[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]




 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                FY 2012 BUDGET FOR THE VETERANS BENEFITS
                   ADMINISTRATION, NATIONAL CEMETERY
                  ADMINISTRATION, AND RELATED AGENCIES

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON DISABILITY ASSISTANCE
                          AND MEMORIAL AFFAIRS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 17, 2011

                               __________

                            Serial No. 112-5

                               __________

       Printed for the use of the Committee on Veterans' Affairs




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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

GUS M. BILIRAKIS, Florida            BOB FILNER, California, Ranking
CLIFF STEARNS, Florida               CORRINE BROWN, Florida
DOUG LAMBORN, Colorado               SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
DAN BENISHEK, Michigan               LINDA T. SANCHEZ, California
ANN MARIE BUERKLE, New York          BRUCE L. BRALEY, Iowa
JEFF DENHAM, California              JERRY McNERNEY, California
BILL FLORES, Texas                   JOE DONNELLY, Indiana
TIM HUELSKAMP, Kansas                TIMOTHY J. WALZ, Minnesota
BILL JOHNSON, Ohio                   JOHN BARROW, Georgia
JON RUNYAN, New Jersey               RUSS CARNAHAN, Missouri
MARLIN A. STUTZMAN, Indiana
Vacancy
Vacancy

            Helen W. Tolar, Staff Director and Chief Counsel

       Subcommittee on Disability Assistance and Memorial Affairs

                    JON RUNYAN, New Jersey, Chairman

DOUG LAMBORN, Colorado               JERRY McNERNEY, California, 
ANN MARIE BUERKLE, New York          Ranking
MARLIN A. STUTZMAN, Indiana          JOHN BARROW, Georgia
Vacancy                              MICHAEL H. MICHAUD, Maine
                                     TIMOTHY J. WALZ, Minnesota

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                             March 17, 2011

                                                                   Page
U.S. Department of Veterans Affairs FY 2012 Budget for the 
  Veterans Benefits Administration, National Cemetery 
  Administration, and Related         Agencies...................     1

                           OPENING STATEMENTS

Chairman Jon Runyan..............................................     1
    Prepared statement of Chairman Runyan........................    35
Hon. Jerry McNerney, Ranking Democratic Member...................     2
    Prepared statement of Congressman McNerney...................    36
Hon. Timothy J. Walz.............................................     4
Hon. John Barrow.................................................     5

                               WITNESSES

U.S. Court of Appeals for Veterans Claims, Hon. Bruce E. Kasold, 
  Chief Judge....................................................    18
    Prepared statement of Judge Kasold...........................    49
American Battle Monuments Commission, Hon. Max Cleland, Secretary    24
    Prepared statement of Secretary Cleland......................    53
U.S. Department of Veterans Affairs:
  Ronald E. Walters, Acting Deputy Under Secretary for Memorial 
    Affairs, National Cemetery Administration....................    25
      Prepared statement of Mr. Walters..........................    56
  Michael Walcoff, Acting Under Secretary for Benefits, Veterans 
    Benefits Administration......................................    27
      Prepared statement of Mr. Walcoff..........................    58

                                 ______

American Veterans (AMVETS), Jay Agg, National Communications 
  Director.......................................................     5
    Prepared statement of Mr. Agg................................    37
Disabled American Veterans, Jeffrey C. Hall, Assistant National 
  Legislative Director...........................................     6
    Prepared statement of Mr. Hall...............................    43


                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                    FY 2012 BUDGET FOR THE VETERANS
                   BENEFITS ADMINISTRATION, NATIONAL
                      CEMETERY ADMINISTRATION, AND
                            RELATED AGENCIES

                              ----------                              


                        THURSDAY, MARCH 17, 2011

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Disability Assistance
                                      and Memorial Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 1:04 p.m., in 
Room 334, Cannon House Office Building, Hon. Jon Runyan 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Runyan, McNerney, Barrow, and 
Walz.

              OPENING STATEMENT OF CHAIRMAN RUNYAN

    Mr. Runyan. Good afternoon. I want to welcome everyone to 
the first hearing of the Subcommittee on Disability Assistance 
and Memorial Affairs for the 112th Congress. Before I begin, I 
would like to extend a warm welcome to all of our Members and 
especially Ranking Member McNerney. Mr. McNerney has been on 
the Committee on Veterans' Affairs since he came to Congress in 
2007 and has proven himself to be a strong advocate for 
veterans and their families. I congratulate him on his 
appointment as this Subcommittee's Ranking Member.
    It is my intention for the Subcommittee to continue its 
tradition of bipartisan communication and collaboration as I 
look forward to working with all Members in the months ahead. 
We are here today to examine the fiscal year 2012 budget for 
the Veterans Benefit Administration (VBA), the National 
Cemetery Administration (NCA), and related agencies. There is 
no secret that veterans are facing difficult times and we must 
do everything we can to ensure that programs and benefits 
administered by the U.S. Department of Veterans Affairs (VA) 
are being done as efficiently and as effectively as possible.
    The elephant in the room, as everyone knows, is the growing 
size of the backlog of claims for disability benefits. Since 
President Obama has taken office, the backlog of disability 
benefit claims has grown by 103 percent and the VA's budget 
projects that the average date to complete a claim will rise 
from 165 days in fiscal year 2010 to 230 days in fiscal year 
2012. This increase and the continued low quality rating is 
unacceptable to me, and I know it is unacceptable to Secretary 
Shinseki, and most of all it is unacceptable to our veterans 
who are our Nation's heroes.
    I am not here to point fingers. However, it is imperative 
that the VA improve accuracy and timeliness in this area. 
Congress has provided large sums of money to hire additional 
claims workers over the past few years, but it clearly is not 
making a big enough dent. I am encouraged to find that the 
resources were allocated in the VA's budget request for the 
final development and implementation of the Veterans Benefit 
Management System (VBMS), which should bring the VA into the 
21st century with a paperless claims processing system. 
However, this new system is still in the testing stages and is 
years away from full implementation.
    While VBMS should bring substantial improvements to the 
claims processing system, it is not a silver bullet that can 
singlehandedly end the backlog once and for all. I believe the 
only way to truly address this problem is to facilitate a 
cultural shift in embracing greater accountability and 
innovation at VBA. For far too long, the VA has focused on 
quantity at the expense of quality, and this must end. The 
culture of greater accountability and innovation must be 
embraced and practiced by all at the VA, from its most junior 
file clerk all the way to Secretary Shinseki himself. It will 
be this Committee's job in providing oversight to ensure that 
greater accountability is happening at every corner of the VA, 
from the VBA headquarters to the regional offices and 
throughout the Board and the Court of Appeals for Veterans 
Claims (CAVC) as well. This Subcommittee will also pursue 
policy and legislation to help develop and foster a new climate 
of innovation and accountability at the VA.
    I also want to briefly comment that while they do not seem 
to have as many challenges as the Court and the VBA we will 
also be looking at the budgets of the American Battle Monuments 
Commission (ABMC) and the NCA. And I look forward to hearing 
from them on ways they intend to reduce costs and improve 
performance.
    I appreciate everyone's attendance at this hearing and 
would now like to call on Ranking Member McNerney for his 
opening statement.
    [The prepared statement of Chairman Runyan appears on 
p. 35.]

            OPENING STATEMENT OF HON. JERRY MCNERNEY

    Mr. McNerney. Thank you, Chairman Runyan. I want to 
congratulate you on your appointment to Chair and I look 
forward to working with you over the next 2 years and maybe 
longer. We all have the same goal in mind. We want to serve our 
vets. We want to make sure that they get the services that they 
have earned. And we want to work on this backlog.
    The goal of today's hearing is to examine the various 
fiscal year 2012 budget requests of agencies over which the 
Disability Assistance and Memorial Affairs Subcommittee 
exercises jurisdiction, including the U.S. Department of 
Veterans Affairs, Veterans Benefits Administration, the 
National Cemetery Administration, the Court of Appeals for 
Veterans Claims, and the American Battle Monuments Commission. 
These organizations oversee many major benefits, services, and 
protections for our Nation's veterans, their families, and 
survivors ranging from providing compensation, pension and 
burial benefits, to ensuring appellate rights, and maintaining 
our National Shrine monuments both here and abroad.
    I look forward to hearing how these benefits and services 
will be administered with the optimum levels of efficiency and 
effectiveness with the new budget request. Today's hearing, our 
Subcommittee's first in the 112th Congress, is an important 
one. As all of you know, Congress is working hard to balance 
our budget and reduce the deficit while at the same time 
provide earned and needed benefits to veterans and their 
families.
    Over the past 4 years Congress has provided more funding, 
resources, and access to VA benefits and care in the 4 years 
than in the previous 12 years. The overall fiscal year 2012 VA 
budget request is $132 billion. Of the total Department budget 
request, $70.3 billion is designated for mandatory funding to 
pay for benefits to veterans, their families, and survivors. 
This represents almost a 6 percent increase from the 2011 level 
of $66 billion.
    This Administration has shown that supporting the troops 
and our veterans is not just a slogan, it is a mandate. Like 
many of the veterans service organizations (VSOs) and other 
stakeholders who represent our veterans, one of my top 
priorities will be addressing problems that veterans face in 
the claims process. We have a large backlog of claims and it is 
an insult to the veterans who serve our Nation. Personally, it 
drives me crazy. There is no reason that we still process 
claims with 20th century technology. I agree with Secretary 
Shinseki that we need to get our claims process under control 
to deliver these benefits in a 21st century paperless manner. 
Get the claim right the first time and do not sacrifice quality 
for quantity.
    I think this budget reflects the work that the VA is doing 
to move the claims process in the right direction. However, I 
know that many of the VSOs agree with me that while the VBA is 
making some progress with its numerous claims processing 
initiatives and with the roll out of the Veterans Benefits 
Management System, more needs to be done. I believe that the 
Virtual Lifetime Electronic Record Effort, along with other 
collaborations between the U.S. Department of Defense (DoD) and 
Veterans Affairs, will assist greatly in this 21st century 
transformation.
    I hope that we can continue to exercise strenuous oversight 
over these areas to ensure that these ideas are actually 
materialized and make a real difference for our veterans. I 
want to make sure that they do not confuse activities with 
progress.
    I also believe that we need to continue the reform work and 
oversight from the past 4 years, particularly as included in 
the claims process transformation roadmap laid out in Public 
Law 110-389, the Veterans' Benefits Improvement Act of 2008. It 
is going to take a sustained effort of all the stakeholders to 
figure out how to transform the VA claims processing system. 
The way that we transformed the Veterans Health Administration 
(VHA) in the 1990's with everyone at the table, with a focused 
commitment to leadership, vision, and resources is the same way 
that we need to proceed to transform the VBA today. Our 
veterans, their families, and survivors deserve no less.
    As the new Ranking Member of the Disability Assistance and 
Memorial Affairs Subcommittee, I look forward to working with 
Chairman Runyan and all of our stakeholders on these and other 
priorities. I would like to congratulate the Honorable Bruce E. 
Kasold for his ascendancy to Chief Judge of the U.S. Court of 
Appeals for Veterans Claims. I also look forward to hearing 
from all our eyewitnesses today. Your input is critical to our 
oversight and informs our legislative efforts. Thank you, Mr. 
Chairman. I yield back.
    [The prepared statement of Congressman McNerney appears on 
p. 36.]
    Mr. Runyan. Thank you, Mr. McNerney. I know at some point 
during this hearing we are going to be called to the floor to 
have some votes and I wanted to give other Members of the 
Committee an opportunity to make an opening statement if they 
wish. Mr. Walz.

           OPENING STATEMENT OF HON. TIMOTHY J. WALZ

    Mr. Walz. Thank you, Mr. Chairman. And again, 
congratulations to joining this Committee. And Ranking Member 
McNerney, your tireless advocacy for veterans is really 
appreciated. All of you being here, I continue to sound like 
the broken record on this, seamless transition is the key to 
many of these issues. I still believe it is the fundamental 
root cause of many of these issues.
    I do applaud and Mr. Chairman, I certainly do not want to 
get started on the wrong foot. But I want to be very clear on 
the backlog of claims. You made a note that it has increased 
since January 21, 2009. I have never seen anyone make that 
being the date where the backlog of claim issues started. I 
have been at this for 30 years and it has been an issue. And 
since President Obama has come into office, too, I want to make 
note of why maybe there is a backlog of claims. We reinstated 
Priority 8 veterans who were excluded. That is a Vietnam 
veteran making $29,000 a year. That added tens of thousands of 
back to the rolls. We ended decades of excluding Agent Orange 
cases from the rolls. We have an unprecedented outreach to 
educate veterans about the benefits they have earned and to 
come back into the system. And we are fighting two wars and 
there are unprecedented numbers coming back.
    I will certainly not make excuses for the backlog. It is 
unacceptable, as you both have said. It is disgraceful to this 
country. But we are going to have to come together to solve it. 
And it starts with that seamless record. It starts with making 
sure we transition to a 21st century way of doing these things, 
and to make sure we get the right people in the right jobs. I 
have to tell you, and we are going to hear from the Judge here 
in a minute. I am certainly very comfortable with the 
Administration right now in terms of Secretary Shinseki's work. 
But we have to get together.
    I look forward to your leadership, Mr. Chairman, to push 
them on it, push us on every issue. Push us on the issues to 
get this done. We will be there. But let us make sure, this 
thing has been around decades. The one thing that we can change 
is, it can end under our watch. We can get it back under 
control. We can shorten those times. We can make the system 
fair and more responsive and I think that is what the public 
asks. So I yield back my time.
    Mr. Runyan. Mr. Barrow, do you wish to give a statement?

             OPENING STATEMENT OF HON. JOHN BARROW

    Mr. Barrow. Thank you, Mr. Chairman. I want to amplify what 
my colleagues have said, and just in the interests of 
clarification exaggerate a little bit for the sake of emphasis. 
Because while I think a seamless transition is a huge component 
of this it will not by itself do very much. And I understand 
the point you made about how we need to do more. You know, to 
be handed off effortlessly from one bureaucracy that takes too 
long to do something to another bureaucracy that takes too long 
to do something may seem like a great advance. But it is not a 
great advance to folks who are still waiting too long to get 
something done.
    What I want to do is explore with witnesses today what we 
can do to actually change the system itself to make it more 
efficient. So that as we do move from one bureaucracy to 
another we can get the services that folks need as quickly as 
possible. And with that I will yield back the balance of my 
time. Thank you.
    Mr. Runyan. Thank you. At this time I would like to invite 
Mr. Agg and Mr. Hall up to the witness table. I thank both of 
you for coming. First of all, we have Mr. Jay Agg from AMVETS 
and Mr. Jeff Hall who is the Assistant National Legislative 
Director of the Disabled American Veterans (DAV). All of your 
complete written statements will be entered into the hearing 
record. And Mr. Agg, we will start with you. You are now 
recognized for 5 minutes.

   STATEMENTS OF JAY AGG, NATIONAL COMMUNICATIONS DIRECTOR, 
  AMERICAN VETERANS (AMVETS); AND JEFFREY C. HALL, ASSISTANT 
   NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS

                      STATEMENT OF JAY AGG

    Mr. Agg. Thank you, Mr. Chairman. Chairman Runyan, Ranking 
Member McNerney, Mr. Walz, our Sergeant Major who has been such 
a fantastic advocate for our veterans, distinguished Members of 
the Subcommittee, on behalf of AMVETS I would like to extend 
our gratitude for being given the opportunity to share with you 
our views and recommendations regarding the President's budget 
request for fiscal year 2012, the Department of Veterans 
Affairs National Cemetery Administration, and VA's compensation 
and pension (C&P). Since you have our full written testimony 
for the record today I will focus on our recommendations 
regarding NCA.
    The most important obligation of the NCA is to honor the 
memory of America's brave men and women who served in the armed 
forces. Many of the individual cemeteries within the system are 
steeped in history and the monuments, markers, grounds, and 
related memorial tributes represent the very foundation of the 
United States. AMVETS believes that with this understanding the 
grounds, monuments, and individual sites of interment represent 
a national treasure that must be protected through proper 
upkeep and funding.
    While AMVETS notes there has been significant progress made 
over recent years, NCA is still struggling to remove decades of 
blemishes and scars from military burial grounds across the 
country. Visitors to National Cemeteries are still likely to 
encounter sunken graves, misaligned or dirty grave markers, and 
other evidence of decay that have been accumulating for 
decades. AMVETS applauds NCA's dedication to correcting these 
problems and notes that NCA has worked tirelessly to improve 
the appearance of our National Cemeteries, investing $45 
million into the National Shrine Initiative in fiscal year 2010 
and approximately $25 million per year for the 3 previous 
years.
    AMVETS believes NCA has done an outstanding job thus far in 
improving the appearance of our National Cemeteries. However, 
there is still much work to be done in restoring the grounds 
and monuments and being prepared to care for new interments, 
which are projected to rise over the next 10 years. VA 
estimates nearly 23 million veterans are living today. As of 
late 2010, NCA maintained more than 3 million graves at 131 
National Cemeteries in 39 States and Puerto Rico. With the 
anticipated opening of several new National Cemeteries, annual 
interments are projected to increase to approximately 116,000 
in 2013 and are expected to remain at this level through 2015.
    As an author of The Independent Budget (IB) sections 
regarding NCA, AMVETS has recommended a total operating budget 
of $275 million for NCA for fiscal year 2012 so that they may 
meet the increasing demands of interments, gravesite 
maintenance, and related essential elements of cemetery 
operations.
    Another critical part of NCA's mission is the State 
Cemeteries Grant Program (SCGP). SCGP complements NCA's mission 
through establishing and maintaining interments for veterans in 
areas not currently served by NCA. Over the years the demand 
for SCGP services has risen significantly. Thus, we recommend 
that $51 million be appropriated to SCGP in order to assist 
with the challenges they are experiencing in meeting the 
growing demand from States to provide burial services in the 
areas not currently served by NCA. Furthermore, this funding 
level will allow SCGP to establish new State Cemeteries at the 
current rate of need and to continue providing burial options 
for veterans that would otherwise have no reasonable access to 
State or National Cemeteries.
    NCA honors veterans with a final resting place that 
commemorates their service to this Nation. More than 3 million 
servicemembers who died in theater or later, from every war and 
conflict that this Nation has been a part of are honored 
through interments and monuments at VA National and State 
Cemeteries. AMVETS calls on the Administration and Congress to 
provide the resources required to meet the critical nature of 
NCA's mission and fulfill the Nation's commitment to all 
veterans who have served their country so honorably and 
faithfully. This concludes my testimony. Thank you.
    [The prepared statement of Mr. Agg appears on p. 37.]
    Mr. Runyan. Thank you. Mr. Hall.

