[Senate Report 105-153]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 292
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-153
_______________________________________________________________________


 
               VETERANS' BENEFITS IMPROVEMENTS ACT OF 1997

                                _______
                                

               November 10, 1997.--Ordered to be printed

_______________________________________________________________________


  Mr. Specter, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 986]

    The Committee on Veterans' Affairs, to which was referred 
the bill (S. 986), the Veterans' Housing Loan Improvements Act 
of 1997, having considered the same, reports favorably thereon 
and recommends that the bill, as amended, do pass.

                             Committee Bill

    The amendments are as follows:
    Strike out all after the enacting clause as follows:

[SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES CODE.

    [(a) Short Title.--This Act may be cited as the ``Veterans' Housing 
Loan Improvements Act of 1997''.
    [(b) References to Title 38.--Except as otherwise may be 
specifically provided, whenever in the Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of title 38, United States Code.

[SEC. 2. LOAN FEE.

    [(a) Section 3729 is amended by striking out everything after the 
catchline, and inserting in lieu thereof:
          [``(a)(1) Except as provided in subsection (c) of this 
        section, a fee shall be collected from each person obtaining a 
        housing loan guaranteed, insured, or made under this chapter, 
        and each person assuming a loan to which section 3714 of this 
        title applies. Such a loan may not be guaranteed, insured, 
        made, or assumed until the fee payable under this section has 
        been remitted to the Secretary.
          [``(2) The fee may be included in the loan and paid from the 
        proceeds thereof.
    [``(b)(1) The amount of the fee shall be determined from the table 
in subsection (d) of this section. The fee is expressed as a percentage 
of the total amount of the loan guaranteed, insured, or made, or, in 
the case of a loan assumption, the unpaid principal balance of the loan 
on the date of the transfer of the property.
    [``(2) Any reference to a section in the Type of Loan column in 
subsection (d) of this section refers to a section of this title.
    [``(3) For the purposes of this section:
          [``(A) The term `Active Duty Veteran' means any veteran 
        eligible for the benefits of this chapter other than a 
        Reservist;
          [``(B) The term `Reservist' means a veteran described in 
        section 3701(b)(5)(A);
          [``(C) The term `Other Obligor' means a person who is not a 
        veteran, as defined by section 101 or other provision of this 
        chapter;
          [``(D) The term `initial loan described in section 3710' 
        means a loan obtained by a veteran pursuant to section 3710 of 
        this title if the veteran has never obtained a loan guaranteed 
        under section 3710 or made under 3711;
          [``(E) The term `subsequent loan described in section 3710' 
        means a loan obtained by a veteran pursuant to section 3710 
        title if the veteran has previously obtained a loan guaranteed 
        under section 3710 or made under section 3711. The term shall 
        not refer to an interest rate reduction refinancing loan;
          [``(F) The term `interest rate reduction refinancing loan' 
        means a loan described in section 3710(a)(8), 3710(a)(9)(B)(i), 
        3710(a)(11), 3712(a)(1)(F) or 3762(h);
          [``(G) The term `0-down' means a downpayment, if any, of less 
        than 5 percent of the total purchase price or construction cost 
        of the dwelling;
          [``(H) The term `5-down' means a downpayment of at least 5 
        percent but less than 10 percent of the total purchase price of 
        construction cost of the dwelling;
          [``(I) The term `10-down' means a downpayment of 10 percent 
        or more of the total purchase price or construction cost of the 
        dwelling;
    [``(c) A fee may not be collected under this section from a veteran 
who is receiving compensation (or who but for the receipt of retirement 
pay would be entitled to receive compensation) or from a surviving 
spouse of any veteran (including a person who died in the active 
military, naval, or air service) who died from a service-connected 
disability.
    [``(d) The following table establishes the percentages of fees to 
be collected under this section:

                            ``Loan Fee Table                            
------------------------------------------------------------------------
                                   Active duty                  Other   
          ``Type of loan             veteran     Reservist     obligor  
------------------------------------------------------------------------
``Initial loan described in                                             
 section 3710 (a) to purchase or                                        
 construct a dwelling with 0-                                           
 down, or any other initial loan                                        
 described in section 3710(a)....         2.00         2.75        (\1\)
``Subsequent loan described in                                          
 section 3710(a) to purchase or                                         
 construct a dwelling with 0-                                           
 down, or any other subsequent                                          
 loan described in section                                              
 3710(a).........................         3.00         3.00        (\1\)
``Loan described in section                                             
 3710(a) to purchase or construct                                       
 a dwelling with 5-down..........         1.50         2.25        (\1\)
``Loan described in section                                             
 3710(a) to purchase or construct                                       
 a dwelling with 10-down.........         1.25         2.00        (\1\)
``Interest rate reduction                                               
 refinancing loan................         0.50         0.50        (\1\)
``Direct loan made under section                                        
 3711............................         1.00         1.00        (\1\)
``Manufactured home loan                                                
 described in section 3712 (other                                       
 than an interest rate reduction                                        
 refinancing loan)...............         1.00         1.00        (\1\)
``Loan to Native American veteran                                       
 made under section 3762 (other                                         
 than an interest rate reduction                                        
 refinancing loan)...............         1.25         1.25        (\1\)
``Assuming a loan to which                                              
 section 3714 applies............         0.50         0.50         0.50
``Loan made under section 3733(a)         2.25         2.25        2.25 
------------------------------------------------------------------------
``\1\ Not applicable.                                                   

    [``(e) Notwithstanding subsection (d) of this section, the 
Secretary, by regulation, may prescribe a different percentage for the 
fee applicable to loans made under section 3733(a), if the Secretary 
finds a different amount is necessary so that the fee charged for such 
loans is consistent with the fees charged by other departments of the 
Government for similar loans available to the public, or if the 
Secretary determines that considerations of the market for properties 
sold by the Secretary necessitate a different fee.''.
    [(b) This section applies to any loan closed after September 30, 
1997.

[SEC. 3. EXTENSION OF NO-BID FORMULA.

    [Section 3732(c) is amended by striking out paragraph (11) in its 
entirety.

[SEC. 4. ENHANCED VENDEE LOAN SALES.

    [Section 3720(h) is amended by:
          [(1) striking out paragraph (2) in its entirety; and
          [(2) striking out ``(h)(1)'' and inserting in lieu thereof 
        ``(h)''.

[SEC. 5. REPEAL OF LOAN DEBT COLLECTION RESTRICTIONS.

    [Subchapter III of chapter 37 is amended by striking out section 
3726 in its entirety.

[SEC. 6. ACCOUNT CONSOLIDATION.

    [(a) Subchapter III of chapter 37 is amended by striking out 
sections 3723, 3724, and 3725 in their entirety.
    [(b) Such subchapter is further amended by inserting after section 
3721 the following new section:

[``Sec. 3722. Veterans Housing Benefit Program Fund

    [``(a) There is hereby established in the Treasury of the United 
States a fund known as the Veterans Housing Benefit Program Fund.
    [``(b) The Veterans Housing Benefit Program Fund shall be available 
to the Secretary, without fiscal year limitation, for all housing loan 
operations under this chapter, consistent with the Federal Credit 
Reform Act of 1990.
    [``(c) There shall be deposited in the Veterans Housing Benefit 
Program Fund:
          [``(1) All money as of September 30, 1997, in: (A) the Direct 
        Loan Revolving Fund established by section 513 of the 
        Servicemen's Readjustment Act of 1944; (B) the Department of 
        Veterans Affairs Loan Guaranty Revolving Fund established by 
        section 7(a) of Public Law 86-665; and (C) the Guaranty and 
        Indemnity Fund established by section 302(a)(1) of Public Law 
        101-237;
          [``(2) All money hereafter appropriated for such Fund;
          [``(3) All fees collected by the Secretary on or after 
        October 1, 1997, pursuant to section 3729, or any other 
        provision of law or regulation established by the Secretary 
        imposing fees on persons or other entities participating in the 
        housing loan program under this chapter; and
          [``(4) All other amounts received by the Secretary on or 
        after October 1, 1997, incident to housing loan operations 
        under this chapter including, but not limited to, collections 
        of principal and interest, proceeds from the sale, rental, use, 
        or other disposition of property acquired under this chapter, 
        proceeds from the sale of loans pursuant to sections 3720(h) 
        and 3733(a)(3), and penalties collected pursuant to section 
        3710(g)(4)(B).
    [``(d) For purposes of this section, the term `housing loan' shall 
not include a loan made pursuant to subchapter V of this chapter.''.
    [(c) The amendments made by this section shall take effect October 
1, 1997.

[SEC. 7. EXTENSION OF PILOT PROGRAM FOR DIRECT LOANS TO NATIVE AMERICAN 
                    VETERANS.

    [Section 3761(c) is amended by striking out ``1997''. and inserting 
in lieu thereof ``1999.''.

[SEC. 8. CONFORMING AMENDMENTS.

    [(a) Section 2106(e) is amended by striking out ``either the direct 
loan or loan guaranty revolving fund established by section 3723 or 
3724 of this title, respectively.'' and inserting in lieu thereof ``the 
Veterans Housing Benefit Program Fund established by section 3722 of 
this title.''.
    [(b) Section 3703(e)(1) is amended by striking out ``3729(c)(1)'' 
and inserting in lieu thereof ``3729(c)''.
    [(c) Section 3711(k) is amended by striking out ``and section 3723 
of this title'' both places it appears.
    [(d) Section 3720 is amended by striking out subsection (e) in its 
entirety and inserting in lieu thereof--
    [``(e) [Repealed.]''.
    [(e) Section 3727(c) is amended by striking out ``funds established 
pursuant to sections 3723 and 3724 of this title, as applicable.'' and 
inserting in lieu thereof ``fund established pursuant to section 3722 
of this title.''.
    [(f) Section 3733(a)(6) is amended by--
          [(1) striking out ``Department of Veterans Affairs Loan 
        Guaranty Revolving'' and inserting in lieu thereof ``Veterans 
        Housing Benefit Program''; and
          [(2) striking out ``3724(a)'' and inserting in lieu thereof 
        ``3722(a)''.
    [(g) Section 3733 is further amended by striking out subsection (e) 
in its entirety.
    [(h) Section 3734 is amended by--
          [(1) striking out, in the catchline, ``Loan Guaranty 
        Revolving Fund and the Guaranty and Indemnity'' and inserting 
        in lieu thereof ``Veterans Housing Benefit Program'';
          [(2) striking out, in subsection (a)(1), ``Loan Guaranty 
        Revolving Fund and the Guaranty and Indemnity'' and inserting 
        in lieu thereof ``Veterans Housing Benefit Program'';
          [(3) striking out, in subsection (a)(2) ``funds,'' and 
        inserting in lieu thereof ``fund,'';
          [(4) striking out, in subsection (b), ``each'' and inserting 
        in lieu thereof ``the''; and
          [(5) striking out, in paragraph (2) of subsection (b), 
        subparagraphs (B), (C), and (D) in their entirety, and 
        redesignating subparagraphs (E), (F), and (G) as (B), (C), and 
        (D), respectively.
    [(i) Section 3735(a)(3)(A)(i) is amended by striking out ``Loan 
Guaranty Revolving Fund and the Guaranty and Indemnity'' and inserting 
in lieu thereof ``Veterans Housing Benefit Program''.
    [(j) The catchline for section 3763 is amended by striking out 
``Housing'' and inserting in lieu thereof ``Native American veteran 
housing''.
    [(k) The table of sections for subchapter III of chapter 37 is 
amended by--
          [(1) striking out the items relating to sections 3722, 3723, 
        3724, 3725, and 3726 and inserting in lieu thereof--
                  ``3722. Veterans Housing Benefit Program Fund.
                  ``[3723. Repealed.]
                  ``[3724. Repealed.]
                  ``[3725. Repealed.]
                  ``[3726. Repealed.]'';
          [(2) striking out, in the item relating to section 3734, 
        ``Loan Guaranty Revolving Fund and the Guaranty and Indemnity'' 
        and inserting in lieu thereof ``Veterans Housing Benefit 
        Program''; and
          [(3) inserting at the end thereof the following new item:
                  ``3736. Portfolio Loan Servicing.''.
    [(l) The table of sections for subchapter V of chapter 37 is 
amended by striking out, in the term related to section 3763, 
``Housing'' and inserting in lieu thereof ``Native American veteran 
housing''.
    [(m) Section 7(h)(2)(B) of Public Law 102-54, as amended (38 U.S.C. 
1718 note), is amended by striking out ``Loan Guaranty Revolving'' and 
inserting in lieu thereof ``Veterans Housing Benefit Program''.]

    Insert in lieu thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Veterans' Benefits 
Improvements Act of 1997''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. References to title 38, United States Code.

          TITLE I--CODIFICATION OF COMPENSATION RATE INCREASES

Sec. 101. Short title.
Sec. 102. Disability compensation.
Sec. 103. Additional compensation for dependents.
Sec. 104. Clothing allowance for certain disabled veterans.
Sec. 105. Dependency and indemnity compensation for surviving spouses.
Sec. 106. Dependency and indemnity compensation for children.
Sec. 107. Effective date.

      TITLE II--AUTHORIZATIONS OF MAJOR MEDICAL PROJECTS AND LEASES

Sec. 201. Authorization of major medical facility project.
Sec. 202. Authorization of major medical facility leases.
Sec. 203. Authorization of appropriations.

                        TITLE III--OTHER MATTERS

           Subtitle A--Improvement of Housing Loan Authorities

Sec. 301. Consolidation of housing loan revolving funds.

           Subtitle B--Improvement of Health Care Authorities

Sec. 311. Reimbursement of costs associated with compensation and 
          pension medical examinations.
Sec. 312. Clarification of certain health care authorities.

                    Subtitle C--State Cemetery Grants

Sec. 321. State cemetery grants program.

                        Subtitle D--Other Matters

Sec. 331. Limitation on special separation incentive recoupment from 
          veterans compensation benefits.
Sec. 332. Report on preparations for a national response to medical 
          emergencies arising from the terrorist use of weapons of mass 
          destruction.
Sec. 333. Technical amendments.

SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.

    Whenever in this Act an amendment is expressed in terms of an 
amendment to a section or other provision, the reference shall be 
considered to be made to a section or other provision of title 38, 
United States Code.

          TITLE I--CODIFICATION OF COMPENSATION RATE INCREASES

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Veterans' Compensation Rate 
Increase Codification Act of 1997''.

SEC. 102. DISABILITY COMPENSATION.

    Section 1114 is amended--
          (1) by striking out ``$87'' in subsection (a) and inserting 
        in lieu thereof ``$94'';
          (2) by striking out ``$166'' in subsection (b) and inserting 
        in lieu thereof ``$179'';
          (3) by striking out ``$253'' in subsection (c) and inserting 
        in lieu thereof ``$274'';
          (4) by striking out ``$361'' in subsection (d) and inserting 
        in lieu thereof ``$391'';
          (5) by striking out ``$515'' in subsection (e) and inserting 
        in lieu thereof ``$558'';
          (6) by striking out ``$648'' in subsection (f) and inserting 
        in lieu thereof ``$703'';
          (7) by striking out ``$819'' in subsection (g) and inserting 
        in lieu thereof ``$887'';
          (8) by striking out ``$948'' in subsection (h) and inserting 
        in lieu thereof ``$1,028'';
          (9) by striking out ``$1,067'' in subsection (i) and 
        inserting in lieu thereof ``$1,157'';
          (10) by striking out ``$1,774'' in subsection (j) and 
        inserting in lieu thereof ``$1,924'';
          (11) in subsection (k)--
          (A) by striking out ``$70'' both places it appears and 
        inserting in lieu thereof ``$74''; and
          (B) by striking out ``$2,207'' and ``$3,093'' and inserting 
        in lieu thereof ``$2,393'' and ``$3,356'', respectively;
          (12) by striking out ``$2,207'' in subsection (l) and 
        inserting in lieu thereof ``$2,393'';
          (13) by striking out ``$2,432'' in subsection (m) and 
        inserting in lieu thereof ``$2,639'';
          (14) by striking out ``$2,768'' in subsection (n) and 
        inserting in lieu thereof ``$3,003'';
          (15) by striking out ``$3,093'' each place it appears in 
        subsections (o) and (p) and inserting in lieu thereof 
        ``$3,356'';
          (16) by striking out ``$1,328'' and ``$1,978'' in subsection 
        (r) and inserting in lieu thereof ``$1,441'' and ``$2,145'', 
        respectively; and
          (17) by striking out ``$1,985'' in subsection (s) and 
        inserting in lieu thereof ``$2,154''.

