National Cemetery System: Opportunities To Expand Cemeteries' Capacities
(Letter Report, 09/10/97, GAO/HEHS-97-192).

Pursuant to a congressional request, GAO reviewed the Department of
Veterans Affairs, National Cemetery System (NCS), focusing on: (1) NCS'
plans for addressing veterans' future burial demands; (2) the relative
30-year costs of three types of cemeteries: casket-only internment,
cremated internment in columbarium niches, and in-ground internment of
cremated remains; and (3) what NCS can do to extend the service period
of existing national cemeteries.

GAO noted that: (1) NCS projects that demand for veterans' burial
benefits will increase; (2) NCS has adopted a 5-year strategic plan with
the goal of ensuring that burial in a national or state veterans'
cemetery is an available option for all veterans and their eligible
family members; (3) strategies outlined in NCS' plan include: (a)
establishing five new national cemeteries; (b) developing available
space for cremated remains; (c) acquiring contiguous land at existing
cemeteries; and (d) encouraging states to provide additional burial
sites through participation in the State Cemetery Grants Program; (4)
the strategic plan does not tie its goals to external factors, such as
the mortality rate for veterans and veterans' relative preferences for
burial options, that will affect the need for additional cemetery
capacity; (5) it is unclear how NCS will address burial demand during
the peak years when pressure on it will be greatest, since NCS has not
developed a strategic plan for beyond 2000; (6) according to NCS' Chief
of Planning, beyond 2000, NCS will continue using the basic strategies
outlined in its current 5-year plan; (7) NCS plans to encourage states
to establish veterans' cemeteries in areas where it does not plan to
operate national cemeteries; (8) fewer than half of the states have
established veterans' cemeteries; (9) states also have shown limited
interest in a legislative proposal to increase state participation by
increasing the share of federal funding; (10) GAO estimated the present
value of the costs of three types of cemeteries, each with 50,000 burial
sites, over a 30-year period; (11) planning, designing, constructing,
and operating a cemetery of casket grave sites and no other burial
options would be the most expensive interment option available; (12) the
costs for a cemetery that offered only a columbarium and one that
offered only in-ground cremains sites would be about the same; (13)
while the cost of a casket-only cemetery would be over $50 million, the
cost of a cremains-only cemetery would be about $21 million; (14) while
the majority of veterans and eligible family members prefer a casket
burial, cremation is an acceptable interment option for many, and the
demand for cremation continues to increase; (15) as annual internments
increase, cemeteries will reach their burial capacity, increasing the
importance of making the most efficient use of available cemetery space;
and (16) GAO's analysis of three interment options showed that
columbaria offer the most efficient interment option because they would
involve the lowest average burial cost and would significantly extend a
cemetery's service period.

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

 REPORTNUM:  HEHS-97-192
     TITLE:  National Cemetery System: Opportunities To Expand 
             Cemeteries' Capacities
      DATE:  09/10/97
   SUBJECT:  Veterans
             Veterans benefits
             Proposed legislation
             Cost sharing (finance)
             Grants to states
             Strategic planning
IDENTIFIER:  VA National Cemetery System
             VA State Cemetery Grants Program
             VA Headstones and Markers Program
             VA Presidential Memorial Certification Program
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Benefits, Committee on
Veterans' Affairs, House of Representatives

September 1997

NATIONAL CEMETERY SYSTEM -
OPPORTUNITIES TO EXPAND
CEMETERIES' CAPACITIES

GAO/HEHS-97-192

National Cemetery System

(105748)


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

  CANA - Cremation Association of North America
  FTE - full-time-equivalent
  GS - general schedule
  NCS - National Cemetery System
  SSA - Social Security Administration
  VA - Department of Veterans Affairs
  WG - wage grade

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


B-277569

September 10, 1997

The Honorable Jack Quinn
Chairman, Subcommittee on Benefits
Committee on Veterans' Affairs
House of Representatives

Dear Mr.  Chairman: 

The National Cemetery System (NCS) of the Department of Veterans
Affairs (VA) provides interment of eligible veterans and their
families upon demand in national cemeteries.  In fiscal year 1996, VA
provided burial benefits to about 72,000 veterans and their family
members and had an appropriation of about $73 million for interments
and related program services.\1 With the aging of World War II
veterans, the numbers of veteran deaths and interments performed by
NCS continue to grow each year and are projected to peak between 2005
and 2010.  In addition, due to the depletion of available grave
sites, over half of the national cemeteries will be unable to
accommodate casket burials of "first family members" before then.\2
Therefore, it is important that NCS develop long-range plans for
addressing veterans' future burial needs. 

This letter responds to your concerns about NCS' ability to
accommodate the increasing demand for burial benefits.  Specifically,
you requested that we (1) assess NCS' plans for addressing veterans'
future burial demands; (2) determine the relative 30-year costs of
three types of cemeteries:  one providing only casket interment,
another providing only interment of cremated remains in columbarium
niches, and a third providing only in-ground interment of cremated
remains;\3 and (3) identify what NCS can do to extend the service
period of existing national cemeteries. 

To address your request, we met with NCS officials responsible for
planning, expanding, and constructing national and state veterans'
cemeteries.  We reviewed legislation, regulations, operating
procedures, strategic plans, and program management reports.  We also
prepared an analysis of the costs for three types of national
cemeteries and provided a comparison of the present value of the
estimated costs for each type of cemetery.\4 (See app.  I for a
detailed discussion of the methodology and data used in the cost
analysis.)

In addition, we visited the NCS area office in Atlanta, Georgia, and
national cemeteries in four localities--San Diego, Riverside, and Los
Angeles, California, and Seattle, Washington--to obtain information
on planned burial site development projects; the use of cremation
within the cemetery service area; and the construction and
maintenance costs of casket graves, columbaria, and in-ground
cremains sites.  We selected the national cemeteries in the first
three localities because they offered interment of cremains in both
columbaria and in-ground sites during fiscal year 1996.  Moreover,
the Los Angeles National Cemetery operates and maintains the oldest
columbarium in the system.  Tahoma National Cemetery, in the fourth
locality, is the most recently constructed national cemetery, and its
cost figures are the basis for our 30-year cost estimates.  We did
our work between November 1996 and July 1997 in accordance with
generally accepted government auditing standards. 


--------------------
\1 In addition to burying eligible veterans, NCS manages three
related programs:  Headstones and Markers; Presidential Memorial
Certificates; and State Cemetery Grants, which provides financial aid
to states establishing, expanding, or improving state veterans'
cemeteries.  (See the background section for a discussion of each of
these programs.)

\2 Currently, veterans who choose casket burial are allotted one plot
that can hold two caskets, one above the other.  The first eligible
family member who dies and is buried in such a plot, which may or may
not be the veteran, is called the first family member; the second
family member who dies and is buried in such a plot is called the
subsequent family member. 

\3 Columbarium niches are recessed compartments within a
structure--called a columbarium--that hold cremation urns.  In-ground
cremated remains (cremains) sites are small burial sites, generally 3
feet by 3 feet. 

\4 "Present value" is defined as the current worth of money expected
to be spent at a future date.  A dollar available at some date in the
future is valued at less than a dollar available today because the
latter could be invested at interest in the interim.  Unless
otherwise noted, when we refer to "30-year costs" in this report, we
mean present value. 


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

As veteran deaths increase, NCS projects that demand for veterans'
burial benefits will also increase.  For example, NCS projects the
number of annual interments will increase over 40 percent between
1995 and 2010.  NCS has adopted a 5-year strategic plan for fiscal
years 1996 through 2000 with the goal of ensuring that burial in a
national or state veterans' cemetery is an available option for all
veterans and their eligible family members.  Strategies outlined in
NCS' plan include (1) establishing five new national cemeteries, (2)
developing available space for cremated remains, (3) acquiring
contiguous land at existing cemeteries, and (4) encouraging states to
provide additional burial sites through participation in the State
Cemetery Grants Program.  However, the strategic plan does not tie
its goal to external factors, such as the mortality rate for veterans
and veterans' relative preferences for various burial options, that
will affect the need for additional VA and state cemetery capacity. 
In addition, it is unclear how NCS will address the veterans' burial
demand during the peak years (2005 through 2010), when pressure on it
will be greatest, since NCS has not developed a strategic plan for
the period beyond the year 2000.\5 According to NCS' Chief of
Planning, beyond 2000, NCS will continue using the basic strategies
outlined in its current 5-year plan.  For example, NCS plans to
encourage states to establish veterans' cemeteries in areas where it
does not plan to operate national cemeteries.  However, since the
grant program's inception in 1978, fewer than half of the states have
established veterans' cemeteries.  States also have shown limited
interest in a legislative proposal designed to increase state
participation by increasing the share of federal funding. 