                  STATEMENT OF JEFFREY C. HALL

    Mr. Hall. Thank you, Mr. Chairman. Good morning, or good 
afternoon, to you Chairman Runyan, and Ranking Member McNerney, 
and Members of the Subcommittee. It is a privilege for me to be 
here on behalf of the Disabled American Veterans so that we can 
offer our views and recommendations regarding the budget for 
fiscal year 2012 in the areas of veterans benefits.
    First, I want to congratulate you, Chairman Runyan, for 
being selected to lead this great Subcommittee, and Congressman 
McNerney for being chosen as the Ranking Member. DAV looks 
forward to working with both of you as well as all the Members 
of the Subcommittee and your respective staffs as we try to 
improve the lives of our Nation's disabled veterans, their 
families, and their survivors.
    Mr. Chairman, it is with gratitude that we note during the 
past couple of years with strong support from Congress VBA's 
Compensation and Pension Service has received significant 
increases in personnel to address the rising workload of claims 
for benefits. For fiscal year 2012, DAV is recommending only 
modest increases in personnel levels for the Veterans Benefits 
Administration, targeted primarily at Vocational Rehabilitation 
and Employment Service as well as the Board of Veterans' 
Appeals.
    Vocational rehabilitation is one of the most beneficial 
programs for disabled veterans and due to the workload demands, 
we support an increase of 100 new counselors and an additional 
50 employees dedicated to the management and oversight of the 
growing number of contract counselors and service providers.
    With respect to the Board of Veterans' Appeals, their 
workload has consistently averaged about 5 percent of the total 
number of claims before the VBA. And with the number of claims 
continuing to rise dramatically, so too will the number of 
appeals. In order to meet this demand and avoid creating an 
even larger backlog of appeals, DAV recommends staffing 
increases at the Board commensurate with the increasing 
workload.
    Mr. Chairman, VBA is at a critical juncture in its efforts 
to reform an outdated, inefficient and overwhelmed claims 
processing system. Secretary Shinseki, as we have heard, has 
made clear his intention to break the back of the backlog as a 
top priority. While we certainly welcome the Secretary's 
optimistic goal of deciding all claims within 125 days with a 
98 percent accuracy rating, we would caution that eliminating 
the backlog is not necessarily the same goal as reforming the 
claims processing system. To achieve real and lasting success, 
VBA must focus on creating a veterans claims processing system 
built around quality and accuracy and designed to consistently 
decide claims right the first time.
    Undoubtedly the most important new initiative underway in 
the VBA is the Veterans Benefits Management System, or VBMS, 
with their new information technology (IT) program currently 
being developed, which will provide a paperless, rules-based 
method of processing and awarding claims. While replacing an 
antiquated IT system is long overdue, VBA cannot be driven 
simply to satisfy self-imposed deadlines. Instead, they must 
ensure VBMS is created right the first time. With this in mind, 
we urge this Subcommittee to carefully monitor and oversee this 
vital initiative and recommend considering an independent 
outside review of the VBMS while it is still in the development 
stages.
    Along with the VBMS, other important initiatives well 
underway in VBA include the use of Disability Benefits 
Questionnaires, or DBQs, and the Fully Developed Claims 
program, or FDC. While we fully support the use of the 
Disability Benefits Questionnaires and the Fully Developed 
Claims program, VBA must bring forward comprehensive and 
credible plans to adopt the best practices needed to achieve a 
lasting reform not just short-term increases in production 
directed at reducing the backlog of claims.
    Regardless of the IT solutions or any of the ongoing pilot 
programs in VBA, they must ensure that they have a properly 
trained workforce and a comprehensive quality control system. 
Training, testing, and accountability must be uncompromising 
requirements for all VBA employees. Anything less is 
unacceptable.
    Mr. Chairman, we realize that VBA is taxed with many 
problems and challenges. Yet despite these difficulties, we 
have seen some positive signs of change. VBA leadership has 
been refreshingly open and candid with DAV and other VSOs about 
problems and the need for reform. We are especially encouraged 
by the new attitude towards VSOs being demonstrated by many key 
VBA leaders, including Acting Under Secretary Mike Walcoff and 
C&P Director Tom Murphy. DAV feels both are strongly committed 
to building a true partnership with VSOs and we are hopeful 
that this positive attitude will be adopted throughout the 
entire VA.
    In closing, Mr. Chairman, DAV once again calls on Congress 
to completely end the inequitable prohibition on concurrent 
receipt for all disabled veterans and eliminate the unfair 
offset between Survivor Benefit Plan and Dependency and 
Indemnity Compensation for veterans' widows and their 
dependents.
    Mr. Chairman, once again DAV thanks you for allowing us to 
come before this Committee and testify. And I will be happy to 
answer any questions you may have.
    [The prepared statement of Mr. Hall appears on p. 43.]
    Mr. Runyan. Thank you, Mr. Hall. I will begin the 
questioning and will recognize the Ranking Member after that 
and alternating Members as they come in. But starting in the 
budget crisis we are in as a Nation, the President's Commission 
on Fiscal Responsibility and Reform issued a report in 2010 
basically saying that everything is on the table, but to 
include the elimination of redundant, wasteful, and ineffective 
spending that may exist in every single Federal agency. And we 
know it is out there. With your close relationship with the VA 
and your members would any of you like to comment on where we 
can root out the waste of the taxpayers' money in the VA? It 
has to be there. You guys having gone through the process and 
knowing where we can draw these back, it is a start. Because we 
know the fiscal constraints we have. But we also have a 
commitment to take care of our heroes that are struggling. And 
we have to be able to define this stuff so we can continue to 
support them, especially in this fiscal crisis we are in. Mr. 
Hall.
    Mr. Hall. Thank you, Mr. Chairman. Before I delve too deep 
into that I would like to say I know one place that is not. And 
that should not be, they should not find it on the backs of our 
veterans or their families. With the immense amount of money 
included in the budget VA has to be innovative not only in 
reforming the claims process, but also in ways at looking at 
additional ways that they can save on their own accord without 
relying on a veterans service organization to bring to their 
attention where excess money is being spent, or where they 
could save money.
    I know in VA's budget as an example they had indicated that 
they were reducing their budget under the VA by I believe $130 
million. And we as part of The Independent Budget are I believe 
around $110 million more. So that is a large gap. One thing 
that we can tell you about the $130 million apparently it comes 
from, by VBA's admission, through cost saving measures in 
training or the hiring of new employees which is not going to 
take place over the next year or so. And we, simply do not 
agree with the fact that they are saving money in travel or 
training costs because the training remains to DAV woefully 
inadequate within the VA. There still has to be a stricter 
accountability regarding implementation of training at all 
levels, managers included. So whether or not they can save 
money, or different areas that they can, I would simply say 
that our Independent Budget that we have co-written with AMVETS 
and the other organizations does outline where we believe the 
VA is inadequate in their monetary, or where we feel that they 
are sufficient.
    Mr. Runyan. With that being said, we talk about oversight. 
Is it enough to really sit here and have these discussions? Or 
are we going to have to push legislation to hold the VA 
accountable to really getting this backlog out of the way?
    Mr. Hall. I agree that discussing it is one thing. And we 
are, as has been mentioned already here today, you know 
activities are not necessarily progress. And that is true. And 
the same thing holds, you know, in this regard with your 
question. Is it going to take legislation enacted to hold them 
accountable? I would certainly hope to think not. That we could 
hold them accountable without the need for enacting some sort 
of legislation to hold them accountable. But yes, specifically 
we can talk about it. I can come here before this Committee or 
with other organizations and we can tell you. And I think we 
are all in full agreement as I have heard all four of you 
gentlemen say. That accountability is a must. VA by their own 
admission says accountability is one of their top priorities, 
or one of their focuses, a cultural change.
    So I guess the best way to answer the question is, I hope 
that we do not have to enact legislation but if that is what it 
takes to hold them accountable so that the veterans that we are 
taking care of can be cared for then that is what it would have 
to take.
    Mr. Runyan. Thank you. And I agree with you. I have had 
several conversations with Secretary Shinseki about it. And it 
is creating a new climate, a climate of accountability. And 
making sure that you do your job to the best of your ability. 
Because that lack of accountability is what keeps this backlog, 
keeps piling it up. And we really do need to move on. It is a 
matter of taking pride in what they are doing for our heroes. 
So with that, I yield to Ranking Member McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. Thank you for coming 
and testifying today, Mr. Agg and Mr. Hall. I am going to ask 
both of you the same question. I will start with Mr. Hall. Do 
you think that the fiscal year 2012 budget is sufficient to 
address the needs of the claims processing? Or, I know that it 
is not just about money. I know that there are other things 
involved. But is that component sufficient in your opinion?
    Mr. Hall. Well as I had stated earlier, and along with The 
Independent Budget that we have written, it is sufficient in 
many aspects. And no, we simply do not believe that throwing 
more money at a situation is what anyone is looking for. Leaner 
times, all of those things considered. We do believe that there 
is a lot of progress going on in the VA. You know, with their 
initiatives, and different things like that. One hundred forty-
eight million dollars being spent, approximately, I think is 
the figure. One hundred forty-eight million dollars being spent 
on the Veterans Benefits Management System, VBMS. I do not know 
if that is an adequate resource for that particular type of 
thing. I am not an IT guy. But I do know that the system itself 
has to be built right and it has to be built one time, or that 
should be the intended goal, and not a repeated effort as so 
many different things have occurred over the years, at least in 
my career which spans 17 years. That you have seen them 
introduce a particular type of program. And I do not know what 
a cost measure attached to that is as an end user. I just know 
that with the budget overall, and it does cover a lot of areas 
that I am not particularly familiar with. But for the most 
part, I have to rely on what The Independent Budget is and 
simply defer to that. If you would like a more detailed 
explanation, I can certainly get back to you in writing on 
that.
    Mr. McNerney. Okay. Thank you, Mr. Hall. Mr. Agg, what 
about the National Shrines? Did we put enough, or did the 
Administration put enough money in the budget for the National 
Shrines, do meet their responsibilities?
    Mr. Agg. Well, like Mr. Hall has said, we do stand behind 
the recommendations in The Independent Budget. Our colleagues 
at the DAV, Paralyzed Veterans of America, and Veterans of 
Foreign Wars have put a lot of time and effort into creating a 
roadmap for Congress to sufficiently fund the VA, and take care 
of our veterans, and you know, the myriad of needs within the 
VA. And we do stand behind the recommendations in the IB.
    Mr. McNerney. Thank you.
    Mr. Agg. Yes, sir.
    Mr. McNerney. Mr. Hall, you know, I know a lot of new 
employees were added in the last couple of years because of the 
resources that were allocated. And there is an average of 24 
months in the training period before these new hires are 
considered journeymen. Do you think that that training is 
sufficient? And could you remark, give me a few remarks about 
the trainings of the VSOs that prepare the claims in the first 
place before they are submitted?
    Mr. Hall. Absolutely, thank you. As far as the training 
period in the VBA? No, I do not think it is adequate. I do not 
think it is adequate because it is a drastic contrast in our 
own training program. And I had the privilege of testifying 
before this Subcommittee last September regarding examination 
of the training requirements in the VBA. While I think that the 
training is intended, the intent is there. However, it is not 
being followed through with by admission of their own 
employees, who feel that training itself is simply a check the 
box. Because again, not being accountable, or whether it be the 
manager that is making sure that they have the training, they 
have an 85-hour training program that they are required to 
complete annually.
    Now the initial employees I think, which is how you are 
alluding to, or the question is more directly towards the newer 
employees, once they complete their initial, I believe it is 6-
month phase, and it takes approximately 2 years for them to get 
up to that independent or journeyman's level. We don't really 
think that it is, and again I have to rely heavily on just the 
several employees that I have talked to who are rating cases 
that do not feel confident in the fact that they have been 
provided adequate information or training or the testing being 
required. A new employee is required to take testing. But 
again, an accountability level, they do not feel that it is 
there. That there is no support network for it.
    Mr. McNerney. Mr. Hall, I did want you to make a comment on 
the training and adequacy of VSOs that prepare the claims 
before they are submitted to the VA?
    Mr. Hall. Well regarding----
    Mr. McNerney. With the indulgence of the Chairman.
    Mr. Hall. With regard to VSOs preparing a claim for 
submission to the VA? Am I understanding you correctly? When we 
receive a claim based off of our expertise and the training 
program and, you know, the experience that we gain at the 
initial phase, which is a 16-month training program just to 
kind of recap. It is a 16-month training program, on the job 
training program. It takes them 5 months before they start 
handling their own or getting exposure to claims themselves. 
Beyond that there is testing throughout to measure their 
knowledge, their retention and understanding of the material. 
So before they even, that is our initial employees, so even 
before preparing and submitting those claims, they have an 
experience or a knowledge level commensurate with even the 
earliest level employees of the Department of Veterans, or the 
VBA rather.
    So once we submit a claim, or prepare that claim for 
submission to VBA, what really happens and what we have, you 
know, what we have seen happen based off of my personal 
account, is we can submit the claim and oftentimes we are, our 
service officers, find ourselves in a discussion with the rater 
or a veterans service representative, a VSR and RVSR, kind of 
educating them on what the components are or the requirements. 
And they come to us. And I mean, we do enjoy a professional 
rapport with those employees. It is not like it is a negative 
situation. We are there to help them as much as our clients. 
You know? And I do believe that the employees when they come to 
us they feel sort of, in my personal experience, they feel sort 
of bad like they are going around the, in the back alley to 
talk to you about something that they should already know or 
should have been taught. And we do not really feel that way. We 
want to make sure that the veteran is taken care of. So our 
claims, when we submit them, we try to prepare them as fully 
and complete as possible for the VBA.
    Mr. McNerney. Thank you. I have exceeded my time. Thank you 
for your indulgence.
    Mr. Runyan. Thank you, Mr. McNerney. Mr. Walz.
    Mr. Walz. Yes. Thank you both for your testimony and the 
work that you have done on this. Just a couple of things that I 
want to hit on and in looking at the budget are we able to 
adequately prepare for the influx, as I was talking about 
earlier, the Agent Orange claims, the preemptive, and going 
back to get those Gulf War changes, stressors on post-traumatic 
stress disorder (PTSD), all the things. There have been 
significant additions of folks into this even with the 
preparation. Are they preparing for that correctly? And the 
number we are going to see as the combatants come out of the 
theaters in Iraq and Afghanistan? In your opinions, and I know 
I go back and I applaud both of you on this. My Bible for this 
is the The Independent Budget. Were those things taken into 
consideration in terms of the claim backlogs and things? In 
looking at the number that are going to be entered into the 
system fairly significant?
    Mr. Hall. I believe for the most part it did. And since you 
referred to The Independent Budget, yes, it did take into 
account a lot of those things. It obviously cannot take into 
account, even as well as we can project with it, it cannot take 
into account something that might occur tomorrow.
    Mr. Walz. That is correct.
    Mr. Hall. That is going to become a product or a part of 
the system. But with the changing laws and things that we are 
adding this, or three new presumptives, with Agent Orange as an 
example, yes, those types of things that we knew well in 
advance and in the year-long preparation of The Independent 
Budget, yes, we do take that into account.
    Mr. Walz. So this year your estimates on that, you believe 
that is the right number? For us to have the resources to start 
tackling this in a realistic manner?
    Mr. Hall. I believe so. Yes, sir.
    Mr. Walz. Do you think the public has a perception on what 
the backlog means? When is a case considered backlogged? Is it 
the day after it is filed?
    Mr. Hall. I do not know what the general public perceives 
as what the backlog is. I have over the course of the last few 
years when we started talking about the backlog, I am not even 
sure that a lot of the people in the system knew, client or 
veteran or VA employee or VSO, knew what backlog really meant. 
But I can assure you that over the course of the years, as much 
as we have been talking about it from all parties considered, 
the backlog of claims, when it starts, and please understand. 
As a service officer and telling my clients for 17 years, you 
will hear something, you probably will not get a decision 
within 8 to 12 months. It has been, that figure we have been 
using for my whole tenure.
    Mr. Walz. Yes, me too.
    Mr. Hall. So as an example, when it becomes backlogged? I 
do not really know. I think it really depends on the person 
that you talk to. To me, I think when it becomes, again I am 
speaking me personally, when it becomes a year, it is 
backlogged.
    Mr. Walz. Yes.
    Mr. Hall. I think it, with the necessary time in the system 
producing, yes, there are things to go along with that that can 
help----
    Mr. Walz. Are we setting a goal on this, like most of us? 
As you say, setting a goal. If 120 days, or whatever we agree 
upon, is the right time. I know for some folks 1 day is too 
long. I understand that. And we have to become realistic where 
that is at. Do you feel like the VA is setting a plan of attack 
here to say this is what our goal is, here is how we are going 
to. And I see the curve bending but I think many of us worry 
that it is bending too slowly. Can we set up realistic 
expectations, funded accordingly, and change the system 
accordingly to reach those? And then maintain that over the 
long period with influxes that may come in? Do you believe we 
can do that?
    Mr. Hall. I believe it is going to be extremely difficult 
at the peril of quality.
    Mr. Walz. Okay. Very good. Two more quick ones. I have a 
State that has county veterans service officers (CVSO) that 
augment and they are wonderful resources. They have no access 
to be able to help on claims, in terms of being able to know 
where the claim is at, getting certified to be able to help the 
way you folks. Do you think that would be helpful, to use them?
    Mr. Hall. We actually have a memorandum of agreement with 
the National County of Veterans Service Officers. In the 
States, various States that I have worked in, most recently New 
York, we had a close relationship with the CVSOs. I am not sure 
in your particular State, sir, but I can assure you, yes, they 
are a valuable resource. Because as an example I think your 
regional office is only in St. Paul?
    Mr. Walz. Yes.
    Mr. Hall. I think is the only one in your State. And having 
said that, it is a big State.
    Mr. Walz. Yes.
    Mr. Hall. And so for them to actually go or work directly 
with that regional office, there is only one location. So CVSOs 
in that type of a setting are extremely important, absolutely.
    Mr. Walz. Okay. Very good. And I am going to get back on 
this. And I would reiterate this. I will go into it more with 
my colleague a little bit on some of the seamless transition, 
but I still do not know why we do not get this right. The 
Chairman is absolutely right, in finding where there is fraud, 
waste, and abuse, absolutely significant. Why do we continue to 
cut the Office of General Counsel (OIG) budget, then? The OIG 
comes to me 3 years ago and sits here and testifies that there 
was, this was May of 2007, $371 million in fraud, waste, and 
abuse to contractors outside the system. I said, ``Is that war 
profiteering?'' He said, ``Yes.'' I said, ``Are they not being 
prosecuted?'' ``I do not have the resources to get them all.'' 
Do you think that increasing the OIG budget in the long run 
would save this country money and provide better services?
    Mr. Hall. Well I do not think OIG itself is, that there are 
a lot of people that are fans of it. They do not really maybe 
understand the purpose or the intent of it. And to kind of go 
with the Chairman's question of the fraud, waste, and abuse, I 
think they were designed to look into those particular 
situations. Any wrongdoings and different things like that. I 
absolutely think it is imperative that the OIG not only exist 
that they are provided that adequate resources to do the 
necessary that they have. Otherwise we are going to be trying 
to hold people accountable without an accountability mechanism.
    Mr. Agg. I am glad I deferred the service officer question. 
I did not realize you were so experienced. And not being an 
inspector general either I think it is counterintuitive if you 
have identified fraud, waste and abuse as being a problem you 
would not want to take away resources to combat it. Just my 
opinion.
    Mr. Walz. Yes, very good. I yield back, Mr. Chairman.
    Mr. Runyan. Mr. Barrow.
    Mr. Barrow. Thank you, Mr. Chairman. I want to follow up on 
the Chairman's confidence that there has to be waste out there 
somewhere and talk about the waste that drives me the craziest. 
It is not the acts of commission, it is not the petty theft, it 
is not the grand larceny. It is the sins of omission. Of doing 
things in a hard and tedious way rather than in an efficient 
way. This is the waste that hides in plain sight, of dealing 
with complicated questions of the sort we have today and of the 
sort they did not have back in the 1950's with substantially 
the same model, basically substantially the same approach as 
they were trying to answer such questions back in the 1950's. 
The model that I think seemed to make sense in those days, who 
needs, let us get efficiency. Let us get one person to cut 
through all the red tape. Let's not have someone wearing the 
hat of being a prosecutor and an advocate, and somebody else 
wearing the hat of being a judge, and somebody else wearing the 
hat of being a medical examiner. Let us give one person the 
information they need to be able to make all those decisions. 
Put all those hats on one person and let us get straight to it 
and cut through the red tape. That seemed to make sense given 
the complexity of the issues back in the 1950's.
    Fast forward three or four decades and you have very 
subtle, very difficult questions of medical causation and 
effect, which are beyond the ken of a lot of laypeople. Which 
causes me to think if we are going to spend massive sums of 
money training more and more people to try and do all of these 
different jobs at once, be both advocate, judge, jury and 
medical examiner all at once, you are going to get somebody who 
is not really good at doing any of them trying to do all of 
them.
    Now if that is the nature of the problem challenging us it 
seems to me that we ought to look for places where folks do 
make these kinds of decisions on a snap basis all the time, and 
they have a lot on the line, and they make these decisions very 
effectively precisely because they have the expertise and they 
have a lot on the line. I look at doctors as having to make 
decisions like this all the time. Every time a doctor cuts on a 
patient or prescribes a medicine they are taking their career 
in their hands. And if they do it negligently they can get 
sued. If they intentionally misprescribe or mistreat they can 
go to jail. So there are very, very severe consequences for 
people who make these life and death decisions all the time. 
Now a death decision is a pretty good analogy, because we 
actually let doctors make the most awesome decision about 
whether or not to turn life support off when someone is no 
longer living, when they are brain dead. Now it seems to me if 
we can give doctors the awesome power to turn life support off, 
we ought to give them the authority to turn life support on. 
Now I recognize the challenge of taking a massive bureaucracy 
that has just grown over the years doing the same thing the 
same way, just grown. I understand the challenge of trying to 
rip that all out and build something new. In an industrial 
setting you might be trying to decide whether or not to get rid 
of a certain problem by basically redoing the whole system, 
ripping it out and starting all over again. Or just bolting 
something on, some technology they could bolt on to an existing 
apparatus. I kind of like the idea of trying to bolt onto the 
existing bureaucracy.
    For those folks who do have access to a medical doctor who 
will certify that somebody has a condition that in their 
opinion is service related, and in their opinion results in a 
certain degree of disability, if those guys are willing to put 
it in writing and under oath in a streamlined, efficient 
fashion. They can make that decision in order to decide whether 
to operate on somebody, they ought to be able to turn the life 
support on. It seems to be that will be binding on the VA.
    Now that is not a panacea. It is not an answer. It is not a 
cure for what ails all veterans who do not have a doctor to do 
that, either in the system or outside. But for those who can, 
it could provide a quick detour around the bureaucracy and go 
straight to the benefits. Consider how the Internal Revenue 
Service (IRS) decides whether or not someone owes some taxes 
and if so how much? The presumption is that what the guy is 
telling you is true when he says, ``I claim that I made this 
much, and I claim I owe this much. Here is my money.'' Uncle 
Sam does not make you wait 2 years to adjudicate that claim. 
They take your money right away. And they reserve the right to 
argue about it later on. We ought to have at least as much 
efficiency when it comes to turning on life support as the IRS 
uses when it comes to taking in the money that runs the whole 
government. And yet we do not do that.
    And so I would encourage you all, what can we do in the way 
of system reform that can allow folks who have access to the 
expertise, the bottom line opinion that this is what they have 
got, and this is what they deserve. What can we do to go around 
the existing bureaucracy? And leave it in place for those folks 
who do not have that, but for those who do let them go straight 
to the head of the line and turn on the benefits. Is there 
something we can do along those lines? It is a long way around 
the barn to get to the question, but I want to give you all a 
sense of the frustration I have with the way we are doing 
things now.
    Mr. Hall. I certainly understand your frustration. And 
again, over the course of my career I have seen a lot of 
different things. And I will just start with just prior to my 
career life and death decisions that I did make during the Gulf 
War in combat. I understand. And we are not dealing with life 
and death situations in the Department of Veterans Affairs in 
these programs and reform. It is not the same thing. So my 
frustration or anxiety level does go up when I feel that it is 
just a lot of activity and no progress. I believe you had said 
that earlier.
    Having said that, there, again, while there are a lot of 
good things, and I am extremely, and DAV shares that, extremely 
optimistic about a lot of these programs, innovations, things 
like that that they are doing. At some point when do we say 
enough is enough and let us fix it? Once and for all?
    One of the things that I guess, me, that I go back to, and 
I always wished it at every regional office that I worked in. 
And that is the simple answer, or to me was simple, was simple 
and direct communication. And who are you going to go to? Your 
own people in your own department who maybe work in a position 
under you? Or something to get those types of answers? I think 
they are getting a lot of those things with a lot of these 
think tank projects that they have going on, and that is great. 
But they often eliminate veterans service organizations as a 
primary resource and really bringing them to the table. I do 
not know how many years, and this may be exceeding my knowledge 
about it, but how many years did the Veterans Administration, 
before they became the Department of Veterans Affairs and were 
invited to the table? How long did that go on? And now they are 
finally recognized as a progressive voice for an agency for the 
veterans.
    The same thing has to occur. And again, whether it is a 
cultural shift, I do not really know what the magic, if there 
is a magic pill for it, or a magic bullet for it. But when the 
Department of Veterans Affairs, and again we are seeing some 
renewed or refreshing openness that they are having, I want to 
see more of that. I hope it continues. It only makes their job 
easier. And in the end the job being easier for them means 
better for veterans.
    So I would say just accountability is going to be strung 
throughout any statement that I make simply because I do not 
believe over the course of my career I have seen a high level 
of accountability. So having said that, I will leave it with 
the communication or the open lines and using the veterans 
service organization as a valuable resource, especially with 
things like the Fully Developed Claims Process. Which is one of 
the, as a service officer, again, is one of the most promising 
things that they have. And this kind of goes to Congressman 
Walz's talk about, you know, reducing the time, or what is an 
acceptable time. Fully developed claims, 90 days or less. 
Imagine the world, 90 days or less. But it is not going to work 
unless the Department of Veterans Affairs, VBA, reaches out to 
the veterans service organization and utilizes us as the free 
service that we are to the clients that are represent.
    Mr. Barrow. Thank you.
    Mr. Runyan. I actually am going to open it up for another 
round of questions. And I just have a quick one. You talked 
about your relationship from your VSOs doing the applications 
for your members and the communication back and forth. I kind 
of look at the backlog as a, I guess a massive wall of stone. 
And just a question, because of that relationship, and you guys 
have some insight into that, on this big wall, on this big 
backlog, as we look at the cracks and fissures in it, where do 
we hit, what is the first blow of the hammer to really get this 
and start moving in the direction of solving this problem? 
Where do we have a solid idea of a point to start? We talk 
about it as a massive problem. But there has to be an ``in'' 
somewhere, and that is really where you have to look to get 
your foot in the door.
    Mr. Hall. I will tell you, I guess really from a personal 
perspective more than maybe an organizational, when that wall 
is there what could be a hurdle sometimes may be a complete 
barrier. And I hope it is not taken the wrong way, but it is 
often because of the people. Lack of communication, more 
importantly. You know, that there is you, and there is us, but 
really what is at stake is the veteran. Okay? So we are just 
trying to get to the table, or submit that claim, whatever it 
is, advocating for the veteran.
    VA, a lot of times it gets stopped right there because if 
you walk into the triage area, which is designed by virtue of 
its very title. Triage, triage is not, is really what I want to 
say. It is not necessarily true. Maybe they need to change the 
name to holding area, or something more accurate. Because 
triage means there is an expedience. Let us triage it and get 
it to the right track, the right lane, the right department, 
the right member. Whoever it is, let us get it there and get it 
done. And it takes them approximately 45 days to even recognize 
a service organization as a power of attorney. We cannot answer 
your question, the veteran's question, unless they recognize us 
as the representative. And oftentimes that means there is a 
human being handling the paperwork.
    And again, I do not want it to be taken the wrong way. I am 
certainly not advocating to replace people with machinery, or 
computers, or things like that. But when the Department of 
Veterans Affairs, when this VBMS system gets up and running, 
the way I feel, I do not think I am far off by saying that it 
is going to revolutionize the way that they do those things 
which by rights will then certainly make it much better and we 
can start depleting or tearing down these barriers, these stone 
walls. Because if they graduate that into what I perceive it to 
be, as a system to where I deal with you the client. I can 
submit the claim electronically. It is in the system. It is 
there. It is data. There is no 30 days. There is no 45 days. So 
when we can finally modernize the IT system in the VA, I think 
it is going to have a dramatic impact on the overall process.
    Mr. Runyan. Well I thank you, and I think we all agree on 
that. But we have a lot of work to do before we get there. And 
I think that is one of the biggest issues. Mr. Agg.
    Mr. Agg. Again, I do not have the 17 years of claims work 
that Mr. Hall has. You know, 5 years ago I was an enlisted guy 
in the Marine Corps, a communications guy. I had an opportunity 
recently to tour kind of behind the scenes at the VA Center in 
Louisville, Kentucky, and was really very impressed by the 
workflow. The way claims were handled went from one expert to 
the next, and it seemed incredibly efficient to me as a layman. 
It would seem that perhaps all, and from what I have heard 
anecdotally, all VA Centers are not operated the same. Maybe 
there are best techniques, tactics, and procedures at some 
locations that could be implemented across the board. Perhaps 
the answer to improved efficiency already lies at some of these 
regional centers.
    But what I can say organizationally from AMVETS is that we 
have been incredibly impressed with Secretary Shinseki, with 
his work since coming aboard. You know, in this one man you 
have someone who is a proven military leader. He himself a 
combat wounded and decorated veteran, an amputee, a medical 
professional. And we have tremendous confidence in his 
abilities to lead this organization forward. VA under Secretary 
Shinseki has been incredibly responsive to us and from what I 
am hearing, you know, our coworkers, our other organizations in 
the veterans service organization community. So if there is a 
leader who can pull VA forward into the future we believe it is 
Secretary Shinseki. It is in good hands.
    Mr. Runyan. Thank you. Mr. McNerney, do you have any 
further questions?
    Mr. McNerney. Basically all I want to say is that, you 
know, it has been frustrating. And everyone I have met in the 
Veterans Administration is dedicated. They care a lot about the 
veterans. But there seems to be a culture there that is obtuse 
and difficult to penetrate. And I do not know if throwing more 
money at it is the answer. It does not sound like it is. The 
prior Ranking Member of the full Committee suggested that we 
have more political appointees in the Administration, because 
there are too many bureaucrats to political appointees. That 
might be an idea. But whatever it is, I am open minded. I want 
to hear from this panel and from other panels today, and in the 
future, what we can do to do this.
    Now maybe your optimism, Mr. Hall, about the communication 
and moving forward with the new system is warranted. I hope so. 
We are going to watch it. And with that, I am just going to 
yield back. And I will let the Chairman move forward.
    Mr. Runyan. Thank you. I agree with what Mr. McNerney says. 
We are all in this together. We are here to take care of our 
heroes. They gave us the opportunity, quite frankly, to sit 
down and have these discussions. And it is something we are all 
on board with. But it is adversely affecting many, many of 
them. I have several in my family that have been through the 
process. It needs to be fixed, and that is why we are here 
having these discussions.
    So on behalf of the Committee, I thank both of you for your 
testimony. I look forward to working with you. And you are 
excused.
    Judge Kasold, would you come up to the table, please? I now 
welcome Judge Bruce Kasold of the United States Court of 
Appeals for Veterans Claims. We appreciate your attendance 
today. And I now recognize you for 5 minutes for your 
testimony.

