<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:26104.wais]
HEARING ON THE DEPARTMENT OF VETERANS
AFFAIRS' BUDGET FOR FY 2007 FOR THE EDUCATION,
VOCATIONAL REHABILITATION AND LOAN GUARANTY PROGRAMS
TUESDAY, FEBRUARY 14, 2006
U.S. HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY,
COMMITTEE ON VETERANS' AFFAIRS,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 334, Cannon
House Office Building, Hon. John Boozman [Chairman of the Subcommittee]
Presiding.
Present: Representatives Boozman, Brown-Waite, Herseth and Evans.
MR. BOOZMAN. Meeting will be in order. We appreciate you all coming
over. One thing before we really get started, we were a little bit concerned
that OMB refused to clear some slides addressing some additional information
that we requested. And I think the information that we requested was certainly
not a threat to national security. Maybe at some time you can address what the
problem is. We would be concerned if we felt that you believed we didn't
really have the right to have this information on how employees spend their
time or that we don't need to know the status of the information technology
programs, which we are requesting -- and for which you are requesting funding.
So we will talk about that in a little bit.
But we appreciate having you here. Today we will hear from Mr. Ron
Aument, Deputy Under Secretary for Benefits, regarding the President's budget
proposal for VA Voc Rehab and Employment, Education, and Loan Guaranty Programs.
Mr. Aument -- am I saying that right?
MR. AUMENT. Yes, you are, sir.
MR. BOOZMAN. Good. I am Boozman but answer to "Bozeman" and whatever.
Mr. Aument, is accompanied by program directors, Ms. Judy Caden, Mr. Keith
Pedigo, Mr. Dennis Douglass and Mr. Scott Denniston from the Office of Small and
Disadvantaged Business Utilization. Mr. Denniston does not work for VBA, but we
have jurisdiction over veteran-owned small business, so we thought it important
to have him here. We will also receive testimony from the DAV representing the
Independent Budget and the American Legion.
We have asked the Vietnam Veterans of America to submit their views for
the record, and without objection, their submission will be made part of the
record.
[The material was unavailable at press time.]
MR. BOOZMAN. I thank each of you for coming today. As I said at the full
Committee hearing last week, I am pleased that the President has significantly
increased the overall budget for VA. However, it is no secret that VBA faces
serious problems in delivering timely services to its Voc Rehab and Education
beneficiaries. I note that, for the week ending 20th of January, the Education
Service had a backlog of 110,000 claims, or about the same as last year, and
that processing days are up.
Voc Rehab has 6,400 in application status; Loan Guaranty seems to be
chugging along. But we absolutely must do a better job in getting the GI Bill
checks to the veterans and getting the veterans to the evaluation and testing
period so that they can get on with their rehab.
I want to hear some ideas from the Department and the VSOs to make these
programs run smoother. I am also concerned about the significant disparity in
performance among the various regional offices. For example, the San Diego
regional office takes about 18 days to determine whether a veteran is eligible
for Voc Rehab, and unfortunately, the Washington regional office takes over 180
days. Now I know that certainly some variation is inevitable, but a factor of
ten is totally out of line. The entire system averages about 62 days to
determine entitlement. So I guess any way that we look at it, something is
wrong and needs to be fixed.
I have to believe that staffing levels play a role in this, therefore I
request VA provide the Subcommittee with an analysis of the disparity between
the best and worst performers in making timely Voc Rehab entitlement decisions
including the number of Voc Rehab staff by position for each RO.
Mr. Aument, if you would, please provide us with a date when that
information would be available to the Subcommittee. I am sure all of you know
that Chairman Buyer has expressed a support for modernizing the GI bill, and I
want to, again, state my enthusiastic support for that initiative.
I look forward to working with Ms. Herseth and her staff to craft a bill
that would affect how today's military operates. I now recognize our Ranking
Member, Ms. Herseth.
[The statement of John Boozman appears on p. 36]
MS. HERSETH. Well, good morning, and thank you, Mr. Chairman. I am very
pleased to be here today to examine the President's fiscal year 2007 budget
request as it relates to VA programs that fall within the jurisdiction of the
Economic Opportunity Subcommittee.
For many years, education benefits, vocational rehabilitation services and
VA home loans have been a hallmark for the types of services a grateful nation
provides to the men and women who serve and sacrifice in defense of the country.
These earned benefits are critical to service members, veterans and their
families as they attempt to successfully transition from military service to
civilian life. I am particularly interested in hearing about the VA's efforts
to address the growing education claims workload, as the Chairman mentioned; the
progress in implementing the 2003 VR&E Task Force report, including any special
efforts to reach out to rural areas; and the Loan Guaranty services
consolidation efforts while maintaining high quality service to veterans and
thorough oversight over property management contractors.
In recent years, much progress has been made in these programs. However,
I think we can all agree that we must remain vigilant to maintain against any
decline in top quality benefits and customer service.
So Mr. Chairman, I look forward to hearing from the witnesses today and
want to thank you for holding the hearing.
MR. BOOZMAN. Thank you very much. Let's begin with the first panel, the
Honorable Ron Aument is Deputy Under Secretary for Benefits. Ms. Judy Caden is
director of the Voc Rehab and Employment Service. Mr. Keith Pedigo is director
of the Loan Guaranty Services. Mr. Dennis Douglass, acting director of the
Education Service. And Mr. Scott Denniston for the Office of Small and
Disadvantaged Business.
STATEMENT OF HONORABLE RON AUMENT, DEPUTY UNDER SECRETARY FOR BENEFITS,
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY DENNIS DOUGLASS,
ACTING DIRECTOR OF EDUCATION SERVICE, VETERANS BENEFITS ADMINISTRATION;
JUDITH CADEN, DIRECTOR OF VOCATIONAL REHABILITATION AND EMPLOYMENT
SERVICE, VETERANS BENEFITS ADMINISTRATION; KEITH PEDIGO, DIRECTOR OF LOAN
GUARANTY SERVICE, VETERANS BENEFITS ADMINISTRATION; AND SCOTT F.
DENNISTON, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION,
DEPARTMENT OF VETERANS AFFAIRS.
MR. BOOZMAN. Before Mr. Aument begins, I think that we need to note that
the Education Service director position has been vacant for 7 months, and, this
is certainly not any reflection in any way on the excellent job that Mr.
Douglass has done as acting director, but I think it is time that we need to
fill that job one way or the other. Leadership continuity is important, and
lengthy gaps are not a good way to run a, certainly, very important program.
As a matter of fact, one can infer from such gaps that directors do not
have significant impact on the daily operations, and that should not be the
case.
So, again, what I am trying to do is say that we appreciate Mr. Douglass'
good work.
Now, in a second, Mr. Aument, we want you to start, and really what I
would like to do today is, I know you are going to give a presentation, and so,
I would like to break a little bit with our normal way of doing things, and
really, Ms. Herseth, whoever is here, I would like for them to feel free to
break in as you go through. Just feel free, Ms. Herseth, if something comes up
that we don't understand, to ask a question then rather than continue with the
formal presentation. The purpose of this hearing is to be of a good educational
situation so that we can better understand what is going on. And I think that
will be a little bit easier, if that is okay with you all.
MR. AUMENT. We would welcome that approach.
MR. BOOZMAN. Thank you, go ahead.
MR. AUMENT. Thank you, Mr. Chairman, Congresswoman Herseth. I appreciate
the opportunity to appear before you today to discuss the VA 2007 budget request
for the Education, Vocational Rehabilitation and Employment, and Loan Guaranty
Programs. My testimony will highlight VA's commitment to meeting the needs of
our Nation's veterans and key initiatives that are included in the 2007 budget
request for these three programs.
Programs I will discuss today assist service members in making the
transition from military to civilian life and provide vital economic
opportunities that allow veterans and their families to prosper. We help
veterans and their dependents seek greater education and economic opportunities
through the highly successful Montgomery GI Bill program and other educational
programs. We promote home ownership through the Loan Guaranty programs. For
qualifying veterans with disabilities, our Vocational Rehabilitation and
Employment Program provides both rehabilitation and training and assist them in
re-entering the civilian workforce.
We are proud of these programs and appreciate your interest in them. We
are pleased with the 2007 budget request for each of these programs. The
funding levels for education and VR&E support significant increases in staffing,
which will allow us to address the growing workload. Although the Loan Guaranty
staffing levels will be reduced slightly, the numbers are sufficient in light of
the program's continued operational improvements.
The budget also includes funding for official initiatives that will ensure
we have a trained and skilled workforce with access to systems and tools that
support service delivery.
VA's budget will allow these programs to improve overall performance and
to continue to fulfill our mission of delivering benefits and services in a
responsive, timely and compassionate manner in recognition of veterans' service
to their nation.
With that, I would like to transition to some of the slides that we are
going to be using to help step us through the budget request for these three
programs if I could, sir.
[The statement of Ronald Aument appears on p. 40]
MR. BOOZMAN. Yes, sir. Thank you. Let me ask one thing real quick in
regard to your statement.
