STATEMENT OF THE HONORABLE TOGO D. WEST, JR.
ACTING SECRETARY OF VETERANS AFFAIRS
FOR PRESENTATION BEFORE THE
SUBCOMMITTEE ON VA, HUD AND INDEPENDENT AGENCIES
OF THE
HOUSE COMMITTEE ON APPROPRIATIONS

March 17, 1998

Mr. Chairman, members of this committee, I am pleased to present the President’s FY 1999 budget request for the Department of Veterans Affairs (VA). We are requesting $42.8 billion in new budget authority for veterans’ programs.

Throughout my professional life, I have witnessed the unique contributions of our men and women in uniform. Their sacrifices have kept this Nation free and secure. I am privileged to have been asked to help keep the Nation’s promise to the veterans of many different eras for their very special contributions to the United States.

Working with Congress over the past five years, VA has torn down bureaucratic barriers between veterans and their health care and compensation benefits, has reorganized its health care system, and has revised eligibility rules to best meet the needs of our veterans. VA right-sized, cut back, did more with less, and reallocated resources to accommodate the changing needs of those we serve. VA is keeping America’s promise to the Nation’s veterans.

My goal will be to keep VA on this aggressive course. We are working to ensure the improved delivery and accuracy of compensation and pension benefits, continue improving our health care system, and fully integrate the Department’s organizational elements into "One VA." Our systems must operate in unison and our focus must be on the veterans and improving their quality of life. VA has the talent and the will to accomplish these goals. A vital element for our success must be providing a workplace free of discrimination and harassment in all forms. We must recognize our employees for their innovation and provide the appropriate tools for their work.

Our budget request builds on our previous accomplishments and positions us for the future. Highlights of our proposal by major component are:

• Medical Care. The budget provides $17.7 billion (includes $677 million in medical collections), to provide medical care to eligible veterans. By continuing to improve the delivery and access of outpatient care, the Department will open 71 new outpatient clinics and treat 134,000 more veterans in 1999 than in 1998, a four percent increase. The Medicare subvention demonstration program will again be recommended by the Administration.
• Montgomery G.I. Bill and Readjustment Benefits. The budget proposes to increase mandatory Montgomery G.I. Bill education benefits by 20 percent, or $191 million, in 1999 – the most significant increase in benefits since the program’s inception. The budget also proposes an increase of $100 million ($500 million over five years) in VA’s readjustment benefits account to reimburse Department of Labor (DOL) programs to train, retrain, and assist Vietnam-era veterans to find employment. The proposed funding would enable the development of a national program that would target dislocated veteran workers, giving emphasis to the needs of individuals from 40 to 65 years of age, large numbers of who are Vietnam-era veterans, and those receiving public assistance.
• Medical Research. The $300 million request includes a ten percent increase over the 1998 enacted level for research into illnesses affecting veterans and the general population. This program is included in "The Research Fund for America."
• Veterans Benefits Administration. The budget provides $806 million, $52 million over the 1998 enacted level, a seven percent increase, to ensure the smooth delivery of compensation, housing, education, pension and insurance benefits to veterans.
• National Cemetery System. The budget requests $92 million, $8 million above the 1998 enacted level, to operate the National Cemetery System. At this level, the Department will open four new cemeteries during the next two years – a number unprecedented since the end of the Civil War.
• Smoking Cessation. The budget proposes to establish a $87 million smoking cessation program for veterans who began to smoke during military service.

Further details on our FY 1999 request are as follows.

Provide Quality Health Care

Dramatic change has occurred in the veterans health care system in the past three years. Our primary consideration is providing quality health care to as many patients as possible. We also must continue to emphasize our goals of achieving greater value for the expenditure of health care dollars, and we are committed to reaching our other strategic goals. Some of our strategies may be similar in principle, or practice, to what other health care organizations are doing to become more efficient and effective. Our efforts, however, must be understood within the context of VA’s special mission of serving veterans, many of whom have unique medical conditions not well suited to "market-based" strategies. We are also dedicated to educating the next generation of health care providers and researching solutions to some of health care’s most perplexing problems.