 STATEMENT OF HON. BRUCE E. KASOLD, CHIEF JUDGE, UNITED STATES 
              COURT OF APPEALS FOR VETERANS CLAIMS

    Judge Kasold. Thank you, Mr. Chairman, Mr. Ranking Member. 
On behalf of the Board of Judges and the Court it is indeed an 
honor to have the opportunity to discuss our budget and the 
Court's activities with you and your distinguished colleagues. 
Before addressing the main topics I would first like to note 
that in the spirit of the day my alias is Chief Judge O'Kasold.
    Second, I noticed that the Battle Monuments Commission is 
scheduled to testify today. I had the great privilege of 
visiting the beaches of Normandy this past fall. And you cannot 
help but leave with admiration for the courage and discipline 
of our soldiers and that of our allies, and have awe at the 
magnitude of their challenge and accomplishment, peaking at the 
height of the hills overlooking Omaha Beach. And at the top of 
Omaha Beach is the most sacred place, laid out and maintained 
impeccably under the supervision of the Battle Monuments 
Commission. Anyone visiting this American cemetery in a foreign 
country will know how much Americans cherish freedom and how 
much we respect our veterans for the sacrifices they make. In 
many respects, there can be no greater warning to those who 
would seek to harm our Nation. I commend the Commission for its 
dedication to their mission and outstanding work of this 
Committee and Congress, and its continued support. I am 
reminded of Vice President Biden's words at the Veterans Day 
ceremonies at Arlington Cemetery this past fall. That while our 
Nation has many obligations, it has only one sacred obligation. 
And that is to care for and protect those who serve and have 
served, and their families.
    With that, Mr. Chairman, I will turn to our budget. As I 
noted in my statement it is really three categories, or best 
looked at that way. The pro bono funding, our operating budget, 
and the Veterans Courthouse. I will speak to the Veterans 
Courthouse and defer to my statement for the others. The amount 
that we requested is that needed to continue toward 
construction of a Veterans Courthouse. In these fiscally 
constrained times, the priority attached to this project can 
only be made by you and Congress as a whole. We are not privy 
to the needs of the other entities that share your portfolio or 
the needs of the Nation. Moreover, the need for a stand alone 
courthouse is not driven by space, equipment, or supply needs 
alone. It is driven by the sense of major veterans groups and 
the sense of Congresses over the past several years that 
veterans, who only recently in the grand scheme of American 
history have been granted the right to judicial review of their 
claims, should have a courthouse at least as equal to the 
courthouses provided to hear the claims of everyday citizens.
    As you know, working in the grand house of the people, 
Congress, buildings, particularly government buildings, 
represent more than just a place to work. They speak to the 
respect our Nation has for the work that is being done within 
them. Courthouses reflect respect for the rule of law and 
particularly in the case of our veterans, a Veterans 
Courthouse, as so aptly stated in H.R. 3936 would be, and I 
quote, ``symbolically significant of the high esteem the Nation 
holds for its veterans,'' and would, ``express the gratitude 
and respect of the Nation for the sacrifices of those serving, 
those who have served in the Armed Forces, and their 
families.''
    Whether a dedicated Courthouse is to be funded now or at 
some later date is a decision the Committee and Congress must 
make, weighing this project against others. Although belts must 
be tightened, some buildings will be funded. As noted in my 
written statement, if a Courthouse is to be built we support 
those who suggest it should be a Veterans Courthouse.
    As to the specific budget request, which is $25 million, it 
is the amount that GSA has advised can prudently be spent over 
the next year. I hasten to add that in addition to reexamining 
the latest projected costs of the Courthouse there remain two 
significant contingencies to constructing it on the currently 
identified location at 49 L Street. One is whether the City 
will close or restrict traffic on a side street to accommodate 
the security needs of the Court. And the second is, can the 
additional property needed to properly site the Courthouse be 
purchased within the estimated amount. So those are two 
contingencies that still exist.
    I would like to turn to the Court activities and our 
caseload. It remains high. The processing times for many cases 
is longer than might be expected. And since becoming Chief 
Judge about 7 months ago I have reviewed that processing time. 
Much of it is simply reflective of the transition from the 
claims processing that takes place at VA and the Board, which 
is the actual processing of the claim, to the adversarial 
appellate judicial review that takes place in an appellate 
court. A record needs to be compiled for review. Briefs need to 
be prepared by the parties. We have instituted across the board 
mandatory conferencing in 65 percent to 75 percent of the 
cases, which are those represented by counsel. And while this 
adds some time to the overall processing there have been 
tremendous results such that in 50 percent of the cases going 
through the conferencing process, the parties come to an 
agreement, usually a remand for the Board to address some 
issues that were not addressed adequately. Overall, the 
required conferencing is well worth any time added to the 
processing of those cases that do not ultimately get resolved 
there.
    There are also many motions for additional time but I would 
like to note that the Secretary has focused on this and his 
requests for motions are now less than for the other parties.
    Some cases will take longer because they are sent to panel, 
and other cases are stayed pending a panel decision, or a 
decision from the Federal Circuit, or a decision from the 
Supreme Court. And each of those is a pyramid, if you can 
imagine, coming down. In sum, judicial review of an appeal 
takes about a year, even when there are no unprogrammed delays. 
And most of the unprogrammed delays are tied to the parties' 
need for additional time, or the fact that a case has been sent 
to panel, or stayed pending another decision. Nevertheless, 
since becoming Chief I have noticed two unprogrammed delays 
within the Court. One arises after cases go through the 
conferencing process, and after the briefing is in. And the 
second is within chambers. I had at first thought I would focus 
on that time period between the conferencing and briefing 
process and getting a case to chambers, which is about 3 
months. But, on becoming Chief I saw the caseload over the 
entire Court and what is in chambers, and I noticed a 
significant number of cases in chambers. Three months ago, we 
also by the way had the retirement of Judge Greene. So we are 
down to six of our nine authorized judges. I have now focused 
on those cases in chambers. Those are the ones now being 
handled by the Senior Judges when we recall them. Central Legal 
Staff (CLS) are assisting in preparing them. And we have also 
redistributed some of the cases to try and move them out of 
chambers, and as we reduce the number of cases in chambers, we 
will go back to the flow within CLS.
    To sum it up, if we get the three additional judges and the 
staff to support them, I believe we can take care of those 
unprogrammed delays. But you are still going to have about a 
year plus for every single-judge case and somewhat longer for 
the panel cases.
    I will just make a note that I commented on the possibility 
of a commission to look into whether or not the Federal Circuit 
should still remain within the appellate review. And I will 
leave it at that, Mr. Chairman, except for questions.
    [The prepared statement of Judge Kasold appears on p. 49.]
    Mr. Runyan. Well, thank you very much. It is down to me and 
Ranking Member McNerney for questions, so. I see where you are 
talking about a new court. But as far as functionality, is the 
space you now have, does it work for you?
    Judge Kasold. Yes, sir. It does without the new judges. But 
I have programmed if we do have the funding this year, money 
for certain renovations to our current space. VA is supposed to 
move out of the building. We would then move into a good 
portion of the sixth floor. I would move some of our Central 
Legal Staff, if you will, down so that we could put the two new 
chambers on the secured top two floors. And so that type of 
construction, movement expenses, we would have to undertake 
with the additional chambers coming in. Short of that, yes sir. 
We have, we can perform our mission. The reason that we have a 
number of cases pending decision is because we are three judges 
down right now.
    Mr. Runyan. Yes. And nothing personal, but I think we would 
all love for you to have a very light caseload. That is the 
purpose of us really being here, and working towards that. But 
as we talked to the last panel, you deal with your Court on a 
daily basis. Where do you think you can find your efficiencies 
and your cost cutting? Because a lot of times we talk about 
them. We never grab hold of it and run with it. And you know, I 
had the example before. You start that process and it starts to 
turn other things up that, ``I never thought about that.'' And 
we know, again, the fiscal constraints we are in. And we have 
to do this for ourselves. It is not the nature of being in 
Washington, we always want more, we want more. And it is 
crucial at this time to find how we are going to create these 
efficiencies and holding ourselves accountable as heads of 
departments to make our offices, our people that work with us, 
our colleagues, run an efficient and an accountable process. 
Are there areas that you have looked into to try to accomplish 
some of this?
    Judge Kasold. Well the two unprogrammed delays that I 
mentioned are ones that I have identified and have tried to 
focus on. We have in the past 3 years, under the guidance of 
Chief Judge Greene, authorized this very extensive consultation 
process, conferencing process if you will. And it has been very 
successful with 50 percent of those cases, which is ultimately 
about a third of the cases that come to Court being remanded 
before they get judicial review. Beyond that, in all fairness, 
with the number of cases we have, we will not be able to dent 
any further without replacement of the judges. I think if we 
got at least one judge back, to bring us to seven, we could 
make some dent, now that we have identified these areas. But 
the fact of the matter is, there is a significant number of 
cases in the chambers.
    As far as costs, we did go through the budget this year. We 
do have some increases but some of that is identifying costs 
that have not been identified in the past, with the retirement 
fund for example. And the construction and moves that I 
identified; they were previously funded in 2009 but not spent 
because it was not done. So that is back on the agenda at this 
time.
    Mr. Runyan. You included in one of your operating expense 
line items ``other objects.'' I just want to know why the 
request includes a $2 million increase?
    Judge Kasold. That other objects does include $1 million in 
the retirement fund and that is a statutorily required funding 
amount. There is about $20 million in there. It's growth has 
been estimated on the standard estimate of 5 percent a year; it 
is invested in Treasuries. Five percent a year is $1 million. 
In reality, it has been earning .25 percent and every year we 
have been running short. So I put that up front. So that is an 
automatic, up front addition. There is somewhere in the 
neighborhood of $600,000, I believe, in all these relocation 
costs, the build-out of the chambers, and everything else. 
There is $400,000 associated with the 125 employees and the 
step increases, and some normal promotions that would take 
place. And so that is getting close to the $2 million. There is 
another $250,000 I believe for IT. And that is a normal, 
standard industry, 3-year replacement program on the computers. 
I can assure you, as we get there, if my IT staff tell us not 
to replace, we would not do it. But in a budgeting process that 
is 2 years out, they convinced me that that was worth putting 
in at this time.
    Mr. Runyan. Thank you. Ranking Member McNerney.
    Mr. McNerney. Thank you, Mr. Chairman.
    Judge Kasold. Thank you.
    Mr. McNerney. In your testimony you explain that there was 
a serious underestimation of the judges' retirement fund.
    Judge Kasold. Yes, sir.
    Mr. McNerney. Monies had to be taken from other programs. 
What were some of the other programs that were raided? That is 
not the right----
    Judge Kasold. We have been funded at 125 employees but we 
have not had the chambers. So personnel budget would be one 
area that it was taken from. This was not money that was needed 
anywhere else. It just happened that we had it left over.
    Mr. McNerney. Okay.
    Judge Kasold. So it was not a degradation.
    Mr. McNerney. What is the more significant cause of your 
backlog? Is it the facilities? Or is it the lack of the 
appointees?
    Judge Kasold. I think now it is the lack of appointees. 
About 6 months prior to a judge's retirement they actually go 
off the wheel (stop taking new cases) so that at the end they 
do not have cases just sitting in the chambers. Those cases, 
then, get spread among the remaining six judges. And at 200 
cases a year, you spread that out, you have another, what 35 
cases, or whatever it comes out to be, going to each of the 
other judges. There also is variation in how fast individual 
judges can decide cases. But overall the number of cases that 
the Senior Judges are in chambers, so those older cases that 
have been sitting in chambers are now being taken care of.
    That does create an unprogrammed delay, if you will, 
between the Central Legal Staff and the chambers. And there is 
only so much that you can get through. Once the parties get 
beyond that conferencing stage, if the two parties can't agree 
on how to handle the case, you are now into that dispute phase. 
And that takes the judge to make a determination.
    Mr. McNerney. Would you say, of the cases that are in front 
of your body, are those the result of just being hard cases? Or 
is there incompetence in a lot of them that have caused them to 
come up to you? Or what would you say is----
    Judge Kasold. I have to say first that I do not know how 
many of these cases result in an award when they go on back to 
VA. I did talk to Secretary Shinseki a year ago and I suggested 
that that be an area he might want to look at. It might be 
important to the Committee, for example. The case adjudication 
is done down below at VA. We are doing an appellate review of 
that process. So it is a review to ensure that the veteran was 
provided all of his rights, if you will. There are very few 
cases that get actually reversed by the court with an award. 
Because to do so we need to have all the evidence in the file, 
and have a clear conviction that it is wrong down below.
    About 70 percent, though, are remanded. And they are 
remanded for various reasons. The Board has a reasons and basis 
requirement, whereby they have to address all the favorable 
evidence. If some favorable evidence is in the record and they 
did not address it, it may not result in a change on remand but 
that has to be weighed by the Board in the first instance 
because they are doing a regular de novo, balancing review, and 
ours is a clear error review. You have a number of cases that 
are remanded because questions are left when you review the 
medical records and they were not explained by the Board. Or 
you cannot tell from the doctor's statement.
    So there are a number of cases like that. Again, I do not 
know how many result in an award versus a denial. The veteran 
may then be satisfied with the better explained denial, or he 
may come back on another appeal.
    Mr. McNerney. Well, one last question.
    Judge Kasold. Yes, sir?
    Mr. McNerney. This may be a softball, actually. What do you 
think are the most pressing needs of the Court? And do you have 
adequate funding in the 2012 budget to meet those needs?
    Judge Kasold. The most pressing need is the appointment 
three judges and their staff. I believe if we get them, we can 
take care of those unprogrammed delays that I have mentioned. 
It will take some time, because it is a tremendous caseload to 
have to get through and it is 6 months to a year for judges to 
become fully acclimated to the whole judicial review process. 
But I do believe we could take care of that if they were 
provided. As far as funding, yes, the budget that we requested 
would fully fund that. And then we have the Courthouse and that 
is a bigger decision, I know.
    Mr. McNerney. What is the hold up on the appointment?
    Judge Kasold. I have spoken to White House staff. And I 
believe that the nomination, the names going to the President 
is very close. I am hopeful and believe that we will get 
nominations and very hopefully----
    Mr. McNerney. This year?
    Judge Kasold [continuing]. Confirmed this year.
    Mr. McNerney. Okay. Perhaps the Committee can tell the 
President in a kind of nonthreatening way that we need these 
appointments. I yield back.
    Judge Kasold. Thank you, sir.
    Mr. Runyan. Thank you. With that, do you have any further 
questions? Because I think in the interest of time, and trying 
to get everybody's statement heard, I think if we have any 
further questions we will submit them to you, and look forward 
to your responses. And with that, I thank you. Thank you for 
all you do for our veterans. You are excused.
    Judge Kasold. Thank you, Mr. Chairman, Ranking Member.
    Mr. Runyan. I would like to ask the members of the third 
panel to please come up?
    First we have the Honorable Max Cleland, Secretary of the 
American Battle Monuments Commission. Secretary Cleland, I want 
to extend a special welcome to you and thank you for your 
service to our country and your steadfast support of our 
veterans. It is truly an honor to have you here. Thank you.
    Next would be Mr. Ronald Walters, Director of the Office of 
Finance and Planning for the National Cemetery Administration. 
And finally, we will hear from Mr. Michael Walcoff, the Acting 
Under Secretary for Benefits of the Veterans Benefit 
Administration. Mr. Walcoff will be accompanied by Ms. Diana 
Rubens, the Deputy Under Secretary for Field Operations, and 
Mr. Jamie Manker, who is the Chief Financial Office (CFO) of 
the VBA. Welcome to each of you. And I will start with yielding 
Secretary Cleland 5 minutes.

  STATEMENTS OF HON. MAX CLELAND, SECRETARY, AMERICAN BATTLE 
 MONUMENTS COMMISSION; RONALD E. WALTERS, ACTING DEPUTY UNDER 
       SECRETARY FOR MEMORIAL AFFAIRS, NATIONAL CEMETERY 
 ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; MICHAEL 
WALCOFF, ACTING UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS 
     ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
ACCOMPANIED BY JAMIE MANKER, CHIEF FINANCIAL OFFICER, VETERANS 
                    BENEFITS ADMINISTRATION,
   U.S. DEPARTMENT OF VETERANS AFFAIRS; AND DIANA M. RUBENS, 
DEPUTY UNDER SECRETARY FOR FIELD OPERATIONS, VETERANS BENEFITS 
      ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS

                    STATEMENT OF MAX CLELAND

    Secretary Cleland. Thank you very much, Mr. Chairman. I am 
sorry we did not get a chance to meet before now, otherwise I 
would have tried to convince you to submit yourself to the NFL 
Draft and become an offensive lineman for the Falcons. We need 
you.
    Mr. Runyan. Years ago they had the opportunity and passed.
    Secretary Cleland. We blew it. The American Battle 
Monuments Commission is a unique agency in the Federal 
Government. We are the overseas people, for one thing. We 
handle all the American cemeteries abroad, none in the United 
States. Secondly, we concentrate on our burials from veterans 
from World War I and World War II, that is it. We have an open 
cemetery in Panama but that is only because about eight times a 
year there are family members from the Panama Canal era that 
are buried there. But we are not like the VA, or the Army that 
runs Arlington, we do not actively bury people. We actually are 
more a monument and memorial entity.
    It is called the American Battle Monuments Commission, 
basically set up by General Pershing after World War I. We just 
went through losing the last American to serve in World War I. 
He was buried at Arlington just a few days ago. So for us we 
live in World War I. We live in World War II.
    We have 24 American cemeteries and 25 monuments in 14 
different Nations. We just had to pull out our superintendent 
and his family in the dark of night from Tunisia when it kind 
of went up in riots. But he is back there now. But basically we 
are an overseas agency. We are focused on World War I and World 
War II.
    In terms of burials, we have 125,000 Americans buried 
overseas that in effect never made it back. After World War I 
and after World War II, families were given the irrevocable 
choice: bring your loved one home, which the United States 
Government would do in World War I and World War II, or as in 
the famous words of Teddy Roosevelt when his son went down in 
an aircraft in World War I, leave him where he fell. So 40 
percent of the time the families said leave them where they 
fell. So the United States Government runs these cemeteries 
abroad from World War I and World War II.
    In terms of managing our resources, we have about 409 
authorized Full-Time Equivalent (FTE). We have lived under that 
ceiling for a long time. We do not necessarily need more people 
to do our work. As a matter of fact when I got there on June 3, 
2009, we began a process of tightening up and making more 
rational the operation. So we let go a number of consultants, a 
number of part-time employees, and we closed down our office in 
Rome. That saved us close to $2 million. And on a $61 million 
budget, you know, for us that is pretty substantial.
    For fiscal year 2012, we are actually requesting a little 
bit under the fiscal year 2010 authorization. The budget 
process has tightened up on us with a $1.5 million reduction. 
So we are somewhere between where we were in 2009 and 2010 
fiscal years in terms of our budget. We can sustain that for a 
while.
    So we feel like we have tightened up. That we have made 
more rational our organization. That we have consolidated 
offices so they need not be duplicative of what we have going 
on. And so we think we are in pretty good shape. Our budget 
request this year will be for about $61 million and we will 
maintain our levels. Thank you very much, Mr. Chairman.
    [The prepared statement of Secretary Cleland appears on p. 
53.]
    Mr. Runyan. Thank you. Mr. Walters.

                 STATEMENT OF RONALD E. WALTERS

    Mr. Walters. Thank you very much, Mr. Chairman. Chairman 
Runyan, Ranking Member McNerney, and Members of the 
Subcommittee. I am pleased to be here today to provide an 
overview of the fiscal year 2012 budget for the National 
Cemetery Administration.
    NCA is responsible within the Department of Veterans 
Affairs for administering burial and memorial programs to meet 
the needs of veterans and their survivors. Our mission is a 
noble one, that of honoring veterans and their families with 
final resting places that commemorate their sacrifice and 
service to our Nation. Our National Cemeteries are the final 
milestone along the continuum of care VA provides to those who 
have served. Our specific responsibilities include management 
of 131 National Cemeteries; furnishing headstones, markers, and 
medallions for the graves of veterans around the world; 
administering the Presidential Memorial Certificate Program; 
and overseeing the Federal grants program for construction of 
State and tribal veterans cemeteries.
    VA's burial memorial programs are funded from both 
discretionary and mandatory accounts. I will focus my comments 
today on NCA's discretionary funding, specifically for 
operations and maintenance of our National Cemeteries, major 
and minor construction, and the Veterans Cemetery Grants 
Program.
    The President's 2012 budget request includes a total of 
$376 million for these programs. Our operations and maintenance 
request for $250 million sustains significant investments in 
National Cemeteries provided by the President and Congress in 
the past several years. The base budget includes nearly $33 
million for gravesite repairs as part of our ongoing effort to 
maintain National Cemeteries as National Shrines. Our request 
also includes $3 million to continue NCA's commitment to energy 
efficiency and renewable energy initiatives, such as use of 
wind turbines and solar panel systems. The budget request will 
permit NCA to hire an additional 10 FTE to address expected 
increases in burials and to provide contract funding for 
additional maintenance requirements.
    VA's 2012 major construction request of $38.2 million for 
NCA will allow us to address our top construction priority, 
keeping existing National Cemeteries open. This includes a 
gravesite expansion project at the National Memorial Cemetery 
of the Pacific in Hawaii.
    The Secretary of Veterans Affairs recently approved new 
burial policies which changed the threshold veteran population 
required to construct a new National Cemetery to 80,000 within 
75 miles of a proposed site. This change will result in the 
construction of new National Cemeteries in Florida, Nebraska, 
New York, and Colorado. NCA is actively searching for land at 
these locations and plans to request related construction 
funding in future budgets.
    Included in VA's 2012 minor construction request is $41.6 
million for gravesite expansion, cemetery infrastructure 
repairs, and the construction of a columbarium-only satellite 
cemetery in the Chicago area as part of an urban initiative 
associated with the new burial policies.
    Finally, the 2012 request provides $46 million for the 
Veterans Cemetery Grants Program. These funds will allow NCA to 
address the highest priority projects, including those 
submitted by tribal governments. VA will also continue to offer 
operating grants to assist States in achieving and maintaining 
standards of appearance commensurate with National Shrine 
status.
    Mr. Chairman, the 2012 budget request builds upon NCA's 
previous success. In 2012, NCA will provide nearly 90 percent 
of the veteran population, about 20 million veterans, with a 
burial option in a State or National Veterans Cemetery within 
75 miles of their homes. We expect to inter more than 115,000 
veterans and family Members next year, maintain over 8,700 
developed acres, and provide perpetual care for 3.2 million 
gravesites. NCA expects to maintain unsurpassed levels of 
customer satisfaction in 2012. We achieved the top rating in 
the Nation four consecutive times over the past decade on the 
prestigious American Customer Satisfaction Index sponsored by 
the University of Michigan. Our own internal surveys confirm 
this exceptional level of performance. For 2010, 98 percent of 
survey respondents rated the appearance of National Cemeteries 
as excellent; 95 percent rated the quality of service as 
excellent. Our 2012 targets for these categories are 99 percent 
and 98 percent respectively.
    Mr. Chairman, this concludes my remarks. I appreciate the 
opportunity to come before you today. We are grateful for your 
support and the support of the Subcommittee. I would be happy 
to answer any questions.
    [The prepared statement of Mr. Walters appears on p. 56.]
    Mr. Runyan. Thank you. Mr. Walcoff.