When responding to the question regarding a decrease in Compensation and
Pension Full Time Employees (CPFT) before the full Committee last week, Under
Secretary Cooper said he would look at moving the proposed additions around. Is
that still the VBA position? And if so, what will be the effect on the business
lines that we are going to be discussing today?
MR. AUMENT. I understand that there was some concern when Admiral Cooper
provided that response in the overall full Committee hearing. I do believe he
was largely referring to moving some of the FTE around within the three programs
that make up the Compensation and Pension business line. In particular, he was
referring to the compensation program, pension program and the burial program.
I think if you look at that carefully, you will see that while there was some
decrease in the FTE, direct FTE supporting the compensation business line, there
was also a corresponding increase in the pension business line.
It will be our expectation that any type of changes in budget execution
would be largely within those three particular business lines.
Clearly, the workload and workload conditions as we approach the actual
budget year would dictate final decisions. But I do believe that was what he
had in mind largely when he made that statement.
MR. BOOZMAN. Thank you.
MR. AUMENT. First slide please. The format that we are going to be using
today as we go through each of the three programs would be pretty much alike,
similar in nature. We will be looking at the programs, program highlights
within each of the three respective programs, focusing on program highlights,
workload, performance and initiatives.
I would like to begin with the education program.
For the top line, you can see the total obligations that have been
estimated for these programs, 2005 actuals, $84 million, arising to $88 million
in the current year, 2006, and rising again to $92.3 million for the budget year
2007.
Those will support a growing staffing level in the education program,
which we divide into direct staffing and indirect staffing. Indirect staffing
consists of a variety of management and overhead staff that are allocated across
VBA programs on a basis that tracks proportionally against the budget and
overall staffing levels. So roughly around 14 percent of our staffing level is
allocated to management and oversight. That also includes information
technology.
The information technology, as I am sure you are aware, Mr. Chairman, is a
little bit of an unknown today because we are in the process now of moving
towards the so-called federated model in which the information technology staff
are going to be divided into operation and maintenance staff and development
staff. The way the model is foreseen is that the operations and maintenance
staff would be transferring out of the administrations and will be under the
direct control of the department's CIO. So there will be some staffing
adjustment as we actually move towards implementing that model within the
department.
The budgets that you look at for the dollars for 2006 and 2007, both
years, already reflect the movement of some of the nonpayroll -- in fact, all of
the nonpayroll dollars have been moved out of the administration's appropriation
accounts and into that of the CIO.
So it is very difficult in some cases on a dollar-for-dollar basis trying
to compare 2005 to 2006 and 2007.
MR. BOOZMAN. With the additional 46 FTE, how many direct service folks
are going to come out of that number?
MR. AUMENT. The -- take a look at my --
MR. BOOZMAN. Educational Service folks.
MR. AUMENT. I believe we have, for 2007, we have I believe 34 FT.
MR. BOOZMAN. We have been joined by Mr. Evans, the Ranking Member on the
full Committee.
And do you have anything that you would like to open with, Mr. Evans.
MR. EVANS. I just wanted to defer to your judgment on the record and look
forward to working with you on these matters that we have been working hard to
obtain. We want to make sure we give the best possible to our veterans, again,
within the budget. And I just yield back my time with it being a complete
record, if that can be put in place in the record, we appreciate it.
MR. BOOZMAN. Without objection. And we appreciate having you here. We
appreciate your hard work on behalf of veterans. Do you all have any questions
about this particular slide?
Okay.
MR. AUMENT. Move on to the next slide. Discuss briefly the workload we
estimate in the upcoming budget year for the Education Program.
As you can see, first of all, there have been some very, very heavy
increases in workload that took place between the years 2000 and 2005. We
believe that, in part, that reflects the improvements in the benefits program
for the education program. The increases recently in the Montgomery GI bill
program that took place a couple of years ago, we believe, are largely
responsible for the increase in workload.
Going into the budget year 2007, we do not foresee the same level of
increase that we have experienced in years past because we do believe that there
is some leveling of that change that went along with the benefits improvements.
Nonetheless, as we continue to have more service members making the transition
from military to civilian status, we continue to see high usage of the
educational benefits.
We also expect to see a growing use of the new chapter 1607 benefit that
we applaud. We believe that this is a vast improvement in the benefits that are
made available to guardsmen and reservists, really reflecting the different role
that they have been asked to play in support of our nation.
Again, we do expect to see additional workload increases associated with
that program.
MS. HERSETH. If I might interject here because I was going to ask if the
VA had a position about the effectiveness for the new benefit for the guardsmen
and reservists, under chapter 1607. And it sounds to me that you feel that it
is a good program as it's been implemented thus far, very effective in meeting
some of the unique needs.
Can you tell me, of the pending education claims of, I believe, just over
100,000, do you know how many come under chapter 1607?
MR. AUMENT. We believe that we probably have around 12,000 of those
claims pending. It was really only in December of 2005 that we actually
completed the arrangements necessary with DOD to allow us to begin making
payments under chapter 1607 and we actually began making some payments very late
in the month, in December, and we have been making them strictly on a manual
basis while we have been waiting to stand up our automated payment system.
That will be installed this weekend, this coming weekend, and it is our
expectation that we should quickly work through the backlog of those claims.
And Dennis tells me 3 to 4 weeks; I am confident we can do it in 2 to 3 weeks.
MS. HERSETH. I am pleased to hear that. And so just one more question to
interject as it relates to this slide. You may not have been finished with the
summary of what you wanted to provide in testimony, which we certainly want you
to go back to. But in addition to the increases in the FTEs, and I am glad that
your response to Chairman Boozman's question about Admiral Cooper's testimony
and how the increases in the FTEs in certain areas hopefully won't be juggled in
a way that minimizes what we hope to accomplish with that increase, both in the
Education Service and within VR&E, but do you have, in addition to the increase
in the FTEs as well as the automated payment system for the new program and
perhaps improvements in the payments made to other Education Service programs,
what else, what is the rest of the strategy to deal with the pending claims that
are -- are there any other aspects to that strategy you could describe to us
today?
MR. AUMENT. We believe certainly the quickest way to actually tackle the
backlog, the existing backlog, is through employment, by adding new staffing
resources to the program. Within the Education Program, we believe that, as
distinguished from the compensation pension business line, we can typically make
a new hire productive in a 6 to 9 month time frame, so that new staffing,
resources come into this program, have really measurable effect relatively
quickly in comparison to the compensation and pension business line.
For some more midterm initiatives, technology -- typically is a longer-
term solution and takes some time to actually bring from concept to fielding and
actual application in production.
But in the meantime, you will note that our budget contains an employee
certification initiative that we plan to apply to the Education Program. We
think that this can help ensure a certain level of professionalism among our
workforce and, in addition, our commitment to invest in training and training
tools in support of the educational program.
MR. BOOZMAN. On the slide, increases as a result of enhanced outreach,
what would be an example of that? Just out of curiosity, what are we doing in
that regard?
MR. AUMENT. Largely, it is. I will turn to Dennis. There are a couple
of strategies for outreach. There is a direct-contact strategy where these are
included in many of the transitional type briefings that we provide to
transitioning service members.
Last year, we conducted nearly 8,200 separate briefings and briefed over
325,000 transitioning service members, including members of the Guard and
Reserve. And Dennis, step in here. But we also have some direct mailings that
are provided to transitioning service members both before they leave the service
and shortly after departing the service as well.
MR. DOUGLASS. Yes, sir. About 12 months after an individual comes on
active duty, they actually receive the first of a series of mailings from VA in
partnership with DOD through the Defense Manpower Data Center. It basically is
an introduction to the Montgomery GI bill, which the service member has agreed
to participate in by having his pay reduced. At the 24-month stage, we also
send another mailing again merely reminding him or her that they have an
important benefit that can be used, strictly speaking can be used at that 24-
month stage while they are still on active duty. They tend not to happen that
way of course. It tends to wait until they are released from service. Then
again, about 6 to 9 months before they are scheduled to separate -- we have
another mailing of a more detailed brochure. It gives them a lot more
information on eligibility requirements, things they need to know to be prepared
for that transitioning period.
We know that many of them will not seek education right away, but we want
that information to be in their hands as they transition so that they can make
those important decisions.
After separation, about 90 days to 6 months afterwards, they get another
mailout with veteran status that basically reiterates all of those things that
we have said up to that point.
MR. BOOZMAN. Very good. Thank you.
Ms. Brown-Waite has joined us. Do you have an opening statement or
anything you would like to --
MS. BROWN-WAITE. Mr. Chairman first of all, I want to thank you for
holding this Committee hearing today, and it is very timely. As you know, I
have the most number of veterans of any member of Congress, and I like to
believe that they moved into the district because I fight so hard for veterans
and for their needs.
We have great opportunity here with thousands of soldiers returning from
Iraq. And I just got back from a visit to Iraq last week, Iraq and Afghanistan,
where the members of the military are returning back from and also other parts
of the world.
And so, I believe that it is essential that Congress assist them in making
the transition from the front lines to the home front.
There is no doubt that the VA will see a surge in the number of
individuals seeking assistance in education, vocational rehabilitation and home
loans. Given this increased workload, I believe it is essential that we need to
continue to direct funds and resources to the area of need while we are also
bringing greater efficiency and better use of our resources.