One of VA’s key strategic objectives is the enhancement and system-wide standardization of quality. Through the integration of strategic planning, performance management and financial goals and targets, VA has organized a system of coordinated health care delivery focused on continuous quality improvement that is patient-oriented, ambulatory care-based and results driven. Better care management is one of the major strategies that will transform the health care delivery system to treat patients in the most appropriate setting. Use of primary care providers/teams to coordinate health services is already enhancing quality and the cost-effectiveness of care. As we continue to perfect functional performance measures, management and patients will be able to assess whether or not high quality health care has been achieved. We continue to emphasize the importance of employing new technology, education and research capabilities to increase efficiencies, reduce costs, and enhance quality of health care provided to veterans. We believe this strategy will preserve the viability of the health care system well into the next century and prepare VA to continue to meet the diverse health care needs of the veteran population, especially the special needs of those groups of veterans for whom VA is the hallmark provider or who cannot afford other health care options. The reinvented VA system is on its way to becoming a model for future integrated health care systems, public and private.

Emphasize a Business-like Approach to Health Care

VA will continue the course set in 1998, emphasizing and supporting a dynamic business-minded approach to health care delivery within a framework of quality. Retention of all medical collections and user fees will add tangible incentives for our employees to enhance customer service. The opportunity for additional patients to choose VA has the potential to improve the return on the VA infrastructure investment made by the taxpayer and to maintain the health of the VA health care system. We will continue to distribute medical care resources under the Veterans Equitable Resource Allocation (VERA) system. The financing of additional workload in 1999 reflects our ability to serve more veterans with their care financed by a system-wide unit cost reduction achieved by increased emphasis on primary care services.

VA will expand and improve health care delivery without any increase in appropriated funds above the current 1998 enacted level for Medical Care. Resources include the Medical Care account’s annual appropriation ($17 billion), sharing and other reimbursements ($147 million), and the Medical Care Collections Fund ($677 million). We expect to provide quality health care to more than 3.4 million unique patients, including 3.0 million veterans, an increase of approximately 134,500 unique patients. The new funding level should support almost 695,000 inpatient episodes and 37 million outpatient visits.

Starting in 1998, VA committed to the goals of reducing per-patient cost for health care by 30 percent, serving 20 percent more veterans, and increasing alternative revenue sources to 10 percent of all Medical Care funding by 2002. This five-year projection assumes FY 1998 authorization of Medicare subvention, successful pilot testing, and expansion nationwide. It is important to emphasize that the per unique patient price reduction of 30 percent is dependent upon the workload increase of 20 percent. This dynamic allows VA to spread its fixed cost across an expanded workload base.

Improving Benefits Delivery

We have made a strong commitment to improving the quality and timeliness of processing compensation and pension claims through better management and development of a Balanced Scorecard for measuring progress. Using five core measures –customer satisfaction, speed, accuracy, unit cost, and employee development and satisfaction—Veterans Benefit Administration (VBA) will upgrade the delivery of benefits and services to veterans and their families. In pursuing the Balanced Scorecard, VBA will establish new management information systems and revise existing ones. This will be accomplished in a manner that is consistent with our departmental efforts to generally improve information content management. Some current performance measures and targets will change as new systems are implemented with new data consistent with the Balanced Scorecard. Eventually, VBA will use a data-driven Balanced Scorecard to link effective strategic planning and performance management with annual budget requests and truly become a data-driven organization. The real measurement of services will be improved satisfaction of our veterans.

This budget requests $22.6 million to continue VBA’s Business Process Reengineering (BPR) initiatives aimed at producing significant improvements in processing compensation and pension claims over the next few years. We are also requesting additional funds to fully automate our education assistance payments for veterans and their dependents, making it much more convenient for them and less costly to the taxpayer. We are requesting increases for other program enhancements aimed at providing better service for veterans at reduced cost, including creative use of information technology and expanded training opportunities.