                  STATEMENT OF MICHAEL WALCOFF

    Mr. Walcoff. Chairman Runyan, Ranking Member McNerney, 
thank you for the opportunity to appear before you today to 
discuss the Veterans Benefits Administration 2012 budget 
request. We look forward to continuing our strong collaboration 
and partnership with this Subcommittee to enhance the delivery 
of benefits and services to our Nation's veterans. I am 
accompanied today by Mr. Jamie Manker, our CFO; Ms. Diana 
Rubens, the Deputy Under Secretary for Field Operations; and 
also sitting in the first row, Mr. Tom Pamperin, the Deputy 
Under Secretary for Disability Assistance.
    VBA provides an integrated program of benefits and services 
to veterans, their families, and survivors. Of the total VA 
budget request for fiscal year 2012 of $132 billion, 53 
percent, or $70.3 billion, is designated for VBA to pay 
benefits to veterans and their families. The Disability 
Compensation Program is by far our largest benefit program. In 
2012, funding for compensation is estimated at nearly $52.9 
billion. An estimated four million veterans and survivors will 
receive compensation in 2012.
    Additionally, VA will provide an estimated $4.9 billion in 
income-based pension benefits to needy wartime veterans and 
their survivors. More than 507,000 veterans and survivors will 
receive pension benefits in 2012.
    VBA's compensation workload continues to dramatically 
increase due to the unprecedented volume of disability claims 
being filed. In 2009, for the first time, we received over 1 
million disability claims, during the course of a single year. 
During 2010, we received approximately 1.2 million disability 
claims, nearly an 18 percent increase. With the increasing 
claims receipts we are also providing historic numbers of 
veterans with decisions on their claims. In fiscal year 2010, 
we completed nearly 1.1 million rating claims. Claim receipts 
are expected to approach 1.5 million in 2011. This includes 
nearly 230,000 claims expected as a result of the approval of 
three new Agent Orange presumptive conditions. The majority of 
Agent Orange claims will be received in 2011, so receipts in 
2012 are projected to be less than the receipts in 2011, or 
approximately 1.3 million.
    Many of the over 200,000 Agent Orange claims we will 
process this year are covered by the Nehmer settlement in that 
they were previously denied. These claims are very complex and 
take much more than twice the resource levels and time to 
complete, which is significantly slowing production this year.
    However, the impact is only in the near term as we work 
through the Agent Orange claims. Our claims transformation plan 
includes new businesses process and technologies that will 
enable us to increase production in 2012. We project decision 
output to outpace claims receipts beginning in 2013, allowing 
us to stay on track for achieving our 2015 goals.
    We administer the pension programs through three pension 
management centers in Philadelphia, Milwaukee, and St. Paul 
with a workforce of about 1,000 or so employees. Consolidation 
of the pension programs has enabled VA to achieve a 96 percent 
accuracy level in 2010.
    In 2010, VBA completed the consolidation of all survivors 
claims to the pension management centers to focus expertise on 
this vital area and achieve similar performance improvements. 
VA's fiduciary program supervises more than 110,000 
Compensation and Pension beneficiaries with a combined estate 
value in excess of $3.2 billion. Our fiduciary responsibilities 
include prevention, identification, and investigation of misuse 
of benefits. We have taken a number of steps to improve the 
fiduciary program, including hiring a new management staff, 
clarifying procedures, and deploying standardized training. We 
consolidated fiduciary activities for the Western Area Regional 
Offices, establishing a fiduciary hub in the Salt Lake City 
Regional Office as a pilot initiative. We are planning on 
expanding that hub to the Southern Area this year.
    Our funding request for 2012 is essential to meeting the 
increasing Compensation and Pension workload and putting us on 
a path to achieving our ultimate goal of having no veteran wait 
more than 125 days to receive a quality decision on a claim. 
And our definition of a quality decision would be 98 percent 
accuracy. The budget supports ongoing and new initiatives to 
improve quality and reduce disability claims processing time, 
including developing and implementation of redesigned business 
processes. Our request funds 14,320 direct FTE for the 
Compensation and Pension programs. We increased our workforce 
in 2010 by converting 2,400 temporary employees funded through 
the American Recovery and Reinvestment Act (ARRA) to full-time 
employees and hiring an additional 600 new employees.
    However, we recognize that continuing to increase our FTE 
levels is not a sufficient solution. The need to better serve 
our veterans requires bold and comprehensive business process 
changes to transform VBA into a high performing 21st century 
organization that provides the best services available to our 
Nation's veterans, survivors, and their families. This is 
exactly the effort currently underway in VBA.
    Our Claims Transformation Plan is a series of business 
process and technology centered improvements designed to 
eliminate the claims backlog. We are changing our culture to 
one that is centered on accountability to and advocacy for 
veterans. We are reviewing and reengineering our business 
processes to collaborate with both internal and external 
stakeholders, including the veterans service organizations and 
Congressional partners to constantly improve our claims process 
using best practices and ideas. We are relying heavily on 
technology and infrastructure by employing leading edge, 
powerful, 21st century IT solutions to create a smart, 
paperless claims system, which simplifies and improves claims 
processing for timely and accurate decisions the first time.
    The cornerstone of our Claims Transformation Strategy is 
the Veterans Benefits Management System, or VBMS. VBMS 
integrates our business transformation strategy with its Web-
based, 21st century paperless processing system. By eliminating 
our dependence on paper, VBA will be better positioned to make 
use of available resources regardless of geographical location. 
In 2011, we are conducting two of three phased development 
programs to test VBMS. Each phase will depend on the success of 
the first phase by adding additional software components. VBMS 
phase one is now being field tested in the Providence Regional 
Office. Phases two and three will be undertaken at two 
additional regional offices, and deployment of the system to 
all regional offices begins in 2012.
    We are also focusing on improving our client interactions. 
The Veterans Relationship Management, or VRM, initiative 
provides veterans with direct, easy, and secure access to 
information on the full range of VA programs through a 
multichannel program that includes phone and Web services. VRM 
will provide employees with up to date tools to better serve 
our veterans clients and empower veterans through enhanced 
self-service capabilities to the eBenefits portal.
    The Secretary recently approved a new organizational 
structure for VBA headquarters. The new structure realigns the 
responsibilities for VBA's major benefit programs currently 
assigned to the Associate Deputy Under Secretary for Policy and 
Program Management under two distinct positions: the Deputy 
Under Secretary for Economic Opportunity and the Deputy Under 
Secretary for Disability Maintenance. Under this new structure 
we are separating the fiduciary and pension program functions 
from the compensation program, creating a separate pension and 
fiduciary service. This will allow us to increase oversight and 
management attention to our fiduciary and pension programs 
while also allowing us to give a greater focus to the complex 
and challenging workload and policy issues in our compensation 
program.
    Mr. Chairman and Members of the Subcommittee, this 
concludes my remarks. I will be happy to respond to any 
questions.
    [The prepared statement of Mr. Walcoff appears on p. 58.]
    Mr. Runyan. Thank you, Mr. Walcoff. Mr. Manker, Ms. Rubens, 
do not have anything? I wanted to start off the questioning 
with Secretary Cleland. First of all I want to commend you for 
the work you are doing. There are not many people that come 
before us and do not ask for more money. It is a tribute to 
your leadership and who you are. But as your testimony states, 
you reduced the maintenance and infrastructure account by $3.6 
million. This cut, is this going to affect your mission of 
maintaining our National Shrines around the globe in the long 
term?
    Secretary Cleland. We can do this for a while, Mr. 
Chairman. But we cannot do it for the long term. So we are 
responding to the impetus by the American people and the 
Congress to tighten up what we do, to be more accountable, and 
to watch our dollars. So as I mentioned, we eliminated about $2 
million up front. That has allowed us some flexibility. And 
with our realignment of responsibility we have given the Paris 
office the responsibility for managing the day-to-day 
operations worldwide. We have some economies of scale there. So 
we can do this for a while. But we could not live forever with, 
under the 2010 fiscal year budget.
    So we will be okay. We will be able to do our maintenance 
and infrastructure programs because we are better organized and 
more accountable for what we do. And the decisions are left for 
maintenance and infrastructure up to Paris to do the day-to-day 
maintenance and we are able to do that. But, you know, 2 or 3 
years down the road we might be singing a little bit different 
tune. But for now we are okay in terms of maintenance and 
infrastructure.
    Mr. Runyan. Thank you. But I think you will probably agree 
with this statement when you say, ``We are okay.'' I worry 
sometimes when we move forward that, you know, as conditions 
decline we create a bigger problem, if you know where I am 
going with that. So it is----
    Secretary Cleland. Mr. Chairman, I do know where you are 
going. As far as I know, we are not really postponing 
maintenance and infrastructure improvements. We have some 
projects underway. But we cannot just stay where we are 
forever. We are making adjustments. We are looking at whether 
or not day to day we should bring on or increase some travel or 
whether or not we ought to decrease some travel. I think we 
have decreased some travel. We have tightened up there. There 
are other areas of the budget where we are looking to tighten 
up so that we can continue our maintenance and infrastructure 
program. We will not let the shrines of American life 
deteriorate. That is our commitment. We will not let that 
happen. And were it to begin to happen, I would scream bloody 
murder to your Committee and to others. But for this year's 
budget, for coming up on what, on the next year and a half or 
so calendar wise, we should be okay.
    Mr. Runyan. Thank you very much and I appreciate your 
testimony.
    Secretary Cleland. Yes, sir.
    Mr. Runyan. Mr. Walters, I had a question, the reasoning of 
your increase of the appropriations for headquarters staff 
operations by $327,000 from fiscal year 2010 to fiscal year 
2012. Why is there that big an increase in the request?
    Mr. Walters. Well usually, sir, the comparison is to the 
2011 level. The convention for this year's budget was compared 
to the 2010 level. The increase reflects primarily changes in 
grades and step increases for support staff in the field and 
Central Office. These adjustments would account for the 
increase.
    Mr. Runyan. And to the same tone there is an increase in 
employee travel budget by $191,000 in that same time period.
    Mr. Walters. Yes, sir. Our travel increases are necessary 
because we have a very large scale operation that encompasses 
39 States, as well as Puerto Rico. We have numerous 
responsibilities that require our Central Office and field 
personnel in our regional offices to travel to cemeteries for 
oversight, for example. We have also our annual conference and 
training sessions where we bring in managers, usually once a 
year, to share best practices and to review our operational 
standards and measures. The comparison to 2010 reflects an 
inflationary increase additional travel requirements.
    Mr. Runyan. Ranking Member McNerney, I yield you 5 minutes.
    Mr. McNerney. Mr. Cleland, I had the honor of meeting you 
shortly after I was elected in 2006 and I certainly appreciate 
your service to the country and the various ways that you have 
done that. Now I know that in the U.S. Government 
Accountability Office (GAO) report, in 2010, indicated some 
serious concerns about the accounting. Does your budget for 
2012 give you the leeway to address those in a meaningful way, 
those concerns?
    Secretary Cleland. Yes, sir. We, in fiscal year 2010, I had 
just gotten there. I brought on the new Chief Financial 
Officer. And we got a substantially better GAO report this time 
than last time. So we got a clean bill of health in fiscal year 
2010. But there are some things more and more now that are 
administrative in nature that we can clean up.
    So we got a clean bill of health the last two GAO reports, 
and each report successively has seen an improvement in our 
operation. However, we are not perfect. And the discrepancies 
that the GAO is finding now are more administrative in nature 
than operational. So we are all right. We are okay. And we are 
in good synch with GAO. As a matter of fact, our Chief 
Financial Officer used to work with GAO. So we feel very much 
that we are getting better and better and that we are able to 
address their concerns.
    Mr. McNerney. Thank you. Mr. Walcoff, I am really glad I 
got to hear your testimony for two reasons. Or for one reason, 
really. I saw a lot of urgency both in your words and in your 
voice. So I think you are clearly taking the backlog seriously 
and you are taking serious steps to address that. I certainly 
appreciate that. Do you feel like your budget is adequate to 
meet the needs that are in front of you in terms of processing 
these claims?
    Mr. Walcoff. Sir, I will tell you that I do believe the 
budget is adequate. There are two items in there that I want to 
particularly talk about. One is the budget as it applies to the 
VBMS initiative. It is $170 million in there for VBMS. And I 
have to tell you that, as you heard my testimony and I think 
that some of the earlier witnesses referred to this, this 
really is to me the key to getting us to get that wall that is 
in front of us that the Chairman referred to and finding the 
place that really is a vulnerable point, and really being able 
to make the progress.
    Congress has been very generous with us over the last 
couple years. And I think it is well known that we have added 
several thousand people. And what is happening is, by having 
those people we are doing more work every year. The problem is 
that as fast as we increase staffing, the receipts increase 
even faster. I mentioned we went up 18 percent last year. The 
year before that we went up 14 percent. So that is 2 years, 14 
percent and 18 percent increases in receipts.
    What I believe is that by continuing to just add people we 
will never be able to catch up with what is coming in. And the 
truth is we need something that is going to blast us, in 
effect, way over the current pace so that we are increasing 
output to the point where we can overtake this backlog. And 
that to me is the technology.
    The technology will allow us not only to do more work, 
which obviously is important, but will also address some of the 
issues involving quality. What I see in this new technology is 
a rules based system that is going to guide our employees 
through the process to the point where they are making correct 
decisions going through the process. Right now they may be 
choosing the wrong path to go down when they are following 
through. We are going to have a rules based system that is 
going to guide them to the right answer and make it so that it 
is much more difficult to make a wrong decision. That is the 
way I hope this technology works. So I would argue that I think 
that is important.
    The other thing in the budget is something called the 
Veterans Relationships Management initiative, or VRM.
    Mr. McNerney. Mm-hmm.
    Mr. Walcoff. There is $128 million in there for that. It is 
also an IT initiative. And this initiative deals with the way 
veterans contact us. Right now if a veteran wants to contact us 
they basically have a choice of calling one of our call centers 
from 8:00 to 5:00 every day. If they want to call us at any 
other time they have to wait until the next day. We need to set 
a system up where we are available to veterans whenever and 
however they want to get in touch with us.
    Mr. McNerney. Yes.
    Mr. Walcoff. The fact is many veterans want to get in touch 
with us, you know, at 11:00 at night, getting on the computer, 
and getting in and saying, ``I want to change my address. I am 
going to do it myself.'' Or, ``I want to change my direct 
deposit account. I can do it myself.'' Or, ``I want to just see 
the status of my claim.'' They can do it themselves. Right now 
each one of those things requires a phone call. We have about 
800 people on the phones right now. If you look at savings, one 
of the things that I see----
    Mr. McNerney. You are not outsourcing those phone call 
jobs, right?
    Mr. Walcoff. Pardon me?
    Mr. McNerney. You are not outsourcing those phone call----
    Mr. Walcoff. No, we are not. What we are trying to do is 
make it easier for the veteran so he does not have to call 
during our office hours and possibly have to wait to get to 
somebody, possibly occasionally get a busy signal. Why not 
allow him to be able to do it through self-service? And that 
frees up our employees to be used for other purposes.
    Mr. McNerney. Thank you. Does the Chairman intend to have 
another round of questions?
    Mr. Runyan. You can continue.
    Mr. McNerney. Thank you.
    Mr. Runyan. Go ahead.
    Mr. McNerney. I have one other question. How many veterans 
have used the Fully Developed Claims initiative?
    Mr. Walcoff. We are going to have to get back to you. I can 
tell you that the number has been disappointing in terms of the 
response. I agree with the statement of the DAV representative 
that this is a very promising program. What it basically says 
is that if a veteran submits all the evidence that we need to 
process the claim that we will be able to guarantee him that we 
will get it processed within a certain number of days. If the 
claim has all the medical evidence then we can probably process 
it in around 30 days. It would take a little bit more if we 
have to order an exam.
    We find that this has been very successful in the places 
that we have used it. But what we have not been able to do is 
get enough support, get enough people participating in it. And 
one of the things that we are trying right now is advertising, 
actual media advertising in two markets, Los Angeles and Waco, 
Texas, to see if we can get veterans interested in this. We 
believe it is to their advantage, and frankly it is to our 
advantage also, if people use this program. So we are trying to 
get interest involved in it. We have been working with the 
service organizations and we will continue to work with them to 
the point where hopefully that will catch on and veterans will 
begin using that program.
    [The VA subsequently provided the following information:]

          Since the pilot started in June 2010, 5,193 claims have been 
        completed through the Fully Developed Claims programs as of 
        March 9, 2011.

    Mr. McNerney. Okay, thank you. One more question?
    Mr. Runyan. Sure.
    Mr. McNerney. How successful has the new Disability 
Benefits Questionnaire been in gathering, you know, useful 
information?
    Mr. Walcoff. It is a great question. It is very similar to 
the last one. This is another program that we think is really 
going to have a major impact on our ability to process claims 
more quickly and also help our quality. Right now we have three 
Disability Benefit Questionnaires that are in use, and they are 
for the three presumptive conditions that were recently added 
under the Agent Orange legislation. We are going to have 76 
total when they are finished, but they have to go through the 
Office of Management and Budget (OMB) because they wind up 
being considered like a survey. It is a form so it has to be 
approved by OMB. We have an emergency approval for the three 
because of the Agent Orange cases coming in.
    Again, there are so many advantages to this. We have often 
heard from veterans, ``Why will you not let me go to my private 
doctor?'' That is a good question. What happens often is that 
they will go to their private physician. The private physician 
will examine them, send the information in to us, but 
unfortunately it does not have the information we need to rate 
the case so then we have to go out and set up an exam with the 
VHA. What this does, these templates, these questionnaires are 
designed to specifically have the information that we need to 
rate the case so that if a veteran goes to his private 
physician and has it filled out, we know that is going to be 
adequate for us to rate the case. And the best thing is that it 
is faster for the veteran and it makes it so that we do not 
have to give VHA another exam to do which, with all the cases 
we have coming in, they are getting a little bit backed up in 
their exams. And this lightens the load a little bit on them. 
So we think it is, again, a win-win for veterans and for us. 
The challenge has been getting veterans to use it. And----
    Mr. McNerney. That is a challenge. How do we get, how do we 
get veterans aware of these tools that are now becoming 
available? That is a challenge for us and it is a challenge for 
the Veterans Administration. Thank you; I am going to yield 
back.
    Mr. Runyan. Very good timing. I just had one question. Mr. 
Walcoff, we kind of talked about it a little bit throughout the 
other panels. We realize the end game is an electronic system. 
But in the same light, the people that we have, it typically 
takes 2 years to get them up to speed to be able to do their 
job. What are we going to do in the short term to facilitate us 
getting through this backlog?
    Mr. Walcoff. Certainly having VBMS implemented next year is 
going to be a start. But I agree with you. We cannot say we are 
going to sit here and do nothing until the end of the year 2012 
and then we will start working on these claims. I think some of 
the things that we are doing or some of the initiatives that we 
have talked about here, the Fully Developed Claim, the 
Disability Benefit Questionnaires, and we have some of what we 
call calculators. These are applications that have been 
developed by some of our employees that will enable them to 
process claims faster. There is a recent application that was 
developed that helps us on hearing loss claims. It saves about 
20 minutes on every claim that we do for hearing loss. These 
are the kinds of things that we are trying to implement and get 
veterans to participate in that will absolutely help us process 
claims faster.
    The one thing that I want to make sure of is that we do 
not, as has been said here, that we do not sacrifice quality in 
the name of speed. Producing more claims that are incorrect is 
not the answer. You know? If we are going to produce more 
claims we have to make sure that they are correct. And that is 
something that myself and everybody who has testified before I 
think are on the same page on.
    Mr. Runyan. Thank you. On behalf of the Subcommittee I want 
to thank each of you for your testimony. I look forward to 
working with you in the future. We have a wide range of 
challenges, as we have seen today, facing our Nation and our 
veterans. And these discussions are the first step, but we 
really do have to work to solve these problems. Mr. McNerney, 
would you like to make any closing remarks?
    Mr. McNerney. I just want to thank you, the witnesses. And 
I agree with the Chairman, we have a lot of challenges. But 
there is a lot of optimism from Mr. Walz's statement, and Mr. 
Barrow's, and mine, and the Chairman's. We clearly want to 
solve this problem and we want to work together. I hear some 
good things out there but we are going to keep our eye on you. 
So thank you for coming today.
    Mr. Runyan. Based on what we have heard today, there is no 
small amount of work to be done. I repeat my earlier desire to 
work with the Members on both sides of the aisle to ensure 
America's veterans receive the benefits they have earned in a 
timely and accurate manner. I ask unanimous consent of all 
Members that they have 5 legislative days to revise and extend 
their remarks and include extraneous material. Hearing no 
objection, so ordered. I thank the Members for their attendance 
today and this hearing is now adjourned.
    [Whereupon, at 2:58 p.m., the Subcommittee was adjourned.]



                            A P P E N D I X

                              ----------                              

            Prepared Statement of Hon. Jon Runyan, Chairman,
       Subcommittee on Disability Assistance and Memorial Affairs

    Good afternoon. I want to welcome everyone to the first hearing of 
the Subcommittee on Disability Assistance and Memorial Affairs for the 
112th Congress. Before we begin, I would like to extend a warm welcome 
to all of our members and especially to Ranking Member McNerney. Mr. 
McNerney has been on the Committee on Veterans' Affairs since he came 
to Congress in 2007 and he has proven himself to be a strong advocate 
for veterans and their families. I congratulate him on his appointment 
as this Subcommittee's Ranking Member.
    It is my intention for this Subcommittee to continue its tradition 
of bipartisan communication and collaboration and I look forward to 
working with all Members in the months ahead.
    We are here today to examine the FY 2012 budget for the Veterans 
Benefit Administration, National Cemetery Administration, and Related 
Agencies.
    It is no secret that veterans are facing difficult times and we 
must do everything we can to ensure that programs and benefits 
administered by the Department of Veterans Affairs are being done as 
efficiently and effectively as possible.
    The elephant in the room, as everyone knows, is the growing size of 
the backlog of claims for disability benefits. Since President Obama 
has taken office, the backlog of disability claims has grown by 103 
percent, and VA's budget projects that the average days to complete a 
claim will rise from 165 days in FY 2010 to 230 days in FY 2012.
    This increase and the continued low quality rating is unacceptable 
to me, I know it is unacceptable to Secretary Shinseki, and most of all 
it is unacceptable to our Nation's heroes.
    I am not here to point fingers; however, it is imperative that VA 
improve accuracy and timeliness in this area. Congress has provided 
large sums of money to hire additional claims workers over the past few 
years, but this is clearly not making a big enough dent.
    I am encouraged to find that resources were allocated in the VA's 
budget request for final development and implementation of the Veterans 
Benefit Management System (VBMS), which should bring VA into the 21st 
century with a paperless claims processing system.
    However, this new system is still in the testing stage and is years 
away from full implementation. While VBMS should bring substantial 
improvements to the claims processing system, it is not a silver bullet 
that can singlehandedly end the backlog once and for all. I believe 
that the only way to truly address this problem is to facilitate a 
cultural shift embracing greater accountability and innovation at VBA.
    For too long VA has focused on quantity at the expense of quality--
this must end.
    The culture of greater accountability and innovation must be 
embraced and practiced by all at VA from the most junior file clerk all 
the way up to Secretary Shinseki himself. It will be this Committee's 
job in providing oversight to ensure that greater accountability is 
happening in every corner of the VA, from the VBA headquarters, to the 
regional offices, and throughout the Board and the Court of Appeals for 
Veterans' Claims as well. This Committee will also pursue policy and 
legislation to help develop and foster a new climate of innovation and 
accountability at the VA.
    I also want to briefly comment that while they don't seem to have 
as many challenges as the Court and VBA, we will also be looking at the 
budgets of the ABMC and NCA and I look forward to hearing from them on 
ways they intend to reduce costs and improve performance.
    I appreciate everyone's attendance at this hearing and I would now 
call on the Ranking Member for his opening statement.

                                 
     Prepared Statement of Hon. Jerry McNerney, Ranking Democratic
   Member, Subcommittee on Disability Assistance and Memorial Affairs

    Thank you, Mr. Chairman.
    I would like to thank you for holding today's hearing. The goal of 
today's hearing is to examine the various FY 2012 budget requests of 
agencies over which the Disability Assistance and Memorial Affairs 
Subcommittee exercises jurisdiction, including the U.S. Department 
Veterans Affairs' Veterans Benefits Administration (VBA) and National 
Cemetery Administration (NCA); the Court of Appeals for Veterans Claims 
(CAVC); and the American Battle Monuments Commission (ABMC).
    These organizations oversee many major benefits, services and 
protections for our Nation's veterans, their families, and survivors--
ranging from providing compensation, pension and burial benefits to 
ensuring appellate rights and maintaining our National Shrine 
requirements both here and abroad. I look forward to hearing how these 
benefits and services will be administered with the optimal levels of 
efficiency and effectiveness with the new budget request.
    Today's hearing, our Subcommittee's first of the 112th Congress, is 
an important one. As all of you know, Congress is working hard to 
balance our budget and reduce the deficit while at the same time 
provide earned and needed benefits to veterans and their families.
    Over the past 4 years, Congress has provided more funding, 
resources and access to VA benefits and care in 4 years than in the 
previous 12 years. The overall FY 2012 VA budget request is $132.2 
billion. Of the total Department Budget request, $70.3 billion (53 
percent) is designated for mandatory funding to pay benefits to 
veterans, their families and survivors. This represents almost a 6 
percent increase from the 2011 level of $66 billion.
    This Administration has shown that supporting the troops and our 
veterans is not just a slogan--it's a mandate.
    Like many of the VSOs and other stakeholders who represent our 
veterans, one of my top priorities will be addressing the problems that 
continue to plague our disability claims process. It is a disgrace that 
we have such a large claims backlog, and it is an insult to the 
veterans who have served our Nation.
    There is no reason that we are still processing claims with 20th 
century technology. I agree with Secretary Shinseki that we need to get 
our claims process under control to deliver these benefits in a 21st 
century, paperless manner. Get the claim right the first time, and 
don't sacrifice quality for quantity.
    I think this budget reflects the work that VA is doing to move the 
claims process in the right direction. However, and I know that many of 
the VSOs agree with me, that while VBA is making some progress with its 
numerous claims processing initiatives and with the rollout of the 
Veterans Benefits Management System (VBMS), more needs to be done. I 
believe that the Virtual Lifetime electronic Record effort, along with 
other collaborations between DoD and VA will assist greatly with this 
21st century transformation. I hope that we can continue to exercise 
strenuous oversight over these areas to ensure that these ideas 
actually materialize and make a real difference for our veterans. We 
want to make sure that we do not confuse activity with progress.
    I also believe that we need to continue the reform work and 
oversight from the past 4 years, particularly as included in the claims 
process transformation roadmap laid out in P.L. 110-389, the Veterans' 
Benefits Improvement Act of 2008. It is going to take the sustained 
efforts of all stakeholders to figure out how to transform the VA's 
claims processing system. The way that we transformed the VHA in the 
1990's, with everyone at the table, with a focused commitment of 
leadership, vision, and resources--is the same way that we need to 
proceed to transform the VBA today. Our veterans, their families and 
survivors deserve no less.
    As the new Ranking Member of the Disability Assistance and Memorial 
Affairs Subcommittee, I look forward to working with Chairman Runyan 
and all of our stakeholders on these and other priorities.
    I would like to congratulate the Honorable Bruce E. Kasold for his 
ascendency to Chief Judge of the U.S. Court of Appeals for Veterans 
Claims. I also look forward to hearing from all of our witnesses 
today--your input is very critical to our oversight and informs our 
legislative efforts.
    Thank you Mr. Chairman, I yield back.

