Veterans' Benefits: More Transparency Needed to Improve Oversight
of VBA's Compensation and Pension Staffing Levels (15-NOV-04,
GAO-05-47).
The Chairman and Ranking Minority Member, Senate Committee on
Veterans' Affairs, asked GAO to assist the committee in its
oversight of the Veterans Benefits Administration's (VBA)
disability compensation and pension programs. This report
examines (1) VBA's determination and justification of claims
processing staffing levels, and the role of productivity in such
determinations, and (2) VBA's projections of future claims
workload and complexity.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-47
ACCNO: A13476
TITLE: Veterans' Benefits: More Transparency Needed to Improve
Oversight of VBA's Compensation and Pension Staffing Levels
DATE: 11/15/2004
SUBJECT: Budgeting
Claims processing
Human resources training
Human resources utilization
Labor force
Pension claims
Performance measures
Personnel management
Productivity in government
Projections
Veterans benefits
Veterans disability compensation
Veterans pensions
Work measurement
Budget requests
Transparency
Virtual VA Iniative
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GAO-05-47
United States Government Accountability Office
GAO
Report to the Committee on Veterans'
Affairs, U.S. Senate
November 2004
VETERANS' BENEFITS
More Transparency Needed to Improve Oversight of VBA's Compensation and Pension
Staffing Levels
GAO-05-47
[IMG]
November 2004
VETERANS' BENEFITS
More Transparency Needed to Improve Oversight of VBA's Compensation and Pension
Staffing Levels
What GAO Found
VBA's fiscal year 2005 budget justification did not clearly explain how
the agency would achieve the productivity improvements needed to meet its
compensation and pension claims processing performance goals with fewer
employees. According to VBA officials, productivity improvements, workload
changes, and employee attrition were considered in developing its fiscal
year 2005 budget request. While some of these factors were identified in
VBA's budget justification, they were not linked to the requested
full-time equivalent (FTE) employment levels. Also, VBA's justification
did not specifically address its claims processing productivity or how
much VBA planned to improve productivity. Finally, VBA does not explain
the impacts of VBA budgetary decisions on long-term productivity. VBA
officials identified information technology improvements and training
programs that could help improve productivity but have been delayed
because VBA shifted funding from these initiatives to support higher
staffing levels. This was done to help meet VBA's shorter-term goal to
improve claims decision timeliness, in particular the Secretary of
Veterans Affairs' goal to reduce decision time for rating-related claims
to an average of 100 days. More transparent budget justifications would
better inform congressional oversight of VBA by making it easier to
evaluate whether the agency's budget requests reflect the resources,
particularly staffing, needed to achieve expected performance.
VBA estimated the number of claims it expects to receive (receipts) in
fiscal year 2005 based on historical workload trends, with adjustments for
factors that could affect future receipts, notably the impact of
legislation allowing some military retirees to concurrently receive
Department of Veterans Affairs (VA) disability compensation and military
retirement pay. The accuracy of VBA's projections of rating-related
receipts for fiscal years 2000 through 2004 was mixed, varying from
underprojecting by about 11 percent to overprojecting by about 19 percent.
Actual receipts in fiscal year 2004 exceeded VBA's projections. Meanwhile,
VBA did not project claims complexity in its fiscal year 2005 budget
justification and did not explain how it expected claims complexity to
affect its productivity and requested staffing levels. A claim's
complexity can be affected by many factors, such as the number and types
of disabilities claimed. VBA's budget justification could be improved if
the agency explained how changes in complexity affect workload and
staffing requirements.
United States Government Accountability Office
Contents
Letter
Results in Brief
Background
VBA's Budget Justification Did Not Clearly Explain the Basis for Its
Fiscal Year 2005 Compensation and Pension Staffing Estimates VBA Projected
Claims Workload Is Based on Historical Trends and
Other Factors but VBA Did Not Project Claims Complexity Conclusions
Recommendation Agency Comments and Our Response 1
2 3
6
9 11 12 13
Appendix I Scope and Methodology
Appendix II Comments from the Secretary of Veterans Affairs
Table
Table 1: VBA Projected versus Actual Rating-Related Claims Receipts,
Fiscal Years 2000-04
Figure
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2005
Abbreviations
BDN Benefits Delivery Network
DOOR Distribution of Operational Resources
FTE full-time equivalent
IDA Institute for Defense Analyses
OMB Office of Management and Budget
RBA Rating Board Automation
STAR Systematic Technical Accuracy Review
TPSS Training and Performance Support Systems
VA Department of Veterans Affairs
VBA Veterans Benefits Administration
VSR Veterans Service Representative
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separately.