SEC. 103. ADDITIONAL COMPENSATION FOR DEPENDENTS.

    Section 1115(1) is amended--
          (1) by striking out ``$105'' in clause (A) and inserting in 
        lieu thereof ``$112'';
          (2) by striking out ``$178'' and ``$55'' in clause (B) and 
        inserting in lieu thereof ``$191'' and ``$59'', respectively;
          (3) by striking out ``$72'' and ``$55'' in clause (C) and 
        inserting in lieu thereof ``$77'' and ``$59'', respectively;
          (4) by striking out ``$84'' in clause (D) and inserting in 
        lieu thereof ``$91'';
          (5) by striking out ``$195'' in clause (E) and inserting in 
        lieu thereof ``$211''; and
          (6) by striking out ``$164'' in clause (F) and inserting in 
        lieu thereof ``$177''.

SEC. 104. CLOTHING ALLOWANCE FOR CERTAIN DISABLED VETERANS.

    Section 1162 is amended by striking out ``$478'' and inserting in 
lieu thereof ``$518''.

SEC. 105. DEPENDENCY AND INDEMNITY COMPENSATION FOR SURVIVING SPOUSES.

    Section 1311 is amended--
          (1) in subsection (a)--
                  (A) by striking out ``$769'' in paragraph (1) and 
                inserting in lieu thereof ``$833'';
                  (B) by striking out ``$169'' in paragraph (2) and 
                inserting in lieu thereof ``$182''; and
                  (C) by striking out the table following paragraph (3) 
                and inserting in lieu thereof the following new table:

                                                                        
                                 Monthly                       Monthly  
          Pay grade                rate        Pay grade         rate   
                                                                        
E-7..........................         $861  O-3............         $972
E-8..........................          909  O-4............        1,028
E-9..........................       \1\949  O-5............        1,132
W-1..........................          880  O-6............        1,276
W-2..........................          915  O-7............        1,378
W-3..........................          943  O-8............        1,510
W-4..........................          997  O-9............        1,618
O-1..........................          880  O-10...........     \2\1,774
O-2..........................          909                              
                                                                        
\1\ If the veteran served as sergeant major of the Army, senior enlisted
  advisor of the Navy, chief master sergeant of the Air Force, sergeant 
  major of the Marine Corps, or master chief petty officer of the Coast 
  Guard, at the applicable time designated by section 1302 of this      
  title, the surviving spouse's rate shall be $1,023.                   
\2\ If the veteran served as Chairman or Vice-Chairman of the Joint     
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval           
  Operations, Chief of Staff of the Air Force, Commandant of the Marine 
  Corps, or Commandant of the Coast Guard, at the applicable time       
  designated by section 1302 of this title, the surviving spouse's rate 
  shall be $1,902.                                                      

          (2) in subsection (b), by striking out ``$100 for each such 
        child'' and all that follows through ``thereafter'' and 
        inserting in lieu thereof ``$211 for each such child';
          (3) in subsection (c), by striking out ``$195'' and inserting 
        in lieu thereof ``$211''; and
          (4) in subsection (d), by striking out ``$95'' and inserting 
        in lieu thereof ``$102''.

SEC. 106. DEPENDENCY AND INDEMNITY COMPENSATION FOR CHILDREN.

    (a) DIC for Orphan Children.--Section 1313(a) is amended--
          (1) by striking out ``$327'' in clause (1) and inserting in 
        lieu thereof ``$354'';
          (2) by striking out ``$471'' in clause (2) and inserting in 
        lieu thereof ``$510'';
          (3) by striking out ``$610'' in clause (3) and inserting in 
        lieu thereof ``$662''; and
          (4) by striking out ``$610'' and ``$120'' in clause (4) and 
        inserting in lieu thereof ``$662'' and ``$130'', respectively.
    (b) Supplemental DIC for Disabled Adult Children.--Section 1314 is 
amended--
          (1) by striking out ``$195'' in subsection (a) and inserting 
        in lieu thereof ``$211'';
          (2) by striking out ``$327'' in subsection (b) and inserting 
        in lieu thereof ``$354''; and
          (3) by striking out ``$166'' in subsection (c) and inserting 
        in lieu thereof ``$179''.

SEC. 107. EFFECTIVE DATE.

    The amendments made by this title shall take effect on December 1, 
1996.

     TITLE II--AUTHORIZATIONS OF MAJOR MEDICAL PROJECTS AND LEASES

SEC. 201. AUTHORIZATION OF MAJOR MEDICAL FACILITY PROJECT.

    (a) Authorization of Seismic Correction Project.--The Secretary of 
Veterans Affairs may carry out seismic corrections at the Department of 
Veterans Affairs medical center in Memphis, Tennessee, in the amount of 
$107,600,000.
    (b) Project Authorization When Partial Funding Provided.--If the 
amount of funds appropriated for fiscal year 1998 or 1999 for design 
and partial construction of the seismic corrections project authorized 
in subsection (a) is less than the amount required to complete the 
seismic corrections project as authorized and if the Secretary 
obligates funds for the seismic corrections project, the project shall 
be deemed to be fully authorized. The authorization shall cease to have 
effect at the end of fiscal year 2002.

SEC. 202. AUTHORIZATION OF MAJOR MEDICAL FACILITY LEASES.

    The Secretary of Veterans Affairs may enter into leases for medical 
facilities as follows:
          (1) Lease of an information resources management field 
        office, Birmingham, Alabama, in an amount not to exceed 
        $595,000.
          (2) Lease of a satellite outpatient clinic, Jacksonville, 
        Florida, in an amount not to exceed $3,095,000.
          (3) Lease of a satellite outpatient clinic, Boston, 
        Massachusetts, in an amount not to exceed $5,215,000.
          (4) Lease of a satellite outpatient clinic, Canton, Ohio, in 
        an amount not to exceed $735,000.
          (5) Lease of a satellite outpatient clinic, Tulsa, Oklahoma, 
        in an amount not to exceed $2,112,000.
          (6) Lease of a satellite outpatient clinic, Portland, Oregon, 
        in an amount not to exceed $1,919,000.
          (7) Lease of an information resources management field 
        office, Salt Lake City, Utah, in an amount not to exceed 
        $652,000.

SEC. 203. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated to the 
Secretary of Veterans Affairs for fiscal year 1998 and fiscal year 
1999--
          (1) for the Construction, Major Projects, account, a total of 
        $34,600,000 for the project authorized in section 201; and
          (2) for the Medical Care account, a total of $14,323,000 for 
        the leases authorized in section 202.
    (b) Limitation.--The project authorized in section 201 may only be 
carried out using--
          (1) funds appropriated for fiscal year 1998 or fiscal year 
        1999 consistent with the authorization of appropriations in 
        subsection (a);
          (2) funds appropriated for Construction, Major Projects for a 
        fiscal year before fiscal year 1998 that remain available for 
        obligation; and
          (3) funds appropriated for Construction, Major Projects for 
        fiscal year 1998 or fiscal year 1999 for a category of activity 
        not specific to a project.

                        TITLE III--OTHER MATTERS

          Subtitle A--Improvement of Housing Loan Authorities

SEC. 301. CONSOLIDATION OF HOUSING LOAN REVOLVING FUNDS.

    (a) In General.--Subchapter III of chapter 37 is amended by 
inserting after section 3721 the following new section:

``Sec. 3722. Veterans Housing Benefits Programs Fund

    ``(a) There is established on the books of the Treasury of the 
United States a fund to be known as the Veterans Housing Benefits 
Programs Fund (in this section referred to as the `Fund').
    ``(b) There shall be deposited in the Fund the following:
          ``(1) Any unobligated funds as of October 1, 1997, in the 
        direct loan revolving fund under section 3723 of this title.
          ``(2) Any unobligated funds as of October 1, 1997, in the 
        Department of Veterans Affairs Loan Guaranty Revolving Fund 
        established by section 3724 of this title.
          ``(3) Any unobligated funds as of October 1, 1997, in the 
        Guaranty and Indemnity Fund established by section 3725 of this 
        title.
          ``(4) Any amounts appropriated to the Fund.
          ``(5) Any fees collected by the Secretary after September 30, 
        1997, under section 3729 of this title, or under any other 
        provision of law or regulations prescribed by the Secretary 
        that imposes fees on persons participating in any housing loan 
        program under subchapter I, II, or III of this chapter.
          ``(6) Any other amounts collected or received by the 
        Secretary after September 30, 1997, as a result of activities 
        under the housing loan programs under subchapter I, II, or III 
        of this chapter, including--
                  ``(A) collections of principal and interest on 
                housing loans made by the Secretary under such 
                programs;
                  ``(B) proceeds from the sale, rental, use, or other 
                disposition of property acquired under such programs;
                  ``(C) proceeds from the sale of loans under section 
                3720(h) or 3733(a)(3) of this title; and
                  ``(D) penalties collected under section 3710(g)(4)(B) 
                of this title.
    ``(d) Subject to the provisions of the Federal Credit Reform Act of 
1990 (2 U.S.C. 661 et seq.), amounts in the Fund shall be available to 
the Secretary, without fiscal year limitation, for all housing loan 
operations and housing loan guaranty and insurance operations under 
subchapter I, II, or III of this chapter.''.
    (b) Conforming Repeals.--Sections 3723, 3724, and 3725 are 
repealed.
    (c) Conforming Amendments.--
          (1) Section 3711(k) is amended by striking out ``and section 
        3723 of this title'' each place it appears.
          (2) Section 3720(e)(2) is amended--
                  (A) in the first sentence--
                          (i) by striking out ``proportionately 
                        allocate and deposit'' and all that follows 
                        through ``as determined on an estimated 
                        basis,'' and inserting in lieu thereof 
                        ``deposit the entire proceeds received from the 
                        sale of participations under this subsection 
                        into the Veterans Housing Benefits Programs 
                        Fund established by section 3722 of this 
                        title'; and
                          (ii) by striking out ``the funds'' and 
                        inserting in lieu thereof ``the fund''; and
                  (B) in the last sentence, by striking out ``in the 
                funds established pursuant to sections 3723 and 3724 of 
                this chapter'' and inserting in lieu thereof ``the 
                Veterans Housing Benefits Programs Fund''.
          (3) Section 3733(a)(6) is amended by striking out ``the 
        Department of Veterans Affairs Loan Guaranty Revolving Fund 
        established by section 3724(a)'' and inserting in lieu thereof 
        ``the Veterans Housing Benefits Programs Fund established by 
        section 3722''.
          (4)(A) Subsection (a)(1) of section 3734 is amended by 
        striking out ``the Loan Guaranty Revolving Fund and the 
        Guaranty and Indemnity Fund'' and inserting in lieu thereof 
        ``the Veterans Housing Benefits Programs Fund''.
          (B) The section heading of such section is amended by 
        striking out ``the Loan Guaranty Revolving Fund and the 
        Guaranty and Indemnity Fund'' and inserting in lieu thereof 
        ``the Veterans Housing Benefits Programs Fund''.
          (5) Section 3735(a)(3)(A)(i) is amended by striking out ``the 
        Loan Guaranty Revolving Fund and the Guaranty and Indemnity 
        Fund'' and inserting in lieu thereof ``the Veterans Housing 
        Benefits Programs Fund''.
    (d) Clerical Amendments.--The table of sections at the beginning of 
chapter 37 is amended--
          (1) by striking out the items relating to sections 3723, 
        3724, and 3725 and inserting in lieu thereof the following:

``3722. Veterans Housing Benefits Programs Fund.''; and

          (2) in the item relating to section 3734, by striking out 
        ``the Loan Guaranty Revolving Fund and the Guaranty and 
        Indemnity Fund'' and inserting in lieu thereof ``the Veterans 
        Housing Benefits Programs Fund''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1997.

           Subtitle B--Improvement of Health Care Authorities

SEC. 311. REIMBURSEMENT OF COSTS ASSOCIATED WITH COMPENSATION AND 
                    PENSION MEDICAL EXAMINATIONS.

    (a) Authorization.--Subchapter I of chapter 77 is amended by adding 
at the end the following new section:

``Sec. 7704. Reimbursement for compensation and pension medical 
                    examinations

    ``(a) Reimbursement.--The Under Secretary for Benefits may 
reimburse the Under Secretary for Health for costs incurred by the 
Under Secretary of Health for the conduct of medical examinations 
requested by the Under Secretary for Benefits in connection with claims 
for benefits under this title.
    ``(b) Source of Funds.--Reimbursements under this section shall be 
made from amounts available to the Secretary for payment of general 
operating expenses.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 77 is amended by inserting after the item relating to section 
7703 the following new item:

``7704. Reimbursement for compensation and pension medical 
          examinations.''.

SEC. 312. CLARIFICATION OF CERTAIN HEALTH CARE AUTHORITIES.

    (a) Eligibility for Hospital Care and Medical Services.--Section 
1710(a)(2)(B) is amended by striking out ``compensable''.
    (b) Home Health Services.--Section 1717(a) is amended--
          (1) in paragraph (1), by striking out ``veteran's 
        disability'' and inserting in lieu thereof ``veteran''; and
          (2) in paragraph (2)(B), by striking out ``section 
        1710(a)(2)'' and inserting in lieu thereof ``section 1710(a)''.
    (c) Authority To Transfer Veterans Receiving Outpatient Care to 
Non-Department Nursing Homes.--Section 1720(a)(1)(A)(i) is amended by 
striking out ``hospital care, nursing home care, or domiciliary care'' 
and inserting in lieu thereof ``care''.
    (d) Acquisition of Commercial Health Care Resources.--Section 
8153(a)(3)(A) is amended by inserting ``(including any Executive order, 
circular, or other administrative policy)'' after ``law or 
regulation''.
    (e) Competition in Procurement of Commercial Health Care 
Resources.--Section 8153(a)(3)(B)(ii) is amended in the second sentence 
by inserting ``, as appropriate,'' after ``all responsible sources''.
    (f) Arrangements for Care of Non-Veterans.--Section 8153(e)(1) is 
amended to read as follows:
          ``(1) that care to veterans will not be diminished as a 
        result of such an arrangement; and''.

                   Subtitle C--State Cemetery Grants

SEC. 321. STATE CEMETERY GRANTS PROGRAM.

    (a) Amount of Grants.--Section 2408(b) is amended by striking out 
paragraphs (1) and (2) and inserting in lieu thereof the following new 
paragraphs (1) and (2):
          ``(1) The amount of any grant under this section may not 
        exceed the following:
                  ``(A) In the case of a grant for the establishment of 
                a new cemetery, an amount equal to the total of--
                          ``(i) the cost of improvements to be made on 
                        the land to be acquired or dedicated for the 
                        cemetery; and
                          ``(ii) the initial cost of equipment 
                        necessary to operate the cemetery.
                  ``(B) In the case of a grant for the expansion or 
                improvement of an existing cemetery, an amount equal to 
                the total of--
                          ``(i) the cost of improvements to be made on 
                        any land to be added to the cemetery; and
                          ``(ii) the cost of any improvements to be 
                        made to the existing cemetery.
          ``(2) If the amount of a grant for a cemetery under this 
        section is less than the amount of the costs with respect to 
        the cemetery described in the applicable subparagraph of 
        paragraph (1) of this subsection, the State receiving the grant 
        shall contribute the amount by which such costs exceed the 
        amount of the grant less the value of any land acquired or 
        dedicated by the State for the cemetery.'.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect 60 days after the date of enactment of this Act.

                       Subtitle D--Other Matters

SEC. 331. LIMITATION ON SPECIAL SEPARATION INCENTIVE RECOUPMENT FROM 
                    VETERANS COMPENSATION BENEFITS.

