing initial disability 
compensation claims and claims for deserved additional benefits has increased 
every year since fiscal year 2000.  The claims from returning Afghanistan and 
Iraq war veterans, as well as from veterans of earlier periods of service, 
have increased by about 200,000 each year since 2000, and it is expected that 
these increases will continue.
	The most important factors leading to these high levels of claims are 
the operations in Iraq and Afghanistan, the increased number of beneficiaries 
on the rolls with resulting additional claims for increased benefits as they 
get older, and improved and expanded outreach activities.
	The increase in claims receipts is not the only change affecting our 
processing requirement.  The greater number of disabilities that veterans now 
claim on each one, the increasing complexities of the disabilities being 
claimed, and extensive changes in laws requiring a more thorough process, pose 
the major challenges to claims workload.
	In my mind, the best thing that we can do is to have a robust training 
program.  This is key to our long-term improvement, the improvement that we 
need in both quality and consistency of our decisions.  Training enables VBA 
to be flexible and responsive to changing workload volume.  VBA is engaged in 
an ongoing effort to improve its training systems, to standardize IT for new 
employees, and to raise the skill levels of existing staff.  We have deployed 
new training tools and centralized training programs.  New hires receive 
comprehensive training and a consistent foundation in claims processing 
principles through a national, centralized training program.
	Local training is provided using standardized curricula.  Improved 
computer-based training tools have been developed.  We have developed a skills 
certification instrument for assessing the knowledge level of our veterans 
service representatives.  We have plans to do the same with our rating VSRs 
and eventually with our decision review officers, field examiners, and pension 
maintenance centers.  Skill certification will enable VBA to identify systemic 
knowledge deficits through the testing process.
	In summary, Mr. Chairman, although VBA has made and will continue to 
make important improvements in processing, IT applications, accountability, 
training, and outreach, we have been unable to keep up with the myriad factors 
complicating claims processing.  In my opinion, with the increases in 
personnel we received in 2006, and that we are bringing on board now and are 
training, and the promise of retaining a relatively high level for the 
foreseeable future, we stand a good chance of turning the corner on delivering 
this very important benefit.  One lesson I've learned, however, is that the 
rules in this complicated endeavor are always subject to change.
	Mr. Chairman, that concludes my testimony.  I greatly appreciate the 
chance to be here, and look forward to answering your questions.
	[The statement of Daniel Cooper appears on p. 21]

	MR. MILLER.  Thank you very much, Admiral.  One thing that I am 
interested in is the six-state targeted outreach language that was in the 
appropriations bill. I am interested in knowing if you were afforded an 
opportunity to comment on the expected impacts on claims processing?
	ADMIRAL COOPER.  I was afforded the opportunity on two occasions to 
talk to a couple of staffers.  And at that time, the first question was, "What 
do you think of this?" and I told them.  Frankly, I told them it was terrible 
public policy to go out and focus on merely six states, because all states 
have certain problems.
	And the second thing I told them was -- and remember, this all came 
out of the discussion of PTSD and the IG's investigation of disparity among 
the states.  One thing I told them was we had not found major errors in the 
claims that we had looked at and, therefore, I did not think it was a good 
idea.  However, I was not asked for a vote.
	At one time, I was further asked, if we knew the number of FTE that we 
were getting in 2006 and how would we allocate those, if in fact that 
amendment came to fruition.  We told them and they didn't like the answer.  
What we showed is that we would have to allocate, if we were going to try to 
keep some control in those six states, most of these people into those six 
states.
	Those are the two questions I was asked, and neither of them proved to 
be germane.
	MR. MILLER.  I know you have the flexibility to move staff around, and 
that you're in the process of strengthening the training programs for your 
ratings staff, but I am not quite sure, however, how you expect to reduce the 
backlog that currently exists with fewer employees, in conjunction with the 
retirements, turnovers, and the time it takes to train new hires.  Can you 
give us a comfort level on that?