United States Government Accountability Office Washington, DC 20548
November 15, 2004
The Honorable Arlen Specter
Chairman
The Honorable Bob Graham
Ranking Minority Member
Committee on Veterans' Affairs
U. S. Senate
In fiscal years 1998 through 2003, the Veterans Benefits Administration
(VBA) added significant numbers of employees to process veterans'
disability compensation and pension benefit claims. With these additional
employees, VBA significantly increased its production of rating-related
claims decisions in fiscal years 2002 and 2003, and this increase in turn
reduced the agency's claims inventory and led to improved decision
timeliness.1 Also, according to VBA, these employees' increased
proficiency, due to experience and training, will lessen the impact of
attrition of its most experienced employees. In its fiscal year 2004 and
2005 budget justifications, VBA requested funding to support lower
staffing levels than in fiscal year 2003 while maintaining ambitious
performance goals, in particular the Secretary of Veterans Affairs' goal
to
complete rating-related decisions within an average of 100 days.
At your request, we reviewed the basis for the agency's estimation of its
disability compensation and pension claims processing staffing needs and
workload levels. Specifically, we assessed how VBA (1) determined and
justified its staffing requests for fiscal year 2005, including the extent
to
which productivity was considered, and (2) projected the volume and
complexity of future workloads.
We focused our review on VBA's fiscal year 2005 budget justification to
the
Congress, specifically the request for funding of compensation and
pension administration. We also reviewed VBA's budget justifications for
fiscal years 2000 through 2004 to compare the fiscal year 2005
justification
with previous justifications, identify trends in requested and actual
funding and staffing, and obtain background information on specific
management initiatives and workload trends. We discussed VBA's fiscal
1Rating-related decisions are primarily decisions on original claims for
compensation and pension benefits and reopened claims. For example,
veterans may file reopened claims if they believe their service-connected
conditions have worsened.
Results in Brief
year 2005 budget and staffing estimates with VBA officials. To review
VBA's estimation of the number of claims it expects to receive (receipts)
in fiscal year 2005, we interviewed VBA officials and reviewed records of
how they developed the receipts estimates for its fiscal year 2005 budget
justification. To assess the accuracy of VBA's estimates, we compared
original estimates with actual rating-related receipts for fiscal years
2000 through 2004. We also interviewed VBA and Institute for Defense
Analyses (IDA) officials and reviewed documentation on the IDA receipt
projection model. Finally, we interviewed VBA officials on the agency's
capability to measure disabilities per claim. We assessed the reliability
of VBA's workload data and found it adequate for purposes of this report.
For additional scope and methodology information, including data
reliability, see appendix I. We conducted our review from April through
September 2004, in accordance with generally accepted government auditing
standards.
Although VBA officials said they considered productivity improvements,
claims workload changes, and employee attrition in developing its
compensation and pension fiscal year 2005 budget request, VBA did not
clearly explain the impacts of these factors on meeting its claims
processing performance goals with fewer employees. VBA officials said they
considered productivity, workload, and attrition when developing VBA's
fiscal year 2005 compensation and pension budget estimate, including its
estimated staffing levels. The justification identified a number of
factors that could affect VBA's staffing requirements, such as
implementation of specialized claims processing teams in VBA's regional
offices, projected increases in receipts of compensation claims, and
expected attrition of experienced claims processing staff. However, VBA
did not clearly explain how each of these initiatives and projections
affected its estimated staffing requirements and funding request for fewer
employees in fiscal year 2005. Also, VBA's budget justification did not
provide information on its productivity or identify how it planned to
improve productivity. Without such information, it is difficult to assess
whether the agency can make the productivity improvements needed to
process more claims faster with fewer staff resources while improving
accuracy. Finally, VBA did not clearly explain the impacts of budget
decisions that delayed training and information technology initiatives
that could improve productivity. The lack of transparency in VBA's budget
makes it difficult for the Congress to assess whether VBA has requested
the resources it needs to meet its performance goals.
