Vocational Rehabilitation: VA Continues to Place Few Disabled Veterans in
Jobs (Letter Report, 09/03/96, GAO/HEHS-96-155).

Pursuant to a congressional request, GAO reviewed the Department of
Veterans Affairs' (VA) vocational rehabilitation program, focusing on:
(1) the percentage of rehabilitated veterans; (2) the services provided;
(3) the characteristics of clients served; (4) the cost of
rehabilitation; and (5) VA efforts to improve program effectiveness.

GAO found that: (1) the VA vocational rehabilitation program continues
to focus on training and higher education, but it places few veterans in
jobs; (2) from 1991 to 1995, VA rehabilitated only about 8 percent of
eligible veterans, while 51 percent continued to receive program
services; (3) those program participants with a serious employment
handicap declined from 40 percent to 29 percent over the last 5 years
and those with a 10-to-20 percent disability increased from 34 percent
to 42 percent; (4) over 90 percent of program applicants were male and
had completed high school and almost 25 percent had some college
courses; (5) VA spent on average about $20,000 on each employed veteran
and $10,000 on each program dropout; (6) over one-half of VA
rehabilitation costs were for veterans' subsistence allowances; (7)
state vocational rehabilitation agencies rehabilitated 37 percent of
eligible individuals, while the remaining individuals continued to
receive state program services; (8) the state vocational rehabilitation
programs provided a wide range of rehabilitation services and had a
majority of severely disabled clients; (9) almost 60 percent of the
state program applicants were male and had completed high school and 17
percent had completed some college courses; (10) the state programs
spent on average about $3,000 on each rehabilitated client and about
$2,000 on each dropout, none of which covered clients' living expenses;
(11) VA established a design team in 1995 to improve program
effectiveness, primarily by increasing the percentage of suitably
employed veterans, improving staff job finding and placement skills, and
developing a data management system; and (12) VA plans to implement
these program changes in fiscal year 1997.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-96-155
     TITLE:  Vocational Rehabilitation: VA Continues to Place Few 
             Disabled Veterans in Jobs
      DATE:  09/03/96
   SUBJECT:  Vocational rehabilitation
             Veterans benefits
             Employment of the disabled
             Demographic data
             Administrative costs
             Subsistence allowances
             State-administered programs
             Veterans employment programs
             Management information systems
             Human resources training
IDENTIFIER:  Dept. of Education Vocational Rehabilitation Program
             VA Vocational Rehabilitation Program
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Education, Training,
Employment, and Housing, Committee on Veterans' Affairs, House of
Representatives

September 1996

VOCATIONAL REHABILITATION - VA
CONTINUES TO PLACE FEW DISABLED
VETERANS IN JOBS

GAO/HEHS-96-155

VA's Vocational Rehabilitation Program

(105744)


Abbreviations
=============================================================== ABBREV

  VA - Department of Veterans Affairs
  ABC - Test

Letter
=============================================================== LETTER


B-270415

September 3, 1996

The Honorable Stephen E.  Buyer
Chairman, Subcommittee on Education,
 Training, Employment, and Housing
Committee on Veterans' Affairs
House of Representatives

Dear Mr.  Chairman: 

Veterans with disabilities resulting from their service in the
military often need help in obtaining and maintaining employment. 
Since the 1940s, the Department of Veterans Affairs (VA), previously
the Veterans Administration, has provided training to veterans with
service-connected disabilities to help improve their employability. 
In 1980, the Congress enacted the Veterans' Rehabilitation and
Education Amendments, which changed the focus of the veterans'
vocational rehabilitation program from just providing training to
improve the employability of disabled veterans to helping them find
and maintain suitable jobs.\1

However, in 1984 and again in 1992, we reported and VA agreed that
the vocational rehabilitation program was still primarily focused on
sending veterans to training, not on finding veterans suitable
employment.\2 In fiscal year 1995, VA spent about $300 million to
provide program services to about 48,000 veterans. 

This letter responds to your concerns about whether VA's vocational
rehabilitation program is achieving one of its primary goals of
helping disabled veterans obtain suitable jobs.  Specifically, you
requested that we provide information on the status of the
program--percentage of rehabilitated veterans, services provided,
characteristics of clients served, and cost of rehabilitation.\3 You
also asked us to provide similar information on the Department of
Education's state vocational rehabilitation program.  Although both
VA and Education programs are designed to help disabled people obtain
employment, significant differences exist between the two in the
kinds of clients served, the types of services provided, and how
successful rehabilitations are defined (for example, under the state
program, a suitable job can be a nonwage-earning position).  For
these reasons, we did not attempt to compare the two programs.  In
addition, you asked us to identify VA efforts to improve program
effectiveness. 