    (a) In General.--
          (1) Chapter 53 is amended by inserting after section 5304 the 
        following new section:

``Sec. 5304A. Recoupment of special separation benefits from 
                    compensation: limitation

    ``In the case of a veteran with a service-connected disability who 
is entitled to compensation and who is paid special separation benefits 
under section 1174a of title 10, the amount of compensation otherwise 
payable to that veteran that is deducted pursuant to section 1174a(g) 
of title 10 by reason of the payment to that veteran of such benefits 
may not exceed 75 percent of the total amount of the benefits paid to 
the veteran.''.
      (2) The table of sections at the beginning of such chapter is 
amended by adding at the end the following new item:

``5304A. Recoupment of special separation benefits from compensation: 
          limitation.''.

    (b) Effective Date.--Section 5304A of title 38, United States Code, 
as added by subsection (a), shall apply with respect to payment of 
compensation by the Secretary of Veterans Affairs for months beginning 
after December 5, 1991.

SEC. 332. REPORT ON PREPARATIONS FOR A NATIONAL RESPONSE TO MEDICAL 
                    EMERGENCIES ARISING FROM THE TERRORIST USE OF 
                    WEAPONS OF MASS DESTRUCTION.

    (a) Findings.--Congress makes the following findings:
          (1) There is a need for improved coordination among the 
        departments and agencies of the Federal Government in planning 
        and carrying out a national response to medical emergencies 
        arising from the terrorist use of weapons of mass destruction.
          (2) All departments and agencies of the Federal Government 
        which would be called upon to respond to such emergencies need 
        to be involved in planning such response.
          (3) The Federal Government needs a comprehensive plan to 
        ensure the establishment and maintenance within the emergency 
        response elements of the Federal Government and State and local 
        governments of a reliable and efficient capability to provide 
        training to, and evaluation of, emergency response personnel 
        and facilities in responding to such medical emergencies.
    (b) Report.--
          (1) Not later than March 1, 1998, the President shall submit 
        to Congress a report on the plans, preparations, and capability 
        of the Federal Government and State and local governments for a 
        national response to medical emergencies arising from the 
        terrorist use of weapons of mass destruction. The report shall 
        be submitted in unclassified form, but may include a classified 
        annex.
          (2) The report should be prepared in consultation with the 
        Secretary of Defense, the Secretary of Health and Human 
        Services, the Secretary of Veterans Affairs, the Director of 
        the Federal Emergency Management Agency, and the heads of any 
        other departments and agencies of the Federal Government that 
        will be involved in responding to such emergencies. The 
        President shall designate a lead agency for purposes of the 
        preparation of the report.
    (c) Contents.--The report shall include the following:
          (1) A description of the steps taken by the Federal 
        Government to plan and prepare for a national response to 
        medical emergencies arising from the terrorist use of weapons 
        of mass destruction.
          (2) A description of the laws and agreements governing the 
        responsibilities of the various departments and agencies of the 
        Federal Government, and of State and local governments, for the 
        response to such emergencies, and an assessment of the 
        interrelationship of such responsibilities under such laws and 
        agreements.
          (3) Recommendations, if any, for the simplification or 
        improvement of such responsibilities.
          (4) An assessment of the current level of preparedness for 
        such response of all departments and agencies of the Federal 
        Government and State and local governments that are responsible 
        for such response.
          (5) A current inventory of the existing medical assets from 
        all sources which can be made available for such response.
          (6) Recommendations, if any, for the improved or enhanced use 
        of the resources of the Federal Government and State and local 
        governments for such response.
          (7) The name of the official or office of the Federal 
        Government designated to coordinate the response of the Federal 
        Government to such emergencies.
          (8) A description of the lines of authority between the 
        departments and agencies of the Federal Government to be 
        involved in the response of the Federal Government to such 
        emergencies.
          (9) A description of the roles of each department and agency 
        of the Federal Government to be involved in the preparations 
        for, and implementation of, the response of the Federal 
        Government to such emergencies.
          (10) The estimated costs of each department and agency of the 
        Federal Government to prepare for and carry out its role as 
        described under paragraph (9).
          (11) A description of the steps, if any, being taken to 
        create a funding mechanism for the response of the Federal 
        Government to such emergencies.

SEC. 333. TECHNICAL AMENDMENTS.

    (a) Plot Allowance for Deaths in Department Facilities.--Section 
2303(a)(2)(A) is amended by striking out ``a Department facility (as 
defined in section 1701(4) of this title)'' and inserting in lieu 
thereof ``a facility of the Department (as defined in section 1701(3) 
of this title)''.
    (b) Educational Assistance Allowance for Certain Individuals 
Pursuing Cooperative Programs.--Section 3015(e)(1) is amended--
          (1) by striking out ``(1) Subject to paragraph (2)'' and 
        inserting in lieu thereof
          ``(1)(A) Except as provided in subparagraph (B) of this 
        paragraph and subject to paragraph (2)''; and
          (2) by adding at the end the following:
                  ``(B) Notwithstanding subparagraph (A) of this 
                paragraph, in the case of an individual described in 
                that subparagraph who is pursuing a cooperative program 
                on or after October 9, 1996, the rate of the basic 
                educational assistance allowance applicable to such 
                individual under this chapter shall be increased by the 
                amount equal to one-half of the educational assistance 
                allowance that would be applicable to such individual 
                for pursuit of full-time institutional training under 
                chapter 34 (as of the time the assistance under this 
                chapter is provided and based on the rates in effect on 
                December 31, 1989) if such chapter were in effect.''.
    (c) Eligibility of Certain VEAP Participants to Enroll in 
Montgomery GI Bill.--Section 3018C(a) is amended--
          (1) in paragraph (1), by striking out ``the date of the 
        enactment of the Veterans' Benefits Improvements Act of 1996'' 
        and inserting in lieu thereof ``October 9, 1996,'';
          (2) in paragraph (4), by striking out ``during the one-year 
        period specified'' and inserting in lieu thereof ``after the 
        date on which the individual makes the election described''; 
        and
          (3) in paragraph (5), by striking out ``the date of the 
        enactment of the Veterans' Benefits Improvements Act of 1996'' 
        and inserting in lieu thereof ``October 9, 1996''.
    (d) Enrollment in Open Circuit Television Courses.--Section 
3680A(a)(4) is amended by inserting ``(including open circuit 
television)'' after ``independent study program'' the second place it 
appears.
    (e) Enrollment in Certain Courses.--Section 3680A(g) is amended by 
striking out ``subsections (e) and (f)'' and inserting in lieu thereof 
``subsections (e) and (f)(1)''.
    (f) Certain Benefits for Surviving Spouses.--Section 5310(b)(2) is 
amended by striking out ``under this paragraph'' in the first sentence 
and inserting in lieu thereof ``under paragraph (1)''.
    Amend the title so as to read: ``A bill to codify the December 1, 
1996, increase in the rates and limitations of compensation and 
dependency and indemnity compensation payable by the Secretary of 
Veterans Affairs, to authorize major medical facility projects and 
leases of the Department of Veterans Affairs, to extend and improve 
other authorities of the Secretary, and for other purposes.''.

                              Introduction

    On February 6, 1997, the President submitted to the 
Congress the Administration's proposed fiscal year 1998 budget. 
Among other things, the proposed budget included requests for 
authority for the Department of Veterans Affairs (VA) to expend 
funds for one major medical construction project and a number 
of major medical leases.
    On February 26, 1997, the Committee held a hearing on the 
proposed budget for veterans' programs. The Committee received 
testimony from the Honorable Jesse Brown, Secretary of Veterans 
Affairs, and from representatives of The American Legion, 
Veterans of Foreign Wars, Disabled American Veterans, AMVETS, 
and Paralyzed Veterans of America. Subsequently, the Committee 
and then the Congress approved certain measures that became 
part of the Balanced Budget Act 1997, Public Law 105-33. That 
legislation, however, contained no provisions relating to VA 
construction or lease authorizations.
    On July 7, 1997, Committee Chairman Arlen Specter 
introduced S. 986 at the request of the Administration. S. 986 
would have, among other things, amended certain provisions of 
law relating to VA's housing loan programs.
    On July 7, 1997, Committee Chairman Specter also introduced 
S. 987 at the request of the Administration. S. 987 would have, 
among other things, provided for transfers of funds within VA 
to facilitate the provision of medical examinations for 
purposes of the adjudication of claims for VA benefits. S. 987 
would also have modified authorities relating to VA assistance 
to the States for the construction of veterans' cemeteries.
    On July 25, 1997, the Committee held a hearing to receive 
testimony on S. 986, on S. 987, on other bills pending before 
the Committee, and on Committee Prints before the Committee, 
including a Committee Print which would have (a) authorized 
major medical construction projects and leases for fiscal year 
1998; (b) codified previously enacted cost-of-living adjustment 
(COLA) increases in certain VA benefits; and (c) made 
clarifying and technical amendments to previously enacted 
legislation. The Committee received testimony from Senator 
Daniel K. Inouye, Senator Barbara Boxer, Representative Bob 
Filner, and Representative Benjamin A. Gilman, and received 
testimony for the record from Representative Sue W. Kelly. The 
Committee also received testimony from Stephen L. Lemons, 
Ed.D., VA's Acting Under Secretary for Benefits, Thomas L. 
Garthwaite, M.D., VA's Deputy Under Secretary for Health, and 
from representatives of The American Legion, Veterans of 
Foreign Wars, Disabled American Veterans, and Vietnam Veterans 
of America. Testimony was also submitted for the record of the 
hearing by the Office of Veterans Affairs, Philippine Embassy; 
Paralyzed Veterans of America; AMVETS; the American Coalition 
for Filipino Veterans; the Coordinating Council of Leaders of 
Veterans Organizations in Southern California; Filipino War 
Veterans, Incorporated; the National Coalition for Homeless 
Veterans; and LA Vets.
    On October 1, 1997, Committee Member James M. Jeffords 
introduced S. 1247, a bill to limit the amount of recoupment 
from veterans' disability compensation that is required in the 
case of veterans who have received special separation benefits 
from the Department of Defense.

                           Committee Meeting

    After carefully reviewing the testimony from the hearings 
of February 26, 1997, and July 25, 1997, the Committee met in 
open session on October 7, 1997, and voted by unanimous voice 
vote to report S. 986, as amended, favorably to the Senate.

                     Summary of S. 986 as Reported

    S. 986, as reported (hereinafter referred to as the 
``Committee bill''), contains provisions that would (a) codify 
previously enacted COLA increases; (b) authorize major medical 
construction projects and leases; (c) consolidate housing loan 
revolving funds; (d) authorize transfers of funds within VA to 
facilitate the provision of medical examinations for purposes 
of the adjudication of claims for VA benefits; (e) clarify 
authorities relating to the provision of health care services 
by VA; (f) modify VA's State cemetery grant program; (g) limit 
the recoupment of special separation incentive payments from VA 
compensation; (h) require reporting on preparations for a 
national response to medical emergencies arising from terrorist 
use of weapons of mass destruction; and (i) make technical 
amendments to previously enacted authorities relating to the 
provision of benefits by VA.

                               Discussion

          Title I. Codification of Compensation Rate Increases

    Title I of the Committee bill, which is derived from a 
Committee Print, would codify the adjusted compensation and 
dependency and indemnity compensation (DIC) rates that resulted 
from the enactment of the Veterans' Compensation Cost-of-Living 
Adjustment Act of 1996, Public Law 104-263, and the Veterans' 
Compensation Cost-of-Living Adjustment Act of 1995, Public Law 
104-57. The affected compensation and DIC rates are the 
following:
          (a) basic compensation rates for veterans with 
        service-connected disabilities, and special rates 
        payable for certain severe disabilities;
          (b) additional amounts of compensation paid to 
        service-connected veterans rated 30 percent or more 
        disabled for spouses, children, and dependent parents;
          (c) 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
          (d) DIC rates paid to:
                  (i) surviving spouses of veterans whose 
                deaths were service-connected;
                  (ii) surviving spouses for dependent 
                children;
                  (iii) surviving spouses who are so disabled 
                that they need aid and attendance or are 
                permanently housebound; and
                  (iv) children of veterans whose deaths were 
                service-connected if no surviving spouse is 
                entitled to DIC and the child is either age 18 
                through 22 and attending an approved 
                educational institution, or at least age 18 and 
                became permanently incapable of self-support 
                prior to reaching age 18.

Background

    The Veterans' Compensation Cost-of-Living Adjustment Act of 
1996, Public Law 104-263, enacted on October 9, 1996, provided 
a cost-of-living adjustment (COLA), effective December 1, 1996, 
in the rates of compensation paid to veterans with service-
connected disabilities and in the rates of dependency and 
indemnity compensation (DIC) paid to the survivors of certain 
veterans who had service-connected disabilities. Previously, 
the Veterans' Compensation Cost-of-Living Adjustment Act of 
1995, Public Law 104-57, enacted on November 22, 1995, provided 
a similar cost-of-living adjustment (COLA), effective December 
1, 1995.
    Congress has traditionally enacted the annual veterans' 
compensation COLA in a form that specifically indicates the 
new, adjusted compensation and DIC rates in the appropriate 
sections of title 38 of the United States Code. The calculation 
of new rates is based on the actual rate of inflation for the 
prior Federal fiscal year, which ends on September 30. The 
inflation rate, as expressed in the increase in the Consumer 
Price Index (CPI) as calculated by the Department of Labor, 
Bureau of Labor Statistics (BLS), for this period is not 
published until the middle or end of October.
    In 1996, Congress passed the annual COLA legislation prior 
to the end of Federal fiscal year 1996. At that time, the 
actual inflation rate, as expressed in the increase in the CPI 
for the prior year, had not yet been published. Accordingly, 
the enacted legislation could not set forth the new 
compensation and DIC rates. Instead, it required VA to compute 
increased compensation and DIC rates by reference to the same 
percentage as the automatic increases for Social Security and 
VA pension benefits--i.e., the prior year's inflation rate as 
expressed by BLS's computation of the prior year's increase in 
the CPI.
    In 1995, Congress took similar action in enacting Public 
Law 104-57. As was the case in 1996, legislation to put into 
effect COLA increases was approved by the Committee before the 
CPI was available. Accordingly, the legislation directed VA to 
compute adjusted compensation and DIC rates when the CPI 
increase as computed by BLS was released.

Committee bill

    The Committee bill would codify the rates of compensation 
and DIC that took effect pursuant to Public Law 104-263. Since 
those rates were based on those previously adjusted by VA 
pursuant to Public Law 104-57, this codification will place 
into effect the adjustments made by both Public Laws 104-57 and 
104-263.
    Codification of the actual rates of compensation and DIC 
will ensure that title 38, United States Code, is current, and 
it will assist in informing veterans, survivors, and others of 
the current rates.

     Title II. Authorizations of Major Medical Projects and Leases

    Title II of the Committee bill, which is derived from a 
Committee Print, would authorize one major VA construction 
project and seven major VA leases. Authority for each project 
or lease was requested by VA in the proposed fiscal year 1998 
budget submitted to the Congress on February 6, 1997.

Background

    Section 8104 of title 38, United States Code, specifies 
that no funds will be appropriated for, and that VA may not 
obligate or expend funds on, ``major'' medical facility 
construction projects or ``major'' medical facility leases, 
unless each such project is authorized by law. In its proposed 
fiscal year 1998 budget, VA requested authorizations for one 
major construction project and a number of major leases.
    Construction Project.--In 1971, the San Fernando, 
California, area was struck by an earthquake which occurred 
along the San Andreas fault line. The then-San Fernando VA 
Hospital was severely damaged, resulting in the loss of 46 
lives and subsequent abandonment by the VA.
    Subsequent to the 1971 earthquake, VA established a 
Structural Advisory Board, which meets periodically to review 
and recommend modifications to the seismic standards with which 
VA medical facilities will comply. Over time, these standards 
have been adjusted and made more stringent.
    The Memphis VA Medical Center (VAMC) was built in the early 
1960's near the New Madrid fault line. In the mid-19th century, 
an earthquake on the New Madrid fault line caused the 
Mississippi River to flow northward for a period and made its 
effects felt as far away as Boston, Massachusetts. It is 
predicted that, before the middle of the 21st century, another 
major earthquake will occur on the New Madrid fault line. At 
the time of construction, the Memphis VAMC complied with 
seismic standards then in force; those standards, however, have 
become more stringent since the date of construction.
    Medical Facility Leases.--Over time, health care services 
in the United States have increasingly been provided on an 
outpatient basis. The Committee has stressed to VA its 
determination that VA must adopt this model of providing care, 
and Congress facilitated the adoption of that model of care by 
enactment, in 1996, of the ``Veterans' Health Care Eligibility 
Reform Act of 1996,'' Public Law 104-262.