VBA estimated the number of rating-related claims it expects to receive in
fiscal year 2005 using historical trends and VBA judgments about the
impacts of various factors on receipts, such as enactment of legislation
allowing some military retirees to receive both military retirement pay
and Department of Veterans Affairs (VA) disability compensation. VBA's
projections in the recent past have been mixed in their accuracy. For
fiscal years 2000 through 2004, the variances between VBA's original
projections of the number of rating-related claims it would receive and
actual receipts ranged from an underprojection of about 11 percent to an
overprojection of about 19 percent. Actual compensation receipts in fiscal
year 2004 exceeded VBA's original projections for that fiscal year. VBA
has been working to improve its ability to project rating-related claims
receipts through a model developed by IDA. Meanwhile, VBA did not provide
projections of claims complexity in its fiscal year 2005 budget
justification and did not explain the impact of complexity on productivity
and requested staffing levels. A claim's complexity can be affected by
many factors, such as the number and types of disabilities claimed. For
example, the Congress and VA have established presumptions of eligibility
for some types of disabilities that can make a claim easier to complete
because less evidence is needed to support the decision. Like information
on productivity and workload, information on complexity and its impact on
staffing requirements could help the Congress better evaluate VBA's
staffing requests.
This report contains a recommendation to the Secretary of Veterans Affairs
to direct VBA to provide additional information to support its staffing
requests and work with appropriate congressional committees and
subcommittees on how best to make it available for their use.
When a veteran submits a claim for disability benefits to a VBA regional
office, Veterans Service Center staff process the claim in accordance with
VBA regulations, policies, procedures, and guidance. A Veterans Service
Representative (VSR) in a Pre-Determination Team develops the claim; that
is, assists the claimant in obtaining sufficient evidence to decide the
claim. The claim then goes to a Rating Team, where a Rating Veterans
Service Representative (also known as a Rating Specialist) makes a
decision on the claim, based on the available evidence and VBA's criteria
for benefit entitlement. VSRs also perform a number of other duties,
including establishing claims files, authorizing payments to beneficiaries
and generating notification letters to claimants, conducting in-person and
telephone contacts with veterans and other claimants, and assisting in the
processing of appeals of claims decisions.
Background
VBA's administrative costs, including personnel costs, are funded through
VA's General Operating Expenses account. VBA, as part of VA's annual
budget justification, asks for specific amounts for each of its programs,
including compensation and pension programs. Funding is requested to
support an estimated full-time equivalent (FTE) employment level.2 In
fiscal year 2003, VBA spent about $878 million to administer its
compensation and pension programs. This funding included support for about
9,350 FTEs.
From fiscal year 1998 through 2003, staffing levels for VBA's compensation
and pension programs increased significantly, particularly for staff who
process compensation and pension claims at VBA's 57 regional offices, as
shown in figure 1 below. In fiscal year 1998, VBA had 6,770 compensation
and pension FTEs; by fiscal year 2003, employment had increased by about
38 percent to 9,352 FTEs. Compensation and pension FTE levels rose by
about 900 in fiscal years 2001 and 2002. Staffing levels increased because
VBA hired hundreds of new rating specialists and VSRs in anticipation of a
large number of future retirements. Also, these additional staff helped
VBA respond to a sharp drop in the production of ratingrelated claims
decisions in fiscal year 2001. In fiscal year 2002, these decisions rose
from about 481,000 to about 797,000, and to about 827,000 in fiscal year
2003.
2Full-time equivalent employment is the basic measure of levels of
employment used in the budget. It is the total number of hours worked
divided by the total number of compensable hours in a fiscal year. For
example, in fiscal year 2003 an FTE represented 2,088 hours (8 hours per
day for 261 days).
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2005
Number of full-time equivalents 10,000
9,352 8,965
8,955
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000 0
1998 1999 2000 2001 2002 2003
2004 est.
2005 est.
Fiscal year
Source: Department of Veterans Affairs Budget Submissions for fiscal years
2000-05.