In connection with NCS' plans to develop land to achieve its goal, we
estimated the present value of the costs of three types of
cemeteries, each with 50,000 burial sites, over a 30-year period. 
Our analysis showed that planning, designing, constructing, and
operating a cemetery of casket grave sites and no other burial
options would be the most expensive interment option available.\6
Moreover, the costs for a cemetery that offered only a columbarium
and one that offered only in-ground cremains sites would be about the
same.  Thus, while the cost of a casket-only cemetery would be over
$50 million, the cost of a cremains-only cemetery would be about $21
million.  This cost difference is primarily attributable to the lower
operating and land development costs of cremains cemeteries.\7

Finally, while the majority of veterans and eligible family members
prefer a casket burial, cremation is an acceptable interment option
for many, and the demand for cremation, which varies by region,
continues to increase.  Moreover, as annual interments increase,
cemeteries will reach their burial capacity, thus increasing the
importance of making the most efficient use of available cemetery
space.  To identify feasible approaches to extending the service
period of existing cemeteries, we analyzed the impact of adding
burial sites to an acre of land in an existing cemetery.\8

Our analysis of three interment options showed that columbaria offer
the most efficient interment option because they would involve the
lowest average burial cost and would significantly extend a
cemetery's service period.  For example, the average cost for a
burial in a columbarium would be less than half the cost of a casket
burial and slightly less than an in-ground cremains burial.  Our
analysis also showed that the total service period of a cemetery
offering only columbaria could be about 50 years longer than the
service period of a cemetery offering only casket or in-ground
cremains burials. 


--------------------
\5 NCS recently drafted a strategic plan to cover fiscal years 1998
through 2003; however, like the current plan, it does not address how
NCS plans to deal with the veterans' burial demand during the peak
years. 

\6 We also evaluated the three types of cemeteries over a 50-year
period (see app.  I).  We found that differences in the relative
costs of using caskets and cremation are roughly the same over a
50-year period as over a 30-year period. 

\7 Land development costs include site preparation (for example,
grading, landscaping, providing irrigation, building roads, and
providing for storm drainage) and site furnishing (for example,
providing benches and flagpoles). 

\8 We assumed an acre of land composed of parcels of land not
contiguous to each other. 


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

The National Cemeteries Act of 1973 (P.L.  93-43) authorized NCS to
bury eligible veterans and their family members in national
cemeteries.  NCS operates and maintains 114 national cemeteries
located in 38 states and Puerto Rico.  In fiscal year 1996, NCS
performed about 72,000 interments and maintained more than two
million burial sites and over 5,600 acres of land developed for
interment purposes. 

NCS offers veterans and their eligible family members the options of
casket interment and interment of cremated remains in the ground (at
most cemeteries) or in columbarium niches (at nine cemeteries).  NCS
determines the number and type of burial options available at each of
its national cemeteries.  The standard size of casket grave sites,
the most common burial choice, is 5 feet by 10 feet, and the grave
sites are prepared to accommodate two caskets stacked one on top of
the other.  A standard in-ground cremains site is 3 feet by 3 feet
and can generally accommodate one or two urns.  The standard
columbarium niche used in national cemeteries is 10 inches wide, 15
inches high, and 20 inches deep.  Niches are generally arrayed side
by side, four units high, and can hold two or three urns, depending
on urn size.  Figure 1 shows a columbarium and in-ground cremains
sites at national cemeteries. 

   Figure 1:  Columbarium and
   In-Ground Cremains Sites at
   National Cemeteries

   (See figure in printed
   edition.)

Armed forces members who die while on active duty and certain
veterans are eligible for burial in a national cemetery.  Eligible
veterans must have been discharged or separated from active duty
under other than dishonorable conditions and have completed the
required period of service.\9 People entitled to retired pay as a
result of 20 years' creditable service with a reserve component of
the armed services are also eligible.  U.S.  citizens who have served
in the armed forces of a government allied with the United States in
a war may also be eligible.  The benefit of burial in a national
cemetery is further extended to spouses and minor children of
eligible veterans and of active duty members of the armed forces.  A
surviving spouse of an eligible veteran who later marries a
nonveteran, and whose remarriage is terminated by death or divorce,
is also eligible for burial in a national cemetery. 

Burial in a VA cemetery includes, at no cost to the veteran, one
grave site for the burial of all eligible family members.  Also
included are the opening and closing of the grave, perpetual care of
the site, and a government headstone or marker and grave liner. 
Veterans' families are required to pay for services provided by
funeral directors and additional inscriptions on the headstone or
marker.  Generally grave sites may not be reserved; space is assigned
at the time of need on the basis of availability. 

In addition to burying eligible veterans and their families, NCS
manages three related programs:  (1) the Headstones and Markers
Program, which provides headstones and markers for the graves of
eligible people in national, state, and private cemeteries; (2) the
Presidential Memorial Certificates Program, which provides
certificates to the families of deceased veterans recognizing their
contributions and service to the nation; and (3) the State Cemetery
Grants Program, which provides aid to states in establishing,
expanding, or improving state veterans' cemeteries. 

In 1978, Public Law 95-476 authorized NCS to administer the State
Cemetery Grants Program, under which states receive financial
assistance to provide burial space for veterans and eligible
dependents.  State veterans' cemeteries supplement the burial service
provided by NCS.  The cemeteries are operated and permanently
maintained by the states.  A grant may not exceed 50 percent of the
total value of the land and the cost of improvements.  The remaining
amount must be contributed by the state.  The State Cemetery Grants
Program has funded the establishment of 28 veterans' cemeteries,
including three cemeteries currently under development, located in 21
states, Saipan, and Guam.  The program has also provided grants to
state veterans' cemeteries for expansion and improvement efforts. 

While VA strongly encourages states to adopt the eligibility criteria
applied to national cemeteries, states have been allowed to establish
eligibility criteria for interments that differ from VA-established
criteria, but only if their criteria are more restrictive than those
established for national cemeteries.  In other words, state veterans'
cemeteries cannot be used for the interment of people who are not
eligible for burial in a national cemetery.  Most states have a
residency requirement, and some states restrict eligibility to
veterans who were honorably discharged, had wartime service, or both. 


--------------------
\9 Veterans who entered active duty as enlisted persons before Sept. 
7, 1980, or as officers before Oct.  17, 1981, are eligible for
burial in a national cemetery.  Veterans who entered active duty
after these times, with certain exceptions, must have served for a
minimum of 24 months or the full period for which they were called to
active duty. 


   NCS STRATEGIC PLAN DOES NOT
   ADDRESS LONG-TERM BURIAL DEMAND
------------------------------------------------------------ Letter :3

As the veteran population ages, NCS projects the demand for burial
benefits to increase.  NCS has a strategic plan for addressing the
demand for veterans' burials up to fiscal year 2000, but the plan
does not tie its strategic and performance goals to external factors
such as veterans' mortality rates and preferences for burial
options--that is, caskets, in-ground cremains, or columbaria niches. 
In addition, NCS' strategic plan does not address long-term burial
needs--that is, the demand for benefits during the expected peak
years of veteran deaths, when pressure on the system will be
greatest.  Beyond the year 2000, NCS officials said they will
continue using the basic strategies contained in the current 5-year
plan. 


      DEMAND FOR VETERANS' BURIAL
      BENEFITS PROJECTED TO
      INCREASE
---------------------------------------------------------- Letter :3.1

With the aging of the veteran population, veteran deaths continue to
increase each year.  For example, NCS projects annual veteran deaths
will increase about 20 percent between 1995 and 2010, from 513,000 to
615,000, as shown in figure 2.  Moreover, NCS projects that veteran
deaths will peak at about 620,000 in 2008.  The demand for veterans'
burial benefits is also expected to increase.  For example, NCS
projects annual interments will increase about 42 percent between
1995 and 2010, from 73,000 to 104,000.  NCS projects that annual
interments will peak at about 107,000 in 2008. 

