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URGENT SUPPLEMENTAL APPROPRIATION BILL, 1971

SUBCOMMITTEE ON HUD-SPACE-SCIENCE

EDWARD P. BOLAND, Massachusetts, Chairman

JOE L. EVINS, Tennessee
GEORGE E. SHIPLEY, Illinois
ROBERT N. GIAIMO, Connecticut
DAVID PRYOR, Arkansas
J. EDWARD ROUSH, Indiana

CHARLES R. JONAS, North Carolina
BURT L. TALCOTT, California
JOSEPH M. McDADE, Pennsylvania
DEL CLAWSON, California

G. Homer Skarin and Hunter L. Spillan, Staff Assistants

TUESDAY, MARCH 30, 1971.

VETERANS' ADMINISTRATION

WITNESSES

F. B. RHODES, DEPUTY ADMINISTRATOR

R. H. WILSON, ASSOCIATE DEPUTY ADMINISTRATOR

J. D. SHYTLE, CONTROLLER

W. D. ROSS, DIRECTOR, BUDGET SERVICE

J. J. CORCORAN, GENERAL COUNSEL

DEPARTMENT OF MEDICINE AND SURGERY

DR. M. J. MUSSER, CHIEF MEDICAL DIRECTOR

DEPARTMENT OF VETERANS BENEFITS

0. B. OWEN, CHIEF BENEFITS DIRECTOR

J. C. PECKARSKY, DEPUTY CHIEF BENEFITS DIRECTOR
E. R. SILBERMAN, DIRECTOR, BUDGETING AND PLANNING
SERVICE

J. T. TAAFFE, JR., DIRECTOR, COMPENSATION, PENSION AND
EDUCATION SERVICE

Mr. GIAIMO. The committee will come to order. We are happy to have with us this morning the Deputy Administrator of the Veterans' Administration and the others listed. We welcome you, Mr. Rhodes. Mr. RHODES. May I begin by saying Mr. Johnson is unable to be here. He had a speaking engagement that he has had planned for a long time and it is, therefore, my privilege to make this statement on behalf of the Administrator concerning the supplemental.

(1)

GENERAL STATEMENT

The President has transmitted (House Document Number 92-73) supplemental appropriation requirements for VA programs totaling $835,877,000, as follows:

$433.8 million for veterans' compensation and pensions benefit payments;

$302.2 million for veterans' educational and training assistance; $99.9 million for increased pay costs resulting from Federal comparability raises effective December 28, 1969 (Public Law 91-231), and January 10, 1971 (Public Law 91-656).

A tabular summary by appropriation of these additional requirements is attached.

COMPENSATION AND PENSIONS

Almost 80 percent of the $433.8 million requested for compensation and pensions is related to new legislation enacted subsequent to the initial budget submission. The compensation rate increases provided by Public Laws 91-262 and 91-376, along with the pension rate increases provided by Public Laws 91-588 and 91-376, account for most of the new legislation requirement of $345 million. The remaining $88.8 million of the request is due to changes in caseload and increases in average unit costs.

READJUSTMENT BENEFITS

We are requesting an additional amount of $302.2 million for readjustment benefits. Although certain new legislation, such as, Public Laws 91-584 and 91-666, have given rise to some added costs in this account, the primary pressure for increase has come from increased numbers of veterans participating in the academic and on-the-job training programs. Our estimate of the number of trainees is now 180,000 greater than was estimated in the original budget request. This training load increase together with rising unit costs have produced the additional requirements requested.

INCREASED PAY COSTS

Our supplemental appropriation requests for civilian pay act and wage board increases are included as a part of the Government-wide request in title II of the proposed 1971 supplemental bill. The total cost of these increases amounts to over $134 million, of which we are absorbing approximately $34 million. Our net request is $99.9 million. The distribution by appropriation account is shown in the attached tabular summary.

(The summary follows:)

VETERANS' ADMINISTRATION: SUPPLEMENTAL APPROPRIATION REQUEST-1971 (HOUSE DOCUMENT 92-73 DATED MAR. 23, 1971)

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Mr. RHODES. This concludes the general statement, sir. We will be glad to answer any questions.

TOTAL APPROPRIATION FOR 1971

Mr. GIAIMO. What is the total Veterans' Administration appropriation for fiscal year 1971?

Mr. SHYTLE. The total appropriation for 1971 is $9,901,393,000 including $835,877,000 in anticipated supplementals.

Mr. GIAIMO. You are still under $10 billion, but not by much.

ABSORPTION OF PAY RAISE

From which appropriation are you absorbing the $34 million for pay increases?

Mr. RHODES. Actually there was an additional $105 million appropriated for 1971. We discussed this with you when we were before you on the 1972 budget.

Mr. GIAIMO. That was for the medical care appropriation, wasn't it?

Mr. WILSON. That is correct.

Mr. GIAIMO. You are using $34 million of that $105 million for pay increases?

Mr. RHODES. Yes, sir. Thirty-three million dollars absorbed in medical care-$1 million in other accounts.

ADDITIONAL FUNDS VOTED BY CONGRESS IN 1971

Mr. GIAIMO. Does that mean you don't need it for the purposes for which it was provided?

Mr. SHYTLE. Mr. Chairman, we testified initially on this. The Congress intended that the $105 million be used for medical care, to improve staffing and to provide for several other items of expenditure relating to the direct care of patients.

Due to the lateness of the enactment of this legislation it was not feasible for us to put this money into employment as intended by the Congress. We used $33 million of it for absorption of pay raise and the balance has been put into such things as fee dental and other direct medical care items.