In fiscal year 2003, VBA's 57 regional offices received about 735,000
ratingrelated claims from veterans and their families for disability
benefits. This included about 167,000 original claims for compensation of
serviceconnected disabilities (injuries or diseases incurred or aggravated
while on active military duty) and about 434,000 reopened compensation
claims.3 In addition, about 90,000 original and reopened claims were filed
for pensions for wartime veterans who have low incomes and are permanently
and totally disabled for reasons not service-connected and for their
survivors.4 In addition, VBA received about 28,000 original claims for
dependency and indemnity compensation by deceased veterans' spouses,
children, and parents and to survivors of service members who died on
active duty.
3For example, a reopened compensation claim could be filed by a veteran
seeking an increase in disability rating based on the worsening of a
service-connected disability or by a veteran seeking compensation for a
previously unclaimed disability.
4Veterans aged 65 or older do not have to be permanently and totally
disabled to become eligible for pension benefits, as long as they meet the
other requirements for income and military service. VBA also pays pensions
to surviving spouses and unmarried children of deceased wartime veterans.
VBA's Budget
Justification Did Not
Clearly Explain the
Basis for Its
Fiscal Year 2005
Compensation and
Pension Staffing
Estimates
VBA officials stated that productivity improvements, workload changes, and
attrition of experienced claims processing staff are considered throughout
the annual budget process. However, VBA's budget justification did not
clearly explain how these factors affected its request. Early in this
process, the Compensation and Pension Service makes a budget request that
is reviewed by VBA's Office of Resource Management, under the direction of
VBA's Chief Financial Officer and becomes part of VBA's total request.
VBA's request eventually becomes part of VA's overall budget request,
which is submitted to the Office of Management and Budget (OMB) for
review.5
VBA's fiscal year 2005 budget justification identified a number of
initiatives and projections that could affect its staffing levels. For
example, implementing specialized claims processing teams in VBA's
regional offices and consolidating pension maintenance work at three
regional offices could affect staffing levels. Also, VBA projected it
would receive more disability compensation claims than in previous years,
based on such factors as the enactment of concurrent receipt legislation
in 2003. Specifically, the fiscal year 2005 budget justification stated
that VBA expected to receive about 65,000 claims because of the enactment
of legislation that allows military retirees with service-connected
disabilities rated at 50 percent or higher to receive both VA disability
compensation and military retirement pay. VBA officials said that this
estimate was included in their negotiations with OMB. Further, VBA noted
that it expects many experienced claims processing staff to leave VBA over
the next several years.
Despite identifying these factors in its 2005 budget justification, VBA
does not specify how such initiatives and projections will affect the
number of employees it needs to meet its claims processing performance
goals. For example, VBA projected that in fiscal year 2005, the number of
original and reopened compensation claims receipts would increase by about
15 and 10 percent respectively from its fiscal year 2004 estimates, and
that original and reopened pension receipts would decrease by about 2
percent. However, VBA did not specifically identify how these anticipated
workload trends had affected its requested staffing levels or its expected
improvements in productivity. VBA's reduced staffing request was
consistent with OMB guidance to agencies to assume increased
5Under OMB guidance (Circular A-11), agency FTE employment estimates
should consider productivity improvements and workload assumptions.
productivity in their budget requests-for example, to do the same amount
of work with fewer employees. However, the budget justification does not
describe how its FTE staffing requirements are linked to the specific
initiatives and projections that could affect these needs.
Also, VBA's fiscal 2005 budget justification provides no specific
information on its compensation and pension claims processing productivity
or on its planned improvements in productivity. VBA expressed confidence
that it can improve productivity enough to meet its claims processing
goals for fiscal year 2005 with fewer employees, despite a projected
increase in the workload of compensation claims. To achieve expected
improvements in timeliness and accuracy with fewer employees, while
receiving more claims for disability compensation, VBA's claims processing
operations will need to become more productive. However, the budget
justification included no measurement of productivity, nor did it identify
how it planned to achieve the needed productivity improvements.