   Figure 2:  Estimated Number of
   Veteran Deaths, 1995-2040

   (See figure in printed
   edition.)

Source:  NCS national data. 


      FIVE-YEAR PLAN HAS MULTIPLE
      STRATEGIES
---------------------------------------------------------- Letter :3.2

According to its 5-year strategic plan (1996-2000), one of NCS'
primary goals is to ensure that burial in a national or state
veterans' cemetery is an option for all eligible veterans and their
family members.  The plan sets forth four specific strategies for
achieving this goal.  First, NCS plans to establish, when feasible,
new national cemeteries.  NCS is currently establishing five new
national cemeteries, which are in various stages of development, and
projects that all will be operational by 2000.\10

A second strategy for addressing veterans' burial demand is to
develop available space for cremated remains.  NCS plans to survey
national cemeteries to determine what space is available for use as
in-ground cremains sites, construct additional columbaria at eight
existing cemeteries, and include columbaria at the five new
cemeteries. 

Third, NCS plans to acquire land through purchase or donation.  NCS
plans to use this land to extend the burial capacity and service
period of national cemeteries currently projected to run out of
available grave sites. 

Fourth, NCS plans to encourage states to provide additional burial
sites for veterans through participation in the State Cemetery Grants
Program.  According to the plan, NCS plans to identify and prioritize
those states most in need of a veterans' cemetery; design a marketing
strategy for those states; visit a minimum of four of those states
annually until all prioritized states have been visited; and
participate in the state conferences of at least three veterans'
service organizations (for example, the American Legion and the
Veterans of Foreign Wars) each year. 

In addition to the strategic and performance goals, the plan also
discusses assumptions, such as veterans' demographics (the projected
increases in veteran deaths and interments), and external factors,
such as resource constraints, that could delay achievement of the
plan's performance goals.  However, the plan does not tie the
strategic and performance goals to its assumptions.  For example,
while the plan includes some data on demographic trends in the
veteran population, it does not explain how these data were used in
setting strategic goals, or how they will be used to measure progress
in achieving these goals.  Neither does the plan tie its strategic
and performance goals to external factors--such as preferences for
VA, state, or private cemeteries and preferences for casket,
in-ground cremains, or columbaria niche burial--that will affect the
need for additional VA and state cemetery capacity.  NCS tracks
actual burial practices in national cemeteries, monitors trends in
the private cemetery sector, and in 1992 surveyed veterans to
determine their preferences for type of cemetery (national, state, or
private) and burial option (casket or cremation burial).\11

Despite NCS plans to ensure that burial in a national or state
veterans' cemetery is an available option, officials acknowledge that
large numbers of veterans currently do not have access to a veterans'
cemetery within a reasonable distance of their place of residence.\12
For example, NCS estimates that of the approximately 26 million
veterans in 1996, about 9 million (35 percent) did not have
reasonable access to a national or state veterans' cemetery. 
According to NCS officials, most underserved areas are major
metropolitan regions with a high concentration of veterans.  With the
completion of the five new cemeteries, NCS officials estimate that
the percentage of veterans who will have reasonable access to a
veterans' cemetery will increase from about 65 percent in fiscal year
1996 to about 77 percent in fiscal year 2000. 


--------------------
\10 New national cemeteries will be located in or near Albany, New
York; Chicago, Illinois; Cleveland, Ohio; Dallas/Fort Worth, Texas;
and Seattle, Washington. 

\11 VA, National Center for Veteran Analysis and Statistics, VA
National Survey of Veterans (NSV9503) (Washington, D.C.:  Apr. 
1995). 

\12 According to NCS, a national or state veterans' cemetery within
75 miles of a veteran's place of residence would provide reasonable
access. 


      HOW NCS PLANS TO ADDRESS
      BURIAL DEMAND BEYOND THE
      YEAR 2000 IS UNCLEAR
---------------------------------------------------------- Letter :3.3

Although NCS has a 5-year strategic plan for addressing veterans'
burial demand during fiscal years 1996 through 2000, it is unclear
how NCS plans to address the demand beyond 2000.  For example, NCS
has not developed a strategic plan to address veterans' burial demand
during the peak years of veteran deaths, when pressure on the system
will be greatest.  According to NCS' Chief of Planning, although its
strategic plan does not address long-term burial needs, NCS is always
looking for opportunities to acquire land to extend the service
period of national cemeteries.  For example, NCS is working to
acquire land for one of its west coast cemeteries that is not
scheduled to run out of casket sites until the year 2011.  Also, to
help address long-range issues, NCS compiles key information, such as
mortality rates, number of projected interments and cemetery
closures, locations most in need of veterans' cemeteries, and
cemetery-specific burial layout plans.  In addition, the planning
chief pointed out that the Government Performance and Results Act
requires a strategic plan to cover only a 5-year period.  However,
the Results Act allows an agency to extend its strategic plan beyond
a 5-year period to address future goals.  Although NCS' strategic
plan notes that annual veteran deaths are expected to increase about
20 percent between 1995 and 2010, the plan does not indicate how the
agency will begin to position itself to handle this increase in
demand for burial benefits.  A longer planning period would provide
the opportunity to develop strategies for obtaining funds, acquiring
land, assessing veterans' preferences, or all three. 

While NCS does not have a formal strategic plan to address veterans'
burial demand beyond the year 2000, NCS officials said they will
continue using the basic strategies contained in the current 5-year
plan.  For example, NCS plans to enhance its relationship with states
to establish state veterans' cemeteries through the State Cemetery
Grants Program.  According to NCS' Chief of Planning, NCS will
encourage states to locate cemeteries in areas where it does not plan
to operate and maintain national cemeteries.  Since the State
Cemetery Grants Program's inception in 1978, fewer than half of the
states have established veterans' cemeteries primarily because,
according to NCS officials, states must provide up to half of the
funds needed to establish, expand, or improve a cemetery, as well as
pay for all equipment and annual operating costs.  Furthermore, the
Director of the State Cemetery Grants Program told us that few
states, especially those with large veteran populations, have shown
interest in legislation that VA proposed in its 1998 budget
submission in order to increase state participation.  This
legislation would increase the federal share of construction costs
from 50 to 100 percent and permit federal funding for up to 100
percent of initial equipment costs.  In fact, according to the
Director, state veterans' affairs officials said that they would
rather have funding for operating costs than for construction. 

In addition, VA does not plan to request construction funds for more
than the five new cemeteries, which will be completed by the year
2000, because of its commitment to deficit reduction.  Officials said
that even with the new cemeteries, interment in a national or state
veterans' cemetery will not be "readily accessible" to all eligible
veterans and their family members.  According to NCS officials, most
underserved areas will be major metropolitan areas with high
concentrations of veterans, such as Atlanta, Georgia; Detroit,
Michigan; and Miami, Florida. 


   TRADITIONAL CASKET CEMETERY
   WOULD BE TWICE AS EXPENSIVE AS
   CREMAINS CEMETERIES
------------------------------------------------------------ Letter :4

As demand for burial benefits increases, cemeteries become filled,
thus reducing the burial options available to veterans and their
families.  We developed a model to analyze the relative costs of
three types of cemeteries.  The analysis showed that over 30 years,
the traditional casket cemetery would be the most expensive interment
option.  Our analysis also showed that there would be no significant
difference in the costs of columbarium and in-ground cremains
cemeteries.  Although the development and construction costs are
higher for a columbarium cemetery, operating costs are higher for an
in-ground cremains cemetery.  Table 1 compares the 30-year costs of
these three types of cemeteries.  (See app.  II for a detailed cost
comparison of the three types of cemeteries.)