	ADMIRAL COOPER.  You may recall that in 2003 we really pushed on 
pending claims.  We pushed the number down to 253,000 pending claims.  Now, I 
will tell you that at that same time, appeals and remands went up, and I then 
decided we need to do things across the board.  However, for the next two 
years, the number of people that we had available to do the work went down.  
The number of claims went up.
	As a result, in 2006 I asked for an increase of 731 additional people, 
because at that time, and this was toward the end of '05, my level of FTE in 
the C&P arena was going down, and across all VBA, was going down to 12,200.
	I pointed out to them that I needed at least 731 additional FTE, and 
that is what I got in the budget, 12,931 FTE.
	Now, I am trying to build up to that.  I think, as of a couple days 
ago, we were at about 12,750.  We have allocated staffing numbers out to get 
us up to the 12,900 allowed, and we have to then do the training, as you 
mentioned, and that will take some time.
	As we were focusing on this budget -- and remember, we start the 
budget 18 months ahead of time.  And so taking the information I knew at that 
time, we looked at staffig needs.  The second point I would like to make is, 
the total number of people we have in C&P and burial, I look at that total 
number of people.  And what you see is that in claims processing we were going 
to decrease 148, but in pension, we were going to increase by a number of 86.  
So, I do play around with those numbers, but if I can get to 911, 12,911, then 
I feel I have a good chance to train people to do the job properly.
	The third thing I would say to you is, we have not yet started the six 
state rollout.  I have everything ready to go, but right now we are operating 
under a letter from Senator Craig that asks that we refrain from starting 
until further notified.  So right now, everybody I have is working on the 
claims we have aboard.
	MR. MILLER.  Mr. Udall?
	MR. UDALL.  Thank you, Chairman Miller.  The VA's testimony is similar 
to the testimony at the full hearing.  The Administration has proposed a 
decrease of 149 FTE who directly handle compensation claims in 2007, despite 
an expectation that the number of veterans seeking benefits will continue to 
rise.  For a number of years VBA has indicated that a backlog of 250,000 
pending claims is an acceptable current inventory, although we refer to the 
backlog as a total number of pending rating claims.
	In any system, there will be a number of claims which the staff can be 
expected to handle in a reasonable amount of time.  That number has 
historically been reported as 250,000.  As of February 11th, 2005, there were 
368,900 rating claims pending.  The number at the close of 2006 is currently 
projected to be 417,852.  And at the end of 2007, 396,834.  This level of 
pending rating claims is unacceptably high.  Additional staff will be needed 
to improve services to veterans.  How many staff would be needed to reduce the 
pending claims to 250,000 by the end of fiscal year 2007?
	ADMIRAL COOPER.  I cannot answer that question, primarily because I 
don't know when we will finally be told to do the on site outreach.  With what 
I have right now, we can start bringing the claims backlog down.  I think the 
chances of getting to 250,000, with all the other work and we do with the 
people we have right now, I don't think we can get there by that time.  We 
have projected certain numbers, and in my written statement, I think on page 
two, there is a table that shows both what I see as the effect if we have to 
suddenly start the outreach, and what I think we can achieve if we do not, 
given the levels that we have.
	MR. UDALL.  The year-end inventory is still high though, right?
	ADMIRAL COOPER.  Yes, sir.  You are correct.
	MR. UDALL.  Yes, okay.
	ADMIRAL COOPER.  If I could state one thing, I -- 
	MR. UDALL.  Please.
	ADMIRAL COOPER.  I don't mean to interrupt but, in trying to keep up 
with things across-the-board and do this broad range of things the we have to 
do, as I mentioned, when I first came aboard I focused specifically and had 
the whole group focus on getting pending claims down.  But these other things 
bobbed up, as Ms. McCarthy will tell you -- and Ms. McCarthy knows more about 
most of my stuff than I do sometimes, I am afraid.  But the fact is that, in 
working across the board, we have done a pretty good job on appeals and 
remands.  Remands are the decisions that come back from the Board of Veterans' 
Appeals.  Three years ago there were 30,000.  Today there are about 20,000.  
We have also reduced the time to process appeals and remands.