Finally, VBA's fiscal year 2005 budget justification does not explicitly
show the impact of budget decisions to shift funding away from initiatives
that could improve productivity; such decisions were based on VBA's
emphasis on meeting the Secretary's 100-day timeliness goal for deciding
ratingrelated claims. According to VBA officials, in fiscal years 2002 and
2003, nonpayroll funds were shifted to help fund increased FTE employment
levels in VBA regional office Veterans Service Centers, which are
responsible for processing compensation and pension claims. This was done
to increase the number of rating-related claims being decided and to meet
the Secretary's fiscal year 2003 goals for improving timeliness and
reducing the backlog of undecided claims. For example, VBA used nonpayroll
funds to help support about 300 more FTEs than it had originally requested
for fiscal year 2002, and about 400 more FTEs than it had originally
requested for fiscal year 2003. Specifically, in fiscal year 2002, VBA
requested funding for 7,351 compensation and pension FTEs but reported
that it actually used 7,663, and in fiscal year 2003, VBA originally
requested funding for 7,532 FTEs but reported that it actually used 7,936.
According to VBA officials, nonpayroll funds were shifted to help pay
increased payroll costs associated with this higher FTE level. In
addition, the fiscal year 2003 budget request assumed a 2003 pay raise of
2.6 percent, but the actual pay raise was 3.1 percent. VBA's fiscal year
2004 and 2005 budgets reflect continued efforts to support as many FTEs as
possible through reductions in nonpayroll funding to continue to support
improvements in claims processing timeliness.
VBA officials identified training and information technology initiatives
that have been delayed because of these cuts in nonpayroll funds. These
include delays in developing new Training and Performance Support Systems
(TPSS) modules and in updating existing TPSS modules to reflect changes in
laws, regulations, and procedures. According to its fiscal year 2005
budget justification, VBA is relying on TPSS to improve productivity by
helping new claims processing employees develop needed proficiency more
quickly and by helping experienced employees maintain their proficiency.
Delays in the progress of TPSS implementation could affect VBA's
productivity, because existing modules may not be as useful as revised
modules could be, and advanced modules may continue to be unavailable. VBA
requested about $2.6 million for TPSS implementation in fiscal year 2005,
including funding to update some existing modules. However, VBA did not
explain the impact of delays in developing new training modules and
updating existing modules.
Another delayed initiative that could improve productivity is Virtual VA.
This initiative involves the scanning of paper records into electronic
claims folders. VBA expects efficiency and timeliness to improve when
Virtual VA is fully implemented, in part because electronic claims folders
could be transferred among regional offices more quickly. VBA has
implemented Virtual VA at its three Pension Maintenance Centers.6 However,
VBA requested fiscal year 2005 funding only to maintain the existing
Virtual VA program and anticipates that funding will not be available to
expand the program beyond the Pension Maintenance Centers. VBA's
justification stated that full implementation of Virtual VA would help
improve claim processing and identified the need for additional staff to
convert existing paper claims files to electronic format, such as for
document preparation and scanning. However, VBA did not request these
additional staffing resources and did not explain why. The budget
justification stated that VBA expected no improvements in performance
because of implementation of Virtual VA at regional offices in fiscal year
2005, but it did not identify how much productivity would be forgone
because of VBA's decision to delay Virtual VA implementation.
The Congress relies on the budget justification as VBA's statement of how
it plans to spend the funds it requested. The House and Senate
6The Pension Maintenance Centers are responsible for processing income and
eligibility verifications and other related actions for VBA's pension
beneficiaries. They are located at VBA's St. Paul, Minnesota,
Philadelphia, Pennsylvania, and Milwaukee, Wisconsin, regional offices.
VBA Projected Claims Workload Is Based on Historical Trends and Other Factors
but VBA Did Not Project Claims Complexity
Appropriations Committees have noted that VA's budget justification
represents the agency's budget plan.7 VA's authorizing committees also
rely on VBA's budget justification in conducting their oversight. In
February 2004, both the Senate and House Veterans' Affairs Committees held
hearings on VA's fiscal year 2005 budget request. Each committee then
recommended funding levels to its respective Budget Committee. The
Appropriations Committees also conduct oversight of VA through the annual
budget process. Congressional oversight could be enhanced if VBA's budget
justifications were more transparent.
VBA estimated the number of rating-related claims it would receive in
fiscal year 2005 based on historical trends and judgments about the likely
impacts of various factors on receipts, but it did not project claims
complexity, such as average disabilities per claim. For example, VBA
expected an increase in the number of claims received based on the
enactment of legislation allowing some military retirees to receive both
military retirement pay and VA disability compensation. Also, VBA
officials stated that they factored in the return of veterans from
operations in Iraq and Afghanistan, but they were unclear as to how many
claims VBA expected to receive from these veterans.
