[Senate Report 104-367]
[From the U.S. Government Publishing Office]
Calendar No. 585
104th Congress Report
SENATE
2d Session 104-367
_______________________________________________________________________
VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 1996
_______
September 9, 1996.--Ordered to be printed
_______________________________________________________________________
Mr. Simpson, from the Committee on Veterans' Affairs, submitted the
following
R E P O R T
[To accompany 1791]
The Committee on Veterans' Affairs, to which was referred
the bill (S. 1791) to increase, effective December 1, 1996, the
rates of disability compensation for veterans with service-
connected disabilities and the rates of dependency and
indemnity compensation for survivors of certain service-
connected disabled veterans, and for other purposes, having
considered the same, reports favorably thereon and recommends
that the bill do pass.
committee bill
The text of the bill as reported is as follows:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans' Compensation Cost-
of-Living Adjustment Act of 1996''.
SEC. 2. INCREASE IN COMPENSATION RATES AND LIMITATIONS.
(a) In General.--(1) The Secretary of Veterans Affairs
shall, as provided in paragraph (2), increase, effective
December 1, 1996, the rates of and limitations on Department of
Veterans Affairs disability compensation and dependency and
indemnity compensation.
(2) The Secretary shall increase each of the rates and
limitations in sections 1114, 1115(1), 1162, 1311, 1313, and
1314 of title 38, United States Code, that were increased by
the amendments made by the Veterans' Compensation Cost-of-
Living Adjustment Act of 1995 (Public Law No. 104-57; 109 Stat.
555). This increase shall be made in such rates and limitations
as in effect on November 30, 1996, and shall be by the same
percentage that benefit amounts payable under title II of the
Social Security Act (42 U.S.C. 401 et seq.) are increased
effective December 1, 1996, as a result of a determination
under section 215(I) of such Act (42 U.S.C. 415(I)).
(b) Special Rule.--The Secretary may adjust
administratively, consistent with the increases made under
subsection (a)(2), the rates of disability compensation payable
to persons within the purview of section 10 of Public Law 85-
857 (72 Stat. 1263) who are not in receipt of compensation
payable pursuant to chapter 11 of title 38, United States Code.
(c) Publication Requirement.--At the same time as the
matters specified in section 215(I)(2)(D) of the Social
Security Act (42 U.S.C. 415(I)(2)(D)) are required to be
published by reason of a determination made under section
215(I) of such Act during fiscal year 1996, the Secretary shall
publish in the Federal Register the rates and limitations
referred to in subsection (a)(2) as increased under this
section.
Introduction
On May 22, 1996, Committee Chairman Alan K. Simpson and
Ranking Minority Member John D. Rockefeller IV introduced S.
1791, the proposed ``Veterans' Compensation Cost-of-Living
Adjustment Act of 1996.'' S. 1791 would provide for a December
1, 1996, cost-of-living adjustment (COLA), equal to the
December 1, 1996, COLA in Social Security benefits, in the
rates of compensation for veterans who have service-connected
disabilities and in the rates of dependency and indemnity
compensation (DIC) for the survivors of those who died from
service-connected causes.
On May 23, 1996, the Committee held a hearing, chaired by
Senator Simpson, to receive testimony on the compensation COLA
and on other bills pending before the Committee. The Committee
received testimony on the bill from Charles L. Cragin,
Chairman, Board of Veterans' Appeals, Department of Veterans
Affairs (VA), and representatives of The American Legion,
Veterans of Foreign Wars, Disabled American Veterans, Paralyzed
Veterans of America, and Vietnam Veterans of America. Testimony
was also submitted for the record of the hearing by the Gold
Star Wives of America, the Non Commissioned Officers
Association of the United States, and by the Military Coalition
(representing the views of the Air Force Association; Army
Aviation Association of America; Association of Military
Surgeons of the United States; Association of the United States
Army; Chief Warrant Officer and Warrant Officer Association,
United States Coast Guard; Commissioned Officers Association of
the United States Public Health Service; Enlisted Association
of the National Guard of the United States; Fleet Reserve
Association; Jewish War Veterans of the United States; Marine
Corps League; Marine Corps Reserve Officers Association;
National Military Family Association; National Order of
Battlefield Commissions; Naval Enlisted Reserve Association;
Navy League of the United States; Reserve Officers Association;
The Military Chaplains Association of the United States; The
Retired Enlisted Association; The Retired Officers Association;
United Armed Forces Association; United States Army Warrant
Officers Association; and the USCG Chief Petty Officers
Association).