To address your request, we met with VA and Department of Education
officials responsible for managing their respective vocational
rehabilitation programs.  We reviewed legislation, regulations,
program operating procedures, and program management reports.  We
also analyzed national data on program participants and visited VA
regional offices and state rehabilitation agencies in four localities
to obtain examples from selected program case files of costs and
services provided.  We did our work between September 1995 and July
1996 in accordance with generally accepted government auditing
standards.  (See app.  I for a more detailed discussion of our
methodology.)


--------------------
\1 VA defines a suitable job as a position consistent with the
veteran's aptitudes, abilities, and interests. 

\2 VA Can Provide More Employment Assistance to Veterans Who Complete
Its Vocational Rehabilitation Program (GAO/HRD-84-39, May 23, 1984);
Vocational Rehabilitation:  Better VA Management Needed to Help
Disabled Veterans Find Jobs (GAO/HRD-92-100, Sept.  4, 1992). 

\3 Disabled individuals who obtain and maintain a suitable job for at
least 60 days are classified as "rehabilitated."


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Despite the 1980 legislation requiring VA to focus its rehabilitation
program on finding disabled veterans suitable employment and
subsequent GAO reports recommending that VA implement this
legislation, VA continues to place few veterans in jobs.  For
example, over the last 5 years (1991-1995), VA rehabilitated about 8
percent of the approximately 74,000 veterans found eligible for
vocational rehabilitation program services, while about 50 percent of
the eligible veterans continued to receive program services.  VA
officials told us that the percentage of veterans classified as
rehabilitated is low because the program does not focus on providing
employment services.  Instead, VA continues primarily to send
veterans to training, particularly to higher education programs. 

Moreover, our analysis of national program data showed that the
characteristics of program participants are changing.  For example,
only about one in four veterans in the vocational rehabilitation
program has a serious employment handicap,\4 and this ratio has been
steadily declining over the last 5 years.  Furthermore, our analysis
showed that VA does not have readily available cost data associated
with providing rehabilitation services to individual veterans.  Our
review of over 100 case files, however, showed that VA spent, on
average, about $20,000 on each veteran who gained employment and
about $10,000 on each veteran who dropped out of the program. 
Generally, over half of the total costs of rehabilitation services
consisted of payments to assist veterans in covering their basic
living expenses.\5

With regard to Education's state vocational rehabilitation program,
our analysis of national program data showed that over the last 5
years (1991-1995) state agencies rehabilitated 37 percent of the
approximately 2.6 million individuals eligible for vocational
rehabilitation program services, while about 31 percent continued to
receive program services.  The state agencies provide a wide range of
rehabilitative services, from physical restoration\6 and
transportation to college education and on-the-job training.  In
addition, we found that a majority of the program participants had
severe disabilities.\7 Moreover, national program data showed that
state vocational rehabilitation agencies spent, on average, about
$3,000 on each client who achieved employment and about $2,000 on
each client who dropped out of the program.  The state program does
not provide funds to cover client living expenses. 

In response to prior GAO and VA findings and recommendations, VA
recently established a design team to identify ways of improving
program effectiveness.  The team's overall objective is to increase
the number of veterans who obtain suitable employment through
improvements in program management.  For example, one approach the
design team is considering involves exploring job options with
veterans before sending them to training.  The team is also looking
at ways to improve staff skills in job finding and placement
activities.  VA hopes to begin implementing program changes in fiscal
year 1997. 


--------------------
\4 In general, VA classifies veterans with a 50-percent or greater
disability as potentially having a serious employment handicap.  VA
determines whether the applicant has a serious employment handicap
after evaluating the veteran's history, including the effects of
disability, prior training and employment, and other pertinent
factors. 

\5 VA is required to pay a subsistence allowance to veterans who
receive training to cover basic living expenses (38 U.S.C.  3108
(1994)). 

\6 Restoration is defined as providing those medical and medically
related services that are necessary to correct or substantially
modify a physical or mental condition.  Restoration services include
surgery, therapy, treatment, and hospitalization. 

\7 A severe disability is a physical or mental impairment that
seriously limits one or more functional capacities (such as mobility,
communication, self-care, self-direction, interpersonal skills, work
tolerance, or work skills) in terms of an employment outcome. 


   BACKGROUND
------------------------------------------------------------ Letter :2

In 1943, Public Law 78-16 authorized the vocational rehabilitation
program to provide training to veterans with service-connected
disabilities.  Between 1943 and 1980, program features and criteria
underwent several legislative changes.  In 1980, the Congress enacted
the Veterans' Rehabilitation and Education Amendments (P.L.  96-466),
which changed the program's purpose to providing eligible veterans
with services and assistance necessary to enable them to obtain and
maintain suitable employment. 

The vocational rehabilitation process has five phases.  In the first
phase, VA receives the veteran's application, establishes
eligibility, and schedules a meeting with the veteran.  In phase two,
a counselor determines if the veteran has an employment handicap and,
if so, the counselor and the veteran jointly develop a rehabilitation
plan.\8 The veteran then moves into training or education (phase
three), if needed, and on to employment services (phase four) if
training or education is not needed or after it is completed.  During
phase four, VA, state agencies, the Department of Labor, and private
employment agencies help the veteran find a job.  In phase five, the
veteran is classified as rehabilitated once he or she finds a
suitable job and holds it for at least 60 days. 