                                 
                     Prepared Statement of Jay Agg,
      National Communications Director, American Veterans (AMVETS)

    Chairman Runyan, Ranking Member McNerney and distinguished Members 
of the Subcommittee, on behalf of AMVETS, I would like to extend our 
gratitude for being given the opportunity to share with you our views 
and recommendations regarding the President's budget request for Fiscal 
Year 2012 for the Department of Veterans Affairs National Cemetery 
Administration and ways to improve accountability and efficiency 
regarding Compensation and Pension.
    AMVETS feels privileged in having been a leader, since 1944, in 
helping to preserve the freedoms secured by America's Armed Forces. 
Today our organization prides itself on continuing this tradition, as 
well as our undaunted dedication to ensuring that every past and 
present member of the Armed Forces receives all of their due 
entitlements. These individuals, who have devoted their entire lives to 
upholding our values and freedoms, deserve nothing less.
    By way of background, the stated mission of The National Cemetery 
Administration (NCA) is to honor veterans with final resting places in 
National Shrines and with lasting tributes that commemorate their 
service to our Nation. Their vision is to serve all veterans and their 
families with the utmost dignity, respect, and compassion and ensure 
that every National Cemetery will be a place that inspires visitors to 
understand and appreciate the service and sacrifice of our Nation's 
veterans. Furthermore, many States have established State veterans 
cemeteries. Eligibility is similar to that of the Department of 
Veterans Affairs (VA) National Cemeteries, but may include residency 
requirements. Even though they may have been established or improved 
with government funds through VA's State Cemetery Grants Program, State 
veterans cemeteries are run solely by the States.
    As of late 2010 the Department of Veterans Affairs National 
Cemetery Administration (NCA) maintained more than 3 million graves at 
131 National Cemeteries in 39 States and Puerto Rico. Of these 
cemeteries, 71 are open to all interment; 19 will accept only cremated 
remains and family members of those already interred; and 41 will only 
perform interments of family members in the same gravesite as a 
previously deceased family member.\1\
---------------------------------------------------------------------------
    \1\ http://www.cem.va.gov/cem/cems/listcem.asp
---------------------------------------------------------------------------
    VA estimates nearly 23 million veterans are living today. They 
include veterans from World Wars I and II, the Korean War, the Vietnam 
War, the Gulf War, the conflicts in Afghanistan and Iraq, the Global 
War on Terrorism, as well as peacetime veterans. With the anticipated 
opening of the newly planned National Cemeteries, annual interments are 
projected to increase to approximately 116,000 in 2013, and are 
projected to maintain that level through 2015.
    Historically, only 12 percent of veterans opt for burial in a State 
or National Cemetery, although these numbers are steadily rising.
    The most important obligation of the NCA is to honor the memory of 
America's brave men and women who served in the armed forces. 
Therefore, the purpose of these cemeteries as National Shrines is one 
of NCA's top priorities. Many of the individual cemeteries within the 
system are steeped in history and the monuments, markers, grounds and 
related memorial tributes represent the very foundation of the United 
States. With this understanding, the grounds, including monuments and 
individual sites of interment, represent a national treasure that must 
be protected, respected and cherished.
    Furthermore, AMVETS would like to acknowledge the dedication and 
commitment of the NCA staff who continue to provide the highest quality 
of service to veterans and their families. We call on the 
Administration and Congress to provide the resources needed to meet the 
changing and critical nature of NCA's mission and fulfill the Nation's 
commitment to all veterans who have served their country honorably and 
faithfully.
    In FY 2010, $250 million was appropriated for the operations and 
maintenance of NCA, with approximately $2 million in carryover. This 
constitutes less than 1 percent of the total Operations and Maintenance 
budget. NCA awarded 47 of its 50 planned minor construction projects, 
and the three unobligated projects will be obligated in FY 2011. The 
States Cemetery Grants Program awarded $48.5 million to fund 12 State 
Cemeteries.
    The NCA has done an exceptional job of providing burial options for 
90.5 percent of veterans who are part of the 170,000 veterans within a 
75-mile radius threshold model. The NCA realized that, without 
adjusting this model, only one area, St. Louis, would qualify for a 
cemetery within the next 5 years and that the five highest veteran 
population centers would never qualify.
    AMVETS is pleased, as were the 2011 Independent Budget (IB) 
authoring organizations, to see that the NCA has adjusted its model and 
will begin using the model of 80,000 veterans within a 75-mile radius 
for future cemetery placement. This modification will allow the NCA to 
continue to provide burial options for veterans who would otherwise be 
limited geographically for this benefit.
    As the author of the NCA section of the 2011 IB, we recommended an 
operations budget of $275 million for NCA for FY 2012 so it can meet 
the increasing demands of interments, gravesite maintenance and related 
essential elements of cemetery operations.
    This funding level will allow NCA to perform their five primary 
missions:

    1.  To inter, upon request, the remains of eligible veterans and 
family members and to permanently maintain gravesites.
    2.  To mark graves of eligible persons in national, State, or 
private cemeteries upon appropriate application.
    3.  To administer the State grant program in the establishment, 
expansion, or improvement of State veterans cemeteries.
    4.  To award a presidential certificate and furnish a United States 
flag to deceased veterans.
    5.  To maintain National Cemeteries as National Shrines sacred to 
the honor and memory of those interred or memorialized.

    However, NCA still continues to face serious challenges. Though 
there has been significant progress made over recent years, NCA is 
still struggling to remove decades of blemishes and scars from military 
burial grounds across the country. Visitors to National Cemeteries are 
still likely to encounter sunken graves, misaligned and dirty grave 
markers, deteriorating roads, spotty turf and other patches of decay 
that have been accumulating for decades. If NCA is to continue its 
commitment to ensure National Cemeteries remain dignified and 
respectful settings that honor deceased veterans and give evidence of 
the Nation's gratitude for their military service, there must be a 
comprehensive effort to greatly improve the condition, function, and 
appearance of all our National Cemeteries.
    Furthermore, to correct these problems NCA has worked tirelessly to 
improve the appearance of our National Cemeteries, investing $45 
million in the National Shrine Initiative in FY 2010 and approximately 
$25 million per year for the three previous years. NCA has done an 
outstanding job thus far in improving the appearance of our National 
Cemeteries, but we have a long way to go to get us where we need to be. 
In 2006 only 67 percent of headstones and markers in National 
Cemeteries were at the proper height and alignment. By 2009 proper 
height and alignment increased to 76 percent. NCA is on target to reach 
82 percent this fiscal year. However, AMVETS believes all of our 
National Cemeteries should be nothing less than perfect to properly 
memorialize the brave men and women who have served, and in many cases 
died for, this great Nation. This is why AMVETS made the recommendation 
in the FY 2012 IB for NCA's operations and maintenance budget be 
increased by $20 million per year until the operational standards and 
measures goals are reached and all of these scared grounds are properly 
maintained.
    In addition to the management of National Cemeteries, NCA is 
responsible for the Memorial Program Service. The Memorial Program 
Service provides lasting memorials for the graves of eligible veterans 
and honors their service through Presidential Memorial Certificates. 
Public Laws 107-103 and 107-330 allow for a headstone or marker for the 
graves of veterans buried in private cemeteries who died on or after 
September 11, 2001. Prior to this change, NCA could provide this 
service only to those buried in national or State Cemeteries or to 
unmarked graves in private cemeteries. Public Law 110-157 gives VA 
authority to provide a medallion to be attached to the headstone or 
marker of veterans who are buried in a private cemetery. This benefit 
is available to veterans in lieu of a government-furnished headstone or 
marker.
    Another critical part of NCA's mission is The State Cemeteries 
Grant Program (SCGP). SCGP complements NCA's mission to establish 
gravesites for veterans in areas where it cannot fully respond to the 
burial needs of veterans. Several incentives are in place to assist 
States in this effort. For example, NCA can provide up to 100 percent 
of the development cost for an approved cemetery project, including 
design, construction, and Administration. In addition, new equipment, 
such as mowers and backhoes, can be provided for new cemeteries.
    Since implemented in 1978, VA has more than doubled the available 
acreage and accommodated more than a 100-percent increase in burial 
through the SCGP. With the enactment of the Veterans Benefits 
Improvements Act of 1998, the NCA has been able to strengthen its 
partnership with States and increase burial service to veterans, 
especially those living in less densely populated areas not currently 
served by a National Cemetery. Currently there are 48 State and tribal 
government matching grants for cemetery projects.
    The SCGP currently is facing the challenge of meeting a growing 
interest and need from States to provide burial services in areas that 
are not currently served. Due to this overwhelming need for SCGP 
services AMVETS and our fellow IB partners recommend an operating 
budget of $51 for FY 2012 for SCGP. This funding level would allow SCGP 
to establish new State Cemeteries at their current rate that will 
provide burial options for veterans who live in regions that currently 
has no reasonably accessible State or National Cemeteries. AMVETS 
believes it is crucial to maintain and establish our State Cemeteries, 
so that veterans who may otherwise not have access to a National 
Cemetery still have the earned option of being buried with their fellow 
brothers and sisters at arms.
    Finally, another part of NCA's responsibilities is burial benefits. 
Burial allowance was first introduced in 1917 to prevent veterans from 
being buried in potter's fields. In 1923 the allowance was modified. 
The benefit was determined by a means test, and then in 1936 the means 
test was removed. In its early history the burial allowance was paid to 
all veterans, regardless of their service-connectivity of death. In 
1973 the allowance was modified to reflect the status of service-
connection. The plot allowance was introduced in 1973 as an attempt to 
provide a plot benefit for veterans who did not have reasonable access 
to a National Cemetery.
    In 1973, NCA established a burial allowance that provided partial 
reimbursements for eligible funeral and burial costs. The current 
payments are:

      $2,000 for burial expenses for service-connected (SC) 
death,
      $300 for non-service-connected (NSC) deaths, and
      $300 for plot allowance.

    At its inception, the payout covered 72 percent of the funeral cost 
for a service-connected (SC) death, 22 percent for a non-service-
connected death, and 54 percent of the burial plot cost. However, by 
2007 these benefits eroded from 72 percent to 23 percent, from 22 
percent to 4 percent and from 54 percent to 14 percent respectively. 
AMVETS strongly believes it is time to restore the original value of 
the benefit.
    And while AMVETS is pleased that the 111th Congress acted to 
improve the benefits, raising the plot allowance to $700 as of October 
1, 2011, we still believe that there are serious deficits in original 
value of the benefit when compared to the current value. While the cost 
of a funeral has increased by nearly 700 percent, the burial benefit 
has only increased by 250 percent.
    To restore both the burial allowance and plot allowance back to 
their 1973 values AMVETS recommends:

      SC benefit payment should be $6,160,
      NSC benefit value payment should be $1,918, and
      Plot allowance should increase to $1,150.

    Based on accessibility and the need to provide quality burial 
benefits, AMVETS and our IB partners recommend the following:

    1.  VA should separate burial benefits into two categories: 
veterans who live inside the VA accessibility threshold model and those 
who live outside the threshold.
    2.  For veterans who live outside the threshold, the SC burial 
benefit should be increased to $6,160, NSC veteran's burial benefit 
should be increased to $1,918, and plot allowance should increase to 
$1,150 to match the original value of the benefit.
    3.  For veterans who live within reasonable accessibility to a 
State or National Cemetery that is able to accommodate burial needs, 
but the veteran would rather be buried in a private cemetery, the 
burial benefit should be adjusted. These veterans' burial benefits will 
be based on the average cost for VA to conduct a funeral.
    4.  The benefit for a SC burial should be $2,793, the amount 
provided for a NSC burial should be $854, and the plot allowance should 
be $1,150. This will provide a burial benefit at equal percentages, but 
based on the average cost for a VA funeral and not on the private 
funeral cost that will be provided for those veterans who do not have 
access to a State or National Cemetery.
    5.  In addition to the recommendations we have mentioned, AMVETS 
also believes that Congress should enact legislation to adjust burial 
benefits to accurately reflect inflation annually.

    AMVETS calls upon the Administration and Congress to provide the 
resources required to meet the critical nature of the NCA mission and 
fulfill the Nation's commitment to all veterans who have served their 
country so honorably and faithfully.
    NCA honors veterans with a final resting place that commemorates 
their service to this Nation. More than three million servicemembers 
who died in every war and conflict are honored through internment in a 
VA National Cemetery. Each Memorial Day and Veterans Day we honor the 
last full measure of devotion they gave for this country. Our National 
Cemeteries are more than the final resting place of honor for our 
veterans; they are hallowed ground to those who died in our defense and 
a memorial to those who survived.
    By way of background, VA has two programs for disability 
compensation and disability pension (C&P). Disability compensation is a 
benefit paid to a veteran because of injuries or diseases that happened 
while on active duty, or were made worse by active military service. It 
is also paid to certain veterans disabled from VA health care. The 
benefits are tax-free.\2\ Eligibility for disability compensation is 
based on an honorable discharge and a service-connected disability. The 
benefits paid are based on the severity of a veteran's disability and 
their percentage rating. In addition a veteran may be eligible for 
additional amounts if they have very severe disabilities or loss of 
limb(s), have a spouse, child(ren), or dependent parent(s) or have a 
seriously disabled spouse.\3\
---------------------------------------------------------------------------
    \2\ http://www.vba.va.gov/bln/21/compensation/index.htm
    \3\ http://www.vba.va.gov/bln/21/compensation/index.htm
---------------------------------------------------------------------------
    AMVETS believes the current C&P formulas used to define eligibility 
need to be simplified and reflect the true needs of disabled veterans, 
survivors and their families. We also believe the pension benefits need 
to more accurately reflect a veteran's financial needs.
    The following charts illustrate the current rate of disability 
compensation:

                      10-20 Percent (No Dependents)
------------------------------------------------------------------------
                 Percentage                              Rate
------------------------------------------------------------------------
10%                                                                $123
------------------------------------------------------------------------
20%                                                                $243
------------------------------------------------------------------------


                     30-60 Percent Without Children
------------------------------------------------------------------------
        Dependent Status             30%       40%       50%       60%
------------------------------------------------------------------------
Veteran Alone                        $376      $541      $770      $974
------------------------------------------------------------------------
Veteran with Spouse Only             $421      $601      $845    $1,064
------------------------------------------------------------------------
Veteran with Spouse and One          $457      $649      $905    $1,136
 Parent
------------------------------------------------------------------------
Veteran with Spouse and Two          $493      $697      $965    $1,208
 Parents
------------------------------------------------------------------------
Veteran with One Parent              $412      $589      $830    $1,046
------------------------------------------------------------------------
Veteran with Two Parents             $448      $637      $890    $1,118
------------------------------------------------------------------------
Additional for A/A spouse (see        $40       $54       $68       $81
 footnote b)
------------------------------------------------------------------------


                     70-100 Percent Without Children
------------------------------------------------------------------------
        Dependent Status             70%       80%       90%      100%
------------------------------------------------------------------------
Veteran Alone                      $1,228    $1,427    $1,604    $2,673
------------------------------------------------------------------------
Veteran with Spouse Only           $1,333    $1,547    $1,739    $2,823
------------------------------------------------------------------------
Veteran with Spouse and One        $1,417    $1,643    $1,847    $2,943
 Parent
------------------------------------------------------------------------
Veteran with Spouse and Two        $1,501    $1,739    $1,955    $3,063
 Parents
------------------------------------------------------------------------
Veteran with One Parent            $1,312    $1,523    $1,712    $2,793
------------------------------------------------------------------------
Veteran with Two Parents           $1,396    $1,619    $1,820    $2,913
------------------------------------------------------------------------
Additional for A/A spouse (see        $95      $108      $122      $136
 footnote b)
------------------------------------------------------------------------


                       30-60 Percent With Children
------------------------------------------------------------------------
        Dependent Status             30%       40%       50%       60%
------------------------------------------------------------------------
Veteran with Spouse and Child        $453      $644      $899    $1,129
------------------------------------------------------------------------
Veteran with Child Only              $406      $581      $820    $1,034
------------------------------------------------------------------------
Veteran with Spouse, One Parent      $489      $692      $959    $1,201
 and Child
------------------------------------------------------------------------
Veteran with Spouse, Two Parents     $525      $740    $1,019    $1,273
 and Child
------------------------------------------------------------------------
Veteran with One Parent and          $442      $629      $880    $1,106
 Child
------------------------------------------------------------------------
Veteran with Two Parents and         $478      $677      $940    $1,178
 Child
------------------------------------------------------------------------
Add for Each Additional Child         $22       $30       $37       $45
 Under Age 18
------------------------------------------------------------------------
EachAdditionalSchoolchildOverAge      $72       $96      $120      $144
 18 (seefootnotea)
------------------------------------------------------------------------
Additional for A/A spouse (see        $40       $54       $68       $81
 footnote b)
------------------------------------------------------------------------


                      70-100 Percent With Children
------------------------------------------------------------------------
        Dependent Status             70%       80%       90%      100%
------------------------------------------------------------------------
Veteran with Spouse and Child      $1,409    $1,643    $1,837    $2,932
------------------------------------------------------------------------
Veteran with Child Only            $1,298    $1,507    $1,694    $2,774
------------------------------------------------------------------------
Veteran with Spouse, One Parent    $1,493    $1,730    $1,945    $3,052
 and Child
------------------------------------------------------------------------
Veteran with Spouse, Two Parents   $1,577    $1,826    $2,053    $3,172
 and Child
------------------------------------------------------------------------
Veteran with One Parent and        $1,382    $1,603    $1,802    $2,894
 Child
------------------------------------------------------------------------
Veteran with Two Parents and       $1,466    $1,699    $1,910    $3,014
 Child
------------------------------------------------------------------------
Add for Each Additional Child         $52       $60       $67       $75
 Under Age 18
------------------------------------------------------------------------
EachAdditionalSchoolchildOverAge     $168      $192      $216      $240
 18(seefootnotea)
------------------------------------------------------------------------
Additional for A/A spouse (see        $95      $108      $122      $136
 footnote b)

------------------------------------------------------------------------
a.  Rates for each school child area shown separately. They are not
  included with any other compensation rates. All other entries on this
  chart reflecting a rate for children show the rate payable for
  children under 18 or helpless. To find the amount payable to a 70
  percent disabled veteran with a spouse and four children, one of whom
  is over 18 and attending school, take the 70 percent rate for a
  veteran with a spouse and 3 children, $1,513, and add the rate for one
  school child, $168. The total amount payable is $1,681.

b.  Where the veteran has a spouse who is determined to require A/A, add
  the figure shown as ``additional for A/A spouse'' to the amount shown
  for the proper dependence code. For example, veteran has A/A spouse
  and 2 minor children and is 70 percent disabled. Add $95, additional
  for A/A spouse, to the rate for a 70 percent veteran with dependence
  code 12, $1,461. The total amount payable is $1,556.


    Pension benefits are meant as assistance for eligible veterans, 
surviving spouses and children who demonstrate financial need. Pension 
is a benefit paid to wartime veterans who have limited or no income and 
who are age 65 or older, or, if under 65, who are permanently and 
totally disabled. Veterans who are more seriously disabled may qualify 
for Aid and Attendance or Housebound benefits. These are benefits that 
are paid in addition to the basic pension rate.\4\ Eligibility for VA 
pension is usually contingent upon a veteran being honorably discharged 
from the military, has served at least 90 days of active military 
service 1 day of which was during a war time period. If you entered 
active duty after September 7, 1980, generally you must have served at 
least 24 months or the full period for which called or ordered to 
active duty (there are exceptions to this rule), and your countable 
family income is below a yearly limit set by law and finally, you are 
age 65 or older, or, you are permanently and totally disabled, not due 
to your own willful misconduct.\5\ In other words, pension is usually 
based on a veterans need and net worth.
---------------------------------------------------------------------------
    \4\ http://www.vba.va.gov/bln/21/pension/vetpen.htm
    \5\ http://www.vba.va.gov/bln/21/pension/vetpen.htm
---------------------------------------------------------------------------
    In 2007, the Institute of Medicine (IOM) Committee on Medical 
Evaluation of Veterans for Disability Compensation published a report, 
``A 21st Century System for Evaluating Veterans for Disability 
Benefits,'' recommending that the current VA disability compensation 
system be expanded to include compensation for nonwork disability and 
loss of quality of life.\6\ The report touches upon several systems 
that could be used to measure and compensate for loss of quality of 
life, including the World Health Organization-devised International 
Classification of Functioning, Disability, and Health, the Canadian 
Veterans' Affairs disability compensation program, and the Australian 
Department of Veterans Affairs disability compensation program. The 
report went on to distinguish between the purpose of disability 
benefits and the operational basis for those benefits. Under the 
current VA disability compensation system, the purpose of the 
compensation is to make up for average loss of earning capacity, 
whereas the operational basis of the compensation is usually based on 
medical impairment. Neither of these models generally appears to 
incorporate noneconomic loss or quality of life into the final 
disability ratings, though special monthly compensation (SMC) does in 
some limited cases.\7\
---------------------------------------------------------------------------
    \6\ Committee on Medical Evaluation of Veterans for Disability 
Compensation, Institute of Medicine of the National Academies, A 21st 
Century System for Evaluating Veterans for Disability Benefits (2007) 
[hereinafter IOM Report].
    \7\ Ibid., 117-18.
---------------------------------------------------------------------------
    The IOM report stated:

           ``In practice, Congress and VA have implicitly recognized 
        consequences in addition to work disability of impairments 
        suffered by veterans in the Rating Schedule and other ways. 
        Modern concepts of disability include work disability, nonwork 
        disability, and quality of life (QOL). . . .'' [and that] 
        ``This is an unduly restrictive rationale for the program and 
        is inconsistent with current models of disability.'' \8\
---------------------------------------------------------------------------
    \8\ Ibid., 3.

    The Congressionally-mandated Veterans Disability Benefits 
Commission (VDBC), established by the National Defense Authorization 
Act of 2004 (P.L. 108-136), spent more than 2 years examining how the 
rating schedule might be modernized and updated.
    Reflecting the recommendations of a comprehensive study of the 
disability rating system by the IOM, the VDBC in its final report 
issued in 2007 recommended:

         The veterans disability compensation program should compensate 
        for three consequences of service-connected injuries and 
        diseases: work disability, loss of ability to engage in usual 
        life activities other than work, and loss of quality of 
        life.\9\
---------------------------------------------------------------------------
    \9\ Veterans' Disability Benefits Commission, Honoring The Call To 
Duty: Veterans' Disability Benefits in the 21st Century (2007), 76.

    The IOM report, the VDBC (and an associated Center for Naval 
Analysis study), and the Dole-Shalala Commission (President's 
Commission on Care for America's Returning Wounded Warriors) all agreed 
that the current benefits system should be reformed to include 
noneconomic loss and quality of life as a factor in compensation. Once 
this principle is established in statute, only then shall Congress and 
VA be able to fully and accurately address the question of whether such 
compensation should be provided through immediate changes to the rating 
schedule that would modify or include additional compensation paid for 
average loss of earnings capacity or whether it should come from a 
separate compensation program, such as SMC.\10\
---------------------------------------------------------------------------
    \10\ FY 2012 The Independent Budget, Benefits Programs.
---------------------------------------------------------------------------
    AMVETS and the other IB authoring VSOs recommend Congress amend 
Title 38 to clarify disability compensation, in addition to providing 
compensation to service-connected disabled veterans for their average 
loss of earnings capacity, must also include compensation for their 
noneconomic loss and for loss of their quality of life.
    AMVETS believes there also must be an immediate change to the level 
of oversight given to the C&P medical exams program. AMVETS believes 
that the overall lack of timely and complete exams by trained medical 
professionals is significantly adding unnecessary burdens and extensive 
waiting periods for veterans seeking these benefits.
    In 2008, GAO published their findings on VA's C&P programs. They 
found over 500,000 VA pensioners had nonpension incomes well below the 
Federal poverty level, were beyond retirement age, and had multiple 
impairments, and the population has been decreasing in number. The 
average annual reported income of these pensioners, excluding their VA 
pensions, was less than $5,000. GAO went on to state, ``VA policies and 
procedures are not sufficient to ensure sound decisions on new pension 
claims.''
    AMVETS is aware of the recent changes to the C&P programs but still 
believes they are falling short of where they should be. AMVETS 
believes the current processes in place at VA to assess whether 
pensioners continue to receive the proper benefits have significant 
limitations and are outdated. Although the agency requires pensioners 
to report changes that might affect their pensions, VA does not require 
documentation such as bank or asset statements when pensioners report 
financial changes.
    AMVETS believes there are still several policies and procedures 
that need to be developed and implemented in order to improve the 
services and benefits our veteran community receives. For example, 
AMVETS believes the rating process quality must be improved to prevent 
unnecessary appeals. AMVETS also believes better and more frequent 
training of staff will improve the chances of a claim being evaluated 
correctly the first time. Periodic testing to identify deficiencies 
will help ensure a successful program, as well as helping to identify 
best practices.
    AMVETS also believes there needs to be a re-evaluation of the work 
credit system. AMVETS strongly believes there needs to be immediate 
corrections of weaknesses within the VA C&P system, so that veterans 
will receive timely and accurate ratings and benefits.
    Chairman Runyan and distinguished Members of the Subcommittee, this 
concludes my testimony and I stand ready to address any questions you 
may have for me.