I look forward to hearing the information today. And I apologize for
being late. I had some folks visiting from Florida.
Once again, I certainly want to thank the Secretary for being here today
and look forward to the continuation of the comments. I do have a question
later, but I think I will let you go through some of the rest of the
presentation.
MR. BOOZMAN. Very good. Thank you.
Again, the way that we are doing this is, as the slides come up, if you
have a question at that time, feel free to -- this is going to be very informal
from that respect and a little bit different from perhaps how we normally do our
hearings. So Mr. Aument --
MR. AUMENT. May I move on to the next slide, Mr. Chairman?
This will briefly provide you some of the performance statistics that we
consider the most critical for the educational program.
The average days to complete original claims for 2005 was 33 days. We
predict this going down, estimate it going down by the end of 2006 to an average
of 27 days, and with the resources requested in the 2007 budget, we believe we
can bring that down to 25 days.
Currently, we are running at around 39 days this year-to-date. The
Educational Program is a cyclical program that typically sees spikes in the
timeliness based upon the peak periods of educational enrollment. But we
believe that, as we bring more staff on, make those staff more productive, we
will be able to bring that down to an average of 27 days by the end of the year.
For our supplemental claims that we ended the year 2005 at an average of
19 days. We expect to be able to bring that down to 13 days in 2006 and to 12
days in 2007.
MR. BOOZMAN. I am sorry. Now, on the chart, we have targets. I am not
sure if you answered this or not, but what are the, for real, the current
performance?
MR. AUMENT. I think I mentioned that as of the end of January, the
original claim timeliness was running at 39 days.
MR. BOOZMAN. 39 days?
MR. AUMENT. Yes.
Dennis, how about supplementals?
MR. DOUGLASS. 21.9 days for supplemental claims through the end of the
month of January.
MR. AUMENT. As we have mentioned, that is clearly not what we are hoping
for but we do have an annual cycle in the educational claims processing, and
typically this is the high point of the year.
MR. BOOZMAN. How would that compare to a year ago with the -- not the
target, but the actual -- what was going on a year ago? I am just trying to
figure out if we are moving in the right direction.
MR. AUMENT. 36.6 a year ago; 19.8 for supplementals.
MR. BOOZMAN. And what would you say, again, you mentioned the outreach
efforts, which I think are great; you know, all of the things that you are doing
to try and get people aware of their benefits. That is so important. But how
would we compare -- what is the usage now compared to a year ago? Do we have
any figures along that line?
MR. AUMENT. Let me clarify the question. You would say the usage figures
through educational benefit or our outreach figures?
MR. BOOZMAN. Well, again, it looks like we have lost a few days. What I
am trying to do is figure out, is that due to the fact that we have more people
trying to access the benefit now than we did a year ago?
MR. DOUGLASS. Through the end of the first quarter, we are about on pace
with where we were at the end of the first quarter last year.
I think the reason that we are seeing the slight bump up in timeliness is
because, during October, November and December, not only is that generally our
highest point, but with the additional staff that we got last year, we worked
down some of the older cases. Those older cases will be reflected in a higher
average processing time, until they are worked through the system.
I believe we'll see significant declines, improvements in the timeliness
through the rest of the year, because we moved a large number of those older
cases out of the system.
MS. HERSETH. So the next peak period is going to be June, July, August,
getting ready for September enrollment.
MR. DOUGLASS. Actually, we will probably see a very small spike in the
April-May time frame for spring and summer enrollments, and then it will be very
small. And then in the fall, September-October, we will see another peak
period.
I would expect that peak, however, not to be as daunting as the last fall
enrollment was because we will have had more staff and more proficient staff by
that point in time.
MR. AUMENT. If I could add. Much of last year, 2005, we were having a
hiring freeze in most of our major programs.
In 2006, we are having, it has turned out, with the help of the Congress
and of the department, a much better year than we were predicting this time last
year.
And as such, we really had pretty tight hiring controls throughout the
year, and it was really not until the summer that we gave the education service
license to go out and hire.
Now, with the additional resources this year, we have increased their
staffing levels yet again, and probably more importantly for the directors at
our regional processing offices, we have given them a ceiling that they can
continue to hire against so that, as opposed to waiting for permission from
headquarters to go out and hire, they have been given authority to maintain
constant staffing levels throughout the year. So, as they have people coming
off the rolls, they can quickly backfill those individuals.
MS. HERSETH. I appreciate the kind of recapping where we were last year
at this time because I remember specifically stating the concern to Admiral
Cooper because we had this new program for Guard and Reserves, and there was a
reduction in FTEs at this time last year that was proposed, and we expressed
concern about that. So I do hope that Mr. Douglass and Mr. Aument, that the
trend of the numbers at this stage is reflected in part because of the older
cases that we are working down, but perhaps you could provide to the
Subcommittee a comparison from last year to this year in that April and May time
frame as well as the other spike that we anticipate seeing in the fall just to
give us a little bit of assurance there.
MR. AUMENT. We will be happy to do that.
[The information is found on p. 91.]
MS. HERSETH. Thanks.
MR. BOOZMAN. Ms. Brown-Waite.
MS. BROWN-WAITE. Thank you, Mr. Chairman. I do have a question for the
Secretary. Back in, I think it was November there was an article in the Miami
Herald about the backlog of those some 8,000 who have applied for the new
funding under chapter 1607, and I also had a constituent contact me.
Where are you in working on that number of backlogged applications? I
actually had a constituent who virtually was at the edge of bankruptcy because
he had proceeded, enrolled in college and just obviously did not have that
money.
Where are you in working on that backlog? And you may have already
covered it, and I apologize if you did.
MR. AUMENT. I would be happy to clarify that, Congresswoman. It was not
until mid-December that we actually were in a position where we could legally
make any payments whatsoever. On December 15th, we signed the memorandum of
understanding with the Department of Defense that actually positioned us to
begin making some payments on this new benefit.
By the end of the month of December, we had made some payments. We are
making payments strictly on a manual basis while we have been waiting to stand
up the automated payment system needed to process those claims on a routine
basis.
As of today, we have around 12,000 chapter 1607 payments that are pending.
We have made payments on something under a thousand. Over this weekend, we have
a scheduled system install that will allow us to bring up a new payment system
for chapter 1607 payments. And we expect to be able to work down the backlog in
its entirety in three to four weeks.
MS. BROWN-WAITE. If I may follow up, have you been in touch with the
veterans to let them know what the problem is, or has it just been if they
contact you?
MR. AUMENT. It has largely been if they would contact us. As far as the
individual veterans, the 12,000 veterans we have not been doing any targeted
outreach that I am aware of.
MS. BROWN-WAITE. Can you turn your microphone on?
MR. DOUGLASS. I am sorry. Thank you.
When the reservists filed their first claims with VA, we made an initial
contact with them basically to let them know that, number one, we had their
claim; number two, that we were awaiting some of the legal issues that Mr.
Aument mentioned; and three, as soon as those things were cleared, we would
begin making the payments.
We did not contact them routinely after that unless they contacted us.
MS. BROWN-WAITE. Thank you. And will you report back to the Committee on
that, when this weekend is over, so that we know people are being taken care of
properly? Mr. Chairman, if you would indulge me, I think that would be very
appropriate. Every one of, every member of Congress has people in that
cachement group who are concerned.
MR. AUMENT. We will be happy to do that.
[The information is found on p. 92.]
May I move on to the next slide?
MR. BOOZMAN. Yes, sir.
MR. AUMENT. Education initiatives. I believe I had already mentioned the
first initiative, the skills certification. This was an initiative that we
began in the compensation and pension business line that we believe is very,
very important and that will help us ensure a certain level of professionalism.
We believe the staff needs to have some sort of confidence that they have
attained this level of professionalism.
We are going to be investing in the educational program for skills
certification for the staff who process claims and staff within the educational
business line in the 2007 budget.
The second initiative is one that I regret that I am not able to provide
greater information that you had requested. The information technology
initiative that we call TEES began as the Education Expert System. This is an
umbrella program that currently we have funding for in 2006 and 2007 to take on
a limited component of the overall program as it has been envisioned.
As fully envisioned, we would be incorporating more rules-based processing
into the educational program that we believe holds great potential for
efficiencies.
Not only efficiencies, but, you know, qualitative improvements in the form
of accuracy of payments, as well.
There are three applications within the education business line that we
have funding to proceed with for years 2006 and 2007.
And the, you know, the program as currently envisioned would include
fielding each of those three applications before the end of fiscal year 2007.
I could state two other initiatives in the information technology area
that we are looking at for the education program. I believe that Chairman Buyer
in the full Committee hearing was talking about issues for funding for code
conversion. Our departmental CIO is very interested in this program. And this
would give initiative to expedite or exit off of some of the department legacy
systems into a more modern corporate processing environment.
Ideally, that ideally would position us to make quicker improvements to
the programs supporting applications and by positioning us in a more modern
information technology environment.
We are looking at a proof-of-concept program that we would be like to be
able to undertake this year that, if successful, would provide us for a pathway
to apply to those systems that remain on our legacy -- on the legacy systems,
the benefits delivery network that you may have heard of, the BDN network.