                          Table 1
          
            Comparison of 30-Year Present Value
          Costs of Three Types of Cemeteries With
           50,000 Burial Spaces, in 1997 Dollars

                                                 In-ground
                      Casket     Columbarium      cremains
Cost factors\a      cemetery        cemetery      cemetery
--------------  ------------  --------------  ------------
Total            $12,100,000     $12,800,000    $4,400,000
 development
 and
 construction
Total             38,400,000      10,200,000    16,500,000
 operations
 and
 maintenance
Nonlabor and      20,000,000       1,800,000     5,100,000
 equipment
Labor             18,400,000       8,400,000    11,400,000
==========================================================
Total            $50,500,000     $23,000,000   $20,900,000
----------------------------------------------------------
\a App.  I defines all cost factors. 

Source:  GAO analysis of NCS cost data. 


      TRADITIONAL CASKET BURIAL
      MOST EXPENSIVE INTERMENT
      OPTION
---------------------------------------------------------- Letter :4.1

A cemetery providing only casket burials would be the most expensive
interment option, costing, on average, over twice as much as
columbarium or in-ground cremains cemeteries.  We estimated that over
a 30-year period, the casket cemetery would cost over $50 million,
compared with about $21 to $23 million for either of the two
cremation cemeteries.  The difference in costs is due primarily to
the higher land development and operations/maintenance costs of a
casket cemetery.  Specifically, providing 50,000 grave sites for 30
years would require developing about 115 acres at a cost of $8.4
million, compared with 34 acres for an in-ground cremains cemetery
and 14 acres for a columbarium cemetery, costing about $2.5 million
and $1 million, respectively. 

Over 30 years, the total operations and maintenance cost for a casket
cemetery is three times as much as that for a columbarium cemetery
and over twice as much as that for an in-ground cremains cemetery. 
As table 1 shows, providing burial services and maintenance
activities for a 115-acre casket cemetery would result in higher
nonlabor and labor costs.\13 For example, it requires about 39
full-time staff to operate and maintain a casket cemetery, compared
with about 21 full-time staff for an in-ground cremains cemetery and
14 full-time staff for a columbarium cemetery. 


--------------------
\13 Burial services include scheduling services; attending committal
services; opening and closing grave sites or niches; interring
remains; setting headstones, markers, or niches; and restoring burial
sections.  Maintenance activities include groundskeeping, facilities
maintenance, and equipment maintenance. 


      COSTS VARY SLIGHTLY FOR
      COLUMBARIUM AND IN-GROUND
      CREMAINS INTERMENTS
---------------------------------------------------------- Letter :4.2

Over 30 years, it would cost about the same to plan, design,
construct, operate, and maintain a columbarium and an in-ground
cremains cemetery with 50,000 burial spaces:  $23 and $21 million,
respectively.  The development and construction cost is higher for a
columbarium cemetery, but its operations and maintenance cost is
lower than that of an in-ground cremains cemetery.  As table 1 shows,
over 30 years the development and construction cost for a columbarium
cemetery would be, on average, about three times as much as that for
an in-ground cremains cemetery.  This difference in costs is
primarily due to the cost of building the columbarium structure.  The
operations and maintenance cost of an in-ground cremains cemetery is
almost twice as much as that of a columbarium cemetery.  This cost
difference can be attributed to the fact that columbarium cemeteries
have fewer acres to maintain, resulting in lower nonlabor and labor
costs. 


   COLUMBARIUM OPTION OFFERS
   OPPORTUNITY FOR EXTENDING
   SERVICE PERIOD OF EXISTING
   CEMETERIES
------------------------------------------------------------ Letter :5

As existing national cemeteries reach their capacity, columbarium
burial offers the most efficient option for extending cemetery
service periods.  We developed a model to analyze the cost of three
interment options on the basis of the cost of developing a total of 1
acre of land, composed of parcels of land not contiguous to each
other, in a cemetery nearing exhaustion of available casket grave
sites.  The analysis showed that the average burial cost would be
lowest and the service delivery period the longest using columbarium
interment.  The analysis also showed that the average cost per burial
would be about the same for columbarium niches as for in-ground
cremains sites.  However, columbarium interment would extend the
service period by about 50 years, while in-ground cremains interment
would extend the service period about 3 years and casket burials,
about half a year.  Casket burials would be the most expensive per
burial and would have the shortest service period. 


      MANY NATIONAL CEMETERIES
      HAVE REACHED CAPACITY FOR
      CASKET BURIALS
---------------------------------------------------------- Letter :5.1

At the end of fiscal year 1996, 57 of VA's 114 national cemeteries
had exhausted their supply of casket grave sites available to first
family members, as shown in figure 3.  Of these 57 cemeteries, 38
could accommodate casket burial of subsequent family members and
interment of cremated remains of both first and subsequent family
members.  Nineteen could accommodate only subsequent family
members--for either casket or cremated remains interment.  According
to NCS' Chief of Planning, unless NCS acquires additional land, it
projects that 15 cemeteries will totally deplete their inventory of
casket grave sites for first family members by 2010, and another 16
cemeteries will do so by 2020.  In total, by 2020, NCS projects that
88 of the 119 national cemeteries (74 percent) will no longer be able
to accommodate casket burials of first family members.\14


   Figure 3:  Casket Grave Site
   Availability at National
   Cemeteries, 1996, 2010, and
   2020

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

Source:  NCS national data. 


--------------------
\14 With the projected completion of five new national cemeteries by
2000, the total number of national cemeteries will increase from 114
to 119. 


      COLUMBARIUM BURIAL OFFERS
      MOST EFFICIENT OPTION FOR
      EXTENDING THE SERVICE PERIOD
      OF EXISTING CEMETERIES
---------------------------------------------------------- Letter :5.2

As less burial space is available, columbarium burial offers the most
efficient interment option for extending the service period of
existing cemeteries.  Our analysis of the costs of three interment
options, based on the development of 1 remaining acre of land, pieces
of which were not contiguous to each other, showed that the average
burial cost would be lowest using columbarium interment.  For
example, the average columbarium interment cost would be about $280,
compared with about $345 for in-ground cremains burial and about $655
for casket burial, as shown in figure 4. 

   Figure 4:  Estimated Average
   Burial Costs of Three Interment
   Options

   (See figure in printed
   edition.)

Source:  GAO analysis. 

Our analysis also showed that the service delivery period would be
extended the most using the columbarium.  For example, a total of 1
acre of land could accommodate about 87,000 columbarium niches and
could extend the service delivery period for over 52 years, compared
with about 3 years for about 4,800 in-ground cremains sites and about
1/2 year for about 870 casket sites, as shown in figure 5. 

   Figure 5:  Estimated Additional
   Sites and Service Delivery
   Period Extension for Three
   Interment Options

   (See figure in printed
   edition.)

Source:  GAO analysis. 

Although NCS officials acknowledge that the columbarium option could
extend the service delivery period of existing cemeteries, they said
that it has been used to do so at only one national cemetery, which
is located on the west coast.  Furthermore, at the end of fiscal year
1996, only 9 of the 114 national cemeteries offered interment in a
columbarium, while the majority of cemeteries provided casket and
in-ground cremains sites.  According to NCS officials, NCS has not
made greater use of columbaria primarily because of their substantial
up-front construction costs.  Officials said they generally develop
casket and in-ground cremains sites first because they believe the
initial costs are less.  However, our analysis showed that the total
cost per burial would be lower for a columbarium because of its low
operations and maintenance costs. 

Columbaria would be particularly useful in metropolitan areas where
interment rates are high; past or projected cremation demand is
significant; land is scarce, expensive, or both; and no state
veterans' cemetery exists to compensate for the lack of available
national cemetery grave sites.  For example, at one midwestern
cemetery, NCS plans to add about 8,000 casket sites, but no cremation
sites, to its last acres.  With the additional casket sites, the
cemetery is projected to deplete all burial spaces about the time
veteran deaths peak, and no state veterans' cemetery exists to
compensate for the lack of burial spaces.  However, by incorporating
columbaria into 1/2 acre of land, this cemetery could continue to
provide a burial option to thousands of additional veterans, who
otherwise would have no burial option available to them within a
reasonable distance of their homes, and keep the cemetery open well
beyond the peak years. 