Ensure a Lasting Tribute for Veterans and Family Members

We project that annual veteran deaths in the U.S. will increase over 14 percent, from 525,000 in 1996 to 601,200 in 2003. Annual veteran deaths are expected to peak at 620,000 in 2008. As the number of deaths increase, the National Cemetery System (NCS) projects increases in the number of annual interments from 71,786 in 1996 to 104,900 in 2008.

Our request for the NCS continues to position VA to meet these future requirements. The budget includes funding and personnel to continue the activation of four new cemeteries during the next two years – an increase unprecedented since the end of the Civil War.

State veterans cemeteries are a complement to VA’s system of national cemeteries and have an important role in meeting future burial demand. To foster an enhanced partnership with the states, as proposed last year, legislation is under consideration to amend 38 U.S.C. 2408 to encourage the establishment, expansion, and improvement of State veterans cemeteries by increasing the maximum Federal share of the costs of construction from 50 percent to 100 percent. The legislation would also permit Federal funding for up to 100 percent of the cost of initial equipment for cemetery operations. States would be responsible for providing the land and paying all costs related to the operation of the state cemeteries and for subsequent equipment purchases.

Improve Performance-Based Budgeting

The Government Performance and Results Act is the primary vehicle through which we are developing more complete and refined strategic goals and performance information. This will allow us to better determine how well VA programs are meeting their intended objectives. We are continuing to move our focus away from program inputs and toward program results.

During FY 1997, we published our initial strategic plan under the Results Act. This plan covers FY 1998 through FY 2003 and was submitted to the Congress in September 1997. The strategic plan is structured around two themes—Honor, Care and Compensate Veterans in Recognition of their Sacrifices for America; and Management Strategies. The first theme addresses the strategic goals for VA programs that provide benefits and services to veterans and their families. The second presents process-oriented strategies that will help VA operate as "One-VA"—a unified organization delivering seamless service to veterans with a focus on providing world-class customer service, ensuring a high performing workforce to serve veterans, and providing the taxpayer maximum return on investment. The Departmental goals and objectives in the strategic plan are the driving forces for budget formulation and performance planning.

We have completed our first performance plan under the Results Act. This plan contains specific performance goals, performance measures, and target levels of performance within each program supporting the broader general goals in the strategic plan. We have integrated the FY 1999 performance plan into our budget request to begin drawing a closer relationship between resources and performance.

We continue to strengthen our strategic management process and to respond to Congressional and GAO criticism of selected management problems in the Department. The prominent criticisms are the need for VA to:(1) identify the purposes and effectiveness of our programs, (2) integrate our information technology investments, and (3) validate our performance measurement data. We have a number of key initiatives ongoing. First, we are developing a list of programs and a schedule of program evaluations that will assist us in determining how well our programs are meeting their intended objectives. These evaluations will begin in FY 1998. Second, we are establishing an Office of the Actuary which, among other areas of responsibility, will be involved in developing and providing information to be used in assessing performance measures and in gauging progress toward achieving our organizational goals and objectives. Third, we have launched a project to bring about a greater degree of integration of our various customer service activities, a project that will focus on how information technology can enhance the Department’s customer service. And finally, the Office of the Inspector General is conducting a study to review the validity and reliability of VA’s performance data. The initial part of this study focuses on timeliness data for compensation and pension claims, but during FY 1998 this effort will be expanded to include measures covering the medical care program.

I will now briefly summarize our 1999 budget request by program.

Medical Programs

Medical Care

The 1999 request recognizes that dramatic changes have occurred in the veterans health care system over the past three years. Commitment to improving the quality of health care and to maintaining a standard of quality is a key strategic objective. VA has implemented a new national network management structure. Duplicative administrative functions and clinical services are being consolidated and geographically proximate facilities are being integrated. Resources are being shifted from inpatient care, which was specialty focused, to primary care delivered on an outpatient basis. It is the continuation of aggressive business-minded approaches coupled with a clear understanding of health care priorities that has allowed VHA to come so far so quickly and which will allow continued progress in 1999. In the four years to follow, VA is committed to its 2002 targets of reducing per-patient health care costs by 30 percent, providing quality health care to 20 percent more veterans and increasing the portion of the operating budget obtained from third party medical collections and other alternative revenue sources to 10 percent.