Committee bill

    Section 201 of the Committee bill would authorize the 
Secretary of Veterans Affairs to undertake a construction 
project to upgrade the Memphis VAMC to comply with current 
seismic standards. The amount authorized is $107,600,000.
    Section 202 of the Committee Bill would authorize VA to 
enter into leases for use as VA satellite medical facilities or 
information resource management field offices. The sites of 
these projects and the amounts authorized are as follows: (1) 
Birmingham, AL, information resource management field office, 
$595,000; (2) Jacksonville, FL, satellite outpatient clinic, 
$3,095,000; (3) Boston, MA, satellite outpatient clinic, 
$5,215,000; (4) Canton, OH, satellite outpatient clinic, 
$735,000; (5) Tulsa, OK, satellite outpatient clinic, 
$2,112,000; (6) Portland, OR, satellite outpatient clinic, 
$1,919,000; and (7) Salt Lake City, UT, information resource 
management field office, $652,000.
    Section 203 of the Committee bill authorizes appropriations 
for the major construction projects and major leases listed in 
sections 201 and 202.

                        Title III. Other Matters

    Title III of the Committee bill is derived from S. 986, as 
introduced, S. 987, S. 1247, and from Committee Prints. Its 
four subtitles would (1) consolidate certain VA home loan 
revolving funds; (2) authorize intra-VA fund transfers to 
facilitate the provision of compensation and pension medical 
exams; (3) clarify provisions of law enacted in the ``Veterans' 
Health Care Eligibility Reform Act of 1996,'' Public Law 104-
262; (4) modify VA's State cemetery grant program; (5) limit 
the funds that would be recouped from VA compensation payments 
made to veterans who had previously received special separation 
incentive payments when they departed service; (6) require the 
preparation of a report on national preparedness for medical 
emergencies stemming from terrorist use of weapons of mass 
destruction; and (7) make technical corrections to provisions 
of law enacted in the ``Veterans' Benefits Improvements Act of 
1996,'' Public Law 104-275.

          Subtitle A--Improvement of Housing Loan Authorities

Section 301. Consolidation of housing loan revolving funds

            Background
    VA administers a number of home loan ``revolving funds,'' 
funds into which all income from housing loan operations (such 
as fees, loan repayments, and property sale proceeds) are 
deposited, and from which all expenses related to loan 
operations (such as paying the claim on the guaranty and 
acquiring and maintaining properties), except for 
administrative expenses (such as salaries and office space), 
are paid. Currently, four such revolving funds exist: the 
Guaranty and Indemnity Fund; the Loan Guaranty Revolving Fund; 
the Direct Loan Revolving Fund; and the Native American 
Veterans Direct Housing Loan Pilot Program Fund.
    The Guaranty and Indemnity Fund provides funding for all 
loans guaranteed since January 1, 1990, for conventionally 
built homes. Approximately 250,000 loans are guaranteed each 
year. The Loan Guaranty Revolving Fund provides funding for 
loans guaranteed before January 1, 1990, for conventionally-
built homes. This fund also finances all manufactured home 
loans (now less than 50 per year).
    The Direct Loan Revolving Fund was created to provide 
direct mortgage money to veterans residing in rural areas that 
lack accessible lending institutions. This fund also provides 
funding for direct loans made to certain veterans with 100 
percent service-connected disabilities who qualify for 
Specially Adapted Housing benefits under chapter 21 of title 
38, United States Code. VA currently makes fewer than two 
direct loans in connection with Specially Adapted Housing per 
year.
    The Native American Veterans Direct Housing Loan Pilot 
Program Fund performs a similar direct-loan function with 
respect to the building, or purchasing, of homes on Native 
American lands. Conventional lenders will not finance such 
housing loans--even with VA guaranties--since lenders would be 
precluded by law from taking possession of Native lands in the 
event of default.
    While the existence of separate revolving funds was useful 
and necessary at one time, the Federal Credit Reform Act of 
1990 (FCRA) (Public Law 101-508) has made separate funds 
unnecessary. FCRA applies to all Federal credit programs and it 
requires, in summary, that each be self-sufficient. The 
policies of FCRA (assured loan program self sufficiency via 
user fees and partial government funding) were already in 
effect with respect to VA's Guaranty and Indemnity Fund, the 
funding source for post-January 1, 1990, VA home loans. They 
were not, however, applied to VA's Loan Guaranty Revolving Fund 
(the funding source guaranteeing pre-January 1, 1990 home 
loans) and VA's Direct Loan Revolving Fund. With enactment of 
FCRA, such policies were extended to these other VA home loan 
funds.
    With FCRA-mandated accounting consistency, there is no 
longer any compelling reason to segregate funds. Now, identical 
accounting systems are applied to all, and separate fund 
accounting yields no benefit. It does, however, create 
unnecessary complexity.
            Committee bill
    Section 301 of the Committee bill would consolidate the 
three VA home loan revolving funds which existed when FCRA was 
enacted--the Guaranty and Indemnity Fund, the Loan Guaranty 
Revolving Fund, and the Direct Loan Revolving Fund--into a 
single fund, the ``Veterans Housing Benefits Programs Fund.'' 
After enactment, all appropriated funding to VA home loan 
programs (except funds specifically designated for the Native 
American home loan program, which would remain separate) would 
be deposited into the new fund. Further, all income 
attributable to the three non-Native American funds--i.e., 
proceeds from sales, rentals, or other uses of acquired 
foreclosed properties, loan repayment, and loan user fees--
would be deposited into the new fund.

           Subtitle B--Improvement of Health Care Authorities

Section 311. Reimbursement of costs associated with compensation and 
        pension medical examinations.

            Background
    VA's Veterans Benefits Administration (VBA) is responsible 
for determining veterans', and others', eligibility for 
benefits administered by VA. Many such benefits--among them, 
compensation for veterans with service-connected disabilities; 
dependency and indemnity compensation for the survivors of 
service personnel of veterans who have died from service-
connected disabilities; pension for certain wartime veterans 
who are permanently and totally disabled due to non-service-
connected disabilities--require that an assessment be made of 
the claimant's medical history and status. VBA does not have 
independent expertise to make such assessments; therefore, it 
generally relies on VA's Veterans Health Administration (VHA) 
to perform medical examinations of claimants when necessary. 
VHA currently receives appropriated funding in the medical care 
account to perform or contract for such examinations.
            Committee bill
    The Committee bill would authorize VBA to reimburse VHA for 
the costs incurred by VHA in performing or securing such 
medical examination services. The Committee notes that while 
its intention is to facilitate VBA ``purchasing'' of such 
services from VHA, the Committee also intends that before such 
``purchasing'' would take place, funds now appropriated to the 
medical care account to fund VHA-provided examinations would be 
redirected by separate appropriations legislation to VBA's 
General Operating Expense funding source for this purpose.

Section 312. Clarification of certain health care authorities.

            Background
    The ``Veterans' Health Care Eligibility Reform Act of 
1996,'' Public Law 104-262, contained numerous amendments 
related to the provision of health care benefits by VA. The 
most notable provisions of Public Law 104-262 affected 
``eligibility reform'' by simplifying eligibility standards 
governing priority access to VA health care services, and by 
eliminating prior legal distinctions which had the effect of 
allowing easier access to inpatient services than outpatient 
services. Public Law 104-262 specified that, henceforth, 
priority-eligible veterans (mainly, the service-connected and 
the poor) will have access to hospital care and ``medical 
services,'' a term which includes, among other things, 
outpatient and preventive services.
    The statute, as enacted, contained numerous provisions that 
merit clarification. Section 312 of the Committee bill contains 
such clarifications.
            Committee bill
    Section 312(a). Public Law 104-262 provides that veterans 
who have not been adjudicated as service-connected by VA, but 
who were discharged from service due to a ``compensable'' 
disability, will have the same priority access to VA health 
care services as the service-connected. When the military 
discharges persons due to disability, however, it does not 
state whether or not the disability is ``compensable.'' Public 
Law 104-262, therefore, would appear to require that a 
determination be made of ``compensability''--a requirement that 
would be tantamount to requiring a finding of service 
connection and, in effect, render the entire provision as a 
separate basis for priority a nullity.
    Section 312(a) of the Committee bill would strike the term 
``compensable'' from 38 U.S.C. Sec. 1710(a)(2)(B) to provide 
that those discharged from service due to disability--not due 
to ``compensable'' disability--have priority access to VA care.
    Section 312(b). Prior to Public Law 104-262, VA provided 
care for ``disabilities.'' Public Law 104-262, however, 
authorized VA to provide needed care without regard to whether 
that care addressed a particular ``disability.'' A separate 
authority (38 U.S.C. Sec. 1717(a)), under which VA is 
authorized to provide home health services, carries over the 
requirement that care address a ``disability,'' creating a 
legal situation whereby hospital care, outpatient care, and 
other health care services need not address a ``disability,'' 
but home health services must.
    Section 312(c). Section 1720 of title 38, United States 
Code, authorizes VA to transfer VA inpatients to non-VA nursing 
home care. That section was unaffected by Public Law 104-262. 
However, the underlying rationale for enactment of Public Law 
104-262--the removal of nonclinical reasons for placing 
patients into inpatient care--would be advanced by removing a 
nonclinical reason for a hospital admission stated in section 
1720: the requirement that VA patients first be receiving VA 
inpatient care before they can be referred to non-VA nursing 
home care.
    Section 312(c) of the Committee bill would amend 38 U.S.C. 
Sec. 1720(a)(1)(A)(i) to allow such transfers (as otherwise 
limited by statute) to be afforded to ``VA patients''--not VA 
``hospital, nursing home, or domiciliary'' patients.
    Section 312(d). Section 8153 of title 38, United States 
Code, as amended by Public Law 104-262, authorizes VA to enter 
into ``sharing agreements'' with non-VA health care providers 
as limited by Sec. 8153 but, otherwise, ``without regard to any 
law or regulation that would otherwise require the use of 
competitive procedures for procuring the resource . . . .'' It 
has been suggested that the term ``regulation'' is unclear--
i.e., it may or may not include within its scope ``executive 
orders, circulars, or other administrative policies.'' Such 
policy directives significantly affect Federal contracting 
policy.
    Section 312(d) of the Committee bill would remove any 
ambiguity by adding a reference to ``executive orders, 
circulars, or other administrative policies'' to 38 U.S.C. 
Sec. 8153(a)(3)(A).
    Section 312(e). When Congress amended VA's ``sharing 
agreement'' authority, it freed VA from restrictive regulatory 
requirements and authorized VA to adopt ``simplified 
procedures.'' Even so, however, the Congress directed that VA's 
simplified procedures ``permit all responsible sources'' 
(emphasis added) to compete. It has been suggested that a 
requirement that ``all'' be allowed to compete denies VA the 
ability to limit the number of bids it will consider and is, 
therefore, contrary to the underlying goal of simplification.
    Section 312(e) of the Committee bill would amend 38 U.S.C. 
Sec. 8153(a)(3)(B)(ii) to require VA to ``permit all 
responsible sources, as appropriate,'' to compete.
    Section 312(f). A limitation imposed by Public Law 104-262 
on VA's ``sharing agreement'' authority--which includes 
authority for VA to provide care to other care providers'' 
nonveteran patients in return for reciprocal arrangements to 
care for VA patients--is the statutory requirement that, under 
any such agreement, ``veterans will receive priority under such 
an arrangement.'' 38 U.S.C. Sec. 8153(e)(1). It has been 
suggested that individual sharing agreements may not contain 
reciprocal arrangements--i.e., they may specify VA's 
obligations to treat the ``partner's'' patients, leaving the 
``partner's'' reciprocal obligations to another document--and 
that, in such arrangements, veteran-patients may not be granted 
priority since the contract does not even provide for care to 
veteran-patients.
    Section 312(f) of the Committee bill would amend 38 U.S.C. 
Sec. 8153(e)(1) to require that VA will enter into sharing 
agreements only if ``care to veterans will not be diminished as 
a result of such an arrangement,'' rather than requiring that 
each such arrangement give priority to veteran-patients.

                   Subtitle C--State Cemetery Grants

Section 321. State cemetery grants program

            Background
    VA is authorized to make grants to the States to assist 
them in establishing, expanding, and improving State veterans' 
cemeteries. Under current law, the amount of a State cemetery 
grant may not exceed 50 percent of the total value of the land 
to be acquired or dedicated for a cemetery, and 50 percent of 
the cost of improvements to be made on the land. The remaining 
amount must be contributed by the State that receives the 
grant.
            Committee bill
    The Committee bill would amend Section 2408(b)(1) of title 
38, United States Code, to authorize VA, in the case of the 
establishment of a new cemetery, to grant (1) the total cost of 
improvements necessary to dedicate land for cemetery use, and 
(2) the total initial ``startup'' cost of equipment necessary 
to operate the cemetery. In the case of expansions or 
improvements of existing cemeteries, VA would be authorized to 
grant an amount equal to the total cost of improvements to be 
made on land to be added to the cemetery, and the cost of 
improvements to be made to the existing cemetery. In both 
cases, VA would no longer provide grants to support the 
acquisition of land for cemetery use. It is the Committee's 
intention that States be given incentives to establish State 
cemeteries.

                       Subtitle D--Other Matters

Section 331. Limitation on special separation incentive recoupment from 
        veterans compensation benefits

            Background
    Under current law, a service member who voluntarily leaves 
service may receive a ``special separation bonus'' (SSB), a 
cash payment computed by reference to his or her service pay 
grade and number of years service, in order to induce the 
separation from service and to facilitate transition to 
civilian status. In the event that a person who received an SSB 
subsequently becomes eligible for VA compensation, his or her 
compensation payments will, in accordance with sections 1174 
and 1174a of title 10, United States Code, be offset by an 
amount equal to the amount of the SSB received. Special 
separation bonus payments are taxable as income; VA 
compensation is not.
            Committee bill
    Section 331 of the Committee bill would specify that the 
amount of the SSB which is offset would not exceed 75 percent 
of the SSB payment amount. The Committee has concluded that the 
offsetting of the entire SSB payment from VA compensation is 
unfair when the tax status of the two forms of payment is 
considered. To cite a hypothetical, a person who receives a 
taxable payment of $10,000 ``takes home'' approximately $7,500, 
not $10,000. It may be appropriate, in the Committee's view, to 
offset the net benefit the SSB recipient ``takes home'' 
($7,500), but to offset the entire amount, especially from 
nontaxable VA compensation, is excessive. Thus, the Committee 
bill specifies that the offset from compensation will not 
exceed 75 percent of the SSB payment.

Section 332. Report on preparations for a national response to medical 
        emergencies arising from the terrorist use of weapons of mass 
        destruction

            Background
    A number of Federal agencies are responsible for policies 
for combating the spread of weapons of mass destruction, and 
for responding to the ill-effects of such weapons. The 
Committee has tentatively concluded, however, that VA--a 
Federal agency which has extensive medical treatment, research, 
and training resources--has not been fully integrated into 
preparations for responding to potential terrorist attacks in 
the United States using weapons such as chemical or biological 
agents.
            Committee bill
    The Committee bill would require the President to submit to 
Congress a report, no later than March 1, 1998, on the plans, 
preparations, and capability of Federal, State and local 
agencies for responding to the medical emergencies arising from 
the terrorist use of weapons of mass destruction.
    This report, which would be prepared in consultation with 
the Secretary of Defense, Secretary of Health and Human 
Services, Secretary of Veterans Affairs, Director of the 
Federal Emergency Management Agency, and heads of other 
interested departments and agencies, would: (1) describe the 
steps taken by the Federal Government to prepare for a national 
response to medical emergencies arising from the terrorist use 
of weapons of mass destruction; (2) describe the laws, 
agreements, responsibilities, and interrelationships of the 
various departments and agencies of the Federal, State, and 
local governments for responding to such emergencies; (3) 
assess current levels of preparedness; (4) inventory existing 
medical assets that can be made available for such a response; 
and (5) make recommendations for improved or enhanced use of 
resources of the Federal Government.