All of the witnesses at the Committee's May 23, 1996,
hearing who addressed the issue expressed support for the
Committee bill. VA testified that it ``wholeheartedly
endorse[s] a COLA for recipients of compensation and dependency
and indemnity compensation.''
committee meeting
After carefully reviewing the testimony from the May 23
hearing, the Committee met in open session on July 24, 1996,
and voted by unanimous voice vote to report S. 1791, as
introduced, favorably to the Senate.
summary of s. 1791 as reported
S. 1791 (hereinafter referred to as the ``Committee bill'')
contains freestanding provisions that would require the
Secretary of Veterans Affairs to increase, effective December
1, 1996, the rates of and limitations on compensation paid to
veterans with service-connected disabilities and the rates of
dependency and indemnity compensation (DIC) paid to certain
service-connected-disabled veterans' survivors by the same
percentage as the COLA provided to Social Security recipients
and VA pension beneficiaries that becomes effective on that
same date. The Congressional Budget Office (CBO) currently
estimates that the FY 1997 COLA will be 2.8 percent.
The COLA would apply to:
1. basic compensation rates for veterans with
service-connected disabilities and the rates payable
for certain severe disabilities;
2. the allowances for spouses, children, and
dependent parents paid to service-connected-disabled
veterans rated 30 percent or more disabled;
3. the annual clothing allowance paid to veterans
whose compensable disability requires the use of a
prosthetic or orthopedic appliance (including a
wheelchair) that tends to tear or wear out clothing, or
requires the use of a medication prescribed by a
physician for a service-connected skin condition if the
medication causes irreparable damage to the veteran's
outer garments; and
4. the DIC rates paid to:
(a) surviving spouses of veterans whose
deaths were service connected;
(b) surviving spouses for dependent children;
(c ) surviving spouses who are so disabled
that they need aid and attendance or are
permanently housebound; and
(d) the children of veterans whose deaths
were service connected if no surviving spouse
is entitled to DIC, the child is age 18 through
22 and attending an approved educational
institution, or the child is age 18 or over and
became permanently incapable of self-support
prior to reaching age 18.
The Committee bill would require the Secretary of Veterans
Affairs to increase the rates of and limitations on
compensation paid to veterans with service-connected
disabilities and the rates of dependency and indemnity
compensation (DIC) paid to survivors of certain service-
disabled veterans effective December 1, 1996. The adjustment
would be the same percentage increase as the FY 1997 COLA for
Social Security and VA pension benefits and would take effect
on the same date as those increases. CBO's most recent estimate
was that the COLA will be 2.8 percent; the Office of Management
and Budget has also estimated that the COLA will be 2.8
percent.
background
Disability compensation
The service-connected disability compensation program under
chapter 11 of title 38, United States Code, provides monthly
cash benefits to veterans who have disabilities incurred or
aggravated during active duty in the Armed Forces.
The amount of compensation depends on the nature of the
veteran's disability or combination of disabilities and the
extent to which the disability impairs earning capacity. VA
rates compensable disabilities according to its Schedule for
Rating Disabilities on a graduated scale ranging from 0 to 100
percent, in 10-percent increments. VA pays higher monthly rates
(known as ``special monthly compensation'') to totally disabled
veterans with certain specific, very severe disabilities or
combinations of disabilities.