Previous VBA projections have been mixed in their accuracy. For fiscal
years 2000 through 2004, VBA's projections of rating-related claims
receipts varied from an underprojection of about 11 percent to an
overprojection of about 19 percent, as shown in table 1.
7Conference Report, Consolidated Appropriations Act, 2004, House Report
108-401, November 25, 2003. Specifically, Division G, p. 1033, which
includes VA's appropriations.
Table 1: VBA Projected versus Actual Rating-Related Claims Receipts,
Fiscal Years 2000-04
Projected
Fiscal year receipts Actual receipts Variance
2000 699,250 585,565 Overprojected by 19.4%
2001 647,960 674,219 Underprojected by 3.9%
2002 812,608 721,727 Overprojected by 12.6%
2003 723,675 735,275 Underprojected by 1.6%
2004 687,412 771,115 Underprojected by 10.9%
Sources: Department of Veterans Affairs Budget Submissions for fiscal
years 2000-05, Veterans Benefits Administration fiscal year 2004 claims
receipt data.
In its fiscal year 2004 budget justification, VBA projected that it would
receive an average of about 57,300 rating-related claims per month. For
its fiscal year 2005 budget justification, VBA revised its fiscal year
2004 projection to an average of about 63,900 receipts, based on actual
receipts for October and November 2003. VBA's revised projection
underprojected by only about 0.5 percent; actual fiscal year 2004 receipts
averaged about 64,300 per month.
VBA is working to improve its ability to project its rating claims
workload by more accurately estimating the number of such claims it will
receive. In June 2000, VBA received the first version of a model for
forecasting original and reopened compensation claims receipts, developed
under contract by the Institute for Defense Analyses. This model factored
into its projections the changing size and demographics of the veteran
population. Specifically, the model used historical claim submission data
and projections of the veteran population to project VBA's future
workload. Although the model was updated in June 2002, its usefulness is
limited by several factors. For example, it projects only original and
reopened compensation claims and relies on outdated veteran population
data. According to a VBA official, VBA's workload projections for its
budget justifications were not based on this model, but the results of the
model were used to check VBA's projections. An expanded model with more
recent information is scheduled to be delivered in December 2004. The
expanded model will project workload for more types of claims, including
all rating-related claims, and will be updated to reflect the 2000 Census.
VBA did not project the complexity of its rating-related claims in its
fiscal year 2005 budget submission and did not explain the impact of
complexity on productivity and requested staffing levels. VBA has noted
that disability compensation claims have become more complex because
veterans are
claiming more service-connected disabilities per claim, and VBA must make
a decision whether each disability is service-connected. Meanwhile, the
Congress and VA have established presumptions of compensation and pension
eligibility that can make some claims less complex. For example, the
Congress and VA have identified several types of disabilities (such as
type II diabetes) as service-connected based on the presumption that
veterans who served in Vietnam were exposed to Agent Orange. Claims based
on these disabilities can be simpler to decide because less evidence is
needed to prove service connection. VBA did not specifically explain the
impact of claims complexity on productivity and staff requirements.
VBA provided some data on average number of disabilities for completed
compensation claims in its fiscal year 2005 budget justification. However,
these data were based on incomplete information. The average number of
disabilities per claim was based on calendar years 1998 through 2001 data
on completed claims from VBA's software application for preparing rating
decisions, Rating Board Automation (RBA). According to a VBA official, the
RBA data were incomplete because data on many rating decisions were not
transmitted to VBA's central database for analysis. For example, according
to a VBA official, employees who were working from home did not always
upload rating information from computer disks into RBA and send the data
to VBA's central database. Also, because making corrections to a rating
once it had been entered into the central database was cumbersome,
corrections were not always made to the incorrect information that had
been entered in the database. VBA began implementing a new rating decision
preparation package (RBA 2000) in October 2000. While VBA officials stated
that RBA 2000 provides more complete data on rating decisions, it cannot
provide data by the end product code, which VBA uses to identify types of
claims (for example, original and reopened compensation claims). VBA
officials suggested that, in the future, it could measure issues per claim
through its new claims development software application, MAP-D. VBA is not
planning to provide information on disabilities per claim in its fiscal
year 2006 budget justification.