Section 333. Technical Amendments

            Background
    The ``Veterans' Benefits Improvements Act of 1996,'' Public 
Law 104-275, made various amendments to VA benefits programs, 
including modifications to VA educational benefits, housing and 
memorial affairs, employment and training, and insurance 
benefits programs. The statute also contained a number of 
administrative provisions applicable to VA, and it created the 
Commission on Service Members and Veterans Transition 
Assistance.
    The statute, as enacted, contained numerous technical 
errors which section 333 of the Committee bill would correct.
            Committee bill
    Section 333(a). Prior to enactment of Public Law 104-275, 
38 U.S.C. Sec. 2302 specified that a veteran who died in a 
``Department facility (as defined in section 1701(4) of this 
title)'' would be entitled to a payment to assist in defraying 
certain burial and funeral expenses. Section 2302, as it 
existed prior to enactment of Public Law 104-275, contained a 
clerical error: ``Department facility'' is not defined in 
section 1701(4) of title 38, it is defined in section 1701(3).
    Section 212 of Public Law 104-275 amended section 2302 to 
extend the burial benefit previously limited to those who died 
in VA facilities to those who died in State veterans homes. In 
so amending section 2302, Public Law 104-275 reenacted the 
improper citation to the definition of ``Department facility.''
    The technical amendment would correct the error which 
predated, but which was perpetuated by, Public Law 104-275 by 
substituting ``1701(3)'' for ``1701(4).''
    Section 333(b). Prior to enactment of Public Law 104-275, 
students enrolled in ``cooperative training programs''--i.e., 
those which combine college courses and job-site training--were 
entitled to educational assistance under 38 U.S.C. Chapter 30 
(the Montgomery GI Bill or ``MGIB'') at 80 percent of the rate 
paid to full-time students. Public Law 104-275 increased the 
rate of educational assistance paid to these students to 100 
percent of the rate paid to full-time students.
    Public Law 104-275 provided for an increase of benefits to 
``conventional'' MGIB participants. Due to a drafting 
oversight, however, it failed to include a parallel increase to 
Vietnam-era veterans who were originally eligible for 
educational assistance under 38 U.S.C. chapter 34, and who had 
``converted'' their eligibility under that chapter to MGIB 
eligibility. Thus, ``conventional'' MGIB beneficiaries are paid 
at a 100 percent rate, but Vietnam-era beneficiaries of MGIB 
are not.
    The technical correction would remedy the above-noted 
oversight by adding a provision to 38 U.S.C. Sec. 3015(e) 
governing benefits to former chapter 34-eligible veterans 
relating to ``cooperative training programs.''
    Section 333(c). Veterans who served between 1977 and 1985 
(the ``Post-Vietnam Era'') are eligible for educational 
assistance benefits under 38 U.S.C. chapter 32 (the Post-
Vietnam Era Educational Assistance, or ``VEAP,'' program). 
Those who served from 1986 to the present are eligible for MGIB 
educational assistance benefits. Prior to enactment of section 
106 of Public Law 104-275, VEAP participants could not elect to 
``convert'' to MGIB eligibility; under section 106, veterans 
who were participating in VEAP on October 9, 1996, were 
authorized for a 1-year period to convert to MGIB.
    As drafted, Public Law 104-275 specified that persons who 
elect to convert to MGIB during the 1-year election period and 
who are discharged under honorable conditions from the military 
during that 1-year election period, would be eligible to 
convert. It did not specify what discharge status would be 
required of those who elected to convert during the 1-year 
period but who were discharged after the expiration of that 
period.
    The technical amendment clarifies that those eligible for 
VEAP can convert to MGIB if (1) they so elect during the 1-year 
period specified in Public Law 104-275 and (2) they are at any 
time thereafter discharged from service under honorable 
conditions.
    Section 333(d). Prior to enactment of Public Law 104-275, 
VA would pay educational benefits to persons enrolled in open 
circuit television courses only if he or she was concurrently 
enrolled in in-residence study. At the same time, VA paid 
educational benefits to veterans enrolled in ``independent 
study'' courses, in conjunction with or separate from in-
residence study, so long as the course leads to standard 
college credit. Public Law 104-275 applied the ``independent 
study'' rule to open circuit television courses of 
instruction--i.e., veterans can receive assistance when they 
take open circuit television courses, as part of or separate 
from in-residence study if the course is for college credit.
    As drafted, Public Law 104-275 attempted to add the words 
``(including open circuit television)'' courses everywhere in 
the statute where reference was made to ``independent study'' 
courses, in order to make it clear that both types of study are 
subject to the same ``for college credit only'' rule. See, 
e.g., 38 U.S.C. Sec. 3523(a)(4). The statute, however, missed 
one such cross reference at 38 U.S.C. Sec. 3680A(a)(4).
    The technical amendment would add the above-noted cross 
reference.
    Section 333(e). Prior to enactment of Public Law 104-275, 
rules governing the payment of VA educational benefits based on 
a veteran's enrollment in institutions in operation for less 
than 2 years were specified in 38 U.S.C. Sec. 3689. Section 103 
of Public Law 104-275 recodified a new ``2-year'' rule in 38 
U.S.C. Sec. 3680A(e)-(g). The new rule specifies, in summary, 
that non-degree-granting institutions will be subject to a ``2-
year rule,'' and that degree-granting institutions (and their 
branches) are exempted from the ``2-year rule.'' It provides, 
further, that special rules will be applied in cases where a 
contractor provides instruction for another institution: first, 
the ``2-year rule'' will be applied to the contractor which 
actually offers the instruction; and, second, in any case, the 
course must be approved by VA. Finally, the new rule specifies 
that VA may, on a case-by-case basis, approve a course of 
study, notwithstanding the ``2-year rule,'' if the course is 
being provided on or near a military post under contract with 
the Department of Defense (DOD) or Department of Transportation 
(DOT) (in the case of the Coast Guard).
    As 38 U.S.C. Sec. 3680 is currently drafted, it authorizes 
VA to approve courses, on a case-by-case basis, at DOD/DOT 
facilities even if: (1) the DOD-contractor has been in 
operation for less than 2 years, 38 U.S.C. Sec. 3680A(e); (2) 
the DOD-contractor's subcontractor has been in operation for 
less than 2 years, 38 U.S.C. Sec. 3680A(f)(1); and (3) the 
provider/course of study has not been approved, 38 U.S.C. 
Sec. 3680A(f)(2). As a matter of legislative draftsmanship, the 
third exemption is flawed; it states that VA has authority to 
approve a course of study even if the course of study has not 
been approved. VA, of course, would have an interest in 
approving no other kind of course, and it did not need 
reference to a specific authority to do that.
    The technical amendment, therefore, eliminates the cross 
reference to subsection (f)(2). It make no substantive change 
to the provisions of Public Law 104-275 which allow VA to 
approve ``on post'' courses, on a case-by-case basis, 
notwithstanding the ``2 year rule.'
    Section 333(f). Prior to enactment of Public Law 104-275, 
veterans were entitled to compensation or pension only for 
months during which they were alive for the entire month. 
Therefore, when a veteran who had been receiving compensation 
or pension died, his or her estate (commonly, a spouse) was 
required to refund to VA the last check received.
    Section 506 of Public Law 104-275 specified that a 
veteran's surviving spouse would be entitled to retain 
compensation or pension paid for the month of the veteran's 
death. In so stating, however, section 506 used technically 
inaccurate language: it stated that the surviving spouse would 
be entitled to retain benefits paid ``under this paragraph'' 
rather than benefits paid ``under this subsection.''
    The technical amendment corrects this error by substituting 
the term ``subsection'' for ``paragraph.''

                             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 the Congressional Budget Office (CBO), 
estimates that, compared to the CBO baseline, there would be no 
costs or savings resulting from enactment of the Committee 
bill.
    The cost estimate provided by CBO follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 4, 1997.
Hon. Arlen Specter,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 986, the Veterans' 
Benefits Improvements Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Valerie 
Brown, Shawn Bishop, Jeannette Deshong, and Mary Helen Petrus.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

S. 986--A bill to amend title 38, United States Code, to make certain 
        improvements in the housing loan programs for veterans and 
        eligible persons, and for other purposes

    Summary: S. 986 would affect several veterans' programs, 
including medical care, disability compensation, and grants for 
cemeteries. CBO estimates that enacting the bill would increase 
annual direct spending by a negligible amount over the 1998-
2002 period. The direct spending costs of the bill would occur 
largely after 2003 and would accumulate to about $100 million 
by 2012. Because the bill would raise direct spending, pay-as-
you-go procedures would apply. In addition, enacting S. 986 
would raise spending subject to appropriations by about $13 
million in 1998 and $63 million over the five-year period. The 
bill contains no intergovernmental or private-sector mandates 
as defined in the Unfunded Mandates Reform Act of 1995 (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: Table 1 displays 
the estimated costs of S. 986 over the 1998-2002 period. The 
costs of this bill would fall within budget function 700 
(veterans benefits and services).

                                      TABLE 1.--BUDGETARY IMPACT OF S. 986                                      
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                       1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Estimated budget authority.........................................      (1)      (1)      (1)      (1)      (1)
Estimated outlays..................................................      (1)      (1)      (1)      (1)      (1)
                                                                                                                
                                        SPENDING SUBJECT TO APPROPRIATION                                       
Estimated authorization level......................................       54        5        5        5        5
Estimated outlays..................................................       13        9       15       15      11 
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         
Note: The costs of this legislation would fall under budget function 700 (veterans' affairs).                   

Direct spending

    The direct spending would stem from provisions that would 
increase payments of disability compensation to certain 
veterans and certain readjustment benefits.
    Disability Compensation.--In 1991, the Congress authorized 
special payments to personnel who separate voluntarily from 
military service prior to September 30, 1999, but are not 
eligible to receive retirement benefits. One of the separation 
incentives is a lump-sum payment known as the special 
separation benefit (SSB). The laws that authorize the 
separation payments also prohibit veterans from receiving those 
payments and veterans' disability compensation if both stem 
from a single period of service. For SSB recipients who 
separated prior to September 30, 1996, that prohibition results 
in a delay in receiving the disability compensation until the 
full amount of the bonus is offset.
    S. 986 would limit the offset required for veteran's 
disability compensation to 75 percent of the value of any SSB 
payment received after December 5, 1991. CBO estimates that 
roughly 10,800 recipients of SSB would be affected. Under 
current law, disability payments for SSB recipients are delayed 
for more than 10 years on average. The bill would shorten the 
period until a veteran would begin receiving disability 
compensation by about three years, so that by 2006, the 
majority of these SSB recipients would qualify for payments--
about $3,000 annually. Near-term costs would be negligible 
because most disability compensation would still be deferred. 
CBO estimates that costs for the additional years of 
compensation eligibility would total $100 million through 2012.
    Readjustment Benefits.--The bill would provide for an 
increase of about $220 per month in educational assistance for 
those individuals who, as of December 31, 1989, were entitled 
to benefits under Chapter 34 and who are pursuing a program of 
cooperative education. This provision would have an 
insignificant cost because it would affect only a small number 
of individuals.

Spending subject to appropriations

    The bill would increase the authorization of appropriations 
for construction and leases of medical facilities, and grants 
to state cemeteries.
    Major Construction and Facility Leases.--The bill would 
authorize the appropriation of $35 million for the Department 
of Veterans' Affairs (VA) to complete seismic corrections to 
its medical facility in Memphis, Tennessee, and $14 million in 
1998 for several specific leasing agreements. For construction, 
CBO estimates VA would spend under $200,000 in 1998 and $33 
million over the 1998-2002 period. For leases, CBO estimates 
that VA would spend $13 million in 1998 and $1 million in 1999.
    The bill would also authorize VA to use unobligated 
balances, in addition to new appropriations, to carry out the 
seismic corrections at the Memphis facility, up to a total cost 
of $107.6 million. The unobligated balances would be derived 
from amounts appropriated for fiscal years before 1998. CBO 
estimates that this authorization would have no budgetary 
impact because spending of these balances under the bill would 
not differ significantly from spending for the projects that 
were funded originally.
    State Cemetery Grants Program.--To receive a grant for a 
cemetery under current law, a state must contribute a 
combination of land and funds. The bill would allow states to 
contribute more land and less funding to satisfy the matching 
requirement. CBO expects that enactment of this provision would 
raise states' participation and result in an expanded grant 
program. Based on information from VA, CBO estimates that this 
provision would raise spending for this program by about $5 
million a year, which would add outlays of $16 million over the 
1998-2002 period, assuming appropriation of the necessary 
funds.

                   TABLE 2.--BUDGETARY IMPACT OF S. 986 ON SPENDING SUBJECT TO APPROPRIATIONS                   
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
                                 MAJOR CONSTRUCTION AND MEDICAL FACILITY LEASES                                 
                                                                                                                
Spending under current law for medical construction:                                                            
    Estimated authorization level \1\.....................      219       32        0        0        0        0
    Estimated outlays.....................................      559      243      126       53       20        9
Proposed changes:                                                                                               
    Estimated authorization level.........................        0       49        0        0        0        0
    Estimated outlays.....................................        0       13        7       11       10        6
Spending under S. 986 for medical construction:                                                                 
    Estimated authorization level.........................      219       82        0        0        0        0
    Estimated outlays.....................................      559      258      133       64       30       15
                                                                                                                
                                          STATE CEMETERY GRANTS PROGRAM                                         
                                                                                                                
Spending under current law for State cemetery grants:                                                           
    Estimated authorization level \2\.....................        1        1        1        1        1        1
    Estimated outlays.....................................        3        2        1        1        1        1
Proposed changes:                                                                                               
    Estimated authorization level.........................        0        5        5        5        5        5
    Estimated outlays.....................................        0        0        2        4        5        5
Spending under S. 986 for State cemetery grants:                                                                
    Estimated authorization level.........................        1        6        6        6        6        6
    Estimated outlays.....................................        3        2        3        5        6       6 
----------------------------------------------------------------------------------------------------------------
\1\ The 1997 and 1998 levels are the amounts appropriated for those years as of September 30, 1997.             
\2\ The 1997 level is the amount appropriated for that year. Amounts for fiscal years 1998 through 2002 are     
  subject to appropriation.                                                                                     

    Pay-As-You-Go Effects: The Balanced Budget and Emergency 
Deficit Control Act of 1985 sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. Because 
the bill would affect direct spending, pay-as-you-go procedures 
would apply. The projected changes in outlays that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the budget year and the succeeding four years 
are counted.

                                        SUMMARY OF PAY-AS-YOU-GO EFFECTS                                        
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                   1998    1999    2000    2001    2002    2003    2004    2005    2006    2007 
----------------------------------------------------------------------------------------------------------------
Change in outlays...............       0       0       0       0       0       4      18      27      30      14
Changes in receipts.............   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)  (\1\) 
----------------------------------------------------------------------------------------------------------------
\1\ Not applicable.                                                                                             

    Estimated Impact on State, Local, and Tribal Governments: 
S. 986 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments. The bill would modify a program that provides 
grants to states for establishing or expanding veterans 
cemeteries.
    Estimated Impact on the private Sector: This bill would 
impose no new private-sector mandates as defined in UMRA.
    Previous CBO Estimate: On October 1, 1997, CBO prepared a 
cost estimate for H.R. 2571, a bill to authorize major 
construction and leases of VA medical facilities. The estimates 
for H.R. 2571 and comparable provisions of S. 986 differ 
slightly because of small differences in the amounts 
authorized.
    Estimate prepared by: Federal Cost: The estimates of 
federal costs were prepared by Mary Helen Petrus (state 
cemetery grants), Shawn Bishop (medical care), Jeannette 
Deshong (disability compensation), and Valerie Barton 
(readjustment benefits); Impact on State, Local, and Tribal 
Governments: Marc Nicole; Impact on the Private Sector: Rachel 
Schmidt.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      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 October 7, 1997, meeting. On that 
date, the Committee, by unanimous voice vote, ordered S. 986 
reported favorably to the Senate.