Veterans are eligible for program services if they have a 20-percent
or higher service-connected disability and they have been determined
by VA to have an employment handicap.\9 The law defines an employment
handicap as an impairment of a veteran's ability to prepare for,
obtain, or retain employment consistent with his or her abilities,
aptitudes, and interests.  Veterans with a 10-percent
service-connected disability also may be eligible if they have a
serious employment handicap.  The eligibility period generally
extends for 12 years, beginning on the date of the veteran's
discharge.  Veterans found eligible for services can receive up to 48
months of benefits during the 12-year period. 

While in the program, most veterans receive services and equipment
that may be required for beginning employment.  For instance,
veterans generally receive diagnosis and evaluation, as well as
counseling and guidance, and some receive such aids as prostheses,
eyeglasses, and educational supplies.  They may also receive
educational and vocational training; special rehabilitative services,
such as tutorial assistance and interpreter services; a subsistence
allowance; and employment assistance. 

Similar to the 1980 amendments, which affect the VA program, the
Rehabilitation Act of 1973, as amended, authorized the Department of
Education to provide eligible people (usually nonveterans) with
services and assistance to enable them to obtain and maintain
suitable employment.  Education provides federal funds to help people
with disabilities become employed, more independent, and better
integrated into the community.  The federal funds are chiefly passed
to state vocational rehabilitation agencies that directly provide
services and assistance to eligible people.  The federal share of
funding for these services is generally about 80 percent; the states
pay the balance.  In fiscal year 1995, about $2 billion in federal
funds went to the state program, and about 1.3 million people
received program services. 

The state vocational rehabilitation process, like the VA program
process, comprises five phases, and state vocational rehabilitation
clients who obtain and maintain a suitable job for at least 60 days
are also classified as rehabilitated.  However, in the state
vocational program, suitable employment may not always involve wages
or salary and may include, for example, working as an unpaid
homemaker or family worker.\10 To be eligible for the program, people
must have a disability that is a substantial impediment to
employment.  However, when states are unable to serve all eligible
applicants, priority is given to serving individuals with the most
severe disabilities. 

The state vocational rehabilitation program offers a wide range of
services to help its clients achieve their vocational goals. 
Examples of specific rehabilitation services include diagnosis and
evaluation, counseling and guidance, vocational and educational
training, physical restoration, adjustment training,\11 on-the-job
training, and employment assistance.  If needed, services such as
transportation to enable the individual to arrive at appointments for
rehabilitation services or to get to work and income maintenance to
cover additional costs incurred while the individual is receiving
specific rehabilitation services are also provided. 


--------------------
\8 A rehabilitation plan outlines specific services to be provided
the veteran, the duration of services, and a basis for assessing
progress toward the program goal. 

\9 Eligible veterans are assigned disability ratings ranging from 0
to 100 percent, in increments of 10 percent.  The rating represents
the average impairment in earning capacity resulting from
service-connected injuries or a combination of injuries. 

\10 The Department of Education defines an unpaid homemaker as
someone who keeps house for himself or herself or others living in
the same home.  An unpaid family worker is someone who works without
pay on a family farm or in a family business. 

\11 Adjustment training helps the client adjust to a particular
situation hindering his or her ability to work.  Such training
includes work conditioning, developing work tolerance, mobility
training, remedial training, literacy training, lip reading, and
braille. 


   VA'S VOCATIONAL REHABILITATION
   PROGRAM FACES CHALLENGES
------------------------------------------------------------ Letter :3

The 1980 Veterans' Rehabilitation and Education Amendments made a
significant change in VA's vocational rehabilitation program by
requiring VA to assist veterans in obtaining and maintaining suitable
employment.  This change expanded the scope of vocational
rehabilitation beyond just training and marked a fundamental change
in the focus and purpose of the program.  However, despite previous
GAO recommendations that VA fully implement this amendment and VA's
agreement to emphasize employment services, few veterans in the
vocational rehabilitation program obtain jobs.  Instead, VA staff
continue to focus on providing training services because, among other
reasons, they lack adequate training and expertise in job placement. 

In addition, our analysis of national program data revealed that the
percentage of veterans in the program with serious employment
handicaps has been steadily declining over the last 5 years.  Our
discussions with program officials also revealed that VA does not
have readily available cost data associated with rehabilitating
veterans.  We found, on the basis of our review of select case files,
that VA typically spends about $20,000 to rehabilitate each veteran. 


      VA CONTINUES TO PLACE FEW
      VETERANS
---------------------------------------------------------- Letter :3.1

In our 1992 report, we noted that approximately 202,000 veterans were
found eligible for vocational rehabilitation program services between
October 1983 and February 1991.  About 62 percent dropped out of the
program before ever receiving a rehabilitation plan, and an
additional 9 percent dropped out after receiving a plan.  VA
rehabilitated 5 percent of the eligible veterans, while the remaining
veterans (24 percent) continued to receive program services. 