While historical data imply that the majority of veterans and
eligible dependents prefer a casket burial, NCS national data show
that the demand for cremation at national cemeteries is increasing. 
For example, while about 70 percent of veterans prefer a casket
burial, veterans choosing cremation increased from about 20 percent
of the veteran population in 1990 to nearly 30 percent in 1996, and
NCS officials expect demand for cremation to continue to increase in
the future.  At cemeteries offering both types of interments, the
ratio of casket to cremation interments varies significantly.  For
example, cremation accounts for over 40 percent of interments at some
cemeteries and less than 5 percent at others.  In addition, according
to cemetery directors, veterans choosing cremation do not strongly
prefer either in-ground burial or interment in a columbarium niche. 

The incidence of cremation also continues to increase in the general
population.  For example, cremation was chosen for about 14 percent
of nationwide burials in 1985 and about 21 percent in 1995.  The
Cremation Association of North America (CANA) projects that
cremations will account for about 40 percent of all burials by
2010.\15 Like other interment options, cremation is an individual's
decision and is subject to influences such as culture, religion,
geographic area of the country, and age and generational preferences. 
According to CANA, people choose cremation primarily because it is
perceived as less expensive and simpler than traditional casket
burial, it uses less land, and it offers more options for
memorialization. 


--------------------
\15 Projected cremation demand is based on actual statewide cremation
data compiled by CANA, the only organization that compiles such data. 
The 2010 projected cremation rate is based upon the average actual
increase in cremation between 1985 and 1995. 


   CONCLUSION
------------------------------------------------------------ Letter :6

Long-range planning is crucial to addressing veterans' burial needs
during the peak years and beyond.  Although NCS has a 5-year
strategic plan, it does not address veterans' burial needs beyond the
year 2000, when the demand for burial benefits will be greatest. 
Specifically, while the World War II veteran population is entering
its peak years of need, many national cemeteries are depleting their
inventory of available casket grave sites.  As a result, additional
burial sites are needed to help meet future burial demand.  In some
cases, state veterans' cemeteries could reduce the negative impact of
the loss of available casket spaces from a national cemetery. 
However, it does not appear that state veterans' cemeteries will be
able to accommodate all veterans seeking interment.  Therefore, NCS
needs to rely more on extending the service periods of its existing
national cemeteries.  Columbaria can more efficiently utilize
available cemetery land at a lower average burial cost than the other
interment options and can also extend the service period of existing
national cemeteries.  Using columbaria also adds to veterans' choice
of services and recognizes current burial trends.  Although cremation
will not be the preferred burial option for all veterans, identifying
veterans' burial preferences would enable NCS to better manage
limited cemetery resources and more efficiently meet veterans' burial
needs. 


   RECOMMENDATION
------------------------------------------------------------ Letter :7

To better serve the American veteran, we recommend that the Secretary
of Veterans' Affairs instruct the director of the National Cemetery
System to

  -- extend its strategic plan to address veterans' long-term burial
     demand during the peak years of 2005 to 2010;

  -- collect and use information on veterans' burial preferences to
     better plan for future burial needs; and

  -- identify opportunities to construct columbaria in existing
     cemeteries, for the purpose of increasing burial capacity and
     extending the cemeteries' service periods. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

In commenting on a draft of this report, the Director of NCS stated
that our recommendations appeared valid and represented the vision
and performance of NCS in meeting the burial needs of veterans.  He
also said that NCS is currently executing many of the practices
recommended by our report.  For example, the NCS Director concurred
with our recommendation that NCS develop plans to address veterans'
long-term burial demand during the peak years and stated that NCS is
already performing long-term planning, as evidenced by numerous
strategies and activities.  We recognize that NCS has developed
valuable information from such sources as the Management and Decision
Support System and cemetery master plans to help it address
long-range issues, but even with this information, NCS is unable to
specify the extent to which veterans will have access to a national
or state veterans' cemetery during the peak years.  NCS' estimates of
the percentage of veterans who will have access to a veterans'
cemetery stop at the year 2000. 

NCS needs to develop a strategic plan that links information such as
mortality rates and the number of projected interments and cemetery
closures, obtained from various sources, to its strategic goals,
performance measures, and mitigation plans over the next 15 years. 
For example, one of NCS' goals is to ensure that a burial option is
available to all eligible veterans.  Although NCS' current strategic
plan estimates a 20-percent increase in annual veteran deaths between
1995 and 2010, it does not indicate how NCS will begin to position
itself to handle this increase in demand for burial benefits. 
Because of the lead time required to acquire land and develop some
types of interment spaces, NCS needs to develop strategies that
address such issues as (1) how many burial spaces will be needed at
each cemetery to accommodate the projected demand for burial benefits
during the peak years; (2) how NCS will acquire the additional burial
spaces--for example, by purchasing adjacent land or maximizing
existing land by using columbaria; and (3) when and how NCS will
obtain funds, acquire land, and assess veteran preferences. 

In addition, while one of NCS' strategies for meeting the projected
burial demand includes encouraging states to build cemeteries, the
Director of the State Cemetery Grants Program told us that few
states, especially those with large veteran populations--such as New
York, Florida, Texas, Ohio, and Michigan--would be swayed by proposed
legislation that would increase the federal share of construction and
equipment costs.  NCS officials also acknowledged that their ability
to persuade states to participate in the program is limited, because
the states must take the initiative to request grant funds.  We
revised our previous recommendation to encourage NCS to extend its
strategic plan to address veterans' long-term burial demand during
the peak years of 2005 to 2010. 

The NCS Director also concurred with our recommendation to collect
and use information on veterans' burial preferences to better plan
for future burial needs.  While the Director stated that NCS
carefully tracks actual burial practices in national cemeteries and
monitors trends in the private cemetery sector, and that these
indexes offer a reliable method of planning for the future, he said
that additional data on veterans' preferences would assist NCS in its
planning efforts.  Therefore, he stated that NCS will include
questions pertaining to personal burial preferences in the next VA
National Survey of Veterans. 

Finally, the Director of NCS concurred with our recommendation to
identify opportunities to construct columbaria in existing cemeteries
for the purpose of increasing burial capacity and extending the
service delivery period of these cemeteries.  He asserted that NCS is
already accomplishing what our recommendation was intended to achieve
in that it (1) plans to add columbaria at eight existing cemeteries
and five new cemeteries and (2) annually considers all sites that may
warrant the establishment of columbarium units.  We acknowledge, as
stated in our report, that NCS plans to add columbaria at 8 of the
114 existing national cemeteries and include columbaria in its 5 new
cemeteries.  However, the intent of our recommendation was to
encourage VA to identify opportunities to construct columbaria in
cemeteries that are nearing depletion of casket grave sites for first
family members or have already run out.  This will involve at least
72 cemeteries by 2010. 

Although NCS acknowledges that columbaria could extend service at a
cemetery that would otherwise be closed to veteran use, they have
only been used for this purpose at one national cemetery.  While the
NCS Director stated in his comments that NCS considers the
anticipated ratio of casket burial to cremains burial when planning
for the future, during our review, NCS officials stated that they
primarily use historical usage data.  For example, at one cemetery,
NCS planned to allocate more than 30 percent of the burial spaces for
cremation sites, although the cremation rate for the state in which
the cemetery was located was more than 50 percent in 1995, and
projected to increase to more than 60 percent in 2000 and to about 80
percent in 2010.  As our report states, by including other factors in
the decision process, such as projected cremation demand,
availability and cost of land, and availability of grave sites at
state veterans' cemeteries, officials may identify additional
national cemeteries that warrant the establishment of columbaria. 

NCS also provided technical comments in an attached white paper. 
Comments 1 through 3 repeat points made in the letter.  Comments 4
and 5 question the results of our analysis of the cost of extending
the service period of existing cemeteries, since it was based on the
maximum number of burial sites available in an acre of land. 
Specifically, NCS commented that it may not be feasible to devote a
single 1-acre plot entirely to columbarium niches because using the
"absolute maximum" would not allow space between structures. 
However, in our analysis we did not envision a single 1-acre plot. 
Rather, we assumed several parcels of land dispersed around the
cemetery that totaled 1 acre of available burial space.  Accordingly,
we have revised our discussion to clarify this issue. 