The allocation of medical care resources under the Veterans Equitable Resource Allocation (VERA) complies with Public Law 104-204, ensuring that veterans across the country have fair and equal access to VA health care. The Eligibility Reform Act, Public Law 104-262, affords a great opportunity to provide improved health care value to current users; expand the number of users; attract new revenue generating customers who bring insurance or Medicare payments with them; and, provide value to taxpayers.

This budget is a continuation of the Administration’s policy, established last year to straight-line appropriation requirements through 2002 along with retention of expanded medical collections, anticipated passage of Medicare subvention, increased sharing revenues, and anticipated improved management efficiencies.

The Balanced Budget Act of 1997, Public Law 105-33, allows VA to retain all collections from third parties, copayments, per diems, and certain torts after June 30, 1997. These collections are deposited in the new Medical Care Collections Fund (MCCF) and beginning, October 1, 1997, were available for transfer to the Medical Care appropriation to remain available until expended. As estimated from individual network plans, MCCF will transfer collections of $677 million to the Medical Care account in 1999 to support veterans’ health care, an increase of 13 percent.

VA is enhancing its customer focus. The department is measuring customer satisfaction and timeliness of services, and comparing our quality measures to community standards. VA is committed to the enhancement and system-wide standardization of quality. This commitment to improve health care quality in VA facilities is evident by moving additional staff to the Office of the Medical Inspector. This staff will conduct investigations, site visits, reviews, and other evaluations of quality of care issues.

The Administration supports enactment of a demonstration program in 1998 to test the feasibility of "Medicare subvention." This demonstration would permit VA to collect from Medicare for health care services provided to Medicare eligible, higher income veterans who do not have compensable disabilities. The advantages of this initiative are that: veterans will have more options in selecting a quality health care provider closer to where they reside; Medicare will be billed at costs that will be lower than the private sector; and VA will be able to employ underutilized capacity to provide health care to Medicare-eligible veterans. The Administration will work with Congress to seek passage of the Medicare subvention pilots this year.

To promote more efficient management of resources, VA proposes a change in the appropriation language that provides for a two-year spending availability for up to 8.3 percent of resources made available. This percentage is equivalent to approximately one month of spending authority. This proposal promotes more rational spending aligned with business-type decisions, recognizes the need for management flexibility during this period of significant change, and reflects the GPRA concept of integrating budget decisions with planning.

SMOKING CESSATION

The Administration is requesting authorization of a five-year smoking-cessation program for any honorably discharged veteran who began smoking in the military. Private providers, on a per capita basis, will deliver the program to the extent that resources are available. Once this program is authorized, the Administration will submit a budget amendment requesting an appropriation of $87 million for this new activity. A legislative proposal to authorize this program will be transmitted in the near future by the Administration. It is estimated that between 1.3 million and 2.6 million veterans would avail themselves of this valuable program over the next five years.

Medical and Prosthetic Research

Funding for Medical and Prosthetic Research is proposed as part of the Research Fund for America. This proposal highlights the Administration’s priority to support needed and sustained investments in important Federal research programs on a deficit neutral basis. A total of $300 million will support over 1,795 high priority projects and VA research’s general goal to meet the needs of the veterans and contribute to the Nation’s knowledge about disease and disability. VA research will continue to focus on designated research areas that are of particular importance to our veteran patients including: Gulf War illnesses, aging, chronic disease, mental illness, substance abuse, and sensory loss.