	So we are making some progress.  As you say, however, the incoming 
workload has come in faster than we can handle, and I have had reduced people 
over the last couple of years.  I feel that I have finally been given the 
people that, once I get them aboard and trained, should allow us to make good 
approach.
	Further I would say to you, as we have made changes in leadership in 
the various regional offices, and then tried to get a degree of uniformity 
across all those regional offices, I think today we have more uniformity than 
certainly they have seen in a good while, and I believe I have very good 
people now in each of my regional offices.
	So I think that together that we will eventually get on top of this.  
Obviously, if there's a large influx  --  and our projected 98,000 is a very 
large influx  --  then I just have to do the best I can with what we have.
	MR. UDALL.  And Admiral, to be clear here, there's no way that you can 
estimate on the basis of how the numbers of staff people that process claims, 
what it would take to tackle that 98,000, or to get it down to 250,000?  Just 
giving me a rough estimate of -- I know that you are making all these changes, 
but based on your history, you should be able to make an educated guesstimate, 
I would think.
	ADMIRAL COOPER.  What I would do is tell you that the 98,000, that 
increases us by one eighth of the total number.  So, if I were to give you a 
rough estimate, which obviously I can't do officially, I would say that about 
one eighth increase, that would be a very hard one to absorb.  But I would say 
to you, as the Chairman mentioned, it is the training that takes a long time.  
So, even if today suddenly all these people appeared, I would be inundated 
because of the need to train them and get them up to speed.
	MR. UDALL.  Sure, sure.  No, I understand that.
	You don't have the lights on, so I don't know when I am supposed to 
quit.
	MR. MILLER.  You keep right on going.
	MR. UDALL.  I just keep right on going?  I might be here forever.
	MR. MILLER.  You've got five more minutes.
	MR. UDALL.  Okay.
	Admiral, are the VBA's first-quarter receipts for fiscal year 2006 on 
track with the three percent increase projected in the Administration's -- 
	ADMIRAL COOPER.  No, they are not.  They are about 15 percent above 
2004, but they are about three percent below 2005.
	MR. UDALL.  Okay.  As I believe you know, I am very concerned about 
the difficulties experienced by veterans who are seeking service-connected 
compensation for Post-Traumatic Stress Disorder, PTSD.
	ADMIRAL COOPER.  Yes, sir.
	MR. UDALL.  According to experts in the field, service members exposed 
to multiple combat traumas are at risk for more severe PTSD than veterans 
exposed to a single incident.  In your testimony, you discussed the difficulty 
in documenting, quote, "the event causing the stress disorder," end quote.  
Are service members who are subjected to the constant threat of IEDs and 
suicide bombers while serving in Iraq; for example, in convoys and transport 
activities, required to document one specific event to support their claim for 
PTSD?
	ADMIRAL COOPER.  I would say to you that it is a much more complicated 
process than that, and if they are exposed to IED or whatever they are exposed 
to, that is in the unit records.  And we then go to the records to try to find 
what it is that might have caused it.  The nexus between the event or the 
several events and PTSD has to be drawn by the medical examiner.  The 
Veteran,usually, will designate the event, or the series of events that is the 
stressor and then they are sent for a medical exam. We are working very 
closely because the Secretary, as you recall, is very interested in helping 
these people better acclimate to civilian life, and to be cured and not carry 
the problem of PTSD.  And so we are working together with VHA to try to do 
everything better.
	MR. UDALL.  In a lot of cases, the medical exams aren't accepted, not 
accepted in terms of determining the stressor; is that the case?
	ADMIRAL COOPER.  I can't talk about the past.  I can tell you we are 
working closely now, and I would expect, yes, the medical exam will give us 
the nexus.  And I think we are making changes.  We are looking very closely, 
as you know, both VHA and the President's commission, have tasked the 
Institute of Medicine to do two different studies on PTSD, to try to help us 
better understand, and thereby have better medical examinations.  And do it in 
such a way that we can tell if somebody is pulling our leg, or if in fact they 
have, really, PTSD, and in fact there is a nexus between their condition and 
some event that caused it.
	MR. UDALL.  Now, I want to go back to the poor-performing offices.  