From October 1991 to September 1995, 201,000 veterans applied to the
vocational rehabilitation program.  VA classified approximately
74,000 (37 percent) veterans eligible.\12 Of these veterans, 21
percent dropped out before receiving a plan, and another 20 percent
dropped out or temporarily suspended their program after receiving a
plan.  VA rehabilitated 8 percent of the eligible veterans, and the
remaining veterans (51 percent) were still receiving program services
at the time of our analysis. 

VA officials told us that the vocational rehabilitation program has
not been effective in placing veterans in suitable jobs.  The primary
reason for the low percentage of rehabilitations is the lack of focus
on employment services, according to VA officials.  The director of
VA's vocational rehabilitation program also acknowledged that the
program's rehabilitation rate needs to be improved and has
established a program goal of doubling the number of successful
rehabilitations over the next 2 years. 

Our analysis of current program participants\13 showed that almost
half of those veterans who were rehabilitated obtained employment in
the professional, technical, and managerial occupations--fields such
as engineering, accounting, and management.  In addition, we found
that the average starting salary of these veterans was about $18,000
a year.  Moreover, veterans who were rehabilitated spent an average
of 30 months in the program, while those who dropped out spent 22
months in the program. 


--------------------
\12 Of the 201,000 veterans who applied to the vocational
rehabilitation program, 55,000 (27 percent) were classified as
ineligible, 11,300 (6 percent) were awaiting an eligibility
determination, and 60,400 (30 percent) dropped out of the program. 

\13 We define current program participants as veterans who were in
the program from October 1, 1994, through February 1996. 


      VA DOES NOT EMPHASIZE
      EMPLOYMENT SERVICES
---------------------------------------------------------- Letter :3.2

VA's vocational rehabilitation program is primarily focused on
sending veterans to training rather than on finding them suitable
employment, according to VA officials.  In 1992, VA issued guidance
that emphasized the importance of finding suitable jobs for veterans
and suggested that field offices begin employment planning as soon as
a veteran's eligibility for the program services was established. 
However, regional officials told us that staff do not generally begin
exploring employment options until near the end of a veteran's
training. 

In 1992, we reported that 92 percent of veterans who received a plan
between October 1983 and February 1991 went from the evaluation and
planning phase directly into training programs, while only 3 percent
went into the employment services phase.  The remaining 5 percent
went into a program designed to help them live independently or were
placed in a controlled work environment.  These figures remained
virtually unchanged for the period we examined.  For example, from
October 1991 to September 1995, 92 percent of veterans who received a
plan went from the evaluation and planning phase into training
programs, while 4 percent went directly into the employment services
phase.  The remaining 4 percent entered an independent living program
or were placed in extended evaluation, as shown in figure 1. 

   Figure 1:  Services Provided
   After Evaluation and Planning,
   1991-95

   (See figure in printed
   edition.)

Source:  VA's computerized data system, October 1991-September 1995. 

Moreover, our analysis of national program data on current program
participants showed that the vast majority of veterans in training
were enrolled in higher education programs.  For example, about 91
percent of such veterans were enrolled in a university or college.\14

The remaining 9 percent were enrolled in vocational/technical schools
or participated in other types of training programs, such as
apprenticeships and on-the-job training. 

VA regional officials offered several reasons why staff continue to
emphasize training over employment services.  First, VA officials
told us that it is difficult for staff to begin exploring employment
options early because veterans entering the program expect to be able
to attend college.  Veterans acquire this expectation, according to
VA officials, because the program is often marketed as an education
program and not a jobs-oriented program.  This image of the program
as education oriented was also evident among some VA management.  For
instance, the director at one regional office we visited described
the vocational rehabilitation program as the "best education program
in VA."

A second reason for emphasizing training over employment, according
to VA officials, is that program staff generally lack adequate
training and expertise in job placement activities.  At one office,
for example, a counseling psychologist told us that program staff are
not equipped to find veterans jobs because they lack employer
contacts and detailed information on local labor markets.  In fact,
counseling psychologists at the regional offices we visited described
the employment services phase as "the weakest part of the program."

Third, VA officials told us that large caseloads make it difficult
for program staff to spend time exploring employment options with
veterans.  As one counseling psychologist responsible for managing
over 300 cases said, "with such a large caseload it's just easier to
place veterans in college for 4 years than it is to find them a job."
According to VA's Vocational Rehabilitation Service's Chief of
Program Operations, the optimal caseload per staff person is about
125. 


--------------------
\14 VA's national database captures the number of veterans enrolled
in college or vocational/technical schools.  However, several
regional office staff told us that a significant number of veterans
classified as attending college are actually enrolled in a
vocational/technical training program provided by a community
college.  VA officials are not able to estimate how many veterans
belong in this category. 