The additional $28 million requested will allow continuation of ongoing programs and the start of major research initiatives that take advantage of VA’s unique assets in clinical outcomes and rehabilitation research and our large integrated health care system. The first of the initiatives will establish a new Quality Enhancement Research Initiative (QUERI) to accomplish unprecedented collaboration between research, policy and performance, patient care and informatics (medical data). Target areas for this initiative include prevalent conditions, such as, cancer, prostate disease, depression and consequences of chronic spinal cord injury. Other initiatives will focus on medical therapy and surgical treatments of Parkinson’s Disease; rehabilitative research in the areas of vision and hearing, aging with a disability, and prosthetics; and prevention of complications of Type II Diabetes Mellitus. In these areas, no other federally supported clinical or research entity can initiate or complete such critical and ambitious research activities on behalf of America’s veterans.

MEDICAL CARE COLLECTIONS FUND

The enactment of Public Law 105-33 established the Medical Care Collections Fund (MCCF) and enabled VA to retain third party recoveries and other copayments from the provision of health care services and to use those resources to provide additional care to veterans. In an era of government efficiency, where fewer federal dollars are being spent to provide more services effectively, MCCF will allow the VA to have the necessary flexibility to produce more funding through user fees while maintaining no increase in appropriated funds.

In 1999, VA expects to increase collections by 13 percent from the previous year to a total of $677 million. To improve recoveries, MCCF is focusing on consistent utilization of existing billing and collection software; better documentation of detailed clinical and cost data on insurance bills; implementation of billing rates based on reasonable charges; and continued development of automated recovery processes.

Benefits Programs

VA benefits programs provide assistance to veterans in recognition of their military service to their country and to aid their transition to civilian life. We provide compensation payments to veterans who suffered disabling illnesses or injuries as a result of military service and to survivors of those who died from service-connected causes; pension payments to needy disabled wartime veterans and the needy survivors of wartime veterans; education and training assistance to active duty personnel and to veterans to help them readjust to civilian life; vocational rehabilitation and counseling assistance to help disabled veterans obtain employment; credit assistance to enable veterans and active duty personnel to purchase and retain homes; and life insurance. Delivery of these benefits must put veterans first, foster partnerships between VA and veterans and their service representatives, exploit advances in information technology and training, and place management focus on desired customer service improvement as well as efficiency.

The Administration is requesting $21.9 billion to support FY 1999 compensation payments to 2.4 million veterans, 305,000 survivors and 2,000 children of Vietnam veterans who were born with spina bifida, and to support pension payments to 390,000 veterans and 283,000 survivors. The mandatory appropriation request includes the estimated cost of providing compensation for disabilities and deaths attributable to tobacco usage during military service estimated at about $17 billion over five years. VA’s General Counsel has determined that under current law, service connection of a disability or death may be established if injury or disease resulted from tobacco use in the active military service. VA already has received and begun to adjudicate tobacco-related disability and death claims. The budget proposes legislation to disallow benefits for these disabilities or deaths attributable to diseases which began after military service and after any applicable presumptive period, and based solely on tobacco use during military service. Discretionary resources in the budget assume enactment of this legislation.

We are also proposing in this budget a 2.2 percent cost-of-living adjustment (COLA) to be paid to compensation beneficiaries, including spouses and children receiving Dependency and Indemnity (DIC) at an estimated cost of $287 million in FY 1999. The COLA is based on the projected change in the Consumer Price Index. Proposed legislation is included to pay full disability compensation benefits to Filipino veterans and DIC to their survivors residing in the U.S. currently receiving these benefits at half the level that U.S. veteran counterparts receive. The cost of the proposal will be approximately $5 million a year, for a total of $25 million over five years.

This budget request also reflects a need for an additional $550 million for the FY 1998 Compensation programs. The COLA that took effect December 1, 1997, is responsible for $303.4 million of this increase. The remainder is primarily attributable to higher than expected increases in average benefits, with an increase of veteran cases as well as the inception of compensation benefits and vocational training for children of Vietnam veterans who were born with spina bifida. Several factors contribute to the increase in the average benefit payments. Among them are (1) the processing of older cases as emphasis on reducing backlogs continues, which generates significant retroactive benefit payments; (2) increases in the number of service-connected disabilities claimed and granted to veterans; and (3) higher than expected average benefit payments to Vietnam and Gulf War veterans. These changes, along with estimated tobacco-related claims, result in the increase over the original budget estimate.