Comment 6 questions our assumption that first family member
interments would be evenly spaced over 30 years for all three modes
of burial.  Specifically, NCS suggests an analysis in which the
annual interment rates are assumed to differ for the three
alternatives (casket, in-ground cremains, and columbarium burials),
reflecting current use patterns.  However, our objective was to
perform a cost comparison.  For a valid cost comparison, the
alternatives being compared must be evaluated in terms of the same
outcome--in this case, to inter a given number of eligible veterans
and their dependents according to a given schedule.  The specific
assumption we adopted--evenly spaced first family member interments
for all alternatives--was previously suggested to us by NCS, and our
analysis is similar to the one NCS used in its 1996 study.  The type
of analysis that NCS is now suggesting is outside the scope of our
work. 

NCS offered other technical comments, which we incorporated where
appropriate.  NCS' comments are included in their entirety in
appendix III. 


---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Secretary of Veterans
Affairs and other interested parties.  This work was performed under
the direction of Irene Chu, Assistant Director.  If you or your staff
have questions about this report, please contact Ms.  Chu or me on
(202) 512-7101.  Other major contributors to this report are listed
in appendix IV. 

Sincerely yours,

Stephen P.  Backhus
Director, Veterans' Affairs and
 Military Health Care Issues


OUR ANALYSIS OF THE LONG-TERM
COSTS OF ALTERNATIVE MODES OF
INTERMENT:  METHODOLOGY AND DATA
=========================================================== Appendix I


   INTRODUCTION
--------------------------------------------------------- Appendix I:1

In this appendix we discuss the methodology, data sources, and
principal assumptions that we used to

  -- characterize the relative long-term cost of each of three modes
     of interment:  casket, in-ground cremains, and columbarium;

  -- project the outlays that would be required to construct and
     operate a cemetery that offers each of these modes of interment
     over a period of 30 years or more;\16 and

  -- estimate the cost of these three types of interment on the basis
     of the development of a total of 1 acre of land composed of
     parcels of land not contiguous to each other in a cemetery
     nearing depletion of available burial sites. 

Our analysis builds on a study that the National Cemetery System
(NCS) performed at the request of the Chairman, Subcommittee on
Compensation, Pension, Insurance and Memorial Affairs, in February
1996.  In that study, the Department of Veterans Affairs (VA)
presented an analysis of the relative costs of casket and columbarium
burial over a 20-year period.  For the purpose of this report, we
have updated and extended the NCS analysis, most notably by

  -- adding in-ground cremains burial as a third alternative, as
     requested by the Subcommittee;

  -- analyzing costs over 30 years or more, thus recognizing that
     cost differences among the modes of interment will persist far
     into the future;

  -- analyzing the relative long-term costs of the three alternatives
     in the context of using available space in existing cemeteries,
     as well as in the context of developing new cemeteries; and

  -- using the present value method to evaluate the relative
     long-term costs of the three alternatives. 


--------------------
\16 We recognize that it is unlikely that VA would ever devote an
entire new cemetery to a single mode of interment.  However, we
believe our analysis of the long-term costs of hypothetical
single-use cemeteries serves to isolate the relevant differences in
the long-term costs of the three types of interment. 


      PRESENT VALUE ANALYSIS
------------------------------------------------------- Appendix I:1.1

Simple comparisons of cumulative outlays for the several modes of
interment (casket, in-ground cremains, and columbarium) would provide
a misleading picture of the relative costs of the respective options
because the modes differ in the relative share of total cost that is
incurred in the first years.  Moreover, a dollar paid by the
government today is more costly than a dollar paid at some future
date, because it increases the burden of making interest payments on
the national debt. 

It is standard practice among policy analysts to compare different
payment streams by calculating the present value (also known as the
lump-sum equivalent) of each stream.\17


--------------------
\17 Office of Management and Budget, Guidelines and Discount Rates
for Benefit-Cost Analysis of Federal Programs, Circular A-94
(Washington, D.C.:  Office of Management and Budget, revised Oct. 
29, 1992). 


   OVERVIEW OF OUR MODELS
--------------------------------------------------------- Appendix I:2

We developed two models.  The first model was used to estimate the
long-term cost of alternative burial modes in a new cemetery.  The
second model was used to estimate the long-term cost of alternative
uses of available space in an existing cemetery.  Each model
consisted of three basic components: 

  -- simulating the sequence of events whereby a cemetery is opened
     and burial sites are developed, placed into service, and
     maintained;

  -- attaching estimated costs to each of these events, so as to
     create a trajectory of costs over the whole time period; and

  -- calculating the present values of cost streams associated with
     each of the options being evaluated. 


   ASSUMPTIONS AND DATA
--------------------------------------------------------- Appendix I:3

We developed the assumptions and specified the data to be collected
in consultation with NCS experts.  Except as noted below, NCS
officials supplied the data.\18 We did not verify all of the data. 

What follows is, first, a description of the elements of the model
for the analysis of the costs of a new cemetery designed for 50,000
burial sites, with burials to take place over a 30-year period. 
Second, we describe how we modified the data and assumptions for the
second model, which analyzes the cost of adding to an existing
cemetery. 


--------------------
\18 As agreed with your office, we asked NCS to supply cost data that
pertain to the Tahoma National Cemetery in the Seattle area and other
data describing the average salaries of NCS employees and their time
charges. 


      ANALYSIS OF THE COSTS OF A
      NEW CEMETERY
------------------------------------------------------- Appendix I:3.1


         TIMING OF SIGNIFICANT
         EVENTS
----------------------------------------------------- Appendix I:3.1.1

Land acquisition.  We assumed that all land acquisition and
development of architectural master plans and environmental impact
statements would occur in the first year. 

Development of burial sites.  NCS officials told us that burial sites
would be developed in three phases, each of which would result in
one-third (about 16,700) of the total number of burial sites.  The
first phase would occur in the second and third years.  The second
phase would occur in the eleventh through thirteenth years.  The
third phase would take place in the twenty-first through twenty-third
years.  Each of the three phases would involve outlays for design,
land development, and equipment acquisition (see below).  The
construction of buildings would occur during the first two phases. 

First family member interments.  Per NCS guidance, we assumed that
first family member interments would commence in the fourth year and
that they would be evenly spaced over the next 30 years (that is,
there would be 1,667 first family member interments per year). 

Subsequent interments.  We used the assumption, supplied by NCS
officials, that subsequent interments would initially make up 2
percent of first family member interments and would increase linearly
over time, so that in the thirtieth year (that is, the thirty-third
year of the period of analysis), subsequent interments would make up
60 percent of first interments. 


         DEVELOPMENT AND
         CONSTRUCTION COSTS
----------------------------------------------------- Appendix I:3.1.2

These costs include the cost of site acquisition, site development
(conducting environmental impact assessments, obtaining
architect/engineer design services, and developing land), and
construction of buildings (administration and maintenance
facilities). 

Site acquisition.  According to NCS officials, land in the vicinity
of the Tahoma National Cemetery costs $10,000 per acre.  They told us
that a cemetery exclusively devoted to casket burial would require
114.8 acres, of which 57.4 acres would be used for grave sites and
57.4 acres for infrastructure (parking lots, driveways, buildings,
landscaping, and so on).  A cemetery devoted exclusively to in-ground
cremains burial would require 34.3 acres (10.3 acres for burial sites
and 24.0 acres for infrastructure).  An all-columbarium cemetery
would require 14.25 acres (0.57 acre for columbaria and 13.68 acres
for infrastructure). 

Site development.  The estimated cost for the environmental
assessment aspect of site development is $100,000 for a casket
cemetery, $17,150 for an in-ground cremains cemetery, and $7,250 for
a columbarium cemetery.  These estimates reflect NCS' experiences
with similar projects in the past. 

The architect/engineer design cost category covers such services as
carrying out a topographic survey, an archeological exploration, and
traffic impact studies.  The cost of architect/engineer design
services is assumed to be proportional to construction costs (land
development plus buildings).  The estimated cost of these services
for phase 1 is $545,414 for the casket alternative, $246,249 for
in-ground cremains sites, and $862,233 for columbaria.  For phases 2
and 3, costs would be lower. 

Land development costs include site preparation (for example,
grading; landscaping; and providing irrigation, roads, storm
drainage, and utilities) and purchasing site furnishings (for
example, benches and flagpoles).  The estimated cost of land
development is $102,298 per acre for all modes of interment.  Thus,
land development costs for the three alternatives are proportional to
their respective acreage requirements, discussed above. 