As of June 1, 1996, VA was providing disability
compensation to 2,247,654 veterans with service-connected
disabilities. Among the veterans receiving such compensation
were 430 World War I veterans; 662,493 World War II veterans;
187,536 Korean-conflict veterans; 710,966 Vietnam-era veterans;
and 159,930 veterans of the Persian Gulf War era.
A veteran with a disability rated at 30 percent or more may
receive additional compensation on behalf of the veteran's
spouse, children, and dependent parents. These dependents''
allowances are prorated according to the percentage of
disability. As of March 31, 1996, 664,570 veterans received
additional compensation on behalf of 1,001,449 dependents.
Dependency and indemnity compensation
Under chapter 13 of title 38, VA pays dependency and
indemnity compensation (DIC) to the survivors of service
members or veterans who died on or after January 1, 1957, from
a disease or injury incurred or aggravated during military
service. Survivors eligible for DIC include surviving spouses,
unmarried children under the age of 18, certain helpless
children age 18 or older, children between the ages of 18 and
22 who are enrolled in school, and certain needy parents. Under
section 5312 of title 38, parents' DIC rates are adjusted
automatically at the same time and by the same percentage as
Social Security and VA pension benefits. Surviving spouses,
children, and parents who are receiving death compensation
based on deaths before January 1, 1957, may elect to receive
DIC instead of death compensation.
For deaths prior to January 1, 1993, surviving spouses
received DIC at rates determined by the pay grade (service
rank) of the deceased veteran. For deaths on or after January
1, 1993, surviving spouses receive $790 per month and, if the
deceased veteran was totally disabled for 8 years prior to
death, an additional $177 per month. Surviving spouses who had
been receiving benefits under the prior DIC program are paid
under whichever program will pay the higher benefit.
A surviving spouse who is so disabled as to be housebound
or in need of regular aid and attendance is eligible to receive
an additional amount. A surviving spouse also may receive
additional allowances on behalf of the veteran's surviving
children.
Children are entitled to DIC if there is no surviving
spouse, if they are 18 years or older and became permanently
incapable of self-support before reaching age 18, or if they
are 18 to 22 years old and pursuing an approved course of
education.
As of June 1, 1996, VA was paying DIC benefits to, or on
behalf of, 279,315 surviving spouses, 35,230 children, and
16,212 needy surviving parents.
Under section 1318(b) of title 38, VA pays benefits at DIC
rates to the surviving spouses and children of veterans whose
deaths are not service connected, if the veteran, immediately
prior to his or her death, had been receiving (or had been
entitled to receive) compensation at the 100-percent rate
continuously for 10 or more years or for at least 5 years from
the date of discharge or release from active duty.
History of cost-of-living increases
The Committee periodically reviews the service-connected
disability compensation and DIC programs to ensure that the
benefits provide reasonable and adequate compensation for
disabled veterans and their families. Based on this review, the
Congress acts periodically to provide a cost-of-living
adjustment (COLA) in compensation and DIC benefits. In fact,
the Congress has provided annual increases in these rates for
every fiscal year since 1976. The following table shows the
percentage increases since 1975.