An appropriation of $1.2 billion is requested for the Readjustment Benefits program to provide education opportunities to veterans and eligible dependents and for various special assistance programs for disabled veterans. Education benefits will be provided for about 482,000 trainees in 1999, including 310,000 training under the Montgomery G.I. Bill. This request includes funds for the annual Consumer Price Index adjustment (estimated to be 2.0 percent effective October 1, 1998) for education programs. Legislation is proposed in this budget that will provide a 20 percent rate increase for the Montgomery G.I. Bill education program as well as for survivors’ and dependents’ education programs. This legislation will also propose additional funds in the amount of $100 million to be used for veterans training programs administered by the Department of Labor (DOL) under Part C of the Job Training Partnership Act. The estimated five-year cost of the rate increase and the reimbursement for DOL training programs is $1.5 billion.

This budget proposes legislation to eliminate authority to finance the sale of acquired properties (establish vendee loans) to the public. VA acquires properties incident to the foreclosure of guaranteed loans. Properties can be sold for cash (borrowers obtain their own financing), but in 80 percent of the cases VA finances the sale by establishing a mortgage loan receivable. The establishment of vendee loans and their subsequent sale extends VA’s liability for many years. By selling all properties on a cash basis, future expenses due to foreclosure of pooled vendee loans will be eliminated. If enacted, this proposal is estimated to save a total of $42.2 million over five years.

VA is also proposing legislation to charge lenders a fee of $25 for each VA loan that is guaranteed. The fees would be earmarked for use in developing, maintaining, and enhancing a VA Loan Information System that would interact with the information systems used by lenders to make and service VA- guaranteed loans. Amounts collected will be deposited in the Supply Fund. VA may charge this fee for four years, not to exceed a total of $15 million.

Legislation is proposed as well to establish a reserve, from appropriated funds, to fully fund the "H" program (certain disabled veterans within the National Service Life Insurance program) and allow for the payments of future dividends. This legislation will require an initial transfer to the National Service Life Insurance fund of $4.5 million in 1999. The $4.5 million appropriation will be offset to the extent that annual appropriations to the Veterans Insurance and Indemnities appropriation to cover the costs associated with the "H" program will no longer be necessary.

General Operating Expenses

A total of $849.7 million is requested for the General Operating Expenses (GOE) appropriation in 1999. This funding level, combined with $160.2 million of administrative costs associated with VA’s credit programs (funded in the loan program accounts under credit reform provisions), $11.3 million in reimbursements from the Compensation and Pensions account for costs associated with the implementation of the Omnibus Budget Reconciliation Act of 1990 as amended, and $38.9 million from insurance funds’ excess revenues, together with other reimbursable authority, will provide $1.224 billion to support operations funded in the GOE account.

Veterans Benefits Administration

The 1999 budget request for the Veterans Benefits Administration (VBA) of $651 million will support an average employment level of 11,221, which is 125 FTE’s below the 1998 level. Much of the FTE decrease, however, relates to moving 80 FTE to the Franchise Fund for the Debt Collection Activity, and to reductions in the overhead, administrative support areas. Employment for direct processing of compensation and pensions claims increases by 140 FTE over 1998 within this total. This request, combined with $155.5 million associated with credit reform funding, will result in an increase of $52.5 million in appropriated discretionary funding over the 1998 level.

This budget reflects VBA’s progress in implementing the requirements of the Government Performance and Results Act (GPRA). The integration of plans, resources and performance measures is constantly being improved. The 1999 budget reflects improvements over last year and will change further as our new team revises indicators and goals and establishes new ones.