                             Agency Report

    On July 25, 1997, Stephen L. Lemons, Ed.D., Acting Under 
Secretary for Benefits, and Thomas L. Garthwaite, M.D., Deputy 
Under Secretary for Health, Department of Veterans Affairs, 
submitted testimony on, among other things, S. 714, S. 986, and 
a Committee Print which would have extended authorities 
relating to the provision of services to homeless veterans, VA 
authority to conduct a pilot program for the provision of 
noninstitutional alternatives to nursing home care, VA 
authority to operate a Health Professional Scholarship Program, 
and VA authority to enter into enhanced use leases. An excerpt 
from that testimony is reprinted below:

    Statement of Dr. Stephen L. Lemons, Acting under Secretary for 
        Benefits, Department of Veterans Affairs, July 25, 1997

    Mr. Chairman and Members of the Committee: I am pleased to 
be here this morning to discuss those items on your agenda that 
would impact the Veterans Benefits Administration, the National 
Cemetery System, and the Board of Veterans' Appeals. Your 
letter of invitation asked that we address each of the 
following bills and draft proposals: S. 987 (VA requested draft 
legislation proposing a compensation cost-of-living-adjustment 
and other program improvements); S. 464; S. 623; S. 714; S. 
730; Committee Print (to increase the Medal of Honor pension); 
S. 813; S. 986 (VA requested draft legislation proposing home 
loan program improvements); Committee Print (to make technical 
amendments to Public Law 104-275); and Committee Print 
(codification of FY 1997 cost-of-living adjustment legislation, 
Pub. L. No. 104-263).


          s. 987 (compensation cola and program improvements)


    S. 987, which the Chairman introduced at VA's request, 
would authorize a cost-of-living adjustment (COLA) for fiscal 
year (FY) 1998 in the rates of disability compensation and 
dependency and indemnity compensation (DIC), and would revise 
and improve certain veterans compensation, pension, and 
memorial affairs programs. We thank the Chairman for 
introducing this bill, and urge its favorable consideration.
          * * * * * * *
    Section 106 would authorize the Veterans Benefits 
Administration (VBA) to reimburse, from the general operating 
expenses account, the Veterans Health Administration (VHA) for 
the cost of medical examinations conducted with respect to 
veterans' claims for compensation or pension. Currently, such 
examinations are paid for out of VA's medical-care fund.
    In order to assure that funding for compensation and 
pension medical examinations is available throughout FY 1998, 
appropriate language would need to be included in both the 
``Medical care'' and ``General operating expenses'' 
appropriations. It is contemplated that VBA will enter into a 
memorandum of understanding with VHA to provide that, should 
funds budgeted under general operating expenses for the purpose 
of ``purchasing'' compensation and pension medical examinations 
prove insufficient, alternate funding under ``Medical care'' 
would be available to permit VHA to continue to provide these 
examinations. Medical care funds would be used for this purpose 
only in the event of a shortfall in general operating expenses.
    Section 201(a) of S. 987 would amend section 2408(b) of 
title 38, United States Code, to make state cemetery grants 
more attractive to States. Section 2408 authorizes the 
Secretary of Veterans Affairs to make grants to States to 
assist them in establishing, expanding, or improving State 
veterans' cemeteries. Currently, the amount of a State cemetery 
grant is limited to 50 percent of the total of the value of the 
land to be acquired or dedicated for a cemetery and the cost of 
improvements to be made on the land. The remaining amount must 
be contributed by the State receiving the grant. Pursuant to 
the amendments proposed in this section, the amount of a State 
cemetery grant could not exceed, in the case of the 
establishment of a new cemetery, the total of the cost of 
improvements to be made on land to be converted into a cemetery 
and the initial cost of equipment necessary to operate the 
cemetery. In the case of the expansion or improvement of an 
existing cemetery, the amount of the grant could not exceed the 
total of the cost of improvements to be made on any land to be 
added to the cemetery combined with the cost of improvements to 
be made to the existing cemetery. If the amount of a grant 
should, for any reason, be less than the amount of those costs, 
the State receiving the grant would be required to contribute 
the remaining amount, in addition to providing any land 
necessary for the cemetery project.
    Also, under current law, if at the time of a grant the 
State receiving the grant dedicates for the cemetery land which 
it already owns, the value of the land may constitute up to 50 
percent of the State's contribution. Once that land value is so 
used, it may not constitute part of the State's contribution 
for any subsequent grant under section 2408. Under the 
amendments proposed in section 201(a) of this draft bill, a 
State would be responsible for providing any land required for 
a cemetery project, since the grant amount would no longer be 
based partly on the value of land to be acquired or dedicated 
for a cemetery.
    We believe that excluding the value of land to be acquired 
for a cemetery from the basis of a grant would encourage states 
to be active partners in the cemetery grants program. In our 
experience, no State has acquired land for a cemetery in 
connection with a grant under section 2408. In every case, the 
State has dedicated land that was donated or transferred for 
that purpose, or land that it already owned. Further, any 
reduction of the basis from which a grant is calculated may be 
offset by an increase from 50 percent to up to 100 percent in 
the proportion of the amount of a project's cost that could be 
assumed by the Federal Government. Moreover, since, under the 
proposal, a grant may cover the entire cost of improvements 
(and initial cost of equipment in certain cases), a State may 
not have to contribute cash toward the initial cost of a 
project.
    Another feature that would make grants more attractive to 
States is the inclusion in the basis of a grant of the initial 
cost of equipment necessary to operate the cemetery. Providing 
funds to acquire the equipment necessary to operate a cemetery 
will, we believe, be a critical financial incentive to 
encourage States to establish new cemeteries. Such equipment is 
as essential to the establishment of an operational cemetery as 
are the land and the improvements made on it. However, because 
our proposed amendment includes only the initial cost of 
equipment for the establishment of a cemetery, the State would 
retain the responsibility for long-term maintenance and 
operation of the cemetery, including costs associated with the 
acquisition of replacement equipment. Each Federal grant would 
assist in the establishment and activation of new veterans' 
cemeteries, or in the expansion or improvement of existing 
cemeteries, but the States would bear the costs of continuing 
operation and long-term maintenance.
    Section 201(b) of S.987 would authorize ``no-year'' 
appropriations for the State cemetery grants program. Under 
current 38 U.S.C. Sec. 2408(d), funds appropriated for State 
cemetery grants remain available only until the end of the 
second fiscal year following the fiscal year for which they are 
appropriated. However, in Public Law No. 104-204, 110 Stat. 
2874 (1996), Congress appropriated funds for State cemetery 
grants, ``to remain available until expended.'' Section 201(b) 
would amend section 2408(d) to reflect this no-year-funding 
policy.
          * * * * * * *


 s. 986 (va draft legislation proposing improvements in the home loan 
                               programs)


    Mr. Chairman, you also requested that we comment on S. 986, 
a bill that you introduced at VA's request, which would make 
certain improvements in VA's housing loan programs to save 
costs, provide management efficiencies, and extend the sunset 
on certain expiring authorities.
    More particularly, you asked that we focus our testimony on 
those provisions of S. 986 that have not already been approved 
by the Committee as part of budget reconciliation legislation. 
Thus, the following discussion is confined to sections 2, 6, 7, 
and 8 of the bill that would permanently extend several cost-
saving measures originally enacted by the Omnibus Budget 
Reconciliation Act (OBRA) of 1993, increase the funding fee for 
``vendee'' loans available to the general public, consolidate 
the funding for the housing loan program into one new account, 
extend for 2 years the pilot program for direct loans to Native 
American veterans, and make conforming and technical 
amendments.
          * * * * * * *
    Section 6 of the bill would consolidate the funding sources 
for the VA housing loan programs (except the pilot program for 
direct loans to Native American veterans) into a new fund in 
the Treasury. The consolidation would include the Direct Loan 
Revolving Fund (DLRF), the Loan Guaranty Revolving fund (LGRF), 
and the Guaranty and Indemnity Fund (GIF). Consistent with the 
Federal Credit Reform Act of 1990 (FCRA), the new Treasury 
fund, to be known as the ``Veterans Housing Benefit Program 
Fund,'' would be available, without fiscal year limitation, for 
all VA housing loan operations (except the pilot program for 
direct loans to Native American veterans). This section would 
be effective October 1, 1997.
    While having separate funds may have had some merit at one 
time, the enactment of the FCRA rendered the need for the 
separate LGRF, GIF, and DLRF unnecessary. Having three separate 
funds makes VA's accounting and budget records and procedures 
unnecessarily complex without any apparent benefit. In fact, 
the current system of breaking down costs by three funds makes 
it more difficult to determine the true cost of VA loan program 
operations. Accordingly, VA urges enactment of this provision.
          * * * * * * *
    Section 8 of the bill contains conforming amendments 
related to the consolidation of home loan funds and the 
elimination of obsolete language, such as references to 
participation certificates under section 3720 which have not 
been sold since the 1960s and to provisions repealed by 
implication by the FCRA. VA believes these amendments to be 
necessary for the maintenance of a current title 38.


      committee print--technical amendments to pub. l. no. 104-275


    This draft bill would make technical amendments to several 
provisions of title 38, United States Code. Our General Counsel 
has reviewed each of these for technical accuracy and we 
support their enactment.


committee print--codification of 1997 cost-of-living adjustment enacted 
                         by pub. l. no. 104-263


    This draft bill would amend pertinent provisions of title 
38, United States Code, to reflect the current rates of 
disability compensation and dependency and indemnity 
compensation (DIC) which became effective on December 1, 1996. 
These rates reflect the most recent cost-of-living adjustment 
in these rates as authorized by Pub. L. No. 104-263. We support 
the enactment of this proposal.
          * * * * * * *
    Thank you, again, Mr. Chairman, for seeking our views on 
each of the measures on today's agenda. We will be pleased to 
respond to questions you or other Members of the Committee may 
have regarding this testimony.
          * * * * * * *

  Statement of Thomas L. Garthwaite, M.D., Deputy Under Secretary for 
         Health, Department of Veterans Affairs, July 25, 1997

    Mr. Chairman and Members of the Committee: I am pleased to 
be here to discuss the array of bills being considered by the 
Committee. Included is S. 801, a bill that would make changes 
in procedures for resolving complaints of employment 
discrimination and sexual harassment, S. 999, a bill pertaining 
to setting standards for how frequently we should offer 
mammograms to women veterans, and a draft bill that would 
change our health care resource allocation system. You also 
asked that we comment on a bill making technical amendments to 
the eligibility legislation enacted last year, a bill extending 
a number of expiring authorities, a draft bill containing 
authorizations for constructions projects, and finally, S. 309, 
a bill pertaining to parking fees at a VA facility in Hawaii.
          * * * * * * *


            draft bill--technical amendments to p.l. 104-262


    Also before you today is a draft bill that would make a 
number of technical and relatively minor amendments to the 
eligibility reform law that Congress enacted last Fall. We 
reviewed all of the proposed changes and they appear to be 
warranted. Accordingly, we support enactment of the bill.
          * * * * * * *


  draft bill--authorization of major va medical facility projects and 
                                 leases


    The final draft bill on today's agenda would authorize VA 
to carryout a major medical facility construction project and 
to enter into major medical facility leases. We support the 
enactment of the bill.
    First, it would authorize the construction of a seismic 
corrections project in Memphis, Tennessee, in the amount of 
$107,600,000. It would allow the major medical facility project 
to be deemed fully authorized if the amount of funds 
appropriated for fiscal year 1998 or 1999 for design and 
partial construction is less than the amount required to 
complete the construction of the project as authorized and if 
the Secretary obligates funds for such construction of the 
major medical facility. Such authorization shall cease to have 
effect at the close of fiscal year 2002.
    The draft bill would also authorize seven leases. Two of 
the leases are for information resources management field 
offices. One would be in Birmingham, Alabama, in an amount not 
to exceed $595,000. The second would be in Salt Lake City, 
Utah, in an amount not to exceed $652,000. The other five 
leases are all for satellite outpatient clinics. They include a 
clinic in Jacksonville, Florida, in an amount not to exceed 
$3,095,000; a clinic in Boston, Massachusetts, in an amount not 
to exceed $5,215,000; a clinic in Canton, Ohio, in an amount 
not to exceed $735,000; a clinic in Tulsa, Oklahoma, in an 
amount not to exceed $2,112,000; and a clinic in Portland, 
Oregon, in an amount not to exceed $1,919,000.
    The draft bill would authorize for appropriation for fiscal 
years 1998 and 1999, $34,600,000 for the construction project, 
and $14,323,000 for the leases. It would also allow the 
construction to be carried out by (1) using funds appropriated 
for fiscal year 1998 or fiscal year 1999 consistent with the 
authorization of appropriations in the bill; (2) using funds 
appropriated for major construction projects for a fiscal year 
before fiscal year 1998 that remain available for obligation; 
and (3) funds appropriated for major construction projects for 
fiscal years 1998 or 1999 for a category of activity not 
specific to a project.
    Mr. Chairman, this ends my statement. I will be pleased to 
answer any questions you may have.

          Changes in Existing Law Made by S. 986, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the Committee bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE

