us and at times they express a fear that they are not competent to evaluate the foreign banks, and that there might be too much competition between foreign branches of American banks, but they have not expressed any reason convincing to us for not putting this money into interest-bearing accounts as a whole; that is, where local conditions permit. There may be local situations where there would be obstacles, but we are making progress. Mr. RHODES. Of course, the interest on lire would be paid in lire? Mr. WEITZEL. Yes, sir. Mr. RHODES. That is all. Mr. THOMAS. Are there any further questions, gentlemen? If not, we are deeply grateful to all of you gentlemen for your ingenuity and the fine job you are doing and we are very proud of the record you are making. Thank you very much. Mr. CAMPBELL. Thank you. MONDAY, MARCH 20, 1961. VETERANS' ADMINISTRATION WITNESSES J. S. GLEASON, JR., ADMINISTRATOR W. J. DRIVER, DEPUTY ADMINISTRATOR A. H. MONK, ASSOCIATE DEPUTY ADMINISTRATOR F. O. STARR, CONTROLLER H. J. CLARKE, DIRECTOR, BUDGET SERVICE B. E. TURNER, ASSISTANT ADMINISTRATOR FOR APPRAISAL J. R. PROVAN, ASSISTANT ADMINISTRATOR FOR MANAGEMENT SERVICES E. R. SILBERBAN, ASSISTANT ADMINISTRATOR FOR PERSONNEL F. B. RHODES, GENERAL COUNSEL R. C. FABLE, DEPUTY GENERAL COUNSEL J. W. STANCIL, CHAIRMAN, BOARD OF VETERANS' APPEALS F. R. HOOD, DIRECTOR, INFORMATION SERVICE J. N. O'NEIL, DIRECTOR, SUPPLY MANAGEMENT SERVICE ASSISTANT ADMINISTRATOR FOR CONSTRUCTION W. ASHBRIDGE, ASSISTANT ADMINISTRATOR L. G. SCHWEICKART, EXECUTIVE ASSISTANT J. C. GARVER, CHIEF, PROGRAM CONTROL DIVISION C. W. DUGGER, CHIEF, BUDGET AND ACCOUNTING SECTION DEPARTMENT OF INSURANCE P. J. BUDD, ACTING CHIEF INSURANCE DIRECTOR H. T. WATERMEIER, CONTROLLER C. B. DRINKARD, CHIEF, BUDGET AND STATISTICS DIVISION DEPARTMENT OF MEDICINE AND SURGERY DR. W. S. MIDDLETON, CHIEF MEDICAL DIRECTOR DR. H. MARTIN ENGLE, DEPUTY CHIEF MEDICAL DIRECTOR J. D. BAKER, CONTROLLER D. I. ROSEN, ASSISTANT CONTROLLER FOR STATISTICS R. W. WISE, DIRECTOR, BUDGET SERVICE DR. L. A. ZINK, ASSISTANT CHIEF MEDICAL DIRECTOR FOR OPERATIONS DR. I. J. COHEN, ASSISTANT CHIEF MEDICAL DIRECTOR FOR PROFESSIONAL SERVICES DR. T. M. ARNETT, DEPUTY FOR PROFESSIONAL SERVICES R. H. BUCKNELL, DIRECTOR, VETERANS' CANTEEN SERVICE DEPARTMENT OF VETERANS BENEFITS P. N. BROWNSTEIN, CHIEF BENEFITS DIRECTOR U. E. WELLS, ACTING CONTROLLER F. J. PETRAITIS, EXECUTIVE ASSISTANT TO CHIEF BENEFITS DIRECTOR A. W. STRATTON, DIRECTOR, COMPENSATION AND PENSION SERVICE T. 0. KRAABEL, DIRECTOR, VOCATIONAL REHABILITATION AND EDUCATION SERVICE P. H. THOMAS, DIRECTOR, GUARDIANSHIP SERVICE E. H. MOCK, DIRECTOR, SYSTEMS AND STANDARDS SERVICE Mr. THOMAS. Gentlemen, will the committee please come to order. We have with us this afternoon the Veterans' Administration, and we are delighted and honored to have with us our new Administrator, Mr. J. S. Gleason, Jr. I think this is the first time we have had the privilege and the pleasure of seeing Mr. Gleason; and when we get through with his staff here, maybe he will tell us something about himself. Then we have some of our old partners here-Mr. Driver, the Deputy Administrator; Mr. Monk, the Associate Deputy Administrator; Mr. Starr, Controller; Mr. Clarke; Mr. Turner; Mr. Provan; Mr. Silberman. Where is Judge Rhodes? Mr. RHODES. Here I am, sir. Mr. THOMAS. Where is Judge Stancil? Mr. STANCIL. Right here, sir. Mr. THOMAS. Judge, greetings. How are you doing? Will they not get you a chair. Mr. STANCIL. It is coming in. Mr. THOMAS. You are not short of business, are you, Judge? Mr. STANCIL. No, sir. Mr. THOMAS. Mr. Hood; where is he, I saw him a little bit ago. Mr. HOOD. Here, sir. Mr. THOMAS. There he is. Where is Mr. O'Neil? Mr. O'NEIL. Here, sir. Mr. THOMAS. Where is Colonel Ashbridge? Mr. ASHBRIDGE. Here, sir. Mr. THOMAS. Did you get a chair? Mr. ASHBRIDGE. Yes, indeed. Mr. THOMAS. All