      CHARACTERISTICS OF
      PARTICIPANTS HAVE CHANGED
---------------------------------------------------------- Letter :3.3

In recent years, there has been a shift in the type of disabled
veteran participating in VA's vocational rehabilitation program.  For
example, during the period 1991 to 1995, the percentage of program
participants classified by VA as having a serious employment handicap
declined from 40 percent to 29 percent, as shown in figure 2. 

   Figure 2:  Percentage of
   Program Participants With
   Serious Employment Handicaps,
   1991-95

   (See figure in printed
   edition.)

Source:  GAO analysis of VA Chapter 31 Target System. 

During the same period, the percentage of program participants with
disabilities rated at 50 percent or higher declined from 26 percent
to 17 percent.\15 Meanwhile, the percentage of program participants
with disabilities rated at 10 and 20 percent increased from 34
percent to 42 percent.  Figure 3 shows the changes in program
participants' characteristics for the period 1991 to 1995. 

   Figure 3:  Program
   Participation by Percentage of
   Disability, 1991-95

   (See figure in printed
   edition.)

Source:  GAO analysis of VA Chapter 31 Target System. 

In addition, our analysis of national program data provided
demographic information on current program participants.  For
example, over 90 percent of the veterans who applied for program
services were male, and the median age was 44 years.  Also, at the
time of their application, over 90 percent of the veterans had
completed high school; of these, almost 25 percent had also completed
1 or more years of college. 


--------------------
\15 As we reported in Vocational Rehabilitation:  VA Needs to
Emphasize Serving Veterans With Serious Employment Handicaps
(GAO/HRD-92-133, Sept.  28, 1992), this trend began in 1985. 


      VA DOES NOT HAVE READILY
      AVAILABLE DATA ON THE COST
      OF PROVIDING REHABILITATION
      SERVICES
---------------------------------------------------------- Letter :3.4

VA headquarters and regional agency officials did not know the costs
associated with providing rehabilitation services to individual
veterans.  VA officials told us that, although cost information is
located in individual veterans' case files, it is not compiled or
analyzed. 

Our review of 59 rehabilitated case files at four regional offices
showed that VA spent, on average, about $20,000 to rehabilitate each
veteran.  The exact cost associated with rehabilitating veterans
depends on the type and duration of services provided.  Our analysis
also showed that, generally, over half of the total cost of
rehabilitation services consisted of subsistence allowances. 
Following are specific examples of costs associated with
rehabilitating some clients. 

  -- VA spent about $23,000 to rehabilitate a veteran who had a
     10-percent disability for lower back strain.  While in the
     program, the veteran obtained a BS degree in education and
     eventually obtained a job as an elementary school teacher
     earning $25,000 a year. 

  -- VA spent over $20,000 to rehabilitate a veteran who had a
     20-percent disability for lower back strain.  The veteran, who
     was attending college under the Montgomery G.I.  Bill and
     working part time before entering the program, obtained a
     bachelor's degree in sociology and, ultimately, a position as an
     advocate for the elderly, earning less than $20,000 a year. 

Our review of 43 program dropout case files--"discontinued" case
files--showed that VA spent, on average, about $10,000 each on
veterans who did not complete the program.  Following are specific
examples of costs associated with veterans who did not complete the
program. 

  -- VA spent over $46,000 on tuition and subsistence to rehabilitate
     a veteran who had a 10-percent disability.  The veteran dropped
     out of college after 4 years because of medical treatment for
     depression and marginal academic progress. 

  -- VA spent over $6,000 on a 20-percent-disabled veteran who
     dropped out of the program after about a year.  The veteran
     stopped attending college classes because of unsatisfactory
     academic progress. 


   EXPERIENCE OF STATE VOCATIONAL
   REHABILITATION PROGRAM
------------------------------------------------------------ Letter :4

The state vocational rehabilitation program places over one-third of
its clients in employment.  Our analysis of 1993 national program
data, the most current data available, showed that state agencies
provide a mix of services to meet their clients' rehabilitation
needs.\16 Our analysis also showed that most clients in the state
program had severe disabilities.  Furthermore, the state program
spends, on average, about $3,000 on each rehabilitated client. 


--------------------
\16 In this section, we addressed issues such as services rendered,
client characteristics, and program cost by analyzing data in the
Department of Education's 1993 Case Service Reports.  Information in
the Case Service Reports covers all accepted clients whose cases were
closed in 1993--clients were rehabilitated, dropped out before a
rehabilitation plan was developed or before services were initiated,
or dropped out after receiving some services. 


      OVER ONE-THIRD OF STATE
      PROGRAM CLIENTS OBTAIN
      EMPLOYMENT
---------------------------------------------------------- Letter :4.1

From October 1991 through June 1995, about 2.6 million individuals
were found eligible for state vocational rehabilitation program
services.  About 10 percent of these individuals dropped out of the
state program before a rehabilitation plan could be initiated, and an
additional 22 percent dropped out after a plan was initiated.  The
state agencies rehabilitated 37 percent of the eligible individuals,
and the remaining individuals (31 percent) were still receiving
program services at the time of our analysis. 