The program that has the largest number of programs that continue to
reside in that environment without an exit strategy is our education programs.
If the code conversion, proof of concept proves successful, we are very
optimistic that it will help expedite our exit strategy from the legacy systems.
The other component that we are looking at this year is what we call TIMS,
which is the image management system that supports the educational programs.
Currently, the infrastructure issue for TIMS is that there are separate
imaging systems and databases that are in place at each of our four regional
processing offices. The investment that we are looking at in this current year
would help move those into a single database that would enable us to move work
around more freely among our regional processing offices so that as any type of
regional backlog would develop, we would be able to redistribute some of the
workload and balance the workload amongst those four offices.
MR. BOOZMAN. Very good. Before we move out of the education, the
partnership for veterans, Ed has proposed the total force GI bill concept which
Chairman Buyer and I think all of the Committee is very interested in looking
at.
I guess, you know, have you all looked at the proposal and had any
discussions with DOD in regard to that, the concept, and I guess, what we would
like to know are, besides funding, what other big issues do you see kind of
lurking out in that regard?
MR. AUMENT. Yes. As you are aware, the proposal first originated from
within the Secretary's Advisory Committee on Education. And so we have looked
at that. We have actually taken this proposal to the Joint Executive Council
that forms the deliberating body between the Department of Veterans' Affairs and
Department of Defense. We have had some presentations before that body. And
they have taken it on as a work group to try and help develop the concept.
There are going to be a lot of challenging issues to it in addition to the
funding. And I am going to ask Dennis to expand upon those somewhat. Probably
the challenge that is one of the more formidable challenges to this, is the fact
that it envisions all of the applicable law being moved into Title 38.
As you are aware, some of the programs today are in Title 10 under the
jurisdiction of the Department of Defense, so that those proposals some will
have legislative challenges towards actually effecting that.
But there are also other types of challenges, too, and we are trying to
normalize some of those programs where the chapter 30 involves a service
member's contribution, whereas the other programs do not involve contributions
from the reservists. So you have to figure out some of the steps that would be
used to try and bring those into conformity as we move forward.
We do believe that it is very promising and are pursuing this in all
sincerity.
But, Dennis, maybe you could speak to some of the other challenges
involved there.
MR. DOUGLASS. Thank you. I believe the working group is in their early
deliberations, and they have met five times since the middle of October and in
fact are scheduled to meet again next week, next Thursday.
But probably the single most daunting challenge is the question, can three
separate programs with three distinct purposes serving three often separate but
sometimes similar populations be seamlessly melded into a single program? And
that has probably been the single largest challenge for the group to work on.
Another one, and probably related somewhat to that, is should a single
program offer all of the best features of any one of those other programs?
And I will give you one example.
Several years ago, I guess about 3 years ago, Congress enacted what we
call buy up, where a service member has an opportunity to actually increase his
pay reduction by up to $600 and, in return, get up to $150 a month added on to
his basic benefit. Now that is only available under the Montgomery GI bill
active duty program, and so you raise the question, should that be in a single
program that serves all of those constituencies?
Those are really the two largest issues. And we have talked about other
smaller issues. But those seem to be the two, the two biggest ones, other than,
where is the funding coming from, and what will a program like this actually
cost?
And we haven't even gotten into those cost estimates yet.
MR. AUMENT. Can we move on to the VR&E program?
MR. BOOZMAN. Yes, sir.
MR. AUMENT. I would like to touch on some of the program highlights as we
have done with education.
As you can see, the total obligations are predicted to rise from the 2005
actuals of $133.5 million to $138.8 in 2006 and $149.3 in 2007.
We are also anticipating some significant staffing increases, particularly
in 2007, when the overall staffing level is going to be rising by around 130
FTE, between both direct and indirect staffing.
The positions that we envision will be added during 2007 fall into three
separate categories. The largest number of them we expect will be in the new
employment counselor position, that is associated with the new five-track model
to employment.
The second most prevalent category would be in counselors. And lastly, we
would be adding additional contract specialists to manage the administrative
contract work of the VR&E program.
During 2005, this program expended quite a bit on contract dollars. We
spent over $26 million in 2005 on various contracts.
In some cases most of those are services, of course, and we employ a
number of contract counselors. Some of our offices utilize that authority more
than others.
But then there are also additional support services that we purchase that
support the vocational rehabilitation programs of the individual enrollees.
MR. BOOZMAN. How many rehab counselors do you think would be hired out of
the 130 FTE?
MR. AUMENT. We would probably be able to give you a better number as we
approach the execution cycle. As we said before, the largest number of FTE we
envision in this hire would be in the employment counselor position. And that,
again, is in support of the five-track model.
Next slide. Workload.
We are predicting in 2005 a two and three quarter percent increase in the
workload to just over 100,000 participants. And we are predicting another 2.5
percent increase in 2007 bringing the total to over 102,000 participants. I
believe it almost goes without saying that one of the factors driving the
workload is outreach. As you are aware, we have individuals stationed at each
of the MTFs where most of the more seriously injured returning service members
first go for treatment. We believe that outreach has been very successful in
drawing new individuals into the program.
For those of you who watched "60 Minutes" over the weekend, there were two
very compelling stories of two young women. There was one with traumatic brain
injury out of the State of Ohio whose aspirations are to become a social worker.
And the other was an amputee who lost one leg at the hip who hopes to become
involved with prosthetics, enter into that entire business line.
I am pleased to say that both of those individuals are participating in
VR&E program. And it really makes me feel good to be able to have programs to
help those types of individuals.
Of course, that brings us to the issue that we do have more seriously
injured veterans because of the actions going on today in the war against
terrorism. So that is contributing to the expected workload increase in the
VR&E program.
MS. HERSETH. If I might, at this point, I did see the 60 Minute segment.
I was very heartened by it, of course, and even asked a member of my staff to
get a hold of Jessica, who is the young woman who suffered from the traumatic
brain injury, because we have a National Guardsman who is receiving care in the
same facility that she did in Minneapolis. And I want to follow up with her on
-- I think she was given a 2 percent chance. And she was one of the most
articulate individuals I have seen interviewed for a long time.
And, I do have a question though about the follow-up. I am glad to know
that there is this clear attempt to reach early, those veterans who are severely
disabled in their service.
And I don't know if you have examples from the folks that were interviewed
in that segment, but what is the follow-up once they are back in their
communities, back with their families? Especially in my part of the world, how
are we getting to some of the folks that may be in more rural, more sparsely
populated areas where the difficulty of travel or at least the infrequency of
travel to say Sioux Falls, South Dakota, or Minneapolis, Minnesota, poses a
particular challenge?
MR. AUMENT. Well, that is a very good question. I would like to ask Judy
Caden in a moment to follow up on that, but I do know that once we have
initiated the seamless transition initiative and we are making a better
organizational effort, making sure that we have both the VBA and VHA staff
stationed at the major MTFs. Admiral Cooper made a very strong statement to all
of our regional office directors that it is our goal to try and track these most
seriously injured service members as they leave the major MTFs and make a
transition to their communities, and we are making every effort to try and
follow those individuals into the community. And Admiral Cooper has charged
each of our regional office directors that, when we become aware that one of
these seriously injured service members is now returning back to their
community, our regional office directors are expected to call them immediately.
Because we realize that not all of these individuals are actually ready for VR&E
services while they are at these facilities, and people need some time to come
to grips with the change in their lives.
And so it is our expectation that we do retain that type of contact,
whether it is in an urban or in a rural environment.
Judy, maybe you can add to that.
MS. CADEN. I will add one thing to that part of it. We did put a
requirement that, when contact is made with a potential VR&E participant, if
they don't express interest in the program at that time, because they are still
going through their medical rehab and they are not ready, that within a year we
have required the regional offices to go back again to the person. At that
point, they are at home; hopefully they have made it through the medical part of
their rehab or it is not as intense, and we again talk to them about the VR&E
program and try and draw them into it.
We also, you know, have VR&E staff at the 57 regional offices. And we
have about 120 outbase sites also because we do require face-to-face contact
with the veteran. And we also use a lot of contract counselors which would help
us in the rural areas especially.
MS. HERSETH. I appreciate the information. Just one suggestion, and
perhaps it is being done at some of the regional offices, if there is that
requirement for additional contact within the year, to certainly try to bring in
some of those service members who have participated, have decided to participate
in the VR&E program to make more sort of a peer-to-peer contact about the
benefits of the program.
MS. CADEN. We will look at that. Thank you.
MS. HERSETH. Thank you.
MR. BOOZMAN. I just have another question that is related to the
workload. When you look at the San Diego office, as far as determining
entitlement benefits, the range there is 18 days in San Diego; 25 in Pittsburgh;
183 days in the Washington regional office. Are we -- I guess the data seems to
indicate that perhaps the resources aren't being spread, you know, evenly to
kind of balance that out.
The IB suggests giving the VBA program directors line authority over VA
field office directors. I would like to know, what do you think about that?
When we see those discrepancies, you kind of wonder what the deal is, and you
know, what is the solution to the problem?