right. Mr. Garver; Mr. Budd; Mr. Drinkard. Where is our actuary, Mr. Poissant? Mr. MONк. He is not here this afternoon. Mr. Singer is here. Mr. THOMAS. Well, Mr. Singer, it is nice to have you with us. Mr. MONK. Mr. Poissant will be here in the morning. Mr. THOMAS. Off the record. (Discussion off the record.) Mr. THOMAS. Dr. Middleton, our very able and distinguished Medical Director; Dr. Engle, his assistant. Where is Mr. Baker? Mr. BAKER. Right here, sir. Mr. THOMAS. We could not get along without Mr. Baker. You are getting expensive, though, Mr. Baker. You are certainly handy with these figures; they go up and up and up. Are you right sure your beds are not going down and down, or what? Mr. BAKER. They are still going up, beds and patients. Mr. THOMAS. Well, it would look like your beds went up by 600 by virtue of bringing in a new hospital. Mr. BAKER. That is right. Mr. THOMAS. And you went up to about $35,000 to operate it- $35 million. Mr. MIDDLETON. $35 million-thank you, sir. Mr. THOMAS. Mr. Rosen; Mr. Wise; Mr. Zink. Where is Dr. Cohen? Dr. COHEN. Here, sir. Mr. THOMAS. How are you doing today, Doc? I thought I saw you. Are you keeping your hand on these boys and keeping them out of mischief? Where is Mr. BROWNSTEIN? Oh, yes, he has been promoted. There he is. You have got him out of the real estate business. Mr. Wells, Mr. Stratton; Mr. Petraitis-is that the way you pronounce it? Mr. PETRAITIS. Yes, sir. Mr. THOMAS. We are liable to call you almost anything in here, but it will always be with a smile. Where is Mr. Monk? Mr. MONK. Here, sir. Mr. THOMAS. It is good to see you, sir. Have we overlooked anybody? What is this sheet over here? Mr. MONK. Those are some standbys. Mr. THOMAS. Are they in the room? Mr. MONK. No, sir. They are available "on call" in the corridor. Mr. THOMAS. Put their names and titles in the record, Mr. Reporter. Mr. Administrator, tell us something about yourself. We are delighted to have you. This is the first time this committee has had the privilege and pleasure of seeing you. We understand you and our colleague, Mr. Yates, are old friends and hail from the city of Chicago. Mr. GLEASON. That is right, sir. Mr. THOMAS. Off the record. (Discussion off the record.) Mr. THOMAS. Do you have a statement for us? Mr. GLEASON. Yes, sir; and with your permission I would like to read it. GENERAL STATEMENT Honorable Chairman and gentlemen of the committee, I am pleased to be here today to discuss with you the fiscal year 1962 appropriation requirements of the Veterans' Administration. We of the VA deeply appreciate the support given by this committee to the veterans of our Nation. Our request for 1962 totals $4,949,846,000. An amendment reducing this amount by $25 million is in process. This reduces our request to $4,924,846,000. (Note: See reduction of $25 million in compensation and pensions estimate in House Doc. 129.) The accompanying table shows a comparison of our needs, by appropriation, with those of this year. We consider our request to be reasonable and prudent. It provides for a significant improvement in hospital staffing and some increase in patient load. It provides funds to meet the increasing medical workload in our outpatient clinics. It provides funds to meet increasing needs for pension payments. It provides for a continuation of the present level of $75 million per year for our construction activities. It makes allowances for decreasing readjustment benefit payments due to declining veterans' training loads. It makes allowances for decreased administrative costs based on declining workloads and improved operating methods. Of the total request, over 95.6 percent, or $4,708,547,000 is for: 1. Medical care for sick and disabled veterans; 2. Direct benefit payments to eligible beneficiaries; and 3. Modernizations, improvements, and repairs in our medical