HISTORY OF SERVICE-CONNECTED DISABILITY COMPENSATION INCREASES, 1975 TO PRESENT
----------------------------------------------------------------------------------------------------------------
Increase Cumulative
Fiscal year Effective date (percent) (1969=$100)
----------------------------------------------------------------------------------------------------------------
1976............................................ August 1975....................... 11.8 158.55
1977............................................ October 1976...................... 8.0 171.23
1978............................................ October 1977...................... 6.6 182.53
1979............................................ October 1978...................... 7.3 195.86
1980............................................ October 1979...................... 9.9 215.25
1981............................................ October 1980...................... 14.3 246.03
1982............................................ October 1981...................... 11.2 273.58
1983............................................ October 1982...................... 7.4 293.82
1984............................................ April 1983........................ 3.5 304.11
1985............................................ December 1984..................... 3.2 313.84
1986............................................ December 1985..................... 3.1 323.57
1987............................................ December 1986..................... 1.5 328.42
1988............................................ December 1987..................... 4.2 342.22
1989............................................ December 1988..................... 4.1 356.25
1990............................................ December 1989..................... 4.7 372.99
1991............................................ December 1990 \1\................. 5.4 393.13
1992............................................ December 1991..................... 3.7 407.68
1993............................................ December 1992..................... 3.0 419.91
1994............................................ December 1993..................... 2.6 430.83
1995............................................ December 1994 \2\................. 2.8 442.89
1996............................................ December 1995 \2\................. 2.6 454.41
1997............................................ December 1996..................... \3\ 2.8 467.13
----------------------------------------------------------------------------------------------------------------
\1\ Payment of the December 1990 increase was delayed until January 1992 by section 8005(b) of Public Law 101-
508.
\2\ December 1994 and 1995 increases were rounded to the next lower dollar amount pursuant to sections 2(c)(2)
of Public Law 103-418 and Public Law 104-57 respectively.
\3\ Estimate.
committee bill
The Committee bill would direct VA to compute and provide
increases in the monthly rates of compensation and DIC,
effective December 1, 1996. The rates would be increased by the
same percentage as the Social Security and VA pension COLA that
will take effect on that date.
The increases in DIC automatically would result in
identical percentage increases in benefits paid at DIC rates
under section 1318 of title 38 to the surviving spouses and
children of veterans who had a service-connected disability at
the time of death for which they continuously were rated
totally disabled for at least either (1) 10 years, or (2) 5
years from the date of discharge from active duty.
Under section 156(e)(1)(A) of Public Law 97-377, the DIC
increases also automatically would result in the same
percentage increases in Social Security benefits that were
terminated by section 2205 of the Omnibus Budget Reconciliation
Act of 1981 (OBRA 1981) (Public Law 97-35). Prior to OBRA 1981,
those benefits had been paid to certain surviving spouses of
those who died on active duty or from a service-connected
disability on behalf of their children under 18 and children
over age 19 who were secondary-school students; OBRA 1981
reduced the eligibility cutoff age from 18 to 16 years old.
Section 314 of Public Law 100-322 amended section 156(a)(1)
of Public Law 97-377 to restore the benefits eliminated by the
OBRA 1981. The DIC increase also would apply to these restored
benefits, effective December 1, 1996.
CBO, in its most recent (May 1996) baseline, estimated that
the FY 1997 Social Security COLA, and thus the COLA provided
for by the Committee bill, will be 2.8 percent. The Office of
Management and Budget's corresponding estimate was 2.8 percent.
The actual Social Security COLA could differ from these
estimates. Rather than selecting any particular percentage
adjustment at the time the Committee ordered the bill reported,
the Committee followed its prior practice of setting the COLA
by reference to the Social Security increase. The Committee
believes this is the most equitable means of providing
increases in these important service-connected benefits.
cost estimate
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the Committee, based on
information supplied by CBO, estimates that, compared to the
CBO baseline, there would be no costs or savings resulting from
enactment of the Committee bill. The costs of the Committee
bill compared to current law would be $335 million in budget
authority and $308 million in outlays in FY 1997; $402 million
in budget authority and $396 million in outlays in FY 1998;
$414 million in budget authority and $413 million in outlays in
FY 1999; $426 million in budget authority and $458 million in
outlays in FY 2000; $439 million in budget authority and $404
million in outlays in FY 2001; and $452 million in budget
authority and $451 in million outlays in FY 2002.
The cost estimate provided by CBO follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 25, 1996.