MR. AUMENT. First of all, sometimes the numbers don't really tell the
whole story just on face value. The Washington regional office, for example, I
believe is an exception. As you may be aware, one of the missions of the
Washington regional office had always been to process all of VBA's foreign work,
and that applied to compensation and pension claims as well as VR& E claims.
Since then we have moved the compensation and pension workload. That
workload has been reassigned out of the Washington Regional Office to our
Pittsburgh Regional Office. But they still retain responsibility for managing
all of the VR&E foreign work out of the Washington office. And that poses a lot
of unusual challenges. So I don't know that the Washington Regional Office is
probably the best example when we're trying to make those one to one comparisons
on a performance basis.
MR. BOOZMAN. Lincoln, Nebraska, is 144 days.
MR. AUMENT. Going on to say, we do realize that there are some
disparities in staffing. VR&E, as I mentioned earlier, that the education
workload had been challenged over the past year, too, with some hiring ceilings.
I don't agree that the solution to this is having sort of a stovepipe
arrangement from the program office down to the field. Our VR&E program
director, as does the education program director and loan guaranty director,
have considerable input into staffing issues and staffing decisions, but I do
believe that there is a real benefit in having a local director to be held
accountable for the success of the program. I believe that by having that type
of a stovepipe arrangement where you have five separate stovepipes going out to
the field creates a situation where you have got a director who is sort of a
building manager that has little or no accountability for the success of those
programs and has no ability to make any type of local decisions based upon local
workload requirements and local conditions.
So I do believe that the model we have today where we have an operations
component with considerable input coming in from the immediate programs and with
the programs focusing on policy and procedures is the model that we believe is
the best model.
MR. BOOZMAN. Thank you. We can go ahead.
MR. AUMENT. VR&E performance, we have some discussion on the later slide
on the rehabilitation rate, but this is one of the key performance measures for
this program.
One of the things I am going to ask Ms. Caden to discuss -- and you will
see we take a jump-up in our targets for 2006 and 2007; we have got some
adjustment there to the baseline that we are measuring from and, in the interest
of full disclosure, we will talk about that so that there is no confusion about
what the numbers actually represent.
But, again, we have been seeing more people rehabilitated through the
program, we are seeing more veterans that are entering into independent living
status, so I will ask Judy to talk about that in further detail.
We are taking a look at the speed of entitlement decisions. Again, we are
predicting improvement both in 2006 and in 2007 in this area, as we are
expecting and predicting improvement in the accuracy of our decision-making.
MS. CADEN. First, let me address the rehabilitation rate.
We have redone the formula for how we are going to calculate the rehab
rate, and we have added into the calculation something called the maximum
rehabilitation gains. These are categories of veterans that have been
participating in the VR&E program, but for several reasons have discontinued
their participation.
Many times they will accept an employment position that the counselor did
not believe was consistent with their disability limitations, but through the
work we have done with them, through the training they have gotten, some of the
job services, they have accepted a position and they are happy with it and they
have dropped out of the program.
There is another category of those who are employable, but they have, for
whatever reason, informed us that they are not going to seek employment. Things
change in their personal life and employment no longer is their goal at that
time and so they discontinue the program.
And then there are others who have worked through the program, they are
not employed, and they are really not employable but are in independent living
programs. And they may not finish the program, and usually that is because
their medical disabilities interfere and for physical reasons they no longer
participate in our program, but we have contributed to increasing their
independent living.
So what we have done with those three categories is neutralize them, if
you will, from the calculation. We are not going to take the hit as a
discontinue, we are not going to take the credit as a full rehabilitation
achieved, but we will neutralize them; and that has caused the rate to jump to
the current 69 percent. We just think that is a more fair view of the work that
is being done.
MR. AUMENT. Retrospectively, if we were to apply that same formulation to
2005, just for an apples-to-apples comparison, you would have seen -- the
rehabilitation rate would have been 68.6 percent.
This provides some of the timeliness statistics as well as to give you an
idea of the order of magnitude of the program participation.
First of all, let me state that what you are seeing here is a snapshot in
time that is giving you the views of the status as of February the 1st of this
year, and that applies both to the average days that have been in that status as
well as the number of veterans and service persons in those various areas.
Are there any questions on that?
This is something I know that there has been great interest amongst the
Congress in our status in implementing the VR&E task force recommendations.
First of all, we have actually completed over half of the recommendations of the
VR&E task force. There will be a few of those that at this point, we would not
propose to implement, but we believe that we are making great progress on the
remaining ones.
The recommendation that we believe probably rises to the top is the
implementation of the five-track employment model. That has successfully
completed, along with the jobs lab, some of the pilot aspects, and we are in the
process of nationwide implementation this year. We are very pleased and we
believe that this is going to have a really positive impact upon the program
operations on a national level.
There is a study of veterans receiving independent living that our staff
has undertaken. We are also looking at new employment coordinator positions to
have national training for a particular position. In the budget request, we
have nearly three-quarters of a million that has been requested for initiatives
to support the program.
If we can move on to the loan guaranty program. Loan guaranty highlights.
This is one of the Department's success stories. We don't always measure
success by increasing resources. In this particular case, I believe that we can
measure some success in the way that the program has been able to do more with
less year after year. They have been making some great programmatic
improvements.
I also believe that this is an area that has been a model for us to look
at for successful consolidation as well as for some successful integration of
technology into their operations, and they continue to make great strides in
that regard.
We can take a look at staffing. As you can see, staffing for this program
is relatively flat, actually with a slight decline going into each year. We do
not foresee any type of degradation of the key performance measures in the loan
guaranty program through these types of adjustments.
MS. HERSETH. If I might, before you go on: So in justifying the
reduction of the FTE for this program -- and you make reference, I think in your
written testimony and I think you just did in terms of operational efficiencies
that have been gained through information technology -- I guess my first
question is, how do you know that the quality of service has remained high? And
perhaps some of these other slides will show us that.
Second, could you describe in a little bit more detail the technological
advances the program has implemented to leverage such efficiencies?
MR. AUMENT. I would be happy to. In fact, I am going to ask Mr. Pedigo
to respond more directly to you.
But I can say right now, much of the staffing of the loan guaranty program
is devoted in one form or another to oversight. And because we are so
intimately involved with the commercial sector in our dealings with lenders and
realtors, truly much of the staffing there is involved in overseeing the
performance of those particular programs.
But, with that, I will pass it along to Mr. Pedigo.
MR. PEDIGO. Yes, Congresswoman, we have done a number of things to ensure
that we have a quality control system that provides a high level of oversight
over the activities that are performed in the loan guaranty program.
We have delegated a considerable amount of processing authority to the
private sector. We have given lenders the authority to improve veterans' loans,
we have given them the authority to make appraisal value determinations on VA's
behalf, and, in order to ensure that they are properly carrying out our
policies, we have several things in place.
Internally, we have a statistical quality control system that measures
every aspect of the work that our own staff performs and, for the last 3 years
running, the overall quality index has been very high.
We also have a lender monitoring unit, a staff of 13 auditors who go
around primarily to the large
lenders and perform on-site audits to make sure that they are properly carrying
out VA's policies.
And then, finally, we have what we call a systematic analysis of
operations, which is required to be performed once a year by each of our nine
regional loan centers. They have to comprehensively review every aspect of
their operations and submit a written report to the field station director as
well as to central office. Those are the main mechanisms that we have in place
to make sure that the quality remains at a high level.
You also asked me to talk about some of the information technology
improvements that we have made that have enabled us to get the job done with
fewer staff. We have made a concerted effort to try to provide as many self-
service automated systems as we can. The first effort in this area was in 2003
when we developed an automated certificate of eligibility system which enabled a
lending institution, whenever they had a veteran come in and apply for a loan,
to go on the Internet, access this system and, by putting in the veteran's name,
Social Security number, and date of birth, in most cases get an instantaneous
certificate of eligibility. That essentially has replaced a manual system that
sometimes required 2 to 3 weeks for a veteran to get a certificate of
eligibility.
We also have a new automated appraisal system that does a number of things
for us. Number one, it allows lending institutions to electronically order an
appraisal report. Instead of having to send in paper documentation, as was
previously the case, they can go on the Internet, access the system, get the
appraisal ordered and, at the same time, get a case assignment number.
This system also permits the appraisal report, once it is completed by the
private sector appraiser, to be electronically sent to the lending institution
and to the VA, eliminating anywhere from 3 to 5 days of mail time.
Those are just some of the systems we have put in place recently.
MR. BOOZMAN. Ms. Brown-Waite.
MS. BROWN-WAITE. Thank you, Mr. Chairman.
About a year ago I had some complaints from realtors about the fact that
they steer clients away from the VA loan guaranty because there was a problem
with the appraisers; and now, if I understood you correctly, you are saying you
allow the lenders to use their own appraisers. But don't they have to be on an
approved list by you all; is that accurate?
MR. PEDIGO. Yes, that is accurate. The change that we made with the
automated system does not alter the requirement that VA controls who the
appraiser will be on a veteran's real estate transaction.
Lenders are now, however, able to access our automated system, and that
automated system selects the appraiser based on a rotational selection process.