Under each alternative, one-third of the total acreage would be
developed in each of the three phases (years 2 through 3, 12 through
13, and 22 through 23).  For a casket cemetery, outlays would amount
to $3.91 million in each phase.  For an in-ground cremains cemetery,
the estimated cost is $1.17 million per phase.  For a columbarium
cemetery, the estimated cost is $0.49 million per phase. 

Construction of buildings.  Buildings that would be constructed in
phase 1 include a public information building, an administration
building, a maintenance building, a vehicle storage building, and two
committal service shelters.  An additional committal service shelter
would be constructed in phase 2.  The three alternatives have
different requirements for the size of the maintenance and vehicle
storage buildings.  Columbaria niches would be constructed in each
phase, giving this mode the highest total construction cost. 


         OPERATIONS AND
         MAINTENANCE COSTS
----------------------------------------------------- Appendix I:3.1.3

These costs include (1) the cost of purchasing initial and subsequent
equipment; (2) salary and benefits for personnel to handle
administration and interment issues (drafting contracts and
correspondence; handling public inquiries, ceremonies, and outreach;
scheduling burial services; opening/closing grave sites or niches;
interring casket or cremated remains; setting headstones or placing
markers; and restoring burial sections); (3) the cost of purchasing
nonlabor items (fertilizer, seeds, headstones, markers, and grave
liners); and (4) the cost of maintenance activities (keeping the
grounds and facilities). 

Equipment.  VA provided estimates of the equipment costs for the
three modes.  The initial costs were $736,674 for caskets, $443,003
for in-ground cremains sites, and $91,664 for columbaria--all
purchased in year 3 of the first phase.  Subsequent equipment
purchases were assumed to be equal and to occur in year 3 of phases 2
and 3.  We estimated their cost at $150,000 for caskets, $90,000 for
in-ground cremains sites, and $18,000 for columbaria. 

Labor associated with administration and interments.  We assumed that
it would require 7.3 full-time-equivalent (FTE) general schedule (GS)
employees, at an annual rate (pay and benefits) of $45,216 each, plus
6.7 FTE wage grade (WG) employees at a rate of $35,085 each, to
conduct the 1,667 interments that are projected for each year under
all three burial modes.  VA said that the GS administrative and
interment requirements would be the same for all three modes but that
the WG labor associated with each mode would vary.  According to NCS
assumptions, the WG labor required for casket burials was 6.7 FTEs. 
We had to develop our own estimate--3 FTEs for in-ground cremains
sites and .56 FTE for columbarium niches--because VA had no specified
ratio for WG labor for the noncasket modes. 

We assumed subsequent interments would require a prorated amount of
labor.  That is, if subsequent interments in a given year are
estimated to be 20 percent of first interments, we assumed that labor
costs associated with subsequent interments would be equal to 20
percent of the labor costs associated with first interments.  Put
differently, we assumed that each subsequent interment would require
as much labor as each first interment. 

Nonlabor costs.  These costs include the costs of irrigating and
purchasing fertilizer, seed, and other supplies.  We used VA
estimates to derive amounts for this category of costs.  The amounts
are small and proportional to the acreage developed.  For the casket
model, the nonlabor costs would be $389,000 in phase 1, increasing by
$95,500 in phases 2 and 3 to a total of $580,000 by the 24th year. 
For in-ground cremains sites, we adjusted the cost in phase 1 by the
ratio of acreage to arrive at a cost of $117,000, rising by $28,500
in phases 2 and 3 to a total of $174,000 in the 24th year (with
rounding).  For columbaria, the initial nonlabor cost was $57,000,
rising $14,000 in phases 1 and 2 to a total of $85,000 in years 24
through 33. 

Outlays for headstones and markers are proportional to the number of
first interments in a given year.  These costs vary depending on the
area of the country in which the headstones and markers are
purchased.  For this analysis, we used the middle price in the range
of prices VA said they pay.  For a casket burial, we assumed a
headstone cost of $120; for an in-ground cremains burial, we assumed
a grave marker cost of $70; and for a columbarium burial, we assumed
a niche cover cost of $15.  Casket burials require grave liners, at
an estimated cost of $240 apiece. 

Labor associated with maintenance.  VA uses the standard of 1 FTE per
10.7 developed acres for casket cemeteries.  Using this ratio, under
the casket scenario, we estimated that maintenance of developed
acreage would require 3.5 WG FTEs during phase 1 (years 4 through
13), 7 FTEs during phase 2 (years 14 through 23), and 10.5 FTEs
during phase 3 (years 24 through 33), at the annual pay rates stated
above.  We adjusted these WG labor requirements for the fewer acres
in the other modes.  For in-ground cremains burials, we estimated
that maintenance of developed grave sites would require 1.1 FTEs
during phase 1 and an additional 1.1 FTEs during phases 2 and 3.  For
columbaria, we estimated that maintenance of developed grave sites
would require .4 FTE during phase 1, .9 FTE during phase 2, and 1.3
FTEs during phase 3. 

Further, there would also be labor costs associated with the
maintenance of burial sites that have already been placed in service
(that is, in which there has been a first family member interment). 
VA uses an estimate of 1 FTE per 7,844 developed grave sites in its
planning for new cemeteries.  Using this ratio, it would require
about .2 FTE a year for the 30-year burial period in a casket
cemetery.  We adjusted this amount to reflect the lesser acreage of
the other modes.  For in-ground cremains sites, .04 FTE per year
would be required; for columbaria, .002 FTE would be required.  The
cost differences among the three alternatives are proportional to the
differences in the number of burial acres (as opposed to
infrastructure acres) that each alternative requires.  For each
alternative, grave site maintenance costs would increase linearly for
each succeeding year, because we assumed that the same number of
first family member interments (1,667) would take place each year. 


      ANALYSIS OF THE COSTS OF
      EXTENDING AN EXISTING
      CEMETERY'S SERVICE PERIOD
------------------------------------------------------- Appendix I:3.2

We also analyzed the relative long-term cost of each of the three
alternatives as it applied to extending the service period of an
existing cemetery.  For this model, we adopted the same assumptions,
and used the same data, as for the model we used to analyze the
long-term cost of a new cemetery, with the following modifications: 

  -- We assumed the existence of an acre of land that had already
     been acquired--an acre composed of parcels of land that were not
     contiguous to each other--so that the cost of land acquisition
     was zero for all three alternatives. 

  -- Similarly, we assumed that such costs as environmental
     assessment, architect/engineer design, land development, and
     construction of administration and maintenance buildings had
     already been incurred for the casket and in-ground cremains site
     estimates. 

  -- We assumed that for columbaria, it would be necessary to incur
     the cost of constructing a set of niches, including
     architect/engineer design costs. 

  -- For each of the three alternatives, we assumed that a total of 1
     acre of land, pieces of which were not contiguous to each other,
     could be devoted to burial sites.  That is, we assumed that the
     cemetery's infrastructure (for example, roads) was complete and
     that there were no other obstacles (such as irregular
     topography) to the full use of the acre for burial sites.  Thus,
     we assumed the theoretical maximum number of interment sites: 
     871 for caskets; 4,840 for in-ground cremains sites; and 87,000
     for columbaria. 

  -- Only costs that are incurred up to the time that the acre is
     closed to further first family member interments are accounted
     for.  Because, as noted above, each of the three alternatives
     permits a different number of interment sites per acre, and
     because we are assuming that first family member interments will
     take place at a rate of 1,667 per year, the time at which the
     acre's first family member interment sites are full will be
     different under the three alternatives (0.52 years for caskets;
     2.9 years for in-ground cremains sites; and 52.2 years for
     columbaria).  This simplifying assumption leads to an
     understatement of the cost of casket burial relative to that of
     the other alternatives, all other things equal. 


         ADDITIONAL ASSUMPTIONS
----------------------------------------------------- Appendix I:3.2.1

Future changes in cost factors.  All costs are expressed in 1997
dollars.  We assumed that although the costs of labor and materials
could rise in the future, the relative prices would remain unchanged. 