Conclusions It is difficult to determine whether VBA's confidence that it
can meet its key fiscal year 2005 claims processing goals is well founded
because its budget justification lacks sufficient information to make such
an assessment. VBA set ambitious goals for providing veterans and their
families with more timely decisions. At the same time, VBA expects the
volume of incoming rating-related claims to increase and to lose
experienced claims processing staff to attrition. Nonetheless, VBA
requested a reduction in claims processing staff in fiscal year 2005, on
top of a decrease in fiscal year 2004. VBA's budget justification does not
clearly explain how its estimated staffing requirements will be affected
by its proposed initiatives to improve efficiency and accuracy, projected
increases in compensation claims, and staff attrition.
To achieve its goals in the face of increasing workloads and decreased
staffing, VBA will have to rely on productivity improvements. However, its
budget justification does not provide information on VBA's claims
processing productivity or how much VBA expects to improve productivity.
Consequently, it is difficult to determine if VBA can achieve the
productivity improvements it needs or determine how these improvements
will be achieved. While VBA's budget assumes improved productivity, the
agency has made budget decisions to delay initiatives that could help
improve productivity, in order to protect funding for claims processing
staff to help meet its top short-term priority-improving timeliness. Its
budget justification could have provided more information on the impacts
of decisions to delay these initiatives. Further, VBA's budget
justification did not clearly explain the effects on productivity of
claims complexity, such as changes in the average number of disabilities
per claim. Consequently, the effect of complexity on VBA's workload and
staffing requirements is unclear. A more transparent budget justification
would better inform the Congress' oversight of VBA, by making it easier to
evaluate whether the agency's administrative budget requests adequately
reflect the resources, particularly staff, needed to achieve expected
performance.
To assist the Congress in its oversight of VBA's compensation and pension
claims processing operations, we recommend that the Secretary of Veterans
Affairs direct the Under Secretary for Benefits to prepare the following
information and work with the Committees on Veterans' Affairs and the
Appropriations Subcommittees on Veterans Affairs, Housing and Urban
Development, and Independent Agencies on how best to make it available for
their use:
o explanation of the expected impact of specific initiatives and changes
in incoming claims workload on requested staffing levels;
o information on claims processing productivity, including how VBA plans
to improve productivity; and
o explanation of how claims complexity is expected to change and the
impact of these changes on productivity and requested staffing levels.
Recommendation
Agency Comments In its written comments on a draft of this report (see
app. II), VA concurred with our recommendation. VA noted that VBA will
work
and Our Response closely with VA's Office of Budget, OMB, and
congressional authorizing and appropriating committees and subcommittees
to ensure that appropriate supporting information is included in its
future budget justifications.
We will send copies of this report to the Secretary of Veterans Affairs,
appropriate congressional committees, and other interested parties. The
report will also be available at GAO's Web site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please call
me at (202) 512-7215 or Irene Chu, Assistant Director, at (202) 512-7102.
In addition to those named, Amy Buck, Denise Fantone, Martin Scire, Greg
Whitney, and Gregory Wilmoth made key contributions to this report.
Cynthia A. Bascetta Director, Education, Workforce, and Income Security
Issues
Appendix I: Scope and Methodology
To assess how the Veterans Benefits Administration (VBA) determined and
justified its staffing requests, we focused on VBA's fiscal year 2005
budget justification to the Congress: specifically, its requests for
discretionary administrative funding for VBA's compensation and pension
programs.1 We also reviewed VBA's budget justifications for fiscal years
2000 through 2004 to identify funding and staffing trends and obtain
background information on specific management initiatives and workload
trends. We reviewed Office of Management and Budget guidance to agencies
on how to prepare their fiscal year 2005 budget requests.2 In particular,
we reviewed guidance on information to be included in budget requests,
estimating staffing levels, and the budget formulation process. In
addition, we interviewed VBA officials to identify the role of
productivity and workload factors in VBA's internal budget process and to
discuss the fiscal year 2005 request. Specifically, we interviewed VBA
officials responsible for compensation and pension programs, resource
management, and field operations. In some instances, we relied on
testimonial evidence from our interviews, along with written responses to
detailed questions.