So the lending institution has no control at all over who the appraiser will be.
This is one of our oversight mechanisms.
MS. BROWN-WAITE. If I may follow up, Mr. Chairman, one of the problems
has been that in some areas the, quote, "approved appraisers" are limited; and
so that is why the realtors have told me that they steer people away from the VA
loans.
Have you remedied that? Have you increased the list? Obviously, we want
to make sure that they are not fly-by-night appraisers, but you also may need to
look at the number that are available in certain areas.
MR. PEDIGO. Yes. We have taken some action in the last couple of years
to address that problem.
In October of 2003 we embarked upon a 2-year marketing effort to increase
the size of our appraisal roster by 40 percent, and when we completed this in
October of 2005, we had accomplished our goal. So we now have roughly 1,600
more appraisers on our roster than we did back in October of 2003. So we
believe that we have substantially addressed the problem where, in some areas,
there were not sufficient appraisers.
That doesn't mean that there aren't pockets where we still need some
appraisers, and so we have directed our regional loan centers to continue
seeking out new appraisers who would be interested in doing veterans'
appraisals.
MS. BROWN-WAITE. Mr. Chairman, I want to thank the gentleman for taking
the initiative to increase the number of appraisers, but I believe I am still
told that there are areas where there is a shortfall; and I think you need to
work toward that. Because I will tell you, I think veterans need to take
advantage of this opportunity, especially now that we have increased the loan
amount to be more reflective of real market values out there. And continuing to
make sure that you have a good geographic representation -- not that a bank will
give you a 30-day loan commitment, but if you can't get an appraiser who is
approved by the VA, that is why there has been a reluctance to use this great
program out there.
And I just simply commend you for taking this initiative and encourage you
to continue to look at areas where there is a shortfall.
MR. PEDIGO. We will definitely do that, Congresswoman.
MS. BROWN-WAITE. Thank you, Mr. Chairman. Yield back.
MR. BOOZMAN. Can you all comment on the cost of the Ocwen contract, and I
guess there was some concern about them outsourcing, off-shoring their cost
center.
MR. AUMENT. Let me start off, and I will pass along to my colleague Mr.
Pedigo.
The Ocwen contract for property management, the outsourcing of that
operation has certainly been a challenge to our organization, and I believe that
we are seeing improvements in the business relationship that we have had with
Ocwen. Admiral Cooper and I are very pleased with the way Mr. Pedigo has
managed that. He has been holding their feet to the fire where we have been
seeing any sorts of performance shortcomings on Ocwen's part, and I think there
has been some fairly skillful contracting at work there that has the ability to
impose penalties where we are not seeing performance, and we commend him for the
business practices that are employed there.
As far as the offshore thing, there is a little notoriety that was gained
there on this offshore component. It is true that Ocwen, we understand, does
have some back office functions where they employ services from India. We
understand they are largely in the accounting area.
But as far as the call center goes, let me make it clear that no veteran
is going to be placing a call that is referred to any offshore call center.
This is largely within the industry. And I will defer to Mr. Pedigo on that
issue, too, but I do believe that there should be no mistaking that no veterans'
calls are being directed for any purpose to any offshore call center.
MR. PEDIGO. I would just expand a little bit on the cost issues.
As Mr. Aument said, we do have a pretty aggressive oversight program in
place. We set up a unit that is located in Nashville, Tennessee, where we have
19 auditors whose only job is to monitor the contract that we have with Ocwen
Loan Servicing, and they review every payment voucher that is submitted by
Ocwen. And there are thousands that are submitted each month.
They also do field inspections of properties that Ocwen's property
managers have inspected for us to make sure that they are doing adequate
inspections. They also conduct quarterly audits of the Ocwen financial records
to make sure that Ocwen is dealing with us in an even-handed manner.
We do believe that we have a very good feel for how they are operating.
At the present time we are in the process of trying to put pressure on them to
improve in certain areas that we are not totally satisfied with, and we will
continue to do that as we move forward.
MR. BOOZMAN. You mentioned -- and, again, this is kind of off a little
bit, but you mentioned the fact that through contracting and things, you are
trying to hold their feet to the fire. And I am not suggesting that they have
done anything wrong. We do have instances where people do things wrong in just
the size and scope of the agency.
Do we need to -- do you feel like there is sufficient law in place to give
you the tools that you need in dealing -- and again, this doesn't have anything
to do with them, but when you run into situations, do you have all the tools in
the toolbox that you need to deal with people that you are having a tough time
with or people that blatantly aren't doing what they are supposed to do?
MR. AUMENT. I believe that we do. I believe that there has been some
skillful contracting involved in establishing the Ocwen contract on that, and I
believe that there are plenty of tools there, and arrows in our quiver, I
believe, to deal with this. Which is not to say that we have not learned how
the contracting in another iteration can be strengthened, because this was all
rather novel to us. We had gone into this for the first time, so I think we
found areas where we can have even tighter contracting in the future. But I
believe the current repertoire of tools and remedies is probably adequate for
our needs.
Keith.
MR. PEDIGO. I would agree with that.
MR. BOOZMAN. Thank you.
Go ahead.
MR. AUMENT. Over 150,000 loans guaranteed in 2005, let me reiterate that
this was something that was a little bit of an eye-opener to me when joining the
Veterans Benefits Administration. And, really, the real workload of our loan
guaranty office, it is difficult to measure in the number of loans that are
guaranteed because that actually is something that is largely conducted within
the private sector, so that is probably not the best measure of workload for us.
Our workload is really more in the oversight area, and the more direct
services aspects of our workload consists of the staff that are out there
helping veterans who eventually find themselves in loan situations that
potentially are going badly. I believe that the direct services aspect of our
work is better measured in the assistance that we provide veterans who are
having financial difficulties in meeting their mortgages.
In loan volume, we are predicting an uptick in 2006 and 2007. This is
somewhat based upon the economic conditions, but Mr. Pedigo believes that, while
we had seen some increase in the past couple of years in some of the unusual
financing type of loans, interest-only types of loans, that there are going to
be more and more veterans in the future who are going to be looking at some of
the benefits of the more conventional type of loan offered by VA.
Again, we are also looking at some of the workloads that are predicted and
we have had some near-historic lows in 2005 on the loans that are actually going
into default. Mr. Pedigo can go into greater detail, but as he has described to
me, both VA and the industry in general tend to see that the 3 to 6-year period
that follows the placement of a new loan is the area that many loans actually
start to experience problems and, because we had the spike in some of our loan
business that corresponded with the historic lows in interest rates, we have
more of our loans that are now entering into that riskier period of time.
So it is our expectation that there could be some workload increase to be
expected in 2006 and 2007 because of that.
Our loan guaranty performance factor that we have relied upon for the last
several years, the so-called FATS ratio, which is the Foreclosure Avoidance
Through Servicing, is a measure of the loans that we are able to help salvage
and repair in making sure that we keep veterans from going fully into
foreclosure.
We are predicting a little bit of a downtick in that for 2006 and 2007 for
the very reason I was describing and that there is some expectation that there
will be a higher percentage of loans encountering difficulties during that
period of time.
Statistical quality index, I believe Mr. Pedigo addressed that earlier
when he was discussing some of the oversight and quality control measures that
we have in place.
One of the things I would like to discuss before we move on to the next
slide, that is sort of in anticipation of the next slide, is that we have a new
system that is going to be going in place, a new initiative called the VA Loan
Electronic Reporting Interface. The acronym is VALERI.
We believe that some of the new capability that sort of a system is going
to allow us to move towards some new types of performance measures in future
years. We don't have those just yet, but I know many of us internally have been
dissatisfied with the FATS ratio as our sole measure of performance for the loan
guaranty program.
The loan guaranty program employees themselves feel that way and we
believe that, when this new system is in place, we will have greater options for
developing what we believe are going to be very meaningful performance measures
for the program, and we are very much looking forward to that.
Lastly, the one initiative that we have on the table today for the loan
guaranty program is this VA Loan Electronic Reporting Interface, which is not
strictly a technology initiative as much as it is a business initiative: I am
going to allow Mr. Pedigo to go into greater detail on it. This is part of our
overall loan application redesign process that involved some rule-making that
was completed last year. This is the system that helps complement some of the
changes made through the rule-making procedure.
MR. PEDIGO. We have been assisting veterans who encounter financial
difficulty for many years, and this is the part of the loan guaranty program
that requires the most hands-on treatment of veterans. For example, last year
we made 301,000 phone calls to veterans whose loans were seriously delinquent,
and during those calls we offered financial counseling. We gathered information
on the veteran's financial situation, and in many cases interceded on the
veteran's behalf with the lender. We set up repayment plans last year that
resulted in almost 9,000 loans that were destined for foreclosure, being brought
current.
We have been using the same policies and the same system for the last 8
years to administer this part of the program. Four years ago we decided it was
time to take a comprehensive look at this process to see if there were ways that
we could do things better, and so we embarked on a formal business process
reengineering initiative that resulted in a totally new way of doing business.
That new way of doing business is included in the 96-page set of regulations
that we expect to finalize very shortly.