                                 

                 Prepared Statement of Jeffrey C. Hall,
  Assistant National Legislative Director, Disabled American Veterans

                           EXECUTIVE SUMMARY

      In order to reform the veterans benefits claims 
processing system, VBA must undergo a cultural shift away from 
``breaking the back of the backlog'' to focusing on processing 
disability claims right the first time.
      VBA must change how it measures progress and success, as 
well as revise employee and management incentives and performance and 
accountability standards so that quality and accuracy are at least as 
important as speed and production.
      While DAV is fully supportive of most of VBA's on ongoing 
pilot programs, including the Disability Benefits Questionnaires (DBQ) 
and Fully Developed Claims (FDC), VBA must now begin to bring forward 
comprehensive and credible plans to adopt the best practices needed to 
achieve lasting reform, not just short term increases in production.
      VBA must complete the ongoing information technology (IT) 
modernization, which includes the Veterans Benefits Management System 
(VBMS), Veterans Relationship Management (VRM) and Veterans Lifetime 
Electronic Record (VLER) programs. In particular, the VBMS pilot 
testing and development needs aggressive Congressional oversight to 
ensure it develops into a comprehensive, paperless and rules-based 
system for processing disability compensation claims. VBA must be 
provided sufficient time and resources to ensure that these vital IT 
initiatives are successfully completed.
      Equally important to the process and technology reforms 
underway will be the people who work within the system, and VBA must 
place greater emphasis on employee training and quality control 
programs. Training materials must be updated and relevant to current 
law, practice and policies, and all employees and management should 
have testing requirements. Quality control must be integrated into the 
VBMS and should guide and inform future training requirements.
      Congress should provide equity to all disabled veterans 
who retire from the armed forces after serving more than 20 years by 
passing legislation removing the prohibition on concurrent receipt for 
those who are rated 40 percent or less.
      Congress should also approve legislation repealing the 
offset currently required for payments made under the Survivor Benefit 
Plan (SBP) and the Dependency Indemnity Compensation (DIC) programs.

                               __________
    Chairman Runyan, Ranking Member McNerney and Members of the 
Committee:
    On behalf of the Disabled American Veterans and our 1.2 million 
members, all of whom are wartime disabled veterans, I am pleased to be 
here today to offer our views regarding the fiscal year (FY) 2012 
budget in the area of veterans' benefits.
    Mr. Chairman, let me first congratulate you for being selected to 
lead the Subcommittee, as well as Congressman McNerney being chosen the 
Ranking Member. DAV looks forward to working with you, as well as all 
of the Members of the Subcommittee, to protect and strengthen the 
benefits programs that serve our Nation's veterans, especially disabled 
veterans, their families and survivors.
    In reviewing the budget request for the Veterans Benefits 
Administration (VBA), DAV recommends only modest increases in funding, 
and increases are primarily directed to Vocational Rehabilitation and 
Employment (VR&E) and the Board of Veterans' Appeals (BVA). Over the 
past couple of years, with strong support from Congress, VBA's 
Compensation and Pension (C&P) Service has received significant 
increases in personnel to address the rising workload of claims for 
benefits. It is important to note that this large increase in claims 
processors could actually result in a short-term net decrease in 
productivity, due to experienced personnel being taken out of 
production to conduct training, and the length of time it takes for new 
employees to become fully productive. While we do not recommend 
additional staffing increases at this time, we do recommend that VBA 
conduct a study on how to determine the optimum number of full-time 
employees necessary to manage the growing number of claims both 
accurately and in a timely manner.
    We do, however, recommend Congress authorize at least 160 
additional full-time employees for the VR&E Service for FY 2012, 
primarily to reduce current case manager workload. A 2009 study by the 
Government Accountability Office (GAO) found that 54 percent of 
Department of Veterans Affairs Regional Offices (VAROs) reported they 
had fewer counselors than they needed and 40 percent said they had too 
few employment coordinators. VR&E officials indicated that the current 
caseload target is 1 counselor for every 125 veterans, but that ratio 
is reported to be as high as 1 to 160 in the field. An increase of 100 
new counselors would address that gap. Given its increased reliance on 
contract services, VR&E also needs an additional 50 full-time employee 
equivalents (FTEE) dedicated to management and oversight of contract 
counselors and rehabilitation and employment service providers. In 
addition, VR&E has requested at least 10 FTEE in FY 2012 to expand its 
college program--``Veteran Success on Campus,'' and we support that 
request.
    With the number of claims for benefits increasing over the past 
several years, so too is the number of appeals to the BVA. On average, 
BVA receives appeals on 5 percent of all claims, a rate that has been 
consistent over the past decade. With the number of claims projected to 
rise significantly in the coming years, so too will the workload at 
BVA, and thus the need for additional personnel. Funding for the BVA 
must rise at a rate commensurate with its increasing workload so it is 
properly staffed to decide veterans' appeals in an accurate and timely 
manner.
    The VBA is at a critical juncture in its efforts to reform an 
outdated, inefficient, and overwhelmed claims-processing system. After 
struggling for decades to provide timely and accurate decisions on 
claims for veterans' benefits, the VBA over the past year has started 
down a path that may finally lead to essential transformation and 
modernization, but only if it has the leadership necessary to undergo a 
cultural shift in how it approaches the work of adjudicating claims for 
veterans benefits.
    The number of new claims for disability compensation has risen to 
more than 1 million per year and the complexity of claims have also 
increased as complicated new medical conditions, such as traumatic 
brain injury, have become more prevalent. To meet rising workload 
demands Congress has provided significant new resources to the VBA over 
the past several years in order to increase their personnel levels. Yet 
despite the hiring of thousands of new employees, the number of pending 
claims for benefits, often referred to as the backlog, continues to 
grow.
    As of January 31, 2011, there were 775,552 pending claims for 
disability compensation and pensions awaiting rating decisions by the 
VBA, an increase of 289,081 from 1 year ago. About 41 percent of that 
increase is the result of the Secretary's decision to add three new 
presumptive conditions for Agent Orange (AO) exposure: ischemic heart 
disease, B-cell leukemia, and Parkinson's disease. Even discounting 
those new AO-related claims, the number of claims pending rose by 
171,522, a 37 percent increase of pending claims over just the past 
year. Overall, there are 331,299 claims that have been pending greater 
than VA's target of 125 days, which is an increase of 147,930, up more 
than 80 percent in the past year. Not counting the new AO-related 
conditions, over 50 percent of all pending claims for compensation or 
pension are now past the 125-day target set by the VBA.
    Worse, by the VBA's own measurement, the accuracy of disability 
compensation rating decisions continues to trend downward, with their 
quality assurance program, known as the Systematic Technical Accuracy 
Review (STAR) reporting only an 83 percent accuracy rate for the 12-
month period ending May 31, 2010. Moreover, VA's Office of Inspector 
General found additional undetected or unreported errors that increased 
the error rate to 22 percent. Complicating the Department's problems is 
its reliance on an outdated, paper-centric processing system, which now 
includes more than 4.2 million claims folders.
    Faced with all of these problems, VA Secretary Shinseki last year 
set an extremely ambitious long-term goal of zero claims pending more 
than 125 days and all claims completed to a 98 percent accuracy 
standard. Throughout the year he repeatedly made clear his intention to 
``break the back of the backlog'' as his top priority. While we welcome 
his intention and applaud his ambition, eliminating the backlog is not 
necessarily the same goal as reforming the claims-processing system, 
nor does it guarantee that veterans are better served.
    As we have consistently maintained, the backlog is not the problem, 
nor even the cause of the problem; rather, it is only one symptom, 
albeit a very severe one, of a much larger problem: too many veterans 
waiting too long to get decisions on claims for benefits that are too 
often wrong. If the VBA focuses simply on reducing the backlog of 
claims, it can certainly achieve numeric success in the near term, but 
it will not necessarily have addressed the underlying problems nor 
taken steps to prevent the backlog from eventually returning. To 
achieve real success, the VBA's benefits claims-processing system must 
be designed to ``get each claim done right the first time.'' Such a 
system would be based upon a modern, paperless information technology 
and workflow system focused on quality, accuracy, efficiency, and 
accountability.
    Recognizing all of the problems and challenges discussed above, we 
have seen some positive and hopeful signs of change. VBA leadership has 
been refreshingly open and candid in recent statements on the problems 
and need for reform. Over the past year, dozens of new pilots and 
initiatives have been launched, including a major new IT system that is 
now being field-tested. The VBA has shared information with the 
veterans service organizations (VSOs) about its ongoing initiatives and 
sought feedback on these initiatives. These are all positive 
developments and we are hopeful this practice will continue and become 
even more open and candid in the future.
    VSOs not only bring vast experience and expertise about claims 
processing, but our service officers hold power of attorney for 
hundreds of thousands of veterans and their families. In this capacity, 
DAV and other VSOs are an integral component of the claims process who 
undeniably make the VBA's job easier by helping veterans prepare and 
submit better claims, thereby requiring less time and resources to 
develop and adjudicate them.
    We are especially pleased with the new attitude towards VSOs 
demonstrated by many key VBA leaders, including Acting Under Secretary 
Mike Walcoff and C&P Director, Tom Murphy. Both have made good on their 
commitments to building a true partnership with VSOs, and we hope they 
are now able to infuse this positive attitude throughout the VBA from 
central office down to each of the 57 regional offices.
    Mr. Chairman, to be successful, VBA must also change how it 
measures success and rewards performance in a manner designed to 
achieve the goal of ``getting it right the first time.'' Unfortunately, 
most of VBAs methodology used today, whether for the organization as a 
whole or for regional offices or employees, are based primarily on 
production measurement, which reinforces the goal of ending the 
backlog. VBA must modify how it measures and reports progress and 
success with reliable indicators of quality and accuracy. It is 
imperative for VBA to review employee performance standards with 
incentives and accountability directed at achieving quality and 
accuracy, not just increased speed or production.
    As VBA moves forward with the myriad of pilot programs and 
initiatives designed to modernize and streamline the claims-processing 
system, it is imperative that they have a systematic method for 
analyzing and integrating ``best practices'' that improve quality and 
accuracy, rather than just those that may increase production. One of 
the more important new initiatives is the use of templates, which VBA 
calls Disability Benefits Questionnaires (DBQs), designed to gather 
medical information specific to rating criteria contained in the VA 
Schedule for Rating Disabilities (VASRD). DBQs are designed to 
alleviate the time consuming burden of sorting through often voluminous 
unrelated medical evidence and instead focusing on pertinent 
information.
    There are currently three DBQs that have been approved for use in 
claims for the three new presumptive conditions associated with Agent 
Orange exposure: ischemic heart disease, Parkinson's disease, and B-
cell leukemia. An additional 76 DBQs are in various stages of the 
development and approval process. We support the use of DBQs as a 
method to streamline and improve the quality and timeliness of 
decisions; however, it is crucial that DBQs are properly completed, 
either by VA or private medical examiners. VBA employees must be 
properly trained so they understand that DBQs are but one piece of 
evidence that must be considered in the development and decisionmaking 
process. VBA's rating specialists must properly consider the 
evidentiary weight and value of all evidence related to the claim, 
while adequately addressing it in the reason and bases of the 
subsequent decision.
    One of the major initiatives toward reforming the claims process is 
the Fully Developed Claims (FDC) program, which began as a pilot 
program mandated by Public Law 110-389, and was rolled out to all VAROs 
last year. We were pleased that VBA modified the FDC application 
process allowing claimants to submit informal notification to the VBA 
of his or her intention to file a FDC claim, thereby protecting the 
earliest effective date for receipt of benefits. There have been 
reports from the field that local Regional Offices (ROs) were not 
allowing such informal claims to be made and that participation in the 
FDC program was extremely low. We have held numerous discussions with 
the C&P Director and his staff to address both issues. We have been 
pleased both with the collaborative process, as well as the plans being 
developed to address these problems. Although we still have concerns 
about particular aspects of the FDC program we appreciate VBAs openness 
with DAV and other VSOs, and for providing us with opportunities to 
exchange information and ideas to improve the FDC program. While DAV 
remains optimistic about the FDC program, we urge this Committee to 
closely monitor the coming improvements to the FDC program and work 
with us and VBA to address the obstacles to its success.
    In order to synthesize the ``best practices'' from all of the 
ongoing pilot programs, VBA recently started a new Integration 
Laboratory at their Indianapolis RO. Although we have not yet visited, 
nor been briefed on this pilot, given the current focus on ``breaking 
the back of the backlog'', we have concerns about whether the VBA will 
successfully extract and then integrate ``best practices'' focused on 
quality and accuracy, not just production and speed. Congress must 
continue to provide aggressive oversight of the VBA's myriad ongoing 
pilots and initiatives to ensure the practices adopted and integrated 
into a cohesive new claims process are judged first and foremost on 
their ability to help VA get claims ``done right the first time.''
    Two longstanding weaknesses of VBA's claims adjudication process 
are training and quality control. These two essential cornerstones of 
claims process reform must be linked to create a single continuous 
improvement program, both for employees and for the claims process 
itself. Quality control programs can identify performance areas and 
subject matter requiring new or additional training for VBA employees; 
better training programs for employees and managers should improve the 
overall quality of the VBA's work.
    VBA's primary quality assurance program is the STAR program. The 
STAR program was last evaluated by the VA Office of Inspector General 
(OIG) in March 2009, with the OIG finding that STAR does not provide a 
complete assessment of rating accuracy. Although the STAR reviewers 
found the national accuracy rate was about 87 percent, the OIG found 
additional errors and projected an overall accuracy rate of only 78 
percent. In addition to rectifying errors found by the OIG, we 
recommend the VBA establish a true quality control program that looks 
at claims ``in-process'' in order to determine propriety of a decision 
and how it was arrived at in order to identify ways to improve the 
system. The data analysis from all such reviews should be incorporated 
into the VBA's new information technology systems being developed to 
provide management and employees vital acumens regarding processes and 
decisions. This in turn would lead to quicker and more accurate 
decisions on benefits claims, and more importantly, the timely delivery 
of all earned benefits to veterans, particularly disabled veterans.
    Essential to the professional development of an individual, 
comprehensive training is unquestionably tied directly to quality of 
work produced, as well as the quantity of work produced with accuracy 
and consistency. DAV National Service Officers (NSOs) have often been 
told by many VBA employees that meeting production goals is the primary 
focus of management, whereas fulfilling training requirements and 
increasing quality is still perceived as being secondary. An 
overemphasis on productivity must not interfere with the training of 
any employee, especially new employees who are still learning their 
job.
    Mr. Chairman, Public Law 110-389, the ``Veterans' Benefits 
Improvement Act of 2008,'' required the VBA to develop and implement a 
certification examination for claims processors and managers; however, 
today there are still gaps in the implementation of these provisions. 
While tests have been developed and piloted for Veterans Service 
Representatives (VSRs) and Rating Veterans Service Representatives 
(RVSRs), additional tests need to be developed and deployed for 
Decision Review Officers (DROs) and supervisory personnel. None of 
these certification tests are mandatory for all employees, nor are they 
done on a continuing basis.
    VBA cannot accurately assess its training or measure an 
individual's knowledge, understanding, or retention of the training 
material without regular testing. It is important, however, for all 
testing and certification to be applied equally to all employees, 
including managers and coaches. All VBA employees, coaches, and 
managers should undergo regular testing to measure job skills and 
knowledge, as well as the effectiveness of the training.
    Equally important, testing must properly assess the skills and 
knowledge required to perform the work of processing claims. Many VBA 
employees report that the testing does not accurately measure how well 
they perform their jobs, and there have been reports that significant 
numbers of otherwise qualified employees who are not able to pass the 
tests. VBA must ensure certification tests are developed to accurately 
measure the skills and knowledge needed to perform the work of VSRs, 
RVSRs, DROs, coaches and other managers.
    DAV has consistently maintained that successful completion of 
training by all employees and managers must be an absolute requirement 
for every VARO and a requisite, shared responsibility of both employees 
and management. Moreover, managers must be responsible for ensuring 
that training is offered and completed by all of their employees and 
held accountable when this requirement is not met. However it is also 
the responsibility, as well as part of the performance standard, for 
all employees to complete their training requirements. Managers are 
obligated to provide employees with the necessary time for training and 
employees must faithfully complete the training. Neither the employee 
nor manager should be able to, or feel pressured to, simply just 
``check the box'' when it comes to training.
    Unquestionably one of the more important new VBA initiatives 
underway is the highly anticipated Veterans Benefits Management System 
(VBMS), which is designed to provide the VBA with a comprehensive, 
paperless, and ultimately rules-based method of processing and awarding 
claims for VA benefits, particularly disability compensation. Following 
initial design work, the VBMS had its first phase of development in 
Baltimore last year where a prototype system was tested in a virtual 
regional office environment. The first actual pilot of the VBMS system 
began in November 2010 at the Providence, Rhode Island Regional Office. 
The 6-month pilot program began with simulated claims and moved to 
``live'' claims early this year. Although they are still in the early 
stages, we have seen great promise from this program. Building on the 
progress in Providence, a second 6-month pilot is expected to begin in 
May 2011 at the Salt Lake City Regional Office. A third phase of the 
VBMS pilot program is scheduled to begin in November 2011 at an 
undesignated location, with the final national rollout of the VBMS 
scheduled to take place in May of 2012.
    Modernizing the VBAs antiquated information technology (IT) system 
to process claims in a paperless environment is long overdue, however 
we do have concerns about whether the VBMS is being rushed to meet 
self-imposed deadlines in order to show progress toward ``breaking the 
back of the backlog.'' While we have long believed VBA's IT 
infrastructure is inadequate, outdated, and constantly falling further 
behind modern software, as well as Web, and cloud-based technology 
standards, we would be equally concerned about a rushed solution that 
ultimately produces an IT system incapable of sustaining itself well 
into the future.
    Given the highly technical nature of modern IT development, we urge 
Congress to fully explore these issues with the VBA. To aid in this 
process, it may be helpful to have an independent, outside, expert 
review of the VBMS system while it is still early enough in the 
development phase to make course corrections, should they be necessary.
    To be successful, the VBMS must include the maximum level of rules-
based decision support feasible at the earliest stages of development 
in order to build a system capable of providing accurate and timely 
decisions, as well as include real-time, quality control as a core 
component of the system. VBA must also commit to incorporating all 
veterans' legacy paper files into the paperless environment of the VBMS 
within the minimum amount of time technically and practically feasible.
    Beyond fixing the process of determining veterans' claims for 
benefits, Congress and VA must also address inequities in the level of 
benefits afforded to disabled veterans. In 2007, the Institute of 
Medicine (IOM) Committee on Medical Evaluation of Veterans for 
Disability Compensation published a report entitled, ``A 21st Century 
System for Evaluating Veterans for Disability Benefits.'' The IOM 
recommended that the current VA disability compensation system be 
expanded to include compensation for non-work disability (also referred 
to as ``noneconomic loss) and loss of quality of life. Non-work 
disability refers to limitations on the ability to engage in usual life 
activities other than work. This includes ability to engage in 
activities of daily living, such as bending, kneeling, or stooping, 
resulting from the impairment, and to participate in usual life 
activities, such as reading, learning, socializing, engaging in 
recreation, and maintaining family relationships. Loss of quality of 
life refers to the loss of physical, psychological, social, and 
economic well-being in one's life.
    The IOM report stated, ``[C]ongress and VA have implicitly 
recognized consequences in addition to work disability of impairments 
suffered by veterans in the Rating Schedule and other ways. Modern 
concepts of disability include work disability, non-work disability, 
and quality of life (QOL). . .''
    In addition, the Congressionally-mandated Veterans Disability 
Benefits Commission (VDBC), established by the National Defense 
Authorization Act of 2004 (Public Law 108-136), spent more than 2 years 
examining how the rating schedule might be modernized and updated. 
Reflecting the recommendations of the IOM study, the VDBC in its final 
report issued in 2007 recommended that the, ``[v]eterans disability 
compensation program should compensate for three consequences of 
service-connected injuries and diseases: work disability, loss of 
ability to engage in usual life activities other than work, and loss of 
quality of life.''
    The IOM Report, the VDBC (and an associated Center for Naval 
Analysis study) and the Dole-Shalala Commission (President's Commission 
on Care for America's Returning Wounded Warriors) all agreed that the 
current benefits system should be reformed to include noneconomic loss 
and quality of life as a factor in compensation.
    DAV calls on Congress to finally address this deficiency by 
amending title 38, United States Code, to clarify that disability 
compensation, in addition to providing compensation to service-
connected disabled veterans for their average loss of earnings 
capacity, must include compensation for their noneconomic loss and for 
loss of their quality of life. Congress and VA should then determine 
the most practical and equitable manner in which to provide 
compensation for noneconomic loss and loss of quality of life and then 
move expeditiously to implement this updated disability compensation 
program.
    Mr. Chairman, as you know, the amount of disability compensation 
paid to a service-connected disabled veteran is determined according to 
the VA Schedule for Rating Disabilities (VASRD), which is divided into 
15 body systems with more than 700 diagnostic codes. In 2007, both the 
VDBC, as well as the IOM Committee on Medical Evaluation of Veterans 
for Disability Compensation in its report ``A 21st Century System for 
Evaluating Veterans for Disability Benefits,'' recommended that VA 
regularly update the VASRD to reflect the most up-to-date understanding 
of disabilities and how disabilities affect veterans' earnings 
capacity. In line with these recommendations, the VBA is currently 
engaged in the process of updating the 15 body systems, beginning with 
mental disorders and the musculoskeletal system and has committed to 
regularly updating the entire VASRD every 5 years.
    In January 2010, the VBA held a Mental Health Forum jointly with 
the Veterans Health Administration (VHA), which included a VSO panel. 
In August 2010, the VBA and VHA held a Musculoskeletal Forum, which 
also included a VSO panel. Just a couple of months ago, a series of 
four public forums were held in Scottsdale, Arizona over the course of 
2 weeks on four additional body systems. The Arizona sessions in 
particular, were far removed from the public and offered little 
opportunity for most VSOs to observe, much less offer any input.
    While we are appreciative of any outreach efforts, we are concerned 
that but for these initial public forums, VBA is not making any 
substantial efforts to include VSO input during the actual development 
of draft regulations for the updated rating schedule. Since the initial 
public meetings, the VBA has not indicated it has any plans to involve 
VSOs at any other stage of the rating schedule update process other 
than what is required once a draft rule is published, at which time 
they are required by law to open the proposed rule to all public 
comment. We strongly believe VBA would benefit greatly from the 
collective and individual experience and expertise of VSOs and our 
service officers throughout the process of revising the VASRD. 
Moreover, since VBA is committed to continual review and revision of 
the VASRD, we believe it would be advantageous to conduct reviews of 
the revision process itself so future body system rating schedule 
updates can benefit from ``lessons learned'' during prior body system 
updates.
    Two other matters we believe Congress must finally address to 
provide equitable benefits to all disabled veterans and their 
survivors. Under current law, many veterans retired from the armed 
forces based on longevity of service must forfeit a portion of their 
retired pay, earned through faithful performance of military service, 
before they receive VA compensation for service-connected disabilities. 
This is inequitable--military retired pay is earned by virtue of a 
veteran's career of service on behalf of the Nation, careers of usually 
more than 20 years. Conversely, monetary compensation for disability 
resulting from military service is awarded by VA, regardless of the 
length of service.
    A disabled veteran who does not retire from military service, 
instead electing to pursue a civilian career after completing a service 
obligation, can receive full VA compensation and full civilian retired 
pay (including retirement from any Federal civil service) without any 
offset. A veteran who retires from the military after serving honorably 
for 20 or more years and suffers from service-connected disabilities 
should have the same right.
    Presently, military longevity retirees are able to receive their 
full retirement pay and VA compensation, provided their disability is 
rated 50 percent or higher. Congress should finally enact legislation 
to repeal the inequitable requirement that veterans' military longevity 
retired pay be offset by an amount equal to their rightfully earned VA 
disability compensation if rated less than 50 percent.
    A similar inequity remains for certain survivors of disabled 
veterans. When a disabled veteran's death is the result of service-
connected causes, or following a substantial period of total disability 
from service-connected causes, eligible survivors or dependents receive 
Dependency and Indemnity Compensation (DIC) from VA. This benefit 
indemnifies survivors, in part, for the losses associated with the 
veteran's death from service-connected causes or after a period of time 
when the veteran was unable, because of total disability, to accumulate 
an estate for inheritance by survivors.
    Career members of the armed forces earn entitlement to retired pay 
after 20 or more years' service. Unlike many retirement plans in the 
private sector, survivors of military retirees have no entitlement to 
any portion of the member's retired pay following his or her death. 
However, military retirees can designate all or a part of their retired 
pay as a basis for survivor's annuity known as the Survivor Benefit 
Plan (SBP), wherein deductions are made from the member's retired pay 
to purchase a survivors' annuity. Upon the veteran's death, the annuity 
is paid monthly to eligible beneficiaries under the SBP. If the 
veteran's death is not due to military service or service-connected 
causes, or if he or she was not totally disabled by reason of service-
connected disability for the required time preceding death, 
beneficiaries receive full SBP payments. Conversely, should a 
beneficiary become entitled to DIC, the SBP annuity is offset or 
reduced by an amount equal to DIC payment and where the monthly DIC 
payment is equal to or greater than the monthly SBP annuity, 
beneficiaries lose all entitlement to the SBP annuity.
    DAV strongly believes this offset is inequitable because no 
duplication of benefits is involved. Payments under the SBP and DIC 
programs are made for different purposes. Under the SBP, a military 
retiree purchases this annuity through deductions of all or a portion 
of earned retired pay solely for the purpose of caring for loved ones 
upon his or her death. On the other hand, DIC is a special indemnity 
compensation paid to the survivor of a servicemember whose death is in 
service or the result of service-connected disabilities. In such cases, 
DIC should be added to the SBP, not substituted for it.
    We note that surviving spouses of Federal civilian retirees who are 
veterans are eligible to receive DIC without losing entitlement to any 
of their purchased Federal civilian survivor benefits. The offset 
between SBP and DIC penalizes survivors of military retired veterans 
whose deaths are under circumstances warranting indemnification from 
the government separate from the annuity funded by premiums paid by the 
veteran from his or her retired pay. Congress should repeal the offset 
between DIC and the SBP.
    Additionally, in order to conform to the requirements of other 
Federal programs, Congress should lower the age requirement for 
restoration of DIC for survivors of veterans whose deaths are service-
connected. Current law permits VA to reinstate DIC benefits to 
remarried survivors of veterans if remarriage occurs at age 57 or older 
or if survivors who have already remarried apply for reinstatement of 
DIC at age 57. Although we appreciate the action Congress took to allow 
restoration of this rightful benefit, the current age threshold of 57 
years is arbitrary. Remarried survivors of retirees of the Civil 
Service Retirement System, for example, obtain a similar benefit at age 
55. We believe the survivors of veterans whose deaths are service-
connected should not be further penalized for remarriage and that 
equity with beneficiaries of other Federal programs should govern 
Congressional action for this deserving group.
    Mr. Chairman and Members of the Committee, this concludes my 
statement and I would be happy to answer any questions you may have.