Hon. Alan K. Simpson,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed S. 1791, the Veterans' Compensation Cost-of-Living
Adjustment Act of 1996, as ordered reported by the Senate
Committee on Veterans' Affairs on July 24, 1996. The bill would
increase the rates of disability compensation for veterans and
dependency and indemnity compensation for survivors of veterans
by a cost-of-living allowance (COLA). Because the COLA is
assumed in the CBO baseline prepared under section 257 of the
Balanced Budget and Emergency Deficit Control Act of 1985, this
bill would have no cost relative to that baseline.
The bill would affect a direct spending program and thus
would be subject to pay-as-you-go procedures under section 252
of the Balanced Budget and Emergency Deficit Control Act of
1985, although the pay-as-you-go costs would equal zero in each
year.
S. 1791 contains no intergovernmental or private-sector
mandates as defined by Public Law 104-4 and would not affect
the budgets of state, local, or tribal governments.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mary Helen
Petrus.
Sincerely,
June E. O'Neill, Director.
regulatory impact statement
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee on Veterans'
Affairs has made an evaluation of the regulatory impact that
would be incurred in carrying out the Committee bill. The
Committee finds that the Committee bill would not entail any
regulation of individuals or businesses or result in any impact
on the personal privacy of any individuals and that the
paperwork resulting from enactment would be minimal.
tabulation of votes cast in committee
In compliance with paragraph 7 of rule XXVI of the Standing
Rules of the Senate, the following is a tabulation of votes
cast in person or by proxy by members of the Committee on
Veterans' Affairs at its July 24, 1996, meeting. On that date,
the Committee, by unanimous voice vote, ordered S. 1791
reported favorably to the Senate.
agency report
On May 23, 1996, Charles L. Cragin, Chairman, Board of
Veterans' Appeals, Department of Veterans Affairs, submitted
testimony on, among other things, S. 1791, as introduced. An
excerpt from that testimony is reprinted below:
Statement of Charles L. Cragin, Chairman, Board of Veterans' Appeals,
Department of Veterans Affairs
Mr. Chairman and Members of the Committee: I am pleased to
be here today to present the views of the Department of
Veterans Affairs (VA) on several bills. Those bills are:
Legislation to provide a cost-of-living adjustment in rates
of disability compensation and dependency and indemnity
compensation;
* * * * * * *
VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT
One of our Nation's most important obligations to veterans
and their survivors is to see that they are appropriately
compensated for service-connected disabilities and deaths. A
high priority of this Administration is to ensure that this
compensation keeps pace with rising costs.
The President's Fiscal Year 1997 budget proposal calls for
cost-of-living adjustments (COLA's) in both disability
compensation and dependency and indemnity compensation rates
effective December 1, 1996. The rate increases would be of a
percentage equal to that by which VA pension and Social
Security benefits are adjusted on that date, currently
estimated to be 2.8 percent. Consistent with the Fiscal Year
1996 compensation COLA, the Administration proposes that all
increased compensation and dependency and indemnity
compensation rates, if not a multiple of one dollar, be rounded
to the next lower whole-dollar amount.
We wholeheartedly endorse a COLA for recipients of
compensation and dependency and indemnity compensation. We
estimate Fiscal Year 1997 costs of the COLA as contemplated in
the Administration's budget proposal to be $288.7 million and
six-year costs (Fiscal Years 1997-2002) to be $2.01 billion.
Because the Omnibus Budget Reconciliation Act of 1990 requires
that the compensation COLA be assumed in the baseline, the
paygo effect of veterans' compensation COLA legislation is
usually zero. However, because this proposal would require all
benefit levels to be rounded down to the next lowest whole
dollar, it would reduce direct spending by $17 million in
Fiscal Year 1997 and by a total of $397 million during Fiscal
Years 1997 through 2000.
* * * * * * *
Changes in Existing Law Made by s. 1791, as Reported
Since the Committee bill would not repeal or amend any
provisions of current law, this report does not contain the
material described in clauses (a) and (b) of paragraph 12 of
rule XXVI of the Standing Rules of the Senate.