When we developed these new policies, we also decided that we needed to
develop a new automated system to overlay the new policies, a system that would
enable us to do a better job of serving veterans who encounter financial
difficulty. That is the VALERI system that Mr. Aument referred to.
At the present time we are working with Fidelity National Financial, which
is a very large company headquartered in Jacksonville, Florida. This company
has an automated system that serves over 50 percent of the private sector
servicing industry; and we have asked them to take their present servicing
platform, build some VA-specific interfaces, and then allow us to pay them a
service fee once that system is completed, in order to utilize this system.
The system will give us the ability to get involved with a delinquent
borrower's loan at the 31st day of delinquency; presently, we do not get
involved until the 90th day of the delinquency. It will also permit us to move
electronically the workload that we have at any one of our nine regional loan
centers to another regional loan center, virtually overnight. It will give us
the ability to have almost real-time access to private servicers' databases;
presently, we have no access. The only information we get on how the servicer
has handled a veteran's loan is when they send in a paper copy record of how
they have serviced that loan.
So with this new system, we will be able to go in when we know a veteran's
loan is delinquent, look at how the servicer has handled that loan, and then
determine whether we need to get involved to supplement the servicing on that
veteran's loan. Our expectation is that in March of 2007 we will have the
finalized regulations, we will have the system ready to roll out, and we will be
able to begin operating in this new and better environment.
MS. HERSETH. If I may, Mr. Chairman, just to wrap this section up. I
appreciate the overview, as well as, Mr. Pedigo, what you just explained that
will allow all of you to get involved earlier to again advocate on behalf of the
veterans and proactively find ways to bring those loans current by getting
involved much earlier in the process.
My last question just relates to the ongoing challenges we face in the
Gulf region. Can you provide an update for us on VA's efforts to support the
Federal Government providing housing assistance to folks in Louisiana, the whole
gulf coast who may have lost their homes due to Hurricane Katrina, who may be
eligible as veterans for these programs?
MR. AUMENT. I will be happy to start that off and pass it along to Mr.
Pedigo.
As you are probably aware, we have become involved very early in the
process, when the Federal Government was trying to work its way through how we
could help provide housing to displaced persons in the gulf region. We at VA
were part of a group that had been formed by the White House and included FEMA
and the three Federal agencies involved in housing: HUD, Department of
Agriculture, and VA. We had to quickly take inventories of some of our
available housing stocks, and we reported on those immediately to the groups
that were spearheading this effort.
I guess we were very sympathetic to FEMA. At this time we realize that,
when we had taken a look at what type of housing we had available that was
considered to be habitable housing -- that would mean that it is, ready and in
move-in condition for families -- in some cases, some of the housing that we
have that we actually own still have veterans or other borrowers residing in the
housing under adverse possession. They have not yet been moved.
But we had probably under 1,000 single-family dwelling housing units that
were available in the 11-state area that constituted the area of demarcation.
We know FEMA was confronted with the challenge of finding housing for
hundreds of thousands of people while we had housing for maybe hundreds. So I
think that initially they were looking at larger-scale housing solutions.
Since then, we have actually finalized a memorandum of agreement with
FEMA. We had a memorandum of agreement that went back into the 1980s that we
have been operating under that had really grown very stale and was not really
reflective of today's conditions. That was refreshed and signed back in
December.
And in the meantime, we continue to work with Ocwen, the property
management contractor, to look at ways that we could make the housing available,
and trying to look at some of the back-office processes and procedures that we
would need to actually execute following a decision to start placing people in
housing.
We are happy to be able to report that just over the past couple of weeks,
I believe last week, we had signed the first lease with someone for a VA
property. That was actually in the San Antonio, Texas, area where we had a 100
percent disabled female veteran that we were actually able to place in one of
the VA's properties in San Antonio. In fact, we have been able to assist her
with some of the minor adaptations to the housing through the program -- I
believe it is the HISSA program that is managed under the VA's prosthetics
program -- to provide some minor adaptations.
I was just asking Keith on the ride over here this morning about other
ones. How many additional? Around 61 additional leases have been signed.
So we may be a little bit slow starting on this, but we are happy to
report that we are being able to put excess housing to good use, leasing to
these individuals who are in need of housing.
One of the things that we have insisted upon that was to be able to
provide some level of veterans' preference here so that if you had certainly
more than a single interested evacuee in any particular VA property, we would
try to provide preference to any one of those who was either a veteran or had a
veteran family member.
MR. BOOZMAN. Just a couple things real quickly, and then we will get you
guys out of here.
How much does the VA collect in loan guaranty funding fees? If you don't
have it, you can send it over.
MR. PEDIGO. Over the last 4 full fiscal years we have collected just a
bit over 2 billion. That is a billion with a "B", dollars.
MR. BOOZMAN. Very good.
One other thing, and this goes back to the voc rehab. The Legion and
others have recommended training the voc rehab staff at the National Veterans
Training Institute. Can you comment on that? Do you have a comment about that.
Do you think that is something that would be beneficial?
MR. AUMENT. I am going to ask Ms. Caden to remark on that. We do use
that as a training source for certain targeted staff members in our VR&E
program.
MS. CADEN. Thank you.
We have been using NVTI, the National Veterans Training Institute, in a
couple of different ways. In fact, we just completed our own training session
using their facility last week for the employment coordinators and in helping us
roll out the five-track training. And as Mr. Aument mentioned, we do accept
employment coordinators or, in the past, employment specialists and counselors
to NVTI for specific training in job placement and, also, case management. And
we also, under our new memorandum of agreement with DOL, have a work group that
is specifically looking at joint training and how we can make that better, using
that facility.
MR. BOOZMAN. Thank you very much.
Scott, we don't want you to get out of here. One last thing: The budget
shows the VA met its statutory 3 percent goal for disabled veterans on small
business in fiscal year 2005. That differs from some of that data we have heard
over the past several months. Can you comment on that?
MR. DENNISTON. Be happy to.
Actually, that was a typo; that was an error. Our trends, though, I am
happy to report, are going upward. In 2003 we had 0.4 percent to service
disabled vets -- I am sorry, that was in 2003.
In 2004, we were at 1.2; and last year, in 2005, 2.1 percent towards the 3
percent statutory goal. So we are going in the right direction.
We have what we believe is a very strategic plan, required by the
executive order, and we fully expect to be able to report to you that we will
make the 3 percent goal in 2006.
MR. BOOZMAN. Do you have any other things?
I want to thank the panel. I think that has been very informative and I
have learned a lot.
And so, again, we really do appreciate you and appreciate you being so
forthcoming, and we look forward to working with you this year to -- we have got
lots of challenges, but I think the good news is, we are moving in the right
direction. So, again, thank you for your hard work.
MR. AUMENT. Thank you, Mr. Chairman, Congresswoman.
MR. BOOZMAN. Okay. Let us have our next panel, if you would.
Today, we are very pleased to have as our second panel Mr. Joe Sharpe,
Deputy Director of Economics for the American Legion; and Ms. Joy Ilem,
Assistant National Legislative Director, who will represent the authors of the
Independent Budget.
STATEMENTS OF JOY ILEM, ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED
AMERICAN VETERANS, ON BEHALF OF THE INDEPENDENT BUDGET; AND JOSEPH C. SHARPE,
JR., DEPUTY DIRECTOR, NATIONAL ECONOMIC COMMISSION
MR. BOOZMAN. Welcome, and let us begin with Ms. Ilem.
STATEMENT OF JOY ILEM
MS. ILEM. Thank you, Mr. Chairman. Good afternoon to you and members of
the Subcommittee.
I am pleased to appear before you on behalf of the Disabled American
Veterans to comment on the recommendations of the 2007 Independent Budget and
the President's proposed fiscal year 2007 budget for the programs under
consideration today.
My statement highlights some of our recommendations for ways to improve
education, vocational rehabilitation, home loan, and specially adapted housing
grant programs. Along with recommendations, we include staffing levels,
recommended staffing levels to administer the respective programs.
Education benefits provided to veterans have served them well throughout
generations. History illustrates that when our veterans have educational
opportunities, the entire Nation benefits. Following World War II, veterans
using the GI Bill became a catalyst in the economic and social development of
our country. Today's veterans carry the same potential, and we should grant
them the highest level of resources possible to reward them for their service
and to ensure our Nation's economic vitality.
To improve education benefits, the IB makes the following recommendations
to Congress. Remove the restriction on eligibility for the Montgomery GI Bill
for those who first entered the service after June 30, 1985; change the law to
permit refund of an individual's Montgomery GI bill contributions when his or
her discharge was characterized as general or under honorable conditions because
of minor infractions; and make education benefits more equitable for National
Guard and Reservists.
The vocational rehabilitation and education program is responsible for
services and assistance to service-connected disabled veterans that will enable
them to obtain and maintain stable, gainful employment. By helping disabled
veterans help themselves, we not only serve them, we serve the Nation as a
whole.