          * * * * * * *

                       PART II--GENERAL BENEFITS

   CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

          * * * * * * *

             Subchapter II--Wartime Disability Compensation

          * * * * * * *

Sec. 1114. Rates of wartime disability compensation

    For the purposes of section 1110 of this title--
          (a) if and while the disability is rated 10 percent 
        the monthly compensation shall be [$87] $94;
          (b) if and while the disability is rated 20 percent 
        the monthly compensation shall be [$166] $179;
          (c) if and while the disability is rated 30 percent 
        the monthly compensation shall be [$253] $274;
          (d) if and while the disability is rated 40 percent 
        the monthly compensation shall be [$361] $391;
          (e) if and while the disability is rated 50 percent 
        the monthly compensation shall be [$515] $558;
          (f) if and while the disability is rated 60 percent 
        the monthly compensation shall be [$648] $703;
          (g) if and while the disability is rated 70 percent 
        the monthly compensation shall be [$819] $887;
          (h) if and while the disability is rated 80 percent 
        the monthly compensation shall be [$948] $1,028;
          (i) if and while the disability is rated 90 percent 
        the monthly compensation shall be [$1,067] $1,157;
          (j) if and while the disability is rated as total the 
        monthly compensation shall be [$1,774] $1,924;
          (k) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of one or more creative organs, or one 
        foot, or one hand, or both buttocks, or blindness of 
        one eye, having only light perception, or has suffered 
        complete organic aphonia with constant inability to 
        communicate by speech, or deafness of both ears, having 
        absence of air and bone conduction, the rate of 
        compensation therefor shall be [$70] $74 per month for 
        each such loss or loss of use independent of any other 
        compensation provided in subsections (a) through (j) or 
        subsection (s) of this section but in no event to 
        exceed [$2,207] $2,393 per month; and in the event the 
        veteran has suffered one or more of the disabilities 
        heretofore specified in this subsection, in addition to 
        the requirement for any of the rates specified in 
        subsections (l) through (n) of this section, the rate 
        of compensation shall be increased by [$70] $74 per 
        month for each such loss or loss of use, but in no 
        event to exceed [$3,093] $3,356 per month;
          (l) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both feet, or of one hand and one 
        foot, or is blind in both eyes, with 5/200 visual 
        acuity or less, or is permanently bedridden or so 
        helpless as to be in need of regular aid and 
        attendance, the monthly compensation shall be [$2,207] 
        $2,393;
          (m) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both hands, or of both legs at a 
        level, or with complications, preventing natural knee 
        action with prostheses in place, or of one arm and one 
        leg at levels, or with complications, preventing 
        natural elbow and knee action with prostheses in place, 
        or has suffered blindness in both eyes having only 
        light perception, or has suffered blindness in both 
        eyes, rendering such veteran so helpless as to be in 
        need of regular aid and attendance, the monthly 
        compensation shall be [$2,432] $2,639;
          (n) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both arms at levels, or with 
        complications, preventing natural elbow action with 
        prostheses in place, has suffered the anatomical loss 
        of both legs so near the hip as to prevent the use of 
        prosthetic appliances, or has suffered the anatomical 
        loss of one arm and one leg so near the shoulder and 
        hip as to prevent the use of prosthetic appliances, or 
        has suffered the anatomical loss of both eyes, or has 
        suffered blindness without light perception in both 
        eyes, the monthly compensation shall be [$2,768] 
        $3,003;
          (o) if the veteran, as the result of service-
        connected disability, has suffered disability under 
        conditions which would entitle such veteran to two or 
        more of the rates provided in one or more subsections 
        (l) through (n) of this section, no condition being 
        considered twice in the determination, or if the 
        veteran has suffered bilateral deafness (and the 
        hearing impairment in either one or both ears is 
        service connected) rated at 60 percent or more 
        disabling and the veteran has also suffered service-
        connected total blindness with 5/200 visual acuity or 
        less, or if the veteran has suffered service-connected 
        total deafness in one ear or bilateral deafness (and 
        the hearing impairment in either one or both ears is 
        service connected) rated at 40 percent or more 
        disabling and the veteran has also suffered service-
        connected blindness having only light perception or 
        less, or if the veteran has suffered the anatomical 
        loss of both arms so near the shoulder as to prevent 
        the use of prosthetic appliances, the monthly 
        compensation shall be [$3,093] $3,356;
          (p) in the event the veteran's service-connected 
        disabilities exceed the requirements for any of the 
        rates prescribed in this section, the Secretary may 
        allow the next higher rate or an intermediate rate, but 
        in no event in excess of [$3,093] $3,356. In the event 
        the veteran has suffered service-connected blindness 
        with 5/200 visual acuity or less and (1) has also 
        suffered bilateral deafness (and the hearing impairment 
        in either one or both ears is service connected) rated 
        at no less than 30 percent disabling, the Secretary 
        shall allow the next higher rate, or (2) has also 
        suffered service-connected total deafness in one ear or 
        service-connected anatomical loss or loss of use of one 
        hand or one foot, the Secretary shall allow the next 
        intermediate rate, but in no event in excess of 
        [$3,093] $3,356. In the event the veteran has suffered 
        service-connected blindness, having only light 
        perception or less, and has also suffered bilateral 
        deafness (and the hearing impairment in either one or 
        both ears is service connected) rated at 10 or 20 
        percent disabling, the Secretary shall allow the next 
        intermediate rate, but in no event in excess of 
        [$3,093] $3,356. In the event the veteran has suffered 
        the anatomical loss or loss of use, or a combination of 
        anatomical loss and loss of use, of three extremities, 
        the Secretary shall allow the next higher rate or 
        intermediate rate, but in no event in excess of 
        [$3,093] $3,356. Any intermediate rate under this 
        subsection shall be established at the arithmetic mean, 
        rounded down to the nearest dollar, between the two 
        rates concerned;
          [(q) * * *]
          (r) Subject to section 5503(e) of this title, if any 
        veteran, otherwise entitled to compensation authorized 
        under subsection (o) of this section, at the maximum 
        rate authorized under subsection (p) of this section, 
        or at the intermediate rate authorized between the 
        rates authorized under subsections (n) and (o) of this 
        section and at the rate authorized under subsection (k) 
        of this section, is in need of regular aid and 
        attendance, then, in addition to such compensation--
                  (1) the veteran shall be paid a monthly aid 
                and attendance allowance at the rate of 
                [$1,328] $1,441; or
                  (2) if the veteran, in addition to such need 
                for regular aid and attendance, is in need of a 
                higher level of care, such veteran shall be 
                paid a monthly aid and attendance allowance at 
                the rate of [$1,978] $2,145, in lieu of the 
                allowance authorized in clause (1) of this 
                subsection, if the Secretary finds that the 
                veteran, in the absence of the provision of 
                such care, would require hospitalization, 
                nursing home care, or other residential 
                institutional care. For the purposes of clause 
                (2) of this subsection, need for a higher level 
                of care shall be considered to be need for 
                personal health-care services provided on a 
                daily basis in the veteran's home by a person 
                who is licensed to provide such services or who 
                provides such services under the regular 
                supervision of a licensed health-care 
                professional. The existence of the need for 
                such care shall be determined by a physician 
                employed by the Department or, in areas where 
                no such physician is available, by a physician 
                carrying out such function under contract or 
                fee arrangement based on an examination by such 
                physician. For the purposes of section 1134 of 
                this title, such allowance shall be considered 
                as additional compensation payable for 
                disability.
          (s) If the veteran has a service-connected disability 
        rated as total, and
                  (1) has additional service-connected 
                disability or disabilities independently 
                ratable at 60 percent or more, or,
                  (2) by reason of such veteran's service-
                connected disability or disabilities, is 
                permanently housebound, then the monthly 
                compensation shall be [$1,985] $2,154. For the 
                purposes of this subsection, the requirement of 
                ``permanently housebound'' will be considered 
                to have been met when the veteran is 
                substantially confined to such veteran's house 
                (ward or clinical areas, if institutionalized) 
                or immediate premises due to a service-
                connected disability or disabilities which it 
                is reasonably certain will remain throughout 
                such veteran's lifetime.

Sec. 1115. Additional compensation for dependents

    Any veteran entitled to compensation at the rates provided 
in section 1114 of this title, and whose disability is rated 
not less than 30 percent, shall be entitled to additional 
compensation for dependents in the following monthly amounts:
          (1) If and while rated totally disabled and--
                  (A) has a spouse but no child, [$105] $112;
                  (B) has a spouse and one or more children, 
                [$178] $191 plus [$55] $59 for each child in 
                excess of one;
                  (C) has no spouse but one or more children, 
                [$72] $77 plus [$55] $59 for each child in 
                excess of one;
                  (D) has a parent dependent upon such veteran 
                for support, then, in addition to the above 
                amounts, [$84] $91 for each parent so 
                dependent;
                  (E) notwithstanding the other provisions of 
                this paragraph, the monthly payable amount on 
                account of a spouse who is (i) a patient in a 
                nursing home or (ii) helpless or blind, or so 
                nearly helpless or blind as to need or require 
                the regular aid and attendance of another 
                person, shall be [$195] $211 for a totally 
                disabled veteran and proportionate amounts for 
                partially disabled veterans in accordance with 
                paragraph (2) of this section; and
                  (F) notwithstanding the other provisions of 
                this paragraph, the monthly amount payable on 
                account of each child who has attained the age 
                of eighteen years and who is pursuing a course 
                of instruction at an approved educational 
                institution shall be [$164] $177 for a totally 
                disabled veteran and proportionate amounts for 
                partially disabled veterans in accordance with 
                paragraph (2) of this section.
          * * * * * * *

Sec. 1162. Clothing allowance

    The Secretary under regulations which the Secretary shall 
prescribe, shall pay a clothing allowance of [$478] $518 per 
year to each veteran who--
          (1) * * *
          * * * * * * *

CHAPTER 13--DEPENDENCY AND INDEMNITY COMPENSATION FOR SERVICE-CONNECTED 
                                 DEATHS

          * * * * * * *

         Subchapter II--Dependency and Indemnity Compensations

          * * * * * * *

Sec. 1311. Dependency and indemnity compensation to a surviving spouse

    (a)(1) Dependency and indemnity compensation shall be paid 
to a surviving spouse at the monthly rate of [$769] $833.
    (2) The rate under paragraph (1) shall be increased by 
[$169] $182 in the case of the death of a veteran who at the 
time of death was in receipt of or was entitled to receive (or 
but for the receipt of retired pay or retirement pay was 
entitled to receive) compensation for a service-connected 
disability that was rated totally disabling for a continuous 
period of at least eight years immediately preceding death. In 
determining the period of a veteran's disability for purposes 
of the preceding sentence, only periods in which the veteran 
was married to the surviving spouse shall be considered.
    (3) In the case of dependency and indemnity compensation 
paid to a surviving spouse that is predicated on the death of a 
veteran before January 1, 1993, the monthly rate of such 
compensation shall be the amount based on the pay grade of such 
veteran, as set forth in the following table, if the amount is 
greater than the total amount determined with respect to that 
veteran under paragraphs (1) and (2):

                                                                        
                                 Monthly                       Monthly  
          [Pay grade               rate        Pay grade         rate   
                                                                        
E-7..........................         $794  O-3............         $897
E-8..........................          838  O-4............          948
E-9..........................      \1\ 875  O-5............        1,044
W-1..........................          812  O-6............        1,177
W-2..........................          844  O-7............        1,271
W-3..........................          869  O-8............        1,392
W-4..........................          920  O-9............        1,492
O-1..........................          812  O-10...........    \2\ 1,636
O-2..........................         838                               
                                                                        
\1\ If the veteran served as sergeant major of the Army, senior enlisted
  advisor of the Navy, chief master sergeant of the Air Force, sergeant 
  major of the Marine Corps, or master chief petty officer of the Coast 
  Guard, at the applicable time designated by section 1302 of this      
  title, the surviving spouse's rate shall be $943.                     
\2\ If the veteran served as Chairman or Vice-Chairman of the Joint     
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval           
  Operations, Chief of Staff of the Air Force, Commandant of the Marine 
  Corps, or Commandant of the Coast Guard, at the applicable time       
  designated by section 1302 of this title, the surviving spouse's rate 
  shall be $1,753.]                                                     


                                                                        
                                 Monthly                       Monthly  
          Pay grade                rate        Pay grade         rate   
                                                                        
E-7..........................         $861  O-3............         $972
E-8..........................          909  O-4............        1,028
E-9..........................      \1\ 949  O-5............        1,132
W-1..........................          880  O-6............        1,276
W-2..........................          915  O-7............        1,378
W-3..........................          943  O-8............        1,510
W-4..........................          997  O-9............        1,618
O-1..........................          880  O-10...........    \2\ 1,774
O-2..........................         909                               
                                                                        
\1\ If the veteran served as sergeant major of the Army, senior enlisted
  advisor of the Navy, chief master sergeant of the Air Force, sergeant 
  major of the Marine Corps, or master chief petty officer of the Coast 
  Guard, at the applicable time designated by section 1302 of this      
  title, the surviving spouse's rate shall be $1,023.                   
\2\ If the veteran served as Chairman or Vice-Chairman of the Joint     
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval           
  Operations, Chief of Staff of the Air Force, Commandant of the Marine 
  Corps, or Commandant of the Coast Guard, at the applicable time       
  designated by section 1302 of this title, the surviving spouse's rate 
  shall be $1,902.                                                      

    (b) If there is a surviving spouse with one or more 
children below the age of eighteen of a deceased veteran, the 
dependency and indemnity compensation paid monthly to the 
surviving spouse shall be increased by [$100 for each such 
child during fiscal year 1993, $150 for each such child during 
fiscal year 1994, and $200 for each such child thereafter] $211 
for each such child.
    (c) The monthly rate of dependency and indemnity 
compensation payable to a surviving spouse shall be increased 
by [$195] $211 if the spouse is (1) a patient in a nursing home 
or (2) helpless or blind, or so nearly helpless or blind as to 
need or require the regular aid and attendance of another 
person.
    (d) The monthly rate of dependency and indemnity 
compensation payable to a surviving spouse shall be increased 
by [$95] $102 if the surviving spouse is, by reason of 
disability, permanently housebound but does not qualify for the 
aid and attendance allowance under subsection (c) of this 
section. For the purposes of this subsection, the requirement 
of ``permanently housebound'' will be considered to have been 
met when the surviving spouse is substantially confined to such 
surviving spouse's home (ward or clinical areas, if 
institutionalized) or immediate premises by reason of a 
disability or disabilities which it is reasonably certain will 
remain throughout such surviving spouse's lifetime.
          * * * * * * *

Sec. 1313. Dependency and indemnity compensation to children

     (a) Whenever there is no surviving spouse of a deceased 
veteran entitled to dependency and indemnity compensation, 
dependency and indemnity compensation shall be paid in equal 
shares to the children of the deceased veteran at the following 
monthly rates:
          (1) one child, [$327] $354;
          (2) two children, [$471] $510;
          (3) three children, [$610] $662; and
          (4) more than three children, [$610] $662, plus 
        [$120] $130 for each child in excess of three.
    (b) * * *

Sec. 1314. Supplemental dependency and indemnity compensation to 
                    children

     (a) In the case of a child entitled to dependency and 
indemnity compensation who has attained the age of eighteen and 
who, while under such age, became permanently incapable of 
self-support, the dependency and indemnity compensation paid 
monthly to such child shall be increased by [$195] $211.
    (b) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's decreased spouse) who has attained the age of 
eighteen and who, while under such age, became permanently 
incapable of self-support, dependency and indemnity 
compensation shall be paid monthly to each such child, 
concurrently with the payment of dependency and indemnity 
compensation to the surviving spouse, in the amount of [$327] 
$354.
    (c) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's deceased spouse), who has attained the age of 
eighteen and who, while under the age of twenty-three, is 
pursuing a course of instruction at an educational institution 
approved under section 104 of this title, dependency and 
indemnity compensation shall be paid monthly to each such 
child, concurrently with the payment of dependency and 
indemnity compensation to the surviving spouse, in the amount 
of [$166] $179.
          * * * * * * *

   CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE

          * * * * * * *

 Subchapter II--Hospital, Nursing Home or Domiciliary Care and Medical 
                               Treatment

Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care

    (a)(1) * * *
          * * * * * * *
    (2) The Secretary (subject to paragraph (4)) shall furnish 
hospital care and medical services, and may furnish nursing 
home care, which the Secretary determines to be needed to any 
veteran--
           (A) * * *
          (B) whose discharge or release from active military, 
        naval, or air service was for a [compensable] 
        disability that was incurred or aggravated in the line 
        of duty;
          * * * * * * *

Sec. 1717. Home health services; invalid lifts and other devices

    (a)(1) As part of medical services furnished to a veteran 
under section 1710(a) of this title, the Secretary may furnish 
such home health services as the Secretary finds to be 
necessary or appropriate for the effective and economical 
treatment of the [veteran's disability] veteran.
    (2) Improvements and structural alterations may be 
furnished as part of such home health services only as 
necessary to assure the continuation of treatment for the 
veteran's disability or to provide access to the home or to 
essential lavatory and sanitary facilities. The cost of such 
improvements and structural alterations (or the amount of 
reimbursement therefor) under this subsection may not exceed--
          (A) $4,100 in the case of medical services furnished 
        under section 1710(a)(1) of this title, or for a 
        disability described in section 1710(a)(2)(C) of this 
        title; or
          (B) $1,200 in the case of medical services furnished 
        under any other provision of [section 1710(a)(2)] 
        section 1710(a) of this title.
          * * * * * * *

Sec. 1720. Transfers for nursing home care; adult day health care

    (a)(1) Subject to subsection (b) of this section, the 
Secretary may transfer to a non-Department nursing home, for 
care at the expense of the United States--
          (A) a veteran
                  (i) who has been furnished [hospital care, 
                nursing home care, or domiciliary care] care by 
                the Secretary in a facility under the direct 
                jurisdiction of the Secretary; and
                  (ii) * * *
          * * * * * * *

                       CHAPTER 23--BURIAL BENEFITS

          * * * * * * *

Sec. 2303. Death in Department facility; plot allowance

    (a)(1) * * *
          * * * * * * *
    (2) A facility described in this paragraph is--
          (A) [a Department facility (as defined in section 
        1701(4) of this title)] a facility of the Department 
        (as defined in section 1701(3) of this title) to which 
        the deceased was properly admitted for hospital, 
        nursing home, or domiciliary care under section 1710 or 
        1711(a) of this title; or
          (B) * * *
          * * * * * * *

             CHAPTER 24--NATIONAL CEMETERIES AND MEMORIALS

          * * * * * * *

Sec. 2408. Aid to States for establishment, expansion, and improvement 
                    of veterans' cemeteries