Clients in the state program are considered successfully
rehabilitated even if they achieve outcomes other than employment
that provides a wage or salary.  For example, in fiscal year 1993,
clients who obtained unpaid work or attained homemaker status
composed about 9 percent of all rehabilitations.  However, the
majority of clients rehabilitated under the state program obtained
such salaried positions as janitor, baker, office clerk, or cashier. 
On average, a person rehabilitated under the state program typically
earned a starting salary of about $10,000 a year.  Moreover, clients
who were rehabilitated spent on average 17 months in the program, and
clients who dropped out of the program after receiving a plan and at
least one rehabilitative service spent 23 months. 


      STATE VOCATIONAL
      REHABILITATION PROGRAM
      PROVIDES A MIX OF SERVICES
---------------------------------------------------------- Letter :4.2

The state vocational rehabilitation program provides a wide range of
services designed to help people with disabilities prepare for and
engage in gainful employment to the extent of their capabilities.  In
fiscal year 1993, the state agencies provided evaluation and
counseling services to almost all program participants.  Additional
services provided included restoration (33 percent of participants);
transportation (33 percent); job finding services, such as resume
preparation and interview coaching (31 percent); and
college/university (12 percent), business/vocational training (12
percent), and on-the job training (6 percent). 


      MOST STATE PROGRAM CLIENTS
      ARE SEVERELY DISABLED
---------------------------------------------------------- Letter :4.3

Our analysis of 1993 national program data showed that people with
severe disabilities make up the majority of clients in the state
vocational rehabilitation program.  For example, people with severe
disabilities composed 73 percent of the state program's total client
population. 

Our analysis of national data also provided demographic information
on the clients who applied to the program.  For example, almost 60
percent of the clients who applied for program services were male,
and the median age was 34 years.  In addition, at the time of their
application, 43 percent of the clients had not completed high school,
while 17 percent had completed 1 or more years of college. 


      COST VARIES SLIGHTLY AMONG
      REHABILITATED AND DROPOUTS
---------------------------------------------------------- Letter :4.4

Our analysis of national program data showed that in fiscal year
1993, the state vocational rehabilitation agencies spent, on average,
about $3,000 on each client who was rehabilitated.  State agency
staff spent funds providing or arranging services on behalf of
clients, including assessment, training, medical services,
transportation, and personal assistance.  These costs exclude costs
incurred for program administration and for salaries of counselors
and other staff, and the state vocational program does not provide
clients money for basic living expenses.\17 Following are examples of
costs associated with rehabilitating clients, which we obtained from
our review of case files of 41 rehabilitated clients at four regional
offices. 

  -- In one case, the state program spent about $4,000 to
     rehabilitate an illiterate client suffering from mild
     retardation.  The client was severely disabled and had not
     completed high school.  The client was provided adjustment
     training and obtained a job working 3 hours a week as a stock
     person at a hardware store making $4.50 an hour. 

  -- In a second case, the state program spent about $6,000 to
     rehabilitate a client with a learning disability and chronic
     back pain.  The client was severely disabled but had graduated
     from high school.  The client was provided clerical training and
     obtained a job working full time as a food service attendant
     making $4.50 an hour. 

The national data also showed that the state program spent, on
average, about $2,000 on each client who did not complete the program
after receiving a plan.  Following are examples of costs associated
with clients who did not complete the program, which we obtained from
our review of 40 discontinued case files. 

  -- In one case, the state program spent about $4,500 on a client
     who dropped out because she became pregnant.  The client was
     deaf and classified as severely disabled.  She had problems
     communicating and had not completed high school.  The client's
     rehabilitation goal involved pursuing an associate's degree and
     obtaining a job as an office clerk. 

  -- In a second case, the state program spent about $3,500 on a
     client who dropped out because he lacked the motivation to
     continue in the program.  The client, who suffered from epilepsy
     and moderate retardation and was classified as severely
     disabled, was provided work adjustment training. 


--------------------
\17 Although the state vocational program does not provide monthly
monetary benefits in the form of a subsistence allowance, it may
provide clients with money to cover additional costs incurred while
they are receiving certain vocational rehabilitation services.  In
1993, 21 percent of clients received this service, which is called
income maintenance. 


   VA HAS BEGUN TO TAKE STEPS TO
   IMPROVE PROGRAM EFFECTIVENESS
------------------------------------------------------------ Letter :5

In response to prior GAO and VA reports that recommended that VA
emphasize finding jobs for veterans, VA has begun to reengineer its
vocational rehabilitation program.\18 The overall objective of VA's
reengineering effort is to increase the number of veterans who obtain
suitable employment through improvements in program management. 
Under new program leadership, VA's Vocational Rehabilitation and
Counseling Service established a design team in 1995 to restructure
the program by focusing on finding veterans suitable employment,
making use of automation, and identifying factors that detract from
program efficiency.  VA consulted with state and private-sector
vocational rehabilitation officials, veterans' service organizations,
the Department of Labor, and private contractors to help it identify
needed program improvements. 