Discount rate.  We used a (real) discount rate of 3.21 percent.  This
rate is based on (1) a (nominal) long-term cost to the government of
borrowing 6.71 percent, as represented by the interest rate on
30-year Treasury securities as of June 1997, and (2) a long-term
inflation rate projection of 3.5 percent that was prepared by the
Social Security Administration (SSA).\19

Period of analysis.  As agreed with your office, we analyzed cost
data over a period that ends 30 years after the first interments
(that is, 33 years), at which time the cemeteries are assumed to be
full. 

Ideally, a cost analysis would consider the entire useful life of the
project, given that differences in operating costs among the three
modes of interment would persist even if there was no new development
of burial sites or new first family member interments.  For a
cemetery, this time period is indefinite.  Accordingly, we performed
a sensitivity analysis in which the present value of costs for the
three modes of interments was evaluated over a period of 53 years
(that is, until 20 years had elapsed since the last first family
member interments). 

We found that when costs were evaluated over the longer period, the
cost would be $58.4 million for casket burial, $24.1 million for
in-ground cremains burial, and $24.8 million for columbarium burial. 
The differences between costs for the 33-year and 53-year periods
reflect differences in operating costs across the three modes of
interment, especially the fact that columbaria would require far less
costly maintenance than the other two types of interment. 


--------------------
\19 We also performed a sensitivity analysis in which we used a
(real) discount rate of 2.7 percent based on SSA's intermediate
long-term projection of the real interest rate (see SSA, 1997 Annual
Report of the Board of Trustees of the Federal Supplementary Medical
Insurance Trust Fund (Washington, D.C.:  SSA, Apr.  24, 1997, p.  7). 
We found that using this alternative assumption did not substantially
alter the relative costs of the three modes of interment. 


INFORMATION ON THE COSTS OF THREE
TYPES OF NATIONAL CEMETERIES
========================================================== Appendix II

We provided information on a cemetery providing only casket
interment, another providing only interment of cremated remains in
columbarium niches, and a third providing interment of in-ground
cremated remains.  For each type of cemetery, this appendix provides
30-year undiscounted and present value cost estimates in 1997 dollars
for development and construction and operations and maintenance.  We
also projected the cash outlays that would be required to construct
and operate a cemetery that offered each of these modes of interment
over a 30-year period (see fig.  II.1).  Costs were based on actual
figures obtained from the most recent NCS construction
project--Tahoma National Cemetery.  The following tables present
detailed data for each type of cemetery we analyzed. 



                                        Table II.1
                         
                           Cost Summary for a Cemetery Offering
                                    Only Casket Burial

                                                                   Total cost     30-year
                                 Years 4-   Years 14-   Years 24-  undiscount     present
Cost factors        Years 1-3          13          23          33          ed       value
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Development and construction costs
-----------------------------------------------------------------------------------------
Site acquisition   $1,148,000          \a          \a          \a  $1,148,000  $1,148,000
 (115 acres)
Environmental         100,000          \a          \a          \a     100,000     100,000
 assessment
Architect/            545,414    $222,446    $215,265          \a     983,125     822,027
 Engineer design
Land development    3,907,783   3,907,783   3,907,783          \a  11,723,349   8,426,331
Construction of     1,547,581          \a          \a          \a   1,547,581   1,476,131
 buildings
Committal service     130,554      65,277          \a          \a     195,831     169,922
 shelter
Subtotal            7,379,332   4,195,506   4,123,048          \a  15,697,886  12,142,411

Operations and maintenance costs
-----------------------------------------------------------------------------------------
Labor                      \a   7,887,048  10,946,990  $14,006,95  32,840,994  18,385,718
                                                                6
Nonlabor\a                 \a   9,891,200  10,846,200  11,801,200  32,538,600  19,071,773
Equipment             736,674     150,000     150,000          \a   1,036,674     869,083
Subtotal              736,674  17,928,248  21,943,190  25,808,156  66,416,268  38,326,574
=========================================================================================
Total              $8,116,006  $22,123,75  $26,066,23  $25,808,15  $82,114,15  $50,468,98
                                        4           8           6           4           5
-----------------------------------------------------------------------------------------
\a Not applicable. 

\b Nonlabor costs include the cost of purchasing such items as grass
seed, pest control, grave liners, and headstones or markers. 



                                        Table II.2
                         
                           Cost Summary for a Cemetery Offering
                                 Only Columbarium Burial

                                                                   Total cost     30-year
                                 Years 4-   Years 14-   Years 24-  undiscount     present
Cost factors        Years 1-3          13          23          33          ed       value
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Development and construction costs
-----------------------------------------------------------------------------------------
Site acquisition     $142,500          \a          \a          \a    $142,500    $142,500
 (14 acres)
Environmental           7,250          \a          \a          \a       7,250       7,250
 assessment
Architect/            862,233    $518,974    $511,794          \a   1,893,001   1,512,670
 Engineer design
Land development      485,916     485,916     485,916          \a   1,457,748   1,047,778
Construction of       965,001          \a          \a          \a     965,001     920,443
 buildings
Committal service     130,554      65,277          \a          \a     195,831     169,922
 shelter
Columbaria          4,166,750   4,166,750   4,166,750          \a  12,500,250   8,984,740
Subtotal            6,760,204   5,236,917   5,164,460          \a  17,161,581  12,785,303

Operations and maintenance costs
-----------------------------------------------------------------------------------------
Labor                      \a   4,041,213   4,902,749  $5,764,296  14,708,258   8,428,489
Nonlabor\b                 \a     820,050     960,050   1,100,050   2,880,150   1,667,550
Equipment              91,664      18,000      18,000          \a     127,664     107,353
Subtotal               91,664   4,879,263   5,880,799   6,864,346  17,716,072  10,203,392
=========================================================================================
Total               6,851,868  $10,116,18  $11,045,25  $6,864,346  $34,877,65  $22,988,69
                                        0           9                       3           5
-----------------------------------------------------------------------------------------
\a Not applicable. 

\b Nonlabor costs include the cost of purchasing such items as grass
seed, pest control, and niche covers. 



                                        Table II.3
                         
                           Cost Summary for a Cemetery Offering
                              Only In-Ground Cremains Burial

                                                                   Total cost     30-year
                                 Years 4-   Years 14-   Years 24-  undiscount     present
Cost factors        Years 1-3          13          23          33          ed       value
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Development and construction costs
-----------------------------------------------------------------------------------------
Site acquisition     $343,000          \a          \a          \a    $343,000    $343,000
 (34 acres)
Environmental          17,150          \a          \a          \a      17,150      17,150
 assessment
Architect/            246,249     $45,890     $38,710          \a     330,849     300,284
 Engineer design
Land development    1,166,197   1,166,197   1,166,197          \a   3,498,591   2,514,664
Construction of     1,159,204          \a          \a          \a   1,159,204   1,105,685
 buildings
Committal service     130,554      65,277          \a          \a     195,831     169,922
 shelter
Subtotal            3,062,354   1,277,364   1,204,907          \a   5,544,625   4,450,705

Operations and maintenance costs
-----------------------------------------------------------------------------------------
Labor                      \a   6,071,287   7,352,561  $8,633,833  22,057,681  11,385,942
Nonlabor\b                 \a   2,336,900   2,621,900   2,906,900   7,865,700   4,590,211
Equipment             443,003      90,000      90,000          \a     623,003     522,387
Subtotal              443,003   8,498,187  10,064,461  11,540,733  30,546,384  16,498,540
=========================================================================================
Total              $3,505,357  $9,775,551  $11,269,36  $11,540,73  $36,091,00  $20,949,24
                                                    8           3           9           5
-----------------------------------------------------------------------------------------
\a Not applicable. 

\b Nonlabor costs include the cost of purchasing such products as
grass seed, pest control, and markers. 

   Figure II.1:  Cash Flow for
   Three Modes of Burial

   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix III
COMMENTS FROM THE NATIONAL
CEMETERY SYSTEM
========================================================== Appendix II



(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 IV

Donald C.  Snyder, Assistant Director (Economist), (202) 512-7204
Jaqueline Hill Arroyo, Evaluator-in-Charge, (202) 512-6753
Jeffrey Pounds, Evaluator
Timothy J.  Carr, Senior Economist


*** End of document. ***