Mr. GIAIMO. As I remember, we had a discussion about some of the special units that we wanted you to get underway as fast as possible. Intensive care units, and some others. We had a long discussion about the fact that they weren't becoming operative as quickly as everyone felt they should. Was any of that $105 million used for those purposes?

Dr. MUSSER. $1 million of it was used for acceleration of our dialysis program but again in a number of special medical programs, the committee will recall, there was a delay in availability.

Mr. GIAIMO. Are you moving to get those services implemented as quickly as possible?

Dr. MUSSER. Yes, sir.

Mr. GIAIMO. There is a strong feeling, nationwide, not to change those programs.

DISTRIBUTION OF ADDITIONAL FUNDS

Mr. RHODES. Mr. Wilson reminds me and I think Mr. Shytle alluded to the fact that in our presentation before your committee in the justification of the 1972 budget, we did list the utilization. Perhaps we should submit a statement for the record.

Mr. GIAIMO. Insert the table at this point in the record. (The information follows:)

VETERANS' ADMINISTRATION

Medical care distribution of $105 million appropriation increase in fiscal year 1971

1. Fee dental backlog---

2. Payroll adjustment to support budgeted fiscal year 1971 FTEE__ 3. Increased costs of contract and fee dialysis_.

4. Increased fuel costs__.

5. Public law 91-418 (increased Government contributions for employee health benefits) -

6. Preactivation costs at new hospitals_

7. M. & R. backlog reduction_.

8. Equipment replacement backlog reduction :

(a) Object 31.

(b) Object 32.

9. Contract hospitalization program.

10. Pay raise absorption_‒‒‒

Total

$31,000

9, 400 1,000 500

4,300 700 5,000

17, 500 2,700 600

32, 300

105, 000

COMPENSATION AND PENSIONS

Mr. GIAIMO. We will place in the record the portion of House Document 92-73 that pertains to compensation and pensions and the justification material for compensation and pensions.

(The material follows:)

COMPENSATION AND PENSIONS

For an additional amount for "Compensation and pensions," $433,779,000, to remain available until expended.

VETERANS' ADMINISTRATION-COMPENSATION AND PENSIONS

Additional requirements of $433,779,000 are needed to make payments authorized by law. Nearly 80 percent or $344,964,000 of this total, is due to legislation enacted subsequent to the initial budget submission. The balance, or $88,815,000, is required to cover unforeseen increases in caseloads, particularly in the Vietnam era category, and higher than planned average payments, especially veterans pension, which manifested themselves in 1970 after the 1971 budget request was submitted to Congress. Obligations incurred against these funds arise by operation of law and are not administratively controllable. Requirements by major category are as follows:

1. Compensation:

(a) Veterans: Public Law 91-376, approved August 12, 1970
increased most rates of disability compensation on the
average by approximately 11 percent effective July 1, 1970,
and is estimated to increase costs in 1971 by $217,943,000.
Additionally, Vietnam era veterans continue to come on the
rolls at a greater than anticipated rate and is estimated to
increase costs by $51,244,000.

Total veterans compensation_.

(b) Survivors: Public Law 91-262, approved May 21, 1970,
increased rates to certain "children alone" cases effective
July 1, 1970, and is estimated to increase costs in 1971 by
$3,612,000. Public Law 91-376, approved August 12, 1970,
authorized the payment of benefits to certain remarried
widows effective January 1, 1971, for an added cost in 1971 of
$2,549,000.

Total survivors compensation_.

2. Pensions :

(a) Veterans: Public Law 91-588, approved December 24,
1970, and effective January 1, 1971, increased rates and in-
come limitations for veterans and is estimated to increase
costs in 1971 by $71,015,000. Additionally, there is an in-
creasing trend being experienced in the average payment
for this category. This is attributable to more veterans,
especially World War I and World War II, becoming eli-
gible to receive the higher “aid and attendance" and "house-
bound" rates. It is estimated that 1971 costs will increase
$29,171,000.

Total veterans pension__

(b) Survivors: Public Law 91-376, as it did for survivors
compensation, authorized the payment of benefits to certain
remarried widow pensioners effective January 1, 1971, and
is estimated to increase costs in 1971 by $1,720,000. Public
Law 91-588, as it did for veterans, increased rates and in-
come limitations for survivor pensions and is estimated
to increase costs in 1971 by $43,985,000.

Total survivors pension_-_

3. Other:

Subsistence allowance: Public Law 91-219, approved March
26, 1970, increased the subsistence allowance rates of veteran
trainees by approximately 22.7 percent effective February 1,
1970, and is estimated to increase costs in 1971 by $4,140,000.
Reprograming of veteran trainees and unit costs caused by
the continued buildup of seriously disabled veterans asso-
ciated with the Southeast Asian crisis will creat an addi-
tional need in 1971 of approximately $8,400,000.
Total other__.

Summary of requirements:

(a) New legislation_.

(b) Reprograming

Total supplemental requirements for 1971.

REASONS FOR SUPPLEMENTAL

$269, 187, 000

6, 161, 000

100, 186, 000

45, 705, 000

12, 540, 000

344, 964, 000 88,815, 000

433, 779, 000

Mr. GIAIMO. Most of the supplemental requested for compensation and pensions is mandatory.

Of the $433,779,000 requested, $344,964,000 is due to legislation enacted subsequent to the initial budget submission, isn't that right? Mr. RHODES. That is correct.

Mr. GIAIMO. The $88,815,000 is due to increases in caseloads and average unit costs.

Is most of the request pertaining to caseloads due to underestimation?

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