facilities. ADMINISTRATIVE COSTS Our administrative costs, estimated at $174,349,000, are less than 3.7 percent of our total budget. These funds are intended for use as follows: Needs for administrative purposes are approximately $1.4 million less than the current year. This reflects a continued reduction in personnel requirements. Since 1949 our employment level for administrative activities has been reduced approximately 70 percent. Average employment for 1961 is down 1,304 from 1960, and this budget contemplates a further reduction of 805, to an average of 21,625 for the fiscal year 1962. STAFF SERVICES Our requirements exceed estimated current year costs by $872,000. The increase in 1962 will enable us to provide needed agency-level staff services for the extensive program operations of the VA. DEPARTMENT OF VETERANS' BENEFITS The Department of Veterans' Benefits will require $121,500,000, an amount $3,675,000 below the current year level. Declining vo cational rehabilitation and education and other workloads, coupled with savings in administrative costs, account for this substantial reduction. Conversion of benefit payments, accounting, and statistical functions to automatic data processing has been delayed in the current fiscal year due to unanticipated operational problems. Due to these problems, we have had to leave our firm schedule set forth in this budget, and I am reevaluating the whole automatic data processing program to determine the proper course of action. Vocational rehabilitation and education requirements will continue to decline, with an estimated decrease of 85,000 Korean veteran trainees in 1962. Our anticipated requirements for loan guarantee in fiscal year 1962 are $400,000 over fiscal year 1961. This estimate was based on the economic conditions which existed at the time the budget was prepared. Since then, there has been an easing of the availability of mortgage money, and lenders are beginning to channel more funds into the VA loan program. Thus, our workloads may increase above the levels contemplated in this budget. At the same time, we are experiencing an increase in the number of defaults and property acquisitions over those anticipated. We will, of course, make every effort to absorb these unbudgeted costs within funds provided; however, if the present trends continue, this may not be possible. DEPARTMENT OF INSURANCE Administrative costs of the Department of Insurance are expected to increase $241,000 in fiscal year 1962. Requirements for the planned conversion of the remaining insurance accounts to automatic data processing, and "cleanup" work incident to conversion at the Philadelphia office account for this increase. Although fund requirements have increased, employment for fiscal year 1962 is expected to decrease by 248 positions. MEDICAL ADMINISTRATION An increase of $1,116,000 is requested to strengthen the administration, direction, and supervision of the medical care programs. This increase will enable us to complete the decentralization of control over field operations to seven area medical offices, correct certain staffing deficiencies in the central office, and explore the potential and value of automatic data processes in medical program areas. Mr. THOMAS. Have you not just added another layer, rather than decentralized? You have got the District of Columbia, then you have got six or seven area offices, then you have got all the other offices. You just added another layer. But we will fuss with the doctor later. Mr. GLEASON. All right, sir. It will provide a funding level for administration purposes equal to about 1 percent of the cost of medical care operations. CONSTRUCTION The modest increase of $13,000 for administrative costs related to our construction activities is for site surveys in connection with the preliminary development of construction projects. |