There are several initiatives which, taken as a whole, comprise our new vision for processing compensation and pension (C&P) claims. Among those included in this request are the conversion to service centers, or the organizational and physical combination of Adjudication and Veterans Services Divisions at each of the 57 regional offices. Once completed, enhanced customer satisfaction as well as improved processing will follow. Funds are requested for the pre-discharge exam initiative that provides an outreach effort prior to separation from the service at major sites across the United States. This is a critical element of the reengineered C&P vision for the performance of claims development, disability examination, and preparation of rating decisions for service persons awaiting discharge from active duty.

This budget also reflects funding for finalization of the ongoing geographical consolidation of loan processing and loan service and claims functions from 45 offices to nine Regional Loan Centers (RLCs). Consolidation will result in improved services to veterans at reduced costs through greater efficiency and economies of scale. Service to lenders will improve through greater consistency and responsiveness. This consolidation is expected to generate nearly $43 million in savings through 2003. Funds are also included to deploy a new Property Management Local Area Network (PLAN) System. Real property acquired by VA as a result of guaranteed loans requires management and disposal. Automated information support will be provided to promote the rapid acquisition and sale of properties in order to maximize recovery of the government’s expenditures.

Other funds are included to continue information technology initiatives that will support the needs of a reengineered environment. Education processing will benefit from completing installation of imaging technology into the VBA environment, reducing the dependency on paper documents and improving timeliness and accuracy of claims processing. Additionally, education systems will be modified to take full advantage of the efficiencies gained from recent technological advantages. Development of the payment processing system for the Montgomery G.I. Bill – Selected Reserve program will continue in 1999 and serve as the foundation for all future education redesign efforts. VBA will also replace the current system of manual processing with an expert system and replace the current system of delivering monthly benefit checks to veterans by mail with either a voucher to be drawn through electronic benefits transfer or electronic transfer of funds directly into their bank accounts.

Another initiative will improve timeliness and quality of service while reducing costs for the insurance program. Paperless processing in this business line will require installation of an imaging system to provide electronic storage of insurance records and on-line access. Creation of a large database of imaged beneficiary forms will allow the retirement of almost 2.5 million insurance folders.

National Cemetery System

The National Cemetery System (NCS) proposes a budget of $92 million. This represents an increase of $7.8 million over the 1998 level. The funding increase over last year’s level is for: 1) workload increases at the Tahoma National Cemetery in the Seattle, Washington, area; 2) the continued activation of three new national cemeteries in Chicago, Illinois; Dallas, Texas; and Saratoga, New York; 3) the partial activation of a new national cemetery in the Cleveland, Ohio area; 4) the increased cost of the Integrated Data Communication Utility (IDCU) system conversion; and 5) for inflation and employee payroll costs.

General Administration

A total of $199 million is requested for the Office of the Secretary, five Assistant Secretaries and three staff offices. This request, combined with $4.7 million associated with credit reform funding, will result in a total resource level of $203.8 million.

Equal Employment Opportunity

During 1998, VA has restructured its Equal Employment Opportunity (EEO) complaint process. The 1999 budget reflects the creation of two new offices to handle processing and adjudication of EEO complaints. The Office of Resolution Management (ORM) was created within the Office of Human Resources and Administration. In addition, the Office of Employment Discrimination Complaint Adjudication (OEDCA) was formed. This function will be located in the Office of the Secretary.

For 1999, funding for the new offices will be handled entirely on a reimbursable basis except for that portion of their operations performed for staff offices within the General Administration activity of the GOE appropriation in which ORM and OEDCA operate. General Administration funds that supported the previous Equal Employment Opportunity process for VHA, VBA, NCS and the Office of the Inspector General have been moved to their respective budgets for 1999. Reimbursements are calculated on a per case basis.

Shared Service Center

The 1999 budget reflects the phased expansion of the Shared Service Center (SSC) to encompass additional VA employees and sites. The SSC will centralize payroll processing and personnel information. For 1999, the SSC is requesting $26.6 million in reimbursement authority from other VA organizations.