                                 
              Prepared Statement of Hon. Bruce E. Kasold,
         Chief Judge, U.S. Court Of Appeals For Veterans Claims

                           EXECUTIVE SUMMARY

    The fiscal year (FY) 2012 budget request of the United States Court 
of Appeals for Veterans Claims (Court) totals $55,796,690, which is 
made up of 3 distinct parts: (1) $2,726,363 sought by the Veterans 
Consortium Pro Bono Program, (2) $28,070,327 for the Court's necessary 
operating expenses, and (3) $25,000,000 for design engineering and site 
acquisition for a veterans courthouse.
    In the past 5 years, the number of cases coming into the Court, as 
well as those decided by the Court, essentially has doubled. In 
response, the Court has implemented several measures aimed at gaining 
efficiency in case development and processing, including the 
development of an enhanced pre-briefing dispute-resolution program, 
utilization of the service of our retired Senior Judges, and full 
implementation of an electronic case management/electronic case filing 
system. Two additional efficiencies that the Court suggests would 
benefit its appellate review of veterans benefits decisions are (1) the 
appointment of judges to fill our three current judicial vacancies, and 
(2) appointment of a commission to evaluate the costs and benefits of 
the unique two-tiered Federal appellate review system we have for 
veterans benefits decisions.
    The Court requested $62 million in FY 2011 for construction of a 
veterans courthouse, but due to the continuing resolution, no funding 
for this project has yet been appropriated in FY 2011. Since the time 
of that request, GSA has advised us that the initial cost estimate 
failed to consider some significant factors, such that the project 
completion cost has gone up significantly over the FY 2011 budget 
request. Moreover, there are still two contingencies to final 
construction, i.e., whether a side street can be closed or access 
limited and whether a necessary adjacent piece of land can be 
purchased. Given those factors, our FY 2012 request includes $25M, 
which GSA advises is the amount necessary for funding the next steps 
toward construction, while permitting time to scrutinize the latest 
cost estimate for possible cost reduction and resolve the two 
contingent factors.

                               __________
    Mr. Chairman and Distinguished Members of the Subcommittee:
    It is both an honor and a pleasure to present testimony to this 
august body on the fiscal year (FY) 2012 budget request and performance 
plans of the United States Court of Appeals for Veterans Claims. My 
remarks today will (1) summarize our budget request, (2) provide an 
overview of the Court, it's caseload, and it's Operation Plan, (3) 
suggest a broad examination of the structure of Federal appellate 
review of veterans benefits decisions, and (4) provide an overview of 
recent developments on the Veterans Courthouse.

                           I. Budget Request

    The Court's FY 2012 budget request is best viewed as three parts 
making up the whole. One piece is a request for $2,726,363 sought by 
the Veterans Consortium Pro Bono Program (Pro Bono Program). Another 
part is the Court's necessary operating expenses, requested at 
$28,070,327. The third part is a request for $25,000,000 for design 
engineering and site acquisition for a veterans courthouse. In total, 
our FY 2012 budget request is $55,796,690.
    Our FY 2012 request reflects an increase of $211,134 sought by the 
Pro Bono Program. Since FY 1997, the Pro Bono Program's budget request 
has been provided to Congress as an appendix to the Court's budget 
request. Accordingly, I offer no comment on that portion of our budget 
request, although I do commend the Pro Bono Program for its success in 
providing legal assistance to many appellants seeking judicial review 
from the Court.
    Our FY 2012 request reflects an increase of $2,438,827 for the 
Court's operations, which is due primarily to (1) anticipated rent 
payment for additional space associated with two new chambers, plus the 
expenses associated with relocating staff to another floor, building 
out and equipping those offices, the two new chambers, and appropriate 
chambers for our Senior Judges ($600K), (2) an increase of $1M in the 
statutorily required contribution to the Judges Retirement Fund (see 38 
U.S.C. Sec. 7298); (3) the estimated, annual increase in payroll 
associated with normal promotions and step increases ($400K), and (4) 
continued cyclical replacement of IT equipment ($250K).
    With regard to the two new chambers, additional leased space, 
relocation of staff, and appropriate chambers for our Senior Judges, 
any funding spent on these matters in the current fiscal year would 
result in a commensurate reduction in costs incurred in FY 2012. The 
Court has forestalled implementing these changes in the past, due to a 
lack of appropriate space and the lack of any known movement on 
appointment of two new judges. However, it now appears that space will 
be available in our building this summer and that the two additional 
judgeships authorized in 2008 likely will be nominated this year; 
accordingly, we will proceed with these plans as soon as the space is 
available, if we have the funding.
    As to funding the Judges Retirement Fund, on becoming Chief Judge I 
reviewed past contributions and noted that our internal budgeting for 
this has been underestimated the past several years, requiring funds 
originally planned for other activities, but not used, to be 
contributed to the Fund at the end of the year. One reason for the 
past-years under-budgeting was that the estimate was based on an 
average 5 percent growth in the Fund, which is invested in Treasury 
instruments. In reality, there was less than .25 percent growth, and 
that alone accounted for a guaranteed $1M shortfall at the end of each 
FY. Our budget request for 2012 is based on a more realistic estimate 
of growth in the Fund.

            II. The Court, Its Caseload, and Its Operations

    As you may be aware, the Court was created in 1988 as an 
independent judicial tribunal to review final agency decisions of the 
Department of Veterans Affairs made by the Board of Veterans' Appeals. 
With the creation of the Court, veterans became entitled, for the first 
time, to contest in a court of law adverse final decisions made by the 
Department of Veterans Affairs (VA) on their benefits claims. Over its 
20 years of existence, the Court has grown to become one of the busiest 
Federal appellate courts based on the numbers of appeals filed and 
decided per judge.
    Appeals and petitions from FY 2007 through 2010 averaged almost 
4,500, (FY 2007 (4,644), FY 2008 (4,128), FY 2009 (4,725) and FY 2010 
(4,341)), compared to an average of about 2,300 from just 5 years 
earlier (FY 2002 (2,150), FY 2003 (2,532), and FY 2004 (2,234)). In 
addition to new appeals and petitions filed, the Court receives 
hundreds of motions each month, ranging from procedural to dispositive 
questions. In FY 2010 the Court disposed of 5,141 cases. The Court has 
implemented several innovations to help process these matters, which I 
will outline here.
    Our pre-briefing dispute-resolution program was expanded 
significantly over the past few years. Our Central Legal Staff (CLS) 
attorneys now conduct conferences in essentially all merits appeals 
where the appellant is represented by counsel--equating to roughly 65-
70 percent of the total number of appeals. Of the cases where 
consultation is scheduled, approximately 50 percent are resolved with 
the parties agreeing to a remand for further adjudication below without 
judicial review. Further, even in those cases where the appeal is not 
resolved at conference, the dispute-resolution process generally is 
successful in narrowing and focusing the issues on appeal. The feedback 
from members of the Court's Bar, as well as from our CLS attorneys, is 
that the conferencing program is efficient and effective in bringing 
the parties together and resolving issues consistent with the law, due 
process, and the interests of justice, while conserving judicial 
resources.
    For the past several years, we have recalled our retired Senior 
Judges. We currently have a total of six Senior Judges eligible for 
recall, with three judges serving as I speak, and all are on notice 
that their continued service is needed. The Senior Judges primarily 
assist with the more straight-forward appeals and the Court's motions 
practice, which in turn affords the regular active judges additional 
time to focus on the more time-consuming decisions.
    Several years ago, the Court also partnered with the Administrative 
Office of the U.S. Courts (AO) to acquire, adapt, and implement an 
electronic case management/electronic case filing system (CM/ECF). CM/
ECF has now been fully functioning for 2 years and we now receive most 
documents electronically and issue most orders and decisions 
electronically, although we still have paper filing and orders for pro 
se litigants. CM/ECF permits remote 24-hour filing access, reduced 
storage space needed for record retention, the opportunity for multiple 
users to access records, efficient electronic notification procedures, 
and reduced mailing/courier costs. We just installed an updated version 
of CM/ECF and will continue working with the AO to acquire future 
versions to provide ever more useful and time saving features for case 
processing and management.
    The Court disposed of more appeals this past fiscal year than were 
filed. This significant accomplishment is due largely to our mandatory 
conferencing program. However, more than half of the appeals filed, 
including a significant number of appeals where the appellant is pro 
se, require judicial review. In FY 2010, more than 2,000 appeals 
required judicial action, as did another 200 EAJA applications, 
petitions for extraordinary relief, and hundreds of motions. This level 
of demand for judicial review exceeds the capacity of our six active 
judges, who average over 200 appeals a year, in addition to the EAJA 
applications, petitions, and motions. The current need for judicial 
review also exceeds the support provided by our Senior Judges who 
average about a quarter of the production of a regular active judge 
(Senior Judges decided 284 appeals in FY 2010, as well as numerous 
motions).
    Nevertheless, there is daylight. Once all of our judicial vacancies 
are filled and the newly appointed judges attain experience and 
familiarity with veterans law and judicial decisionmaking, I am 
confident there will be an increase in the annual number of appeals 
resolved.

           III. Suggestion for Possible Time and Cost Savings
                  Without Judicial Review Degradation

    In October 2009, I testified before this Subcommittee regarding the 
Court's views on draft legislation entitled the ``Veterans Appellate 
Review Modernization Act.'' Within that proposal was a provision that 
would establish a commission to evaluate the process of appellate 
review of veterans benefits decisions and to make recommendations on 
how to improve that system.
    As I stated then, the time is right for a working group to step 
back and review the system we have, critically examine its strengths 
and weaknesses, and identify measures that could benefit the overall 
appellate process. Specifically, we support and encourage a commission 
to weigh the costs and benefits of the unique two-tiered Federal 
appellate review system in place for veterans benefits decisions. 
Similar action was taken in the past with regard to the U.S. Court of 
Appeals for the Armed Forces, where direct appeal to the Supreme Court 
ultimately was permitted. With two decades of experience in appellate 
review of veterans benefits claims, and the resultant seasoned body of 
case law, it is time to consider the added value of a second layer of 
Federal appellate review. No doubt, continued bites at the apple, so to 
speak, will be sought by some, but at the end of the day, I suggest it 
cannot be convincingly argued that a veteran, the taxpayer, or anyone 
is best served by waiting nearly 2 years to have a decision of the 
Veteran's Court overturned by the Federal Circuit, only to wait 
approximately another 2 years to have the Federal Circuit overturned by 
the Supreme Court, as was the situation in the case of Shinseki v.  
Sanders, 129 S.Ct. 1696, 1707 (2009), or to have a veteran wait 18 
months to have a decision of the Veteran's Court upheld by the Federal 
Circuit, only to wait another 9 months to have that decision overturned 
by the Supreme Court, as was the situation in the recently decided case 
of Henderson v.  Shinseki, 131 S.Ct. 1197 (Mar. 1, 2011). Because these 
cases involve issues of law, their impact is far reaching, often 
causing cases to be stayed, reconsidered, or readjudicated below. The 
extra step in the appellate process is unique, time consuming and 
costly, and worthy of examination for its continued need.

                       IV. A Veterans Courthouse

    Although now over 20 years old, the United States Court of Appeals 
for Veterans Claims remains the newest Federal court. Under the able 
leadership of our first Chief Judge--Chief Judge Nebeker--the Court 
offices and courtroom were constructed in leased commercial space, 
where the Court is housed today. Since at least 2003, many of our 
Nation's largest Veterans Service Organizations (VSOs) have supported a 
dedicated courthouse for veterans seeking judicial review. In 2004, the 
United States House of Representatives expressed its sense that the 
Court ``should be housed in a dedicated courthouse'' that would be 
``symbolically significant of the high esteem the Nation holds for its 
veterans'' and would ``express the gratitude and respect of the Nation 
for the sacrifices of those serving and those who have served in the 
Armed Forces, and their families'' (H.R. 3936). That sentiment was 
echoed in 2007 with the sense of Congress that the Court be provided 
appropriate office space ``to provide the image, security, and stature 
befitting a court that provides justice to the veterans of the United 
States'' (S. 1315). The Board of Judges fully supports the convictions 
expressed by Congress and the VSOs.
    In 2004, pursuant to Congressional support and funding, an initial 
and follow-on studies were undertaken by GSA to determine the 
feasibility of acquiring a dedicated courthouse. In 2009, eight 
National VSOs collaboratively sent a letter to Congress expressing 
their strong support of legislation that would authorize the funding 
and construction of a veterans courthouse. In FY 2009, Congress 
responded by appropriating $7 million (M) for advance planning and 
architectural design, and those funds were transferred to GSA for 
completion of a pre-development planning study (planning study). The 
Court made no specific funding request for the courthouse project in 
its FY 2010 budget request because the planning study had not yet been 
concluded and plans were too uncertain at that time to make such a 
request prudent.
    Following receipt of a GSA estimate that $50M was needed for 
construction funding and an additional $12M for land acquisition, $62M 
was requested in the Court's FY 2011 budget submission. In response, 
the House proposed full funding at $62M, and the Senate proposed $25M--
sufficient funding, per GSA, to perform more detailed design and 
planning, and to purchase the necessary land adjacent to GSA property 
being considered for the courthouse, the next steps in the process. As 
you know, the FY 2011 budget request has not yet been acted on because 
we are operating on a continuing resolution, and therefore no funding 
has been appropriated for construction of the courthouse in FY 2011.
    Subsequent to submitting the Court's FY 2011 request, GSA presented 
a more specific courthouse cost estimate based on the particular 
location and general design developed in the planning study. This 
estimate reflects a significant cost increase for project completion 
over the FY 2011 budget request. We understand that GSA has either 
briefed or offered to brief the appropriate Congressional Committees as 
to the basis for the cost increase.
    We also have learned over the past months that the local government 
may not be amenable to closing an infrequently used street on the side 
of the proposed location for the courthouse, and there are no 
assurances that the additional property needed to site the courthouse 
can be purchased within the estimated cost. GSA is less concerned about 
the second factor than it is the first. Should the side street be 
neither closed nor limited to controlled access, the cost of 
construction surely would rise and we may even need to find another 
site.
    Given the increased cost estimate from GSA and need for close study 
thereof, as well as the factors just noted, and mindful of the Court's 
responsibility to ensure fiscal prudence, our FY 2012 request includes 
$25M, which GSA advises is the amount necessary for funding the next 
steps toward construction, i.e., more detailed planning, design, and 
land acquisition. (This $25M is not needed in FY 2012 if it is 
appropriated in FY 2011.) We are sensitive to budget constraints and 
understand that priorities must be set by Congress; however, if any 
Federal courthouses are to be funded for construction, we support the 
veterans who contend that their courthouse should be one of them.
    If construction of the courthouse is to be delayed, with no work 
anticipated for the next several years, it is my understanding the $7M 
already appropriated for initial design--which has been transferred to 
GSA and of which a little over $6.6M still remains--could be used to 
fund the construction at our current location of two chambers, the 
relocated offices, and Senior Judges' chambers, if there is appropriate 
congressional agreement to do so.

                             V. Conclusion

    On behalf of the judges and staff of the Court, I express my 
appreciation for your past and continued support, and for the 
opportunity to provide this testimony today.

                                 
                Prepared Statement of Hon. Max Cleland,
            Secretary, American Battle Monuments Commission

Introduction
    Mr. Chairman and Members of the Subcommittee,
    Thank you for this opportunity to appear before you to discuss the 
American Battle Monuments Commission's Fiscal Year 2012 Appropriation 
Request.
    Honoring our Nation's fallen has been the mission of our Commission 
since 1923. Our purpose was eloquently stated in 1934 by our first 
Chairman, General of the Armies John J. Pershing, who promised that:
            ''Time will not dim the glory of their deeds.''
    We honor the fallen by commemorating the service, achievements and 
sacrifice of America's armed forces.
    It is our responsibility to preserve for future generations the 24 
cemeteries and 25 memorials, monuments and markers worldwide that have 
been entrusted to our care by the American people, to honor America's 
war dead, missing in action, and those that fought at their side.
    We have an equally important responsibility to continue the 
historical narrative for those who created it-to tell their stories at 
each of our overseas cemeteries.
    This imperative has never been more evident than over the past few 
weeks, when we lost Frank Buckles and Len Lomell to the passage of 
time.
    Many have read the story of Frank Buckles in recent weeks. With his 
passing, at the age of 110, we lost our last Doughboy of World War I--
our Nation's living connection to the Great War.
    Not as many Americans know of Len Lomell. I had the honor of 
meeting Len 15 months ago at his home in New Jersey. He exemplified the 
humble courage of our World War II generation, as he told me the story 
of Pointe du Hoc.
    On D-day, June 6th, 1944, Lomell was a first sergeant and acting 
platoon leader in D Company, 2nd Ranger Battalion. He climbed the 100-
foot cliffs of Pointe du Hoc with his comrades, after already being 
wounded in the side by machine gun fire. Experiencing the death and 
wounding of many comrades, he continued to move forward.
    Once at the top of the cliff, he began looking for the five 155-
millimeter guns that could have decimated the American invasion forces 
on Omaha and Utah Beaches. The guns could not be found. Lomell and Jack 
Kuhn went looking for them.
    Approximately 1 mile down a sunken road Lomell spotted the guns 
concealed under camouflage in an orchard. German soldiers located 100 
meters away did not see them coming.
    Lomell used silent thermite grenades on two of the guns. The 
incendiary compound poured out of the grenades like solder, hardening 
like a weld around the gears. Running back to the platoon to get more 
grenades, Lomell and Kuhn returned to destroy the remaining guns.
    Historian Stephen Ambrose said that other than General Eisenhower, 
Lomell contributed most to the success of D-Day. Len was discharged in 
December 1945. He died 2 weeks ago at the age of 91.
    We had hoped to have Len with us at Pointe du Hoc this June--67th 
anniversary of D-Day--when we rededicate the Pointe du Hoc Ranger 
Monument.
    The monument and German Observation Bunker it sits upon had been 
dosed to the public since March 2001 because of cliff erosion. It was 
reopened this month, following completion of a project to stabilize the 
cliff and preserve this iconic site.
    I will never forget the story Len shared with me, told not with 
bravado but with the matter-of-factness so typical of those who fought 
and won the Second World War. He will be in my thoughts on June 6th.
    Our mission--our noble purpose--is to honor the service, 
achievements and sacrifice of those, like Frank Buckles and Len Lomell, 
who have served overseas in the United States armed forces since our 
entry into the First World War.
    We execute that mission in part by maintaining our overseas 
cemeteries to a standard of excellence unparalleled for sites of their 
kind around the world.
    Those whom we honor deserve nothing less.
    The men and women buried in our overseas cemeteries and 
memorialized on our walls of the missing served and sacrificed so that 
we--and others--might live in peace and freedom. And they continue to 
serve today, as sentinels giving silent testimony to citizens of the 
world, of the values and principles for which we stand.
Telling Their Story
    Maintaining our cemeteries and memorials to the highest of 
standards will always be the Commission's top priority. But an 
increasingly important priority is to do a better job of preserving and 
telling the stories of those honored within them.
    We are making progress toward that end:

      We have projects underway to improve the interpretive and 
visitor services at Cambridge, Sicily-Rome, Meuse-Argonne and Flanders 
Field American Cemeteries.
      We are adding interpretive exhibits at Pointe du Hoc--our 
second most visited overseas site, surpassed only by Normandy American 
Cemetery and Vietnam battle maps to the Honolulu Memorial.
      We are producing educational interactive programs on 
major U.S. campaigns of the world wars for our Web site.

    Similar projects at our other cemeteries will follow as we adapt 
our visitor facilities, our Web site, and our message to the interests 
and demands of younger generations, for whom these important heritage 
sites and timeless lessons must remain relevant.
    Our goal is to maintain the world's finest commemorative sites; and 
to provide our visitors, in person and online, the historical context 
for understanding why our overseas cemeteries were established, how and 
why those honored within them died, and the values and principles for 
which they died.

Appropriation Request
    To execute this mission, our Fiscal Year 2012 request seeks $61.1 
million for our Salaries and Expenses Account and $16.0 million to 
replenish our Foreign Currency Fluctuation Account.
    The $61.1 million we request for Salaries and Expenses supports 
Commission requirements for compensation and benefits; rent and 
utilities; maintenance, infrastructure, and capital improvements; 
contracting for services; procurement of supplies and materials; and 
replacement of equipment.
    Our Salaries and Expenses request is $1.6 million below the 
annualized funding provided by the current Continuing Resolution for FY 
2011.
    To support this level of effort our staffing requirement remains at 
409 Full-Time Equivalent positions.
    Most of the Commission's facilities range in age from 49 to 95 
years old, with the Mexico City National Cemetery being nearly 160 
years old. Care and maintenance of these aging heritage sites requires 
exceptionally intensive labor. Not surprisingly, compensation and 
benefits consume nearly half of the Commission's appropriations 
request.
    The $16.0 million we need to replenish our Foreign Currency 
Fluctuation Account defrays losses resulting from changes in the value 
of foreign currencies against the U.S. Dollar, allowing us to maintain 
purchasing power in an uncertain financial environment--a critical 
factor when 70 percent of our annual appropriation is spent overseas.
    In the summer of 2009, I began an initiative to simplify, 
streamline and support our mission operations. We have completed that 
transition. In the process we eliminated a redundant contract staff in 
our Washington headquarters, closed an unnecessary regional office in 
Rome, and centralized all overseas operations under a single 
administrative office in Paris.
    Our agency is now streamlined into a Washington-based policy and 
support office and a Paris-based field operations center responsible 
for all overseas cemeteries and memorials. The new structure is 
standardizing operations at our 24 cemeteries, improving supervision of 
our cemeteries, providing new career growth opportunities for our 
superintendents, and positioning us for success in the 21st century.
    And this summer we will implement a new Financial Management System 
that will enable us to more efficiently manage our financial resources.

Conclusion
    The Commission's mission success hinges on our ability to perform 
three core functions: (1) keep the headstones white; (2) keep the grass 
green; and (3) tell the story of those we honor.
    Our Fiscal Year 2012 request enables us to perform these core 
functions to a level of excellence that our war dead deserve and that 
the American people expect.
    With the support of the Administration and the Congress, we do our 
part to meet the challenge posed by the words of the poet Archibald 
MacLeish:
   `` . . . We leave you our deaths: give them their meaning . . .''
    Mr. Chairman, Members of the Committee, we welcome your visits to 
our commemorative sites--to experience firsthand the inspiration they 
provide to all who walk those hallowed grounds.
    Thank you again for allowing me to present this summary of our 
mission operations and our appropriation request.
    This concludes my prepared statement. I will be pleased to respond 
to your questions.
                               __________
                  American Battle Monuments Commission
                    Fiscal Year 2012 Budget Request

                           Executive Summary

Total Budget Authority Requested for Fiscal Year 2012
    The American Battle Monuments Commission requests $77,100,000 in 
total budget authority for fiscal year (FY) 2012 to provide funding for 
Salaries and Expenses and the Foreign Currency Fluctuation Account.