And I know you have been dealing with those by having no new staff, and I am 
concerned about those reports of no new staff, and those offices having no 
realistic hope of improving their performance, based on VBA's resource 
allocation formula.  What actions can VBA take to improve the performance of 
low-performing offices?  Could the VA send in a strike team to help deal with 
the pending backlog, or take other actions to give these offices a fresh 
start?  What is your approach going to be there?
	ADMIRAL COOPER.  We have several things that we do in order to try to 
help offices.  My goal is to help offices, but -- one of the main things we 
did when I was in charge of a study before I got this job, was to try to 
figure out what we could do better.  And one of the things we noted is poor 
offices have a large pending backlog, because they weren't doing things 
properly, or they didn't have good leadership.  So we determined that we were 
not merely going to allow poor offices to continue doing poor jobs and 
probably not have good training.
	So we decided we would allocate differently.  We have a very specific 
allocation that is done looking at what we expect them to receive the next 
year, what their quality is, what their timeliness is, and a couple other 
factors, to determine where we send new people.  Now, for as those offices 
that are backlogged, we also have them work specifically on preparing claims 
for adjudication, and then brokering them out to other regional offices.  So 
we try to help them get on their feet by better developing the claim.
	We also have a group from headquarters that I send out to one third of 
my regional offices every year, and they are there for about a week, doing 
both training and inspection, to see what they can do better.  We have all of 
our regional offices organized into four areas, and we have very well-trained 
area directors, very sharp area directors who have lots of experience, and 
they go to every one of their offices at least once a year, and work with 
them.
	Then I go to the training program that we are putting in, the training 
program that started last year, and we are enforcing it across the board with 
everybody having certain requirements; specifically, 80 hours of training a 
year.
	Another area of intrest is IT. We are improving IT with something 
called VETSNET, which I am sure you all have heard about.  VETSNET is 
extremely important.  Three years ago we put in a component called MAP-D.  Two 
years ago, we put in a component called RBA 2000, and I dictated -- modestly 
speaking -- that each one of those be enforced across the board, and everybody 
use them, and that will eventually help us tremendously, if you compare today 
with 10 years ago.
	And so we are trying to do all these things to improve, as well as get 
on top of this major problem that we have.
	MR. UDALL.  Thank you very much.  Thank you, Admiral.
	MR. MILLER.  Thank you, Admiral, and we may have some more questions 
we would like for you to take for the record. We will send them to you, since 
we are a little bit pinched for time, and we will move on.
	ADMIRAL COOPER.  Thank you very much.
	MR. MILLER.  Thank you, sir. 
	Our next witness, while they are clearing the table, is Mr. Brian 
Lawrence.  He is the Assistant National Legislative Director for the DAV, and 
they are the organization responsible for the benefits portion of the 
Independent Budget.  Mr. Lawrence, thank you for being with us today, and as 
you know, we have a backstop; we have a full committee meeting at 3:00.  So if 
you would, please proceed.  


STATEMENT OF BRIAN LAWRENCE, ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED 
AMERICAN VETERANS

	MR. LAWRENCE.  Thank you, Mr. Chairman.  I am pleased to appear before 
you on behalf of the 1.2 million members of the DAV to present the IB 
recommendations regarding the Veterans' Benefits Administration.
	We view adequate staffing levels for the VBA business lines as one of 
the most important issues for consideration in this component of the VA 
budget, so I will first address recommended numbers, full-time employees  --  
or FTEs, and time permitting I will include some IB recommendations regarding 
the benefit programs.
	The level of funding sought in the president's '07 budget would 
increase operating expenses by nearly $114 million, approximately an 11 
percent increase over last year's level.  We are greatly encouraged that the 
administration has proposed a substantial increase in resources for VBA.  The 
need for such an increase has become critical, and we deeply appreciate the 
president's bearing on this issue.  With the proposed budget, VBA staffing 
would be increased in '07 by 173 FTE.  C&P service would be authorized 9445 
FTE, which is a total increase of 14.  However, the number of FTE under the 
subcategory, "Direct Compensation," would be reduced by 149.  The net gain of 
FTE would be as a result of increases in other VBA activities.  This 
recommendation is somewhat perplexing since one of the Administration's stated 
goals is to decrease the number of backlog compensation claims.