Like the Montgomery GI Bill, vocational rehabilitation and education
services also have a direct impact on the country's economic and social
development. To improve these benefits, the IB makes the following
recommendations:
VR&E should develop plans and partnerships to enhance entrepreneurial
opportunities for disabled veterans, monitor the progress of disabled veterans
to ensure rehabilitation is successful;
Reduce the caseload for managers from the current 145 to 100 cases per
counselor to allow closer monitoring of progress; and
Employ results-based criteria to evaluate and improve services.
Reviewing adequate staffing levels is essential to an efficient benefits
delivery system that is necessary for VA to actual fill its mission. We
recommend an increase of 149 FTE for education service than authorized for
fiscal year 2006, for a total of 133 FTE. We recommend an increase of 250 FTE
for voc rehab over last year, for a total of 1,375 FTE.
Another recommendation by the IB concerns the specially adapted housing
program. Veterans who are entitled to compensation for certain permanent and
total service-connected disabilities are eligible for a grant to adapt their
homes for fixtures made necessary by the nature of their disabilities. The
specially adapted housing program provides 50 percent of the cost of an adapted
home. Veterans who have sacrificed so dearly in the name of freedom have earned
any measure we can provide to make their lives as normal as possible. This
program is intended for this purpose.
To improve the specially adapted housing benefits, the IB makes the
following recommendations:
Congress should increase specially adapted housing grants and provide for
future automatic adjustments indexed to the rise in the cost of living.
Additionally, Congress should establish a grant to cover the cost of home
adaptation for veterans who replace their specially adapted homes with new
housing.
With regard to loan guaranty, the IB has just one recommendation:
Congress should refrain from increasing home loan fees and should, as soon as
possible, repeal such fees entirely.
Mr. Chairman, that concludes my statement. I am happy to answer any
questions you or members of the Subcommittee may have. Thank you.
MR. BOOZMAN. Thank you.
[The statement of Ms. Ilem appears on p. 68]
MR. BOOZMAN. Mr. Sharpe.
STATEMENT OF JOSEPH C. SHARPE, JR.
MR. SHARPE. Mr. Chairman and members of the Subcommittee, we appreciate
this opportunity to share the views of the American Legion on the VA's fiscal
year 2007 budget request for the education, loan guaranty and the Vocational
Rehabilitation and Employment programs. The mission of the VR&E program is to
help qualified service-disabled veterans achieve independence in daily living
and to maximize and, to the maximum extent feasible, obtain and maintain
suitable employment.
The American Legion fully supports these goals. Therefore, the American
Legion supports the Veterans Benefit Administration's recommendations that 149
million is needed to fund the discretionary portion of the Vocational
Rehabilitation and Employment program in 2007. Additional FTE requirements,
along with an expected 2.5 increased workload of veterans expected to use the
program's services, thus requiring additional funding.
The veterans Home Loan Guaranty program has been in effect since 1944 and
has afforded approximately 17 million veterans the opportunity to purchase
homes. The home loan program has been so successful over the past few years
that it is one of the only Federal programs turning a profit. Therefore, the
American Legion recommends that the cost savings should be passed on to the
veterans in the form of a reduction in funding fees, which can add approximately
8,000 to 13,000 for a first- or second-time buyer.
The American Legion strongly recommends that the VA funding fee on home
loans be reduced or eliminated for all veterans, whether active duty, reservists
or National Guard. The American Legion recommends a discretionary funding level
of 127.2 million for the VA home loan program.
In the 20 years since the Montgomery GI Bill went into effect on June 30,
1985, the Nation's security has changed radically from a fixed cold war to a
dynamic global war on terror. In 1991, the Active-Duty Force of the military
stood at 2.1 million; today, it stands at 1.4 million. Between 1915 and 1990,
the Reserve Force was involuntarily mobilized only nine times. Since 9/11 more
than 480,000 members of the 860,000-member Select Reserves have been activated.
Today, approximately 40 percent of troops in Iraq are guardsmen and
reservists.
As the distinctions between the active and reserve forces continues to
diminish, the difference between the active and reserve forces of the GI Bill
should decline accordingly. Therefore, the American Legion recommends updating
the GI Bill to accept the new security realities of the open-ended global war on
terror, the recruiting retention issues which arise from it, and the expanded
role the Reserve Forces play in the modern era.
The American Legion supports and has a history of advocating increasing
education benefits to members of our Armed Forces. The American Legion supports
recommendations of the Veterans Benefit Administration for a funding level of
92.3 million to fund a discretionary program of the education program of 2007.
Mr. Chairman, this concludes my testimony. I appreciate the opportunity
to present the American Legion's views on these important and timely topics.
MR. BOOZMAN. Thank you.
[The statement of Mr. Sharpe appears on p. 71]
MR. BOOZMAN. Ms. Herseth.
MS. HERSETH. Thank you, Mr. Chairman. I don't have any questions, just a
couple of comments, and certainly appreciate both of you being here today and
your testimony in support of the Independent Budget, the work that your
organizations do that you are here to represent today on behalf of our Nation's
veterans.
Just a couple of comments with regard to the housing adaptation grants. I
do intend to introduce legislation in the upcoming weeks to do precisely what
you have recommended as a representative of the DAV, that reflects sort of the
increased amounts to make these adaptations to various homes for our veterans;
and certainly we hope to get good bipartisan support for that bill.
Then, Mr. Sharpe, I do appreciate -- I like this idea
of -- a number of us have commented in the past, as I did even, with making
permanent a pilot program for Native American veterans and their housing, that
this is an area where it is paying for itself. And so I find your idea
interesting, to take that and meet the objective that Ms. Ilem mentioned of
reducing these fees to veterans over time within that program.
It is also a recognition of the importance of the education programs, the
timeliness and effectiveness of those benefits to our veterans as a recruitment
and retention tool in our Armed Forces -- active duty as well as guard and
reserve.
So thank you again very much for the work that you have put into the
Independent Budget.
MR. BOOZMAN. Yes. I would like to join Ms. Herseth in again
complimenting you on the great deal of work that was put into the budget. We do
appreciate your testimony, and as you know, the next few days are going to be
really very busy; we have got our views and estimates for the Budget Committee
that we are going to have to have the next couple of days.
I think the Chairman will present his views and estimates to the full
Committee at a business meeting following Thursday's hearing, and the final
document will go to the Budget Committee not later than the 23rd.
So what we have heard from you, what we have heard from the administration
really is very, very helpful, so thank you for your testimony.
Let me just ask you a couple of things. We have talked about the total
force GI bill. Would you explain the concept behind revamping veterans
education benefits in that regard, as you see it?
MS. ILEM. I would just -- we did do a section in the Independent Budget
on the GI bill and the revamping of that program, entitled Matching Education
Benefits to the Service Performed, 21st Century Montgomery GI Bill; and
basically it offers a three-tier approach to the program, with the first being
to those similar occurring under the Montgomery GI Bill for active duty 3-year
rate and addressing those folks in the active Armed Forces.
The second tier recommended would be for nonprior service, direct entry
into the Select Reserves, and the benefit being more proportional to the Active-
Duty rate.
Then a third tier would be for members of the Ready Reserves who are
activated for at least 90 days, and they would receive -- the recommendation was
that they receive 1 month of benefits for each month of activation up to a total
of 36 months at the Active-Duty rate.
And the overall recommendation was just that Congress should combine all
the Active-Duty and Reserve, Montgomery GI Bill programs and tier benefits
according to the service performed just to make it a more equitable benefit.
MR. SHARPE. The Legion feels that, again, with the new realities, that it
is a better program, and it would help retention if we did something to enhance
the education benefits not only for the Reserves but also Active-Duty.
As you know, for a reservist that is activated, they are generally paid
$297 months, regardless of whether they go to Iraq or not. We feel that those
individuals who are on active duty, who are in Iraq and Afghanistan, who are
also paying the price the same as the Active-Duty individual, that they should
get some sort of increase in the educational benefit. We just think it is a
fairer thing to do.
Also, with the total force bill, with everything put under one house,
probably the VA, we just think it is much more efficient. Right now, it takes 2
or 3 months for an individual to get their education benefits, and as was
mentioned earlier, my own reserve unit, we have individuals waiting 3 and 4
months to get their check from the VA; and of course, this causes a great deal
of hardship on these individuals. They are usually young, they are usually
married, they have families, and to be forced to try and pay this bill out of
pocket and then wait for payment later is just not the right thing to do.
And I know the VA has been trying to augment their services with
additional FTE, trying to automate. It is still a time-consuming situation, and
I think the total force GI Bill would go a long way to help reduce the current
situation.
MR. BOOZMAN. Very good. Thank you.
One final thing: Would you explain the Independent Budget's position on
empowering the business line directors?
MS. ILEM. Empowering the business line directors. I am sorry, I am not
going to be able to answer that. I certainly can ask someone that has expertise
on the subject matter to relay the question.
MR. BOOZMAN. Yes, ma'am, that will be fine. We will do that for the
record then and that would be great.
Again, that is all I have got.
Have you got any other things, Ms. Herseth?
Well, thank you all again very much for your help. We certainly
appreciate the input, the hard work that goes into the Independent Budget; and
we thank you for your service and all that you represent.
The meeting stands adjourned.
[Whereupon, at 11:54 a.m., the Subcommittee was adjourned.]