----------------------------------------------------------------------------------------------------------------
                                                        FY 2010         FY 2011        FY 2012
                                                     Appropriation   Annualized CR     Request        Change
----------------------------------------------------------------------------------------------------------------
Salaries & Expenses                                   $62,675,000     $62,675,000   $61,100,000    ($1,575,000)
----------------------------------------------------------------------------------------------------------------
Foreign Currency                                      $20,200,000     $16,000,000   $16,000,000              $0
----------------------------------------------------------------------------------------------------------------
    Total                                             $82,875,000     $78,675,000   $77,100,000    ($1,575,000)
----------------------------------------------------------------------------------------------------------------
Full-TimeEquivalentemployment                                 409             409           409               0
----------------------------------------------------------------------------------------------------------------

Salaries and Expenses Request
    The Commission's FY 2012 budget request for salaries and expenses 
of $61,100,000 is $1,575,000 below the annualized funding provided by 
the current Continuing Resolution (P.L. 111-242, as amended) for FY 
2011. Adjustments to the Commission's budget request are shown below:

----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
FY 2011--Annualized Level under the Continuing Resolution                                           $62,675,000
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------

------------------------------------------------------------------------
Adjustments:                      Notes
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
  Salaries and Benefits                                                     1          $578,000
-------------------------------------------------------------------------------------------------
  Utilities, Services and Cemetery Supplies                                 2        $1,491,000
-------------------------------------------------------------------------------------------------
  Maintenance and Infrastructure Programs                                   3      ($3,644,000)
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------

------------------------------------------------------------------------
  Total Adjustments                                        ($1,575,000)
----------------------------------                       ---------------
FY 2012 Budget Request                                      $61,100,000
------------------------------------------------------------------------
Notes:
1. Increase for Salaries and Benefits for the expenses of overseas
  employees; estimates include a pay freeze in effect for FY 2011 and FY
  2012.
2.  Net Increase for Utilities, Contractual Services and Cemetery
  Supplies offset by reductions in Rent, Travel, Transportation,
  payments to the Department of State, etc.
3. Decrease in the Maintenance and Infrastructure Programs at ABMC
  cemeteries and monuments.


Foreign Currency Fluctuation Account Request
    The FY 2012 budget request to replenish its Foreign Currency 
Fluctuation Account is estimated to be $16,000,000. This funding is 
required to retain the Commission's buying power against currency 
losses, primarily against the European Euro.

                                 
                Prepared Statement of Ronald E. Walters,
          Acting Deputy Under Secretary for Memorial Affairs,
 National Cemetery Administration, U.S. Department of Veterans Affairs

    Chairman Runyan, Ranking Member McNerney and Members of the 
Subcommittee, I am pleased to be here today to provide an overview of 
the FY 2012 budget for the National Cemetery Administration (NCA). 
Within the Department of Veterans Affairs (VA), NCA is responsible for 
administering burial and memorial programs to meet the needs of 
veterans, their families and survivors. Our responsibilities include: 
management of 131 National Cemeteries and 33 soldiers' lots and 
monuments; furnishing headstones, markers and medallions for the graves 
of veterans around the world; administering the Presidential Memorial 
Certificate program; and, overseeing the Federal grants program for 
construction of State and tribal veterans cemeteries.
    VA's burial and memorial programs are funded from both 
discretionary and mandatory accounts. Mandatory funding is provided 
from the Compensation and Pension account, managed by the Veterans 
Benefits Administration (VBA). These funds are used to purchase 
headstones, markers and burial crypts. I will focus my comments today 
on the discretionary funding, administered by NCA. The President's 2012 
budget request includes a total of $376.7 million for NCA's 
discretionary programs. Of this amount, $250.9 million is included for 
operations and maintenance of our National Cemeteries; $38.2 million is 
requested for our Major Construction program; $41.6 million for Minor 
Construction; and $46 million for the Veterans Cemetery Grant program.
    Our operations and maintenance request of $250.9 million sustains 
significant investments in National Cemeteries provided by the 
President and Congress in the past several years. The base budget for 
operations includes nearly $33 million for projects to raise, realign 
and clean headstones and markers and repair sunken graves, as part of 
our ongoing effort to maintain National Cemeteries as National Shrines 
worthy of veterans' service and sacrifice. In addition, our operations 
and maintenance request includes $3 million for renewable energy 
projects such as the installation of windmills and solar panels at 
several facilities, along with $2 million for non-recurring maintenance 
projects.
    The budget request will also permit NCA to hire an additional 10 
FTE to address expected increases in burials and to provide contract 
funding for additional maintenance requirements.
    VA's 2012 Major Construction request includes $38.2 million for 
NCA. This funding will allow us to address our top construction 
priority: keeping existing National Cemeteries open. The 2012 major 
program includes $23.7 million for a gravesite expansion project at the 
National Memorial Cemetery of the Pacific in Hawaii. The request also 
includes $14.5 million in line item funding: $10 million for planned 
land acquisition that will be used to purchase property when the 
opportunity arises, and $4.5 million for advance planning of future 
major construction projects.
    Using the total available funding in these line items, together 
with available balances from prior-year major construction funding, NCA 
expects to acquire land and begin preliminary planning efforts for five 
new National Cemeteries. The Secretary of Veterans Affairs' recent 
approval of new burial policies, which changed the threshold veteran 
population required to construct a new National Cemetery to 80,000 
within 75 miles of a proposed site, will result in the construction of 
new National Cemeteries in Central East Florida; Omaha, Nebraska; 
Western New York; Tallahassee, Florida; and Southern Colorado. NCA is 
actively searching for land at 
these locations and expects to request related construction funding in f
uture budgets.
    Included in VA's 2012 Minor Construction request is $41.6 million 
for NCA. NCA will allocate these funds for gravesite expansion 
projects, infrastructure repairs and the construction of a columbarium-
only satellite cemetery in the Chicago area. The Chicago satellite is 
part of an urban initiative associated with the new burial policies.
    Finally, the 2012 request provides $46 million for the Veterans 
Cemetery Grants program. These funds will allow NCA to address all of 
the anticipated, highest-priority projects, including those submitted 
by tribal governments. The grants program is especially important in 
providing burial access to veterans living in rural areas. As part of 
this program, VA will continue to offer operating grants to assist 
States in achieving and maintaining standards of appearance 
commensurate with National Cemetery shrine status. The States will also 
benefit greatly from Congress' increase in the plot allowance to $700 
beginning in FY 2012, and the subsequent indexing of adjustments to the 
allowance based on the Consumer Price Index. These funds, which are 
administered by VBA, are paid to the States for the burial of veterans 
and help offset operating expenses.
    Mr. Chairman, the 2012 request builds upon NCA's previous success 
and will allow us to continue to meet the needs of veterans and their 
families. In 2012, NCA will provide nearly 90 percent of the Veteran 
population--about 20 million veterans--with a burial option in a 
national or State veterans cemetery within 75 miles of their homes. We 
expect to inter more than 115,000 veterans and dependents next year--an 
increase of about 1,000 burials over 2011. We will also maintain over 
8,700 developed acres, or 3 percent over the 2011 estimate, while 
giving perpetual care to 3.2 million, or 2.6 percent more gravesites.
    NCA expects to maintain unsurpassed levels of customer satisfaction 
in 2012. NCA achieved the top rating in the Nation four consecutive 
times on the prestigious American Customer Satisfaction Index (ACSI) 
established by the University of Michigan. The Index is the only 
national, cross-industry measure of satisfaction in the United States. 
On the most recent 2010 survey and over the past decade, NCA's scores 
bested over 100 Federal agencies and the Nation's top corporations 
including Ford, FedEx and Coca Cola, to name a few. Our own internal 
surveys confirm this exceptional level of performance. For 2010, 98 
percent of our survey respondents rated the appearance of National 
Cemeteries as excellent; 95 percent rated the quality of service as 
excellent. Our 2012 targets for cemetery appearance and quality of 
service are 99 and 98 percent, respectively.
    The 2012 budget will enable NCA to process 90 percent of headstone 
and marker applications for veterans buried in locations other than VA 
National Cemeteries (e.g., private cemeteries, State and tribal 
veterans cemeteries) within 20 days of receiving the request. Ninety 5 
percent of gravesites in National Cemeteries will be marked within 60 
days of an interment.
    Mr. Chairman, this concludes my remarks. I appreciate the 
opportunity to come before you today to provide an overview of the FY 
2012 budget request for the National Cemetery Administration. We are 
grateful for your support and the support of this Subcommittee. I'd be 
happy to answer any questions. Thank you.

                                 
                 Prepared Statement of Michael Walcoff,
                  Acting Under Secretary for Benefits,
 Veterans Benefits Administration, U.S. Department of Veterans Affairs

    Chairman Runyan, Ranking Member McNerney, Distinguished Members of 
the Subcommittee:
    Thank you for the opportunity to appear before you to discuss the 
Department of Veterans Affairs (VA) Veterans Benefits Administration 
(VBA) FY 2012 budget request for compensation and pension programs. I 
am accompanied today by Mr. Jamie Manker, VBA's Chief Financial 
Officer, and Ms. Diana Rubens, Deputy Under Secretary for Field 
Operations. We look forward to continuing our strong collaboration and 
partnership with this Subcommittee, the Committee as a whole, and the 
entire Congress as we work together to continue to enhance the delivery 
of benefits and services to our Nation's veterans.
    VBA's budget request for 2012 continues our focus on three key 
priorities established by Secretary Shinseki to transform VA into a 
21st century organization that is people-centric, results-driven, and 
forward-looking: expanding access to benefits and services; reducing, 
and ultimately eliminating the claims backlog; and ending Veteran 
homelessness by 2015.
    Under Secretary Shinseki's leadership, we have disciplined 
ourselves to understand that successful execution of our mission at VA, 
especially one for a Department as large as ours, requires good 
stewardship of resources entrusted to us by the Congress. Every dollar 
counts, both in the current constrained fiscal environment and during 
less stressful times. Accountability and efficiency are behaviors 
consistent with our philosophy of leadership and management. The 
responsibility of caring for America's veterans on behalf of the 
American people demands unwavering commitment to effectiveness, 
accountability, and in the process, efficiency.
    VBA provides an integrated program of benefits and services to 
veterans, their families and survivors. These benefit programs are 
administered through a nationwide network of 57 regional offices, 
including offices in Puerto Rico and the Philippines. The benefits 
provided include compensation for veterans with service-connected 
disabilities; pension for aged, needy, and totally disabled veterans 
and veterans' survivors; vocational rehabilitation and employment 
services; educational and training assistance; home buying assistance; 
estate protection services for veterans under legal disability; 
information and assistance through personalized contacts and outreach 
programs to separating Servicemembers and other special groups of 
veterans; and life insurance programs. Of the total Department budget 
request for FY 2012 of $132.2 billion, 53 percent or $70.3 billion is 
designated for mandatory funding for VBA to pay benefits to our 
Nation's veterans, their families and survivors.

Compensation and Pension
    Seventy-five percent of the total mandatory funding supports 
monthly disability compensation and ancillary benefit payments to 
veterans. In 2012, funding for compensation is estimated at nearly 
$52.9 billion. The compensation program also provides monthly payments 
to surviving spouses, dependent children, and dependent parents of 
Servicemembers and veterans who die as a result of injuries or 
illnesses related to their military service. An estimated 4 million 
veterans and survivors will receive compensation benefits in FY 2012.
    Additionally, VBA will provide an estimated $3.3 billion in income-
based pension benefits to wartime veterans who are permanently and 
totally disabled due to nonservice-connected causes or age 65 or older. 
Pension benefits to income-eligible surviving spouses and dependent 
children of deceased wartime veterans who die as a result of a 
disability unrelated to military service are projected to total $1.6 
billion. More than 507,000 veterans and survivors will receive pension 
benefits in 2012.

Incoming Disability Claims Workload
    VBA's workload continues to dramatically increase due to the 
unprecedented volume of disability claims being filed. In 2009, for the 
first time, we received over one million disability claims during the 
course of a single year. In 2010, we received approximately 1.2 million 
disability claims, a 17.6 percent increase over the previous year. This 
growth is driven by a number of factors, including our successful 
outreach efforts; improved access to benefits through the joint VA and 
DoD pre-discharge programs; Agent Orange presumptive disabilities for 
veterans who served in the Republic of Vietnam; increased demand as a 
result of 10 years at war; the aging of our veteran population; new 
regulations for processing certain claims related to Gulf War service, 
traumatic brain injuries, and post-traumatic stress disorder; and the 
impact of a difficult economy, prompting America's veterans to pursue 
access to the benefits they earned during their military service. With 
the increase in claims receipts, we are also providing historic numbers 
of veterans with decisions on their claims. In fiscal year 2010, VBA 
completed nearly 1.1 million rating claims.
    Claim receipts are expected to approach 1.5 million in 2011. This 
includes nearly 230,000 additional claims expected as a result of the 
approval of three new Agent Orange presumptive conditions. In October 
2009, Secretary Shinseki announced his decision to establish 
presumptions of service-connection for veterans exposed in service to 
certain herbicides, including Agent Orange, for three illnesses (B-cell 
leukemia, Parkinson's disease and Ischemic heart disease) based on the 
latest evidence of an association between those illnesses and exposure 
to herbicides. This was an important decision for our Vietnam veterans. 
The majority of the Agent Orange-related claims will be received in 
2011, so receipts in 2012 are projected to be less than receipts in 
2011 (1.3 million in 2012).
    Of the over 200,000 Agent Orange claims we plan to process this 
year, approximately 93,000 are covered by the Nehmer settlement, in 
that they were previously denied. These claims are very complex and 
take more than twice the resource levels and time to complete, which is 
significantly slowing production in 2011. However, the impact is only 
in the near term as we work through the Agent Orange-related claims. 
New business processes and technologies will enable us to increase 
production beginning in 2012, and we project decision output to outpace 
claims receipts beginning in 2013, allowing us to stay on track for 
achieving our 2015 goals. These new processes and technologies are the 
result of our aggressive efforts to transform VBA.
    The funding request in the President's budget for VBA is essential 
to meet the increasing workload and put VA on a path to achieve our 
ultimate goal of having no veteran wait longer than 125 days to receive 
a quality decision on a claim. The budget supports ongoing and new 
initiatives to reduce disability claims processing time, including 
development and implementation of further redesigned business 
processes, and funds 14,320 direct FTE to assist in reducing the 
benefits claims backlog. We increased our workforce in 2010 by 
converting 2,400 temporary employees funded through the American 
Recovery and Reinvestment Act to full-time employees and hiring an 
additional 600 new employees. VBA continues to aggressively train 
claims processing staff across the Nation, and we currently employ over 
11,000 full-time claims processors. However, we recognize that 
continuing to increase our FTE levels is not a sufficient solution. The 
need to better serve our veterans requires bold and comprehensive 
business process changes to transform VBA into a high-performing 21st 
century organization that provides the best services available to our 
Nation's veterans, survivors, and their families. That is exactly the 
effort currently underway in VBA.

VBA Claims Transformation Plan
    VBA's transformation is demanded by a new era, emerging 
technologies, the latest demographic realities, and our renewed 
commitment to today's veterans. VA must deliver first-rate and timely 
benefits and services to our Nation's veterans, their families and 
survivors. VBA is vigorously pursuing its Claims Transformation Plan, a 
series of business process and technology-centered improvements 
designed to ``break the back of the claims backlog'' and achieve our 
goal of processing all claims within 125 days with 98 percent accuracy 
by 2015. The success of the plan is essential to better serving 
veterans, improving claims processing time and eliminating the backlog.
    VBA is changing our culture to one that is centered on 
accountability to, and advocacy for, our veterans. We're reviewing and 
reengineering our business processes in collaboration with both 
internal and external stakeholders, including the veterans Service 
Organizations and Congressional partners, to constantly improve our 
claims process using best practices and ideas. We're relying heavily on 
technology and infrastructure by deploying leading-edge, powerful 21st 
century IT solutions to create a smart, paperless claims system which 
simplifies and improves claims processing for timely and accurate 
decisions the first time.
    In August 2009, President Obama challenged VBA employees to be more 
innovative and to come up with the best ways of doing business and 
cutting red tape in VA's disability compensation system. Responding to 
this call, VA received more than 3,000 proposals from our employees. 
The most promising proposals have been refined, resourced, and closely 
monitored. As I will discuss in more detail, nearly three dozen 
nationally supported initiatives are testing better ways to do 
business, and regional offices are encouraged to explore innovations 
locally. Our initiatives span the entire claims review process, from 
simplifying medical evidence collection to realigning internal 
resources to better address more complex claims.
    VBA is working to simplify processes and reduce the burden of 
paperwork for our veterans. Improvements in efficiency and customer 
service include new policies to promote the use of simple telephone 
contacts with veterans to clear up evidence questions and add 
dependents; relaxing the schedule for routine future examinations for 
most veterans to a 5-year interval instead of a 2-year interval; and 
reducing requirements for second signatures in medical reports where 
appropriately trained practitioners are capable of providing health 
evaluations.
    On October 6, 2010, VA published the first set of streamlined forms 
specifically designed to capture medical information essential to a 
quick and accurate evaluation of disability compensation and pension 
claims. Dozens more of these forms are in development for various 
disabilities. The content of these disability benefits questionnaires 
is being built into VA's own medical information system to guide in-
house examinations. Veterans can provide them to private doctors as an 
evidence guide that will speed their claims decisions. The result will 
be more timely rating decisions, fewer duplicated examinations, a 
reduced need for VA examinations, less time needed to evaluate 
examination results by claims processors, and a potential to improve 
rating accuracy.
    Another initiative to reduce the time needed to obtain private 
medical records utilizes a private contractor to retrieve the records 
from the provider, scan them into a digital format, and send them to VA 
through a secure transmission. This contract frees VA staff to focus on 
processing claims and improve productivity.
    VBA is integrating rules-based processing and other calculator 
tools to significantly improve the accuracy of VA's compensation and 
pension decisions. We are working on more than a dozen such logic-based 
calculators with the Office of Information and Technology to equip VA 
decisionmakers with rules-based, online tools that automatically 
calculate evaluations and certain award actions, enabling VA to issue 
faster and more accurate decisions. VA recently completed and deployed 
tools for working cases of hearing loss and special monthly 
compensation. These types of calculators can free employees working on 
simple claims to concentrate on more complex claims requiring detailed 
review and analysis by claims professionals.
    VBA's pilot initiatives are being tested in focused offices, 
enabling us to determine which concepts are suitable for nationwide 
deployment. A second-generation pilot is an Integration Lab in 
Indianapolis that is examining the effect of combining previously 
fielded initiatives simultaneously in one office, testing for synergies 
and conflicts.

Veterans Benefits Management System
    The Veterans Benefits Management System (VBMS) initiative is the 
cornerstone of VA's claims transformation strategy. VBMS is a holistic 
solution that integrates a business transformation strategy (BTS) and a 
web-based, 21st century paperless claims processing system, which will 
significantly reduce our reliance on the receipt, movement, and storage 
of paper. By eliminating the dependence on paper, VBA will be better 
positioned to make use of available resources, regardless of geographic 
location.
    In 2011, VBA is conducting two of three phased development programs 
to test VBMS. Each phase will expand on the success of the first phase 
by adding additional software components. VBMS Phase 1 is now being 
field-tested at the Providence Regional Office. This test comes after 
completion of a Virtual Regional Office project and marks a major 
milestone as the first of three 6-month program phases. Feedback from 
field-testing and live claims processing will be used to drive 
enhancements to VBMS and business practices in preparation for 
subsequent phases. Phases 2 and 3 of VBMS will be undertaken at two 
additional regional offices and deployment of the system to all 
regional offices begins in 2012.
    VBA recognizes that technology is not the sole solution for our 
claims-processing challenges; however, it is the hallmark of a forward-
looking organization. Combined with a renewed commitment and focus 
toward increasing advocacy for veterans, the VBMS strategy combines a 
business transformation and re-engineering effort with enhanced 
technologies, giving an overarching vision for improving service 
delivery to our Nation's veterans. In the 2012 budget request for 
information technology, we will invest $148 million to complete VBMS 
phased development and testing and initiate a national rollout.

Veterans Relationship Management
    As we work to implement a paperless system to transform the way we 
process disability claims, we are also focusing on improving our 
customer service and interaction with veterans. The Veterans 
Relationship Management (VRM) initiative will provide veterans, their 
families, and survivors with direct, easy, and secure access to the 
full range of VA programs through an efficient and responsive multi-
channel program, including phone and Web services. VRM will provide VA 
employees with up-to-date tools to better serve VA clients, and empower 
clients through enhanced self-service capabilities.
    Expanding the self-service capabilities of the eBenefits on-line 
portal is one of the early successes of the VRM program in 2010. VA and 
DoD jointly developed the eBenefits portal, with VA serving as the 
designated lead agent for this project. Since initial inception, 
eBenefits has expanded beyond its original scope and is now intended to 
be an interactive web portal for all veterans, servicemembers, and 
their families. It can be accessed via https://www.ebenefits.va.gov.
    With quarterly releases, the eBenefits portal is a one-stop shop 
that provides information about military and veterans benefits and 
allows users to access online tools to perform multiple self-service 
functions such as:

      Apply for benefits;
      Download the DD Form 214, Certificate of Release or 
Discharge from Active Duty;
      See the status of their disability compensation claim 
and/or appeal online;
      View their record of payments issued;
      Self generate letters to verify eligibility for civil 
service preference, VA benefits, and military service;
      Update direct deposit information for certain benefits; 
and
      Obtain a VA guaranteed home loan Certificate of 
Eligibility

    Over 200,000 Servicemembers and veterans are registered in 
eBenefits, with over 1.5 million eBenefits visits to the portal since 
inception.

Pension and Fiduciary Programs
    VA's non-service-connected disability and death pension programs 
provide monthly payments to over 500,000 elderly and disabled veterans 
and veterans' survivors with limited financial resources. To improve 
the timeliness of service delivery in this program and to assure 
accurate claims processing, VA administers the pension programs through 
three Pension Management Centers (PMCs) in Philadelphia, Milwaukee, and 
St. Paul, with a workforce of 1,093 employees. Consolidation of the 
pension programs has enabled VA to achieve a 96 percent accuracy level 
in 2010. In 2010, VBA completed the consolidation of all compensation 
survivor claims to the PMCs to focus expertise on this vital area and 
achieve similar performance improvements.
    VA conducts a comprehensive fiduciary program for our most 
vulnerable beneficiaries who are incapable of managing their own funds. 
VA's fiduciary program supervises more than 110,000 beneficiaries with 
combined estate value in excess of $3.2 billion. Our fiduciary 
responsibilities include prevention, identification, and investigation 
of misuse of benefits. The workload in the fiduciary program continues 
to grow as the age of our veterans increases. The number of veterans 
who are enrolled in C&P programs and who are 85 or older is projected 
to increase by 32 percent between now and 2018.
    We have taken a number of steps to improve the program, including 
hiring new management staff to spearhead reform efforts; clarifying 
existing procedural guidance; and deploying standardized training. We 
consolidated fiduciary activities for the Western Area regional 
offices, establishing a Fiduciary Hub in the Salt Lake City Regional 
Office as a pilot initiative. Our analysis of the pilot program 
documented increased efficiencies and service improvements. We are 
therefore this year expanding the hub concept to the Southern Area.

VBA Headquarters Reorganization
    A new organizational structure for VBA Headquarters was approved by 
the Secretary on January 19, 2011. The new organization is in line with 
the Secretary's goal of transforming VA into a high-performing 21st 
century organization. The VBA Office of Strategic Planning was created 
to direct our transformation and strategic planning efforts, including 
leadership of the three major departmental initiatives for which VBA 
has program management responsibility.
    The new structure realigns the responsibilities for VBA's major 
benefit programs, currently assigned to the Associate Deputy Under 
Secretary for Policy and Program Management, under two distinct 
positions: Deputy Under Secretary for Economic Opportunity and Deputy 
Under Secretary for Disability Assistance. The alignment of our primary 
business lines under these new positions correlates to the 
responsibilities of HVAC Subcommittees on Economic Opportunity and 
Disability Assistance and Memorial Affairs.
    Under this new structure, we are also separating the fiduciary and 
pension program functions from the compensation program in our VBA 
Headquarters organization, creating a separate Pension and Fiduciary 
Service. This will allow us to increase oversight and management 
attention in our fiduciary and pension programs, while also allowing us 
to give greater focus to the complex and challenging workload and 
policy issues in our compensation program. The reorganization is being 
accomplished within existing resource levels. VBA Headquarters staff 
currently working in the pension and fiduciary programs will be 
reassigned to the new service. This change in VBA Headquarters 
structure does not result in any change to the VBA field structure, nor 
is there any direct impact on VBA's FY 2012 budget request.

Concluding Remarks
    Mr. Chairman, Members of the Subcommittee, this concludes my 
remarks. Thank you again for the opportunity to testify. I will be 
happy to respond to any questions from you or other Members of the 
Subcommittee.