	Additionally, ongoing hostilities in Iraq and Afghanistan, along with 
an aging veteran population, will almost certainly increase the number of 
claims for compensation.  In the five-year period from the end of 2000 to the 
end of 2005, the volume of disability claims increased 36 percent, or an 
average of 7.2 percent annually.  VA projects that the number of disability 
claims will increase three percent during '06, and two percent in '07.  But 
even with those modest projections for increased work, the number of direct 
program FTE should be increased.  Especially since VA estimates that above the 
projected increases in regular claims work, it will receive an additional 
98,000 claims from its outreach to veterans in six states with the lowest 
average competition payments, as mandated by last year's legislation.
	It appears VA contemplates and accepts an increase in the claims 
backlog during these two years, despite the fact that it projects in increase 
in production.
	In the IB, we have recommended a substantially higher staffing level 
that we believe reflects a more realistic assessment of what VA needs to 
deliver benefits in a timely manner.  The IB recommends that the '06 staffing 
of 9431 FTE for C&P be increased to 10,820, and I would invite your attention 
to the IB in my written statement, for the basis of that recommendation.
	Similarly, we have recommended staffing levels for the educational 
program and vocational rehabilitation and employment program, that we think 
are necessary to get the job done in an acceptable manner.  Though the 
administration's budget seeks increases for these programs, the IB 
recommendations are slightly higher.  We recommend an increase of 149 for 
educational service, compared with the Administration's request of 46.  And we 
recommend an increase of 250 FTE vocational rehabilitation, compared with the 
administration's requested increase of 130.
	In addition to ensuring that VBA has the resources necessary to 
accomplish its mission, Congress must also make adjustments to the programs 
from time to time, to address increases in the cost of living, and other 
needed improvements.  The IB makes a number of such recommendations, and we 
invite the committee's attention to that section in the IB.
	Mr. Chairman, that concludes my statement.  I thank you for this 
opportunity, and I will be happy to answer any questions you may have.
	[The statement of Brian Lawrence appears on p. 32]

	MR. MILLER.  I thank you very much.  You mentioned an increase in FTE 
of some 1,375 more than the President's request.  You asked us to refer to the 
Independent Budget for the methodology.  Can you just give us an encapsulated 
version of how those numbers were derived?
	MR. LAWRENCE.  The exact wording in the IB is based on accepted 
percentages from previous years.  They just look back to the previous two or 
three years, and project those percentages onto the upcoming year.
	MR. MILLER.  Is there anything that VBA can do to address the claims 
backlog that doesn't require funding, new funding, or is that the only 
solution 
that you see?
	MR. LAWRENCE.  No, sir.  Part of the problem is just to adjudicate 
claims properly the first time.  And you know, the backlog is created because 
claims are appealed and they are sent to the Board of Veterans' Appeals, and 
then they are remanded back to the regional office.  So they end up reworking 
claims when that shouldn't be necessary.  The original rating decision should 
be adequate, and remands for minor issues such as improper exams would 
alleviate a lot of backlog.
	And for those type of problems, we recommend increased training, or 
proper training for adjudicators.  We recognize right now that VA has a large 
turnover in employees that are senior adjudicators that are taking a wealth of 
knowledge with them, and they are being replaced by people that need training, 
and that it is a very complex system, and it takes a while for these new 
employees to ramp up to operate at that level.
	MR. MILLER.  Is it your testimony that the vast majority of the 
incorrect adjudications are a result of improperly trained staff?
	MR. LAWRENCE.  I am not in a position to say the vast majority, but I 
would say -- 
	MR. MILLER.  You have an idea of a percentage?  Your testimony is more 
geared toward VBA incorrectly deciding claims, and I am interested on what 
basis is that, or is there a vast majority of claims that are submitted that 
are not fully developed, that do in fact need more information?