VA's design team has identified several key initiatives aimed at
improving program effectiveness.  For example, VA plans to emphasize
employment by exploring job options with veterans before sending them
to training.  VA also plans to develop marketing strategies that
emphasize employment services.  This initiative may involve revising
existing pamphlets and brochures and developing informational videos. 
Further, VA plans to assess and develop program staff skills to
ensure that staff have the necessary expertise to provide employment
services. 

VA is also piloting an automated data management system designed to
capture key information on program participants, such as the cost of
providing rehabilitation services.  VA officials told us that this
information would be helpful in targeting ways to make the program
more cost effective. 

VA also plans to conduct nationwide telephone surveys to determine
why veterans drop out of the program.  Officials told us that knowing
this information will help them better identify problems veterans
encounter with program services and develop plans that enhance
veterans' chances of successfully completing the program. 

VA is in the early stages of its reengineering effort and has not
implemented any of the design team's initiatives.  The Chairman of
VA's design team told us that VA plans to begin implementing these
initiatives nationwide by the end of fiscal year 1997. 


--------------------
\18 GAO/HRD-84-39, May 23, 1984; GAO/HRD-92-100, Sept.  4, 1992; and
Veterans Benefits Administration, Study of Vocational Rehabilitation
and Counseling Service (Washington, D.C.:  VA, Sept.  7, 1993). 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Despite a legislative mandate enacted 16 years ago requiring VA to
help program participants obtain suitable jobs and prior GAO reports
documenting VA's limited success, VA's vocational rehabilitation
program continues to rehabilitate few disabled veterans.  Currently,
new program leadership recognizes the need to refocus the program
toward the goal of employment and has taken steps to improve the
program's effectiveness.  However, the concerns addressed in this
letter are long standing, and VA's reengineering efforts have not
been completed.  The success of VA's efforts will depend on which
initiatives VA adopts and how they are implemented. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We received comments from the Department of Education and VA on a
draft of this report.  Education agreed with our findings and offered
some technical suggestions, which we incorporated where appropriate. 

VA said it generally agreed with our findings and that its current
reengineering initiative will successfully address all of the
concerns we raised.  However, VA cited a number of concerns with the
information contained in the draft.  For example, VA took issue with
our finding that 8 percent of eligible veterans are rehabilitated. 
Instead, VA claims that 32 percent are rehabilitated and that this
rate compares favorably with the 37-percent rehabilitation found in
the state program.  We disagree.  VA based their rehabilitation
percentage on the number of veterans who left the program (about
19,000)--a combination of veterans who dropped out or interrupted
their program of services, as well as those who were
rehabilitated--as opposed to the total number of eligible veterans
(about 74,000).  VA's approach inflates the VA rehabilitation rate. 
Using VA's approach, the state program would have an even higher
rehabilitation rate--more than 60 percent.  The fact remains,
however, that of the 74,000 veterans found eligible for program
services, 6,000 successfully completed the program. 

VA also took exception with our discussion of its lack of focus on
employment services.  VA contends it has consistently focused on the
necessity of providing meaningful employment services, a goal that is
outlined in policy directives and reinforced with comprehensive staff
training.  Our report acknowledges that VA issued guidance in 1992
that emphasized employment services.  However, VA staff that
administered and implemented the program in the four locations we
visited told us that they do not emphasize employment until near the
end of a veteran's training.  Furthermore, the Chairman of VA's
design team, an individual charged with evaluating and restructuring
the program, told us that the primary reason for the program's low
rehabilitation rate is VA's lack of focus on employment services. 
Regarding VA's claim it provides comprehensive staff training, the
Program Operations Chief told us that other than a week-long seminar
on employment services presented about 2 to 3 years ago, VA
headquarters has not sponsored staff training in employment
assistance.  Further, as already reported, staff in the regional
offices that we visited told us they are not adequately trained in
job placement activities. 

VA also took issue with our discussion of its lack of knowledge of
the costs associated with providing rehabilitation services to
individual veterans.  VA claims that it has this information and can
retrieve it at any time, although doing so is a laborious process. 
However, we saw no evidence that VA officials knew the costs
associated with providing rehabilitation services.  Neither the Chief
of Program Operations nor officials located in the four regional
offices that we visited could provide us with the costs associated
with rehabilitating a veteran.  Instead, we were always directed to
the case files and, in some regional offices, to the finance section
to obtain this information. 