    (a)(1) * * *
          * * * * * * *
    (b) Grants under this section shall be subject to the 
following conditions:
          [(1) The amount of any grant under this section may 
        not exceed an amount equal to 50 percent of the total 
        of the value of the land to be acquired or dedicated 
        for the cemetery and the cost of the improvements to be 
        made on such land, with the remaining amount to be 
        contributed by the State receiving the grant.
          [(2) If at the time of a grant under this section the 
        State receiving the grant dedicates for the purposes of 
        the cemetery involved land already owned by the State, 
        the value of such land may be considered in determining 
        the amount of the State's contribution under paragraph 
        (1) of this subsection, but the value of such land may 
        not be used for more than an amount equal to 50 percent 
        of the amount of such contribution and may not be used 
        as part of such State's contribution for any subsequent 
        grant under this section.]
          (1) The amount of any grant under this section may 
        not exceed the following:
                  (A) In the case of a grant for the 
                establishment of a new cemetery, an amount 
                equal to the total of--
                          (i) the cost of improvements to be 
                        made on the land to be acquired or 
                        dedicated for the cemetery; and
                          (ii) the initial cost of equipment 
                        necessary to operate the cemetery.
                  (B) In the case of a grant for the expansion 
                or improvement of an existing cemetery, an 
                amount equal to the total of--
                          (i) the cost of improvements to be 
                        made on any land to be added to the 
                        cemetery; and
                          (ii) the cost of any improvements to 
                        be made to the existing cemetery.
          (2) If the amount of a grant for a cemetery under 
        this section is less than the amount of the costs with 
        respect to the cemetery described in the applicable 
        subparagraph of paragraph (1) of this subsection, the 
        State receiving the grant shall contribute the amount 
        by which such costs exceed the amount of the grant less 
        the value of any land acquired or dedicated by the 
        State for the cemetery.
          (3) * * *
          * * * * * * *

     CHAPTER 30--ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM

          * * * * * * *

              Subchapter II--Basic Educational Assistance

          * * * * * * *

Sec. 3015. Amount of basic educational assistance

    (a) * * *
          * * * * * * *
    (e)[(1) Subject to paragraph (2)] (1)(A) Except as provided 
in subparagraph (B) of this paragraph and subject to paragraph 
(2) of this subsection, in the case of an individual who on 
December 31, 1989, was entitled to educational assistance under 
chapter 34 of this title, the rate of the basic educational 
assistance allowance applicable to such individual under this 
chapter shall be increased by the amount equal to one-half of 
the educational assistance allowance that would be applicable 
to such individual under such chapter 34 (as of the time the 
assistance under this chapter is provided and based on the 
rates in effect on December 31, 1989) if such chapter were in 
effect.
    (B) Notwithstanding subparagraph (A) of this paragraph, in 
the case of an individual described in that subparagraph who is 
pursuing a cooperative program on or after October 9, 1996, the 
rate of the basic educational assistance allowance applicable 
to such individual under this chapter shall be increased by the 
amount equal to one-half of the educational assistance 
allowance that would be applicable to such individual for 
pursuit of full-time institutional training under chapter 34 
(as of the time the assistance under this chapter is provided 
and based on the rates in effect on December 31, 1989) if such 
chapter were in effect.
    (2) * * *
          * * * * * * *

Sec. 3018C. Opportunity for certain VEAP participants to enroll

    (a) Notwithstanding any other provision of law, an 
individual who--
          (1) is a participant on [the date of the enactment of 
        the Veterans' Benefits Improvements Act of 1996] 
        October 9, 1996, in the educational benefits program 
        provided by chapter 32 of this title;
          (2) * * *
          * * * * * * *
          (4) if discharged or released from active duty 
        [during the one-year period specified] after the date 
        on which the individual makes the election described in 
        paragraph (5), is discharged or released therefrom with 
        an honorable discharge; and
          (5) during the one-year period beginning on [the date 
        of the enactment of the Veterans' Benefits Improvements 
        Act of 1996] October 9, 1996, makes an irrevocable 
        election to receive benefits under this section in lieu 
        of benefits under chapter 32 of this title, pursuant to 
        procedures which the Secretary of each military 
        department shall provide in accordance with regulations 
        prescribed by the Secretary of Defense for the purpose 
        of carrying out this section or which the Secretary of 
        Transportation shall provide for such purpose with 
        respect to the Coast Guard when it is not operating as 
        a service in the Navy, may elect to become entitled to 
        basic educational assistance under this chapter.
    (b) * * *
          * * * * * * *

           CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS

                 Subchapter I--State Approving Agencies

          * * * * * * *

Sec. 3680A. Disapproval of enrollment in certain courses

    (a) The Secretary shall not approve the enrollment of an 
eligible veteran in--
          (1) * * *
          * * * * * * *
          (4) any independent study program except an 
        accredited independent study program (including open 
        circuit television) leading to a standard college 
        degree.
    (b) * * *
          * * * * * * *
    (g) Notwithstanding [subsections (e) and (f)] subsections 
(e) and (f)(1), the Secretary may approve the enrollment of an 
eligible veteran in a course approved under this chapter if the 
course is offered by an educational institution under contract 
with the Department of Defense or the Department of 
Transportation and is given on or immediately adjacent to a 
military base, Coast Guard station, National Guard facility, or 
facility of the Selected Reserve.
          * * * * * * *

              CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

                         Subchapter I--General

Sec. 3701. * * *
          * * * * * * *

               Subchapter III--Administrative Provisions

3720. * * *
     * * * * * * *
[3722. [REPEALED.]]
[3723. Direct loan revolving fund.]
[3724. Loan Guaranty Revolving Fund.]
[3725. Guaranty and Indemnity Fund.]
3722. Veterans Housing Benefits Programs Fund.
3726. * * *
     * * * * * * *
3734. Annual submission of information on [the Loan Guaranty Revolving 
          Fund and the Guaranty and Indemnity Fund] the Veterans Housing 
          Benefits Programs Fund.
3735. * * *
     * * * * * * *

Sec. 3711. Direct loans to veterans

    (a) * * *
          * * * * * * *
    (k) Without regard to any other provision of this chapter, 
the Secretary may take or cause to be taken such action as in 
the Secretary's judgment may be necessary or appropriate for or 
in connection with the custody, management, protection, and 
realization or sale of investments under this section, may 
determine the Secretary's necessary expenses and expenditures, 
and the manner in which the same shall be incurred, allowed and 
paid, may make such rules, regulations, and orders as the 
Secretary may deem necessary or appropriate for carrying out 
the Secretary's functions under this section [and section 3723 
of this title] and, except as otherwise expressly provided in 
this chapter, may employ, utilize, compensate, and, to the 
extent not inconsistent with the Secretary's basic 
responsibilities under this chapter, delegate any of the 
Secretary's functions under this section [and section 3723 of 
this title] to such persons and such corporate or other 
agencies, including agencies of the United States, as the 
Secretary may designate.

               Subchapter III--Administrative Procedures

Sec. 3720. Powers of Secretary

    (a) * * *
          * * * * * * *
    (e)(1) * * *
    (2) The Secretary shall [proportionately allocate and 
deposit the entire proceeds received from the sale of 
participations into the funds established pursuant to sections 
3723 and 3724 of this chapter, as determined on an estimated 
basis,] deposit the entire proceeds received from the sale of 
participations under this subsection into the Veterans Housing 
Benefits Programs Fund established by section 3722 of this 
title and the amounts so deposited shall be available for the 
purposes of [the funds] the fund. The Secretary may 
nevertheless make such allocations of that part of the proceeds 
of participation sales representing anticipated interest 
collections on mortgage loans, including installment sale 
contracts, on other than an estimated proportionate basis if 
determined necessary to assure payment of interest on advances 
theretofore made to the Secretary by the Secretary of the 
Treasury for direct loan purposes. The Secretary shall set 
aside and maintain necessary reserves [in the funds established 
pursuant to sections 3723 and 3724 of this chapter] the 
Veterans Housing Benefits Programs Fund to be used for meeting 
commitments pursuant to this subsection and, as the Secretary 
determines to be necessary, for meeting interest payments on 
advances by the Secretary of the Treasury for direct loan 
purposes.
    (f) * * *
          * * * * * * *

Sec. 3722. Veterans Housing Benefits Programs Fund

    (a) There is established on the books of the Treasury of 
the United States a fund to be known as the Veterans Housing 
Benefits Programs Fund (in this section referred to as the 
`Fund').
    (b) There shall be deposited in the Fund the following:
          (1) Any unobligated funds as of October 1, 1997, in 
        the direct loan revolving fund under section 3723 of 
        this title.
          (2) Any unobligated funds as of October 1, 1997, in 
        the Department of Veterans Affairs Loan Guaranty 
        Revolving Fund established by section 3724 of this 
        title.
          (3) Any unobligated funds as of October 1, 1997, in 
        the Guaranty and Indemnity Fund established by section 
        3725 of this title.
          (4) Any amounts appropriated to the Fund.
          (5) Any fees collected by the Secretary after 
        September 30, 1997, under section 3729 of this title, 
        or under any other provision of law or regulation 
        prescribed by the Secretary that imposes fees on 
        persons participating in any housing loan program under 
        subchapter I, II, or III of this chapter.
          (6) Any other amounts collected or received by the 
        Secretary after September 30, 1997, as a result of 
        activities under the housing loan programs under 
        subchapter I, II, or III of this chapter, including--
                  (A) collections of principal and interest on 
                housing loans made by the Secretary under such 
                programs;
                  (B) proceeds from the sale, rental, use, or 
                other disposition of property acquired under 
                such programs;
                  (C) proceeds from the sale of loans under 
                section 3720(h) or 3733(a)(3) of this title; 
                and
                  (D) penalties collected under section 
                3710(g)(4)(B) of this title.
    (d) Subject to the provisions of the Federal Credit Reform 
Act of 1990 (2 U.S.C. 661 et seq.), amounts in the Fund shall 
be available to the Secretary, without fiscal year limitation, 
for all housing loan operations and housing loan guaranty and 
insurance operations under subchapter I, II, or III of this 
chapter.
          * * * * * * *

Sec. 3733. Property management

    (a)(1) * * *
          * * * * * * *
    (6) The Secretary shall make a loan to finance the sale of 
real property described in paragraph (1) of this subsection at 
an interest rate that is lower than the prevailing mortgage 
market interest rate in areas where, and to the extent, the 
Secretary determines, in light of prevailing conditions in the 
real estate market involved, that such lower interest rate is 
necessary in order to market the property competitively and is 
in the interest of the long-term stability and solvency of [the 
Department of Veterans Affairs Loan Guaranty Revolving Fund 
established by section 3724(a)] the Veterans Housing Benefits 
Programs Fund established by section 3722 of this title.
    (b) * * *
          * * * * * * *

Sec. 3734. Annual submission of information on the Loan Guaranty 
                    Revolving Fund and the Guaranty and Indemnity Fund

    (a) In the documents providing detailed information on the 
budget for the Department of Veterans Affairs that the 
Secretary submits to the Congress in conjunction with the 
President's budget submission for each fiscal year pursuant to 
section 1105 of title 31, United States Code, the Secretary 
shall include--
          (1) a description of the operations of [the Loan 
        Guaranty Revolving Fund and the Guaranty and Indemnity 
        Fund] the Veterans Housing Benefits Programs Fund 
        during the fiscal year preceding the fiscal year in 
        which such budget is submitted; and
          (2) * * *
          * * * * * * *

Sec. 3735. Housing assistance for homeless veterans

    (a)(1) * * *
          * * * * * * *
    (3) The Secretary may enter into an agreement under 
paragraph (1) of this subsection only if--
          (A) the Secretary determines that such an action will 
        not adversely affect the ability of the Department--
                  (i) to fulfill its statutory missions with 
                respect to the Department loan guaranty program 
                and the short- and long-term solvency of [the 
                Loan Guaranty Revolving Fund and the Guaranty 
                and Indemnity Fund] the Veterans Housing 
                Benefits Programs Fund under this chapter; or
                  (ii) * * *
          * * * * * * *

          CHAPTER 53--SPECIAL PROVISIONS RELATING TO BENEFITS

Sec. 5301. * * *
     * * * * * * *
5304A. Recoupment of special separation benefits from compensation: 
          limitation.
     * * * * * * *

Sec. 5304A. Recoupment of special separation benefits from 
                    compensation: limitation

    In the case of a veteran with a service-connected 
disability who is entitled to compensation and who is paid 
special separation benefits under section 1174a of title 10, 
the amount of compensation otherwise payable to that veteran 
that is deducted pursuant to section 1174a(g) of title 10 by 
reason of the payment to that veteran of such benefits may not 
exceed 75 percent of the total amount of the benefits paid to 
the veteran.
          * * * * * * *

Sec. 5310. Payment of benefits for month of death

    (a) * * *
    (b)(1) * * *
    (2) If (notwithstanding section 5112(b)(1) of this title) a 
check or other payment is issued to, and in the name of, the 
deceased veteran as a benefit payment under chapter 11 or 15 of 
this title for the month in which death occurs, that check or 
other payment (A) shall be treated for all purposes as being 
payable to the surviving spouse, and (B) if that check or other 
payment is negotiated or deposited, shall be considered to be 
the benefit to which the surviving spouse is entitled [under 
this paragraph] under paragraph (1). However, if such check or 
other payment is in an amount less than the amount of the 
benefit under paragraph (1), the unpaid amount shall be treated 
in the same manner as an accrued benefit under section 5121 of 
this title.
          * * * * * * *

              CHAPTER 77--VETERANS BENEFITS ADMINISTRATION

                  Subchapter I--Organization; General

Sec. 7701. * * *
     * * * * * * *
7704. Reimbursement for compensation and pension medical examinations.
     * * * * * * *

                  Subchapter I--Organization; General

          * * * * * * *

Sec. 7703. Functions of the Administration

          * * * * * * *

Sec. 7704. Reimbursement for compensation and pension medical 
                    examinations

    (a) Reimbursement.--The Under Secretary for Benefits may 
reimburse the Under Secretary for Health for costs incurred by 
the Under Secretary of Health for the conduct of medical 
examinations requested by the Under Secretary for Benefits in 
connection with claims for benefits under this title.
    (b) Source of Funds.--Reimbursements under this section 
shall be made from amounts available to the Secretary for 
payment of general operating expenses.
          * * * * * * *

   CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY 
    FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL 
                                PROPERTY

          * * * * * * *

     Subchapter IV--Sharing of Medical Facilities, Equipment, and 
                              Information

          * * * * * * *

Sec. 8153. Sharing of health-care resources

    (a)(1) * * *
          * * * * * * *
    (3)(A) If the health-care resource required is a commercial 
service, the use of medical equipment or space, or research, 
and is to be acquired from an institution affiliated with the 
Department in accordance with section 7302 of this title, 
including medical practice groups and other entities associated 
with affiliated institutions, blood banks, organ banks, or 
research centers, the Secretary may make arrangements for 
acquisition of the resource without regard to any law or 
regulation (including any Executive order, circular, or other 
administrative policy) that would otherwise require the use of 
competitive procedures for acquiring the resource.
    (B)(i) * * *
    (ii) The Secretary, in consultation with the Administrator 
for Federal Procurement Policy, may prescribe simplified 
procedures for the procurement of health-care resources under 
this subparagraph. The Secretary shall publish such procedures 
for public comment in accordance with section 22 of the Office 
of Federal Procurement Policy Act (41 U.S.C. 418b). Such 
procedures shall permit all responsible sources, as 
appropriate, to submit a bid, proposal, or quotation (as 
appropriate) for the resources to be procured and provide for 
the consideration by the Department of bids, proposals, or 
quotations so submitted.
          * * * * * * *
    (e) The Secretary may make an arrangement that authorizes 
the furnishing of services by the Secretary under this section 
to individuals who are not veterans only if the Secretary 
determines--
          [(1) that veterans will receive priority under such 
        an arrangement; and]
          (1) that care to veterans will not be diminished as a 
        result of such an arrangement; and
          * * * * * * *