To review VBA's fiscal year 2005 receipts projections, we interviewed
Compensation and Pension Service officials responsible for these
estimates. We obtained records showing the workload data used to estimate
receipts for fiscal years 2004 and 2005 as well as the adjustments VBA
made to historical trends in developing its estimates. To assess the
accuracy of receipts estimates for fiscal years 2000 through 2004, we
reviewed VBA's budget justifications for those fiscal years. For fiscal
years 2000 through 2003 we compared initial estimates of rating-related
claims for each fiscal year with actual VBA-wide receipts reported in
VBA's budget justifications. We focused on rating-related claims because
they represent the types of claims VBA uses to develop key performance
measures, such as timeliness (average days to complete rating-related
claims). For fiscal year 2004, we compared VBA's estimate in its budget
justification with VBA's Distribution of Operational Resources (DOOR)
report of receipts for the fiscal year.
1Department of Veterans Affairs, Fiscal Year 2005 Budget Submission,
Volume 1: Benefits Programs, February 2004.
2Office of Management and Budget, Circular No. A-11, Preparation,
Submission, and Execution of the Budget, July 2003.
Appendix I: Scope and Methodology
In addition, we reviewed documentation of the Institute for Defense
Analyses (IDA) receipt estimation model and discussed the model with IDA
and Compensation and Pension Service officials. Because VBA did not use
this model to develop the compensation claims receipt estimates in its
fiscal year 2004 and 2005 budget justifications, we did not conduct a
detailed analysis of the model. In our discussions, IDA officials
identified improvements in its model, such as projecting receipts for
additional types of claims and using updated population data.
We assessed the reliability of end product data in VBA's Benefits Delivery
Network (BDN). The end product code is a key data element because it
identifies the type of claim. VBA's DOOR reports aggregate workload data
from the BDN by end product. We reviewed 1997 and 1998 Department of
Veterans Affairs (VA) Inspector General reports that identified
significant control deficiencies in BDN, leading to questionable
reliability of workload and timeliness data. We reviewed VBA's system for
identifying potentially erroneous end product transactions that might lead
to inaccurate workload data. VBA adopted this system in response to the
Inspector General's findings. We interviewed the VBA official responsible
for sampling transactions to identify questionable end product instances-
where a regional office may have improperly taken credit for completing a
claim or for completing a claim in less time than was actually required.
For example, this sample is designed to identify when a regional office
has taken credit for more than one decision on the same claim, leading to
overcounting of decision production. We also reviewed sample data from
fiscal year 1999 through the second quarter of 2004.
We also reviewed how VBA's Systematic Technical Accuracy Review (STAR)
program identifies questionable and erroneous end product codes. If a STAR
reviewer determines that the end product code for a randomly sampled claim
file is questionable or erroneous, the claim will be removed from the STAR
sample and be replaced by another claim with the same end product code.
For example, if a claim is identified as completed in BDN but no decision
has been made on the claim, the claim is removed from the STAR sample. We
interviewed a VBA official responsible for STAR and reviewed data on
claims removed from the STAR sample in fiscal year 2003 and the first half
of fiscal year 2004.
We determined that VBA's end product data are sufficiently reliable for
the purposes of this report, which focuses on VBA-wide data. For example,
VBA's sampling shows a decline in questionable end product codes from the
second quarter of fiscal year 2003 to the second quarter of fiscal year
2004, from about 5.2 percent to 2.8 percent. However, we are aware that
Appendix I: Scope and Methodology
BDN is an aging information system. In its October 2001 report, VA's
Claims Processing Task Force noted this and recommended that VBA maintain
BDN until the replacement VETSNET system is fully implemented. However,
VBA officials stated that VBA was not planning to make significant
investments in maintaining BDN because it will be replaced.
We interviewed VBA officials about the reliability of its Rating Board
Automation (RBA) system as a source of data on average disabilities per
claim. These officials noted that many rating decisions were not included
in the RBA data used in VBA's fiscal year 2005 budget justification. On
the basis of this, we determined that the data on average disabilities per
compensation claim in VBA's budget justification were not reliable, and we
do not use the data in our report. Finally, we did not assess the
reliability of the full-time equivalent data VA reported in its budget
submissions.
Appendix II: Comments from the Secretary of Veterans Affairs
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