Board of Veterans' Appeals

The Board of Veterans’ Appeals (BVA) will continue administrative productivity enhancement initiatives involving both automated and manual procedural changes. In 1998 and continuing into 1999, BVA expects to increase electronic exchanges of information with VBA and thus improve data currency and decrease administrative handling. BVA continues to work to reduce the time it takes veterans to receive decisions on appeals. A total of $40 million is requested for the Board in 1999.

Policy and Planning

The Office of Policy and Planning is requesting $11 million in 1999. Funding is provided for program evaluations ($2 million in 1999), establishment of an Office of the Chief Actuary ($2 million in 1999), and the National Survey of Veterans II ($1 million in 1999). This request builds upon funds provided by Congress in 1998 for these activities.

Office of General Counsel

The Office of General Counsel (OGC) is requesting $38.8 million in budget authority to support its operations in 1999. The 1999 request is $2.2 million above the 1998 current estimate. These additional funds will allow the General Counsel to maintain its current level of operations plus allow it to address the growing backlog at the Court of Veterans Appeals and field offices.

Office of Management

The Assistant Secretary for Management is requesting $49.4 million in budget authority in 1999. This request includes $900 thousand to develop a replacement strategy for the VACO Campus LAN. This strategy will focus on immediate short-term solutions to keep the system viable and long-term solutions that will allow the VACO community to have a dependable, reliable, and fully functional LAN network.

Office of Inspector General

The 1999 request of $32.7 million includes funding for the Inspector General to continue to focus its efforts on high pay-off areas deemed most vulnerable to fraud, waste, inefficiency, and mandatory coverage areas such as audits of VA’s financial statements.

Capital Planning

With the recognition of the need to improve its capital planning process, VA has initiated a process to ensure that major capital investments are based on good business decisions, tie to Departmental strategies and goals, and represent the best return to the taxpayer. Representatives from top management, in the form of the Capital Investment Board (CIB), make strategic decisions about capital expenditures. This is an evolving process that also fosters a "One-VA" approach to the use of capital funds by facilitating dialogue about major construction projects, leases, information technology, and major equipment purchases across VA management.

CONSTRUCTION, MAJOR PROJECTS

A total of $97 million is requested for the Major Construction program. The Major Construction request would fund a clinical consolidation/seismic project at Long Beach, California, a seismic corrections project at San Juan, PR, and columbarium projects at Ft. Rosecrans (California) and Florida National Cemeteries. Additional funds are requested to remove asbestos from VA-owned buildings and to support advanced planning and design activities.

CONSTRUCTION, MINOR PROJECTS

A total of $141 million is requested for the FY 1999 Minor Construction program. The request includes $123 million for Veterans Health Administration projects. Of this amount, $68.9 million is targeted for the outpatient care and support category. This will enable VA to continue its commitment to provide primary and preventive care. Additionally, $32.5 million is for inpatient care and support. This category includes projects that improve the patient environment, such as providing private and semi-private rooms. A total of $14 million is also included for the National Cemetery System. Funds in the amount of $2.4 million are requested for the Veterans Benefits Administration. Staff Office and Emergency projects are provided $1.6 million.

Parking Revolving Fund

VA is requesting authorization of $13 million for a parking garage in Denver, Colorado. No additional funding is required as this project would be funded from unobligated balances currently available.

GRANTS FOR THE CONSTRUCTION OF STATE EXTENDED CARE FACILITIES

The FY 1999 request of $37 million for the Grants for the Construction of State Extended Care Facilities will provide funding to assist States to establish new, or renovate existing nursing homes and domiciliaries.

GRANTS FOR THE CONSTRUCTION OF STATE VETERANS CEMETERIES

The FY 1999 request of $10 million for the Grants for the Construction of State Veterans Cemeteries will provide funding to assist States to establish, expand, or improve State veterans cemeteries. Legislation is again proposed to increase the maximum Federal share of the costs of construction from 50 to 100 percent.

Closing

Mr. Chairman, the challenges before us are great but our dedication and commitment to ensuring the best possible care and service to our Nation's veterans are greater. We owe our veterans the best service we can provide. I look forward to working with you and the members of this Committee to meet these challenges.