	MR. LAWRENCE.  A lot of them have inadequate exams; they are not ready 
to be rated.  They get to the Board of Veterans' Appeals, and information has 
been left out.  The problem stems a lot from the desire to show production at 
the regional office level.  They are more concerned about producing numbers, 
rather than property adjudicating claims and getting it done right the first 
time.
	MR. MILLER.  But I am trying to figure, you just said a lot of them 
are not ready to be adjudicated.
	MR. LAWRENCE.  Right.
	MR. MILLER.  What makes them ready?  Who makes them ready?
	MR. LAWRENCE.  Thorough exams, for one thing.
	MR. MILLER.  And where does that responsibility lie?
	MR. LAWRENCE.  Well, it lies probably both with VBA and VHA.  The VBA 
needs to clarify when a rating is sent for an examination, exactly the 
information that they seek to be able to do the rating.
	MR. MILLER.  I am trying to get at, because I am not a veteran and I 
don't know the process as a veteran would from personal experience, but I 
understand that there are forms that are filled out, require backup 
information that is submitted to VBA.  And you are saying today that because 
of production numbers, the VA feels a need to move those through, and possibly 
some of them are remanded or kicked back.
	I am trying to find out where the disconnect is.  I understand that 
there is a staff turnover and some training issues at VBA, and some things 
that really need to take place -- and nobody is denying that -- through 
attrition.  But we also heard testimony either yesterday or the day before -- 
maybe yesterday -- the same thing is happening in the VSOs.  And a lot of 
those folks that are helping the veterans fill out their paperwork, I am 
trying to figure out what percentage is improperly filled out, incomplete, or 
what percentage is absolutely complete, and VBA just misses it.  Do you have a 
clue?
	MR. LAWRENCE.  I don't have that number available.
	MR. MILLER.  Okay.  Mr. Udall?
	MR. UDALL.  Thank you, Mr. Chairman.  As, Mr. Lawrence, you said in 
your testimony, the Independent Budget recommends a staffing level of 10,820 
for the compensation and pension service.  How many additional FTE recommended 
by the Independent Budget are for direct compensation work?
	MR. LAWRENCE.  I would have to get back to you with that number.  I 
don't recall right off.
	MR. UDALL.  Okay.  Could you do that?
	MR. LAWRENCE.  Absolutely.
	[The information requested appears on p. 62]

	MR. UDALL.  Thank you.
	Should the VA reevaluate the criteria needed for persons employed as 
decision review officers and adjudicators?
	MR. LAWRENCE.  Could you restate the question, please?
	MR. UDALL.  Should the VA reevaluate the criteria needed for persons 
employed as decision review officers and adjudicators?
	MR. LAWRENCE.  I don't know that a reevaluation of the criteria -- and 
I am just speaking off-the-cuff, here, and not one part of the IB  --  that 
the initial criteria I am not sure is what the problem is, but just the 
ramping-up period, and the training to prepare them to begin doing their job 
is, I know, lacking in some instances.
	MR. UDALL.  Thank you very much.  Thanks, Mr. Chairman.
	MR. MILLER.  Thank you very much, and we also may have additional 
questions that we may want to submit to you for the record.  Thank you for 
being with us.
	We all know that caring for and compensating the men and women who are 
injured as a result of their military service is the core mission of the VA.  
And I realize that some do not like the label of "core constituency," as we 
heard yesterday, but I believe that is who Abraham Lincoln was referring to 
during his second inaugural address, when he said that it is the nation's duty 
to care for him who have bourne the battle, and for his widow, and his orphan, 
as we heard this morning from the Gold Star wives representative.
	I look forward to working with each of you as we carry out this solemn 
obligation. Without objection, statements will be entered into the record for 
the Board of Veterans' Appeals, the U.S. Court of Appeals for Veterans Claims, 
and AMVETS.
	[The attachments appear on pgs. 35, 45 and 54]

	MR. MILLER.  And with nothing further, this hearing is adjourned.
	[Whereupon, at 2:51 p.m., the Subcommittee was adjourned.]

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