VA also expressed concern that our random sample of program
participant cases was not representative of the veterans that VA
serves.  VA asserted that "a more appropriate sample could readily
come up with examples of veterans with more profound disabilities who
are earning handsome salaries as a result of their participation in
VA's vocational rehabilitation program." As we have pointed out, the
results of our sample of 102 individual veteran case files are
neither representative nor generalizable to all program participants. 
Our purpose in sampling program participants was to furnish examples
of costs associated with providing rehabilitation services, not to
demonstrate the severity of disabilities represented in the program
or the average salaries of program participants.  We addressed the
issues of disability severity and salary using VA's national database
and discussed them in other sections of the report. 

VA's comments in their entirety appear as appendix II. 


---------------------------------------------------------- Letter :7.1

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter.  At that time, we will send copies to
the Secretary of Veterans Affairs and other interested parties. 

This work was performed under the direction of Irene Chu, Assistant
Director, Veterans' Affairs and Military Health Care Issues.  If you
or your staff have any questions, please contact Ms.  Chu or me on
(202) 512-7101.  Other major contributors to this report are listed
in appendix III. 

Sincerely yours,

David P.  Baine
Director, Veterans' Affairs and
 Military Health Care Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

We designed our study to collect national information on the
characteristics of VA and state vocational rehabilitation clients,
the services they received, and the outcomes they achieved.  We also
obtained information on the costs associated with providing
rehabilitation services to clients in each program.  In doing our
work, we examined VA and Department of Education databases.  We also
interviewed VA and Education officials at the national and regional
levels during site visits at VA and state vocational rehabilitation
facilities in four judgmentally selected locations. 


      NATIONAL DATABASES
------------------------------------------------------- Appendix I:0.1

We examined VA and Education vocational rehabilitation databases to
obtain national information on the percentage of clients
rehabilitated, client characteristics, and services provided. 
However, we did not verify the information included in the databases. 
To determine the percentage of veterans rehabilitated, we analyzed
VA's Chapter 31 Target System database for the period October 1991
through September 1995.  We also compiled information on client
characteristics of and services provided to veterans currently
participating in the program.  We define current participants as
veterans who were not rehabilitated or discontinued prior to the
beginning of fiscal year 1995 and were in one of the program's five
phases on February 7, 1996. 

For the state vocational rehabilitation program, we analyzed data
from two Education databases.  To address the percentage of the
clients rehabilitated, we reviewed Education's Quarterly Cumulative
Caseload Reports for October 1991 through June 1995.  This report
provides aggregate data on the cases handled by state rehabilitation
agencies. 

To obtain information on demographic characteristics and services
provided, we analyzed Education's Case Service Reports.  The Case
Service Reports contain information collected from the state agencies
at the end of each fiscal year on the characteristics of each client
whose case was closed that year, as well as on the general types of
services that each client received and his or her employment status
in the week of case closure.  At any particular time, Education may
be waiting for original or corrected data from one or more states for
1 or more years.  At the time we began our study, the most recent
full year for which largely complete data were available was fiscal
year 1993. 


      SITE VISITS
------------------------------------------------------- Appendix I:0.2

We conducted site visits at VA regional offices and state vocational
rehabilitation agencies at four locations from January 1996 through
March 1996.  We visited VA and state vocational rehabilitation
facilities in Milwaukee, Wisconsin; New Orleans, Louisiana; Roanoke,
Virginia; and Portland, Oregon.  We selected the sites judgmentally
to include VA and state agencies that (1) were located in different
regions, (2) were varied in staff size and workload, and (3) had
ongoing initiatives to improve their vocational rehabilitation
program. 

During these site visits, we interviewed vocational rehabilitation
officials on various aspects of the program operations, reviewed
selected case files, and discussed the specific cases with program
specialists.  At each VA regional office and state agency visited, we
randomly selected and reviewed 9 to 12 case files of program
participants who had been rehabilitated or had dropped out of the
program between January 1 and June 30, 1995.  Because the total
number of rehabilitated cases available at VA's field office in
Portland, Oregon, was relatively small, we reviewed all 30 cases.  We
reviewed a total of 183 vocational rehabilitation cases:  102 at VA's
regional offices and 81 at the state agencies.  These cases did not
compose a representative sample of each site's rehabilitation or
dropout cases; thus, our results cannot be generalized. 

From case file reviews and discussions with program specialists, we
obtained detailed information on client characteristics; services
provided; and, when applicable, the type of employment obtained and
starting salary.  Also from the case files, we determined the costs
associated with providing rehabilitation services to program
participants, such as how much was spent for basic education and
vocational training, readjustment training, physical restoration, and
other support services. 




(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
VETERANS AFFAIRS
=========================================================== Appendix I



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

Irene Chu, Assistant Director, (202) 512-7101
Jaqueline Hill Arroyo, Evaluator-in-Charge, (202) 512-6753
Julian Klazkin, Senior Attorney
Steve Morris, Evaluator
Michael O'Dell, Senior Social Science Analyst
Jeffrey Pounds, Evaluator
Pamela Scott, Communications Analyst
Joan Vogel, Senior Evaluator (Computer Science)


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