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REPORT OF THE COMMITTEE ON VETERAN'S AFFAIRS ON BUDGET MATTERS UNDER ITS JURISDICTION

The Committee on Veterans' Affairs is submitting this report on estimates of budget matters under its jurisdiction pursuant to section 301 (c) of the Congressional Budget and Impoundment Control Act of 1974. This report is based on the best information that is now available to the Committee. It is hoped that the report will be helpful to the Committee on the Budget in preparing its budget targets for the first concurrent resolution.

OBSERVATIONS ON THE FISCAL YEAR 1979 AND FISCAL YEAR 1980 BUDGETS

The President's 1980 budget for the Veterans Administration provides for benefits and services to the country's 30 million veterans, the 59 million members of their families, and the 4 million survivors of deceased veterans.

Budget authority of $21 billion and outlays of $20.5 billion are estimated for 1980. These estimates represent increases of $506 million in budget authority and $135.3 million in budget outlays over estimated requirements for 1979. Budget authority for 1980 consists of an appropriation request of $20.2 billion for existing programs, $549.6 million of permanent authority, and $196 million in proposed legislation.

Employment for 1980 will decrease from the level of the previous year. The employment levels for 1978, 1979 and 1980 are as follows:

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Personnel reductions are substantial in most program areas, both in the current fiscal year as well as in fiscal year 1980. Specific reductions will be noted later in this report.

Outlays for fiscal year 1980 would decrease from fiscal year 1979 if the President's proposed legislation is not enacted. If all are enacted, there would be an increase in outlays of only 0.7 percent. Budget authority under the President's legislative proposals would increase by 2.5 percent. If these proposals are not enacted, budget authority would increase by 1.5 percent. This compares to an estimated increase in the Consumer Price Index of almost 8 percent. Thus, the VA budget request does not keep pace with the projected inflation for the year. Benefit programs are decreasing by 1.6 percent in outlays and increasing in budget authority by 2.5 percent. The reduction in readjustment benefits is the largest, with more than 16 percent reduction ($448 million) in outlays and over 6.8 percent ($167 million) reduction in budget authority.

Medical programs will increase slightly (1.3 percent in budget authority and 3.2 percent in outlays). This is primarily due to inflation. The treatment of veterans in existing hospitals and outpatient clinics is being phased downward. More than 1,650 positions will be lost during the next fiscal year. Contract hospitals, VA domiciliaries and outpatient visits are also being cut. There is also a decrease in the grants to the Republic of the Philippines program.

Medical research is, in effect, being cut back due to a straight line budget in the next fiscal year.

In the construction accounts, there is a decrease in budget authority both in major and minor projects, totalling about $61.5 million (13.6 percent).

Of the total $23.7 billion Federal outlay for education, veterans' readjustment education programs are projected at 8.1 percent for fiscal year 1980. In fiscal year 1979, the VA portion was 10.3 percent and in fiscal year 1978 it was 15.9 percent.

In the area of Federal training and employment programs, the total obligations for fiscal year 1980 are estimated to be $11.5 billion, with VA supporting $96.3 million for on-the-job training, and $96.2 million for vocational rehabilitation, a VA sub-total of $192.5 million, or 1.7 percent.

In the health area, Federal spending is expected to total $66.5 billion, with 8.6 percent attributable to the VA.

DEPARTMENT OF VETERANS BENEFITS

A. Income Security

1. In 1980, 2.6 million veterans and their survivors will receive monthly compensation payments totalling $6.8 billion. Legislation has been proposed by the Administration to provide a 7.8 percent compensation rate increase for veterans, DIC spouses, and children effective October 1, 1979. The cost of this legislation is estimated by VA to be $498.4 million in fiscal year 1980.

2. Approximately 1.0 million veterans and 1.3 million survivors who qualify for monthly pensions, based on financial need, will be paid $4.2 billion in 1980. The $476.3 million increase is primarily the result of the automatic cost-of-living increases due in July 1979 and July

1980.

3. The families of 7.8 million servicemen and veterans are protected by various life insurance programs with a total coverage of $96.5 billion, a decrease of $500 million.

4. A decrease of 3,126 veterans and survivors is anticipated in the compensation caseload. However, the VA underestimated the caseload for 1979 by 6,144 beneficiaries. With the enactment of Public Law 95-479 and Public Law 95-588, it is obvious the projected caseloads are grossly underestimated and massive overtime will be required to keep workloads current.

B. Readjustment Benefits

1. Payments for education and training are estimated to be $2.2 billion in fiscal year 1980, covering assistance to 1.1 million trainees (veterans, servicemen and survivors). This represents a decrease of almost $500 million from fiscal year 1979, and a decline in enrollment of over 206,600.

2. A decrease of 520 education loans is expected in fiscal year 1980, bringing the number down to 17,900; however, the number of defaults is expected to increase by 554, bringing that total up to 7,116. The total amount of defaults in fiscal year 1980 is expected to be $7.7 million, up $1.2 million from fiscal year 1979. The number and amounts. could be substantially higher.

DEPARTMENT OF MEDICINE AND SURGERY (FY-79)

The Committee is very concerned with personnel reductions imposed by the Office of Management and Budget throughout the Veterans Administration in the current fiscal year, notwithstanding Congressional action to increase staffing levels, especially in medical care. The fiscal year 1979 Appropriations Act included an additional $32,300,000 for 1,500 FTEE for inpatient care; $18 million for 700 FTEE to meet anticipated increases in outpatient caseload, and $4,375,000 (175 FTEE) for new program starts a total increase of 2,375 personnel for medical care.

Notwithstanding these substantial personnel increases the agency was not allowed to spend any of the additional $54,675,000 for increased personnel. Instead, VA was informed by the Office of Management and Budget that the funds would be released; however, it could only be used for cost-of-living salary adjustments that became effective last October; for wage board increases; special pay for physicians and dentists, and postal rate increases.

Notwithstanding a Congressional mandate that 3,132 beds not be closed during fiscal year 1979, the agency closed these beds and reduced personnel by 1,500 effective October 1, 1978. In addition, in order to meet the ceiling imposed by the Office of Management and Budget, the Administrator has approved a Department of Medicine and Surgery decision to reduce medical care personnel in existing facilities by an additional 3,581 average FTEE. This means that there will be a total reduction of personnel in medical care of 5,081 average FTEE during the current year. In order to attain this reduction, some 7,000 positions will be lost.

To further acerbate the personnel problem, the Veterans' Administration was directed by the Office of Management and Budget, on October 1, 1978, to participate in a Federal FTEE ceiling control test which substantially changes the management of personnel resources within the agency. This annual FTEE ceiling limitation will be in effect through fiscal year 1981.

As a result of these two personnel management actions, the latest monthly employment freeze report submitted to the committee by the Agency shows that 6,000 full-time permanent positions remain vacant in the medical care program and 1,197 other positions; more than 2,800 of these have been vacant for more than 60 days. Included among the 6,000 existing vacancies are: 436 physicians, 907 nurses, 508 practical nurses, 786 nursing assistants, and 184 lab technicians. VA hospital directors, chiefs of staff and chiefs of nursing Service appeared before the Committee on March 1, and presented impressive testimony pointing out that they are, and will continue, experiencing extreme difficulty in providing quality and quantity care and treatment for our Nation's veterans unless the following

actions are taken: First, that a decision be made without delay to exclude the Veterans' Administration from any further participation in the FTEE ceiling crontol test. Second, the administration should allow the agency to use all funds appropriated for medical care personnel increases, including 1,500 for inpatient treatment and an additional 700 for increased outpatient workloads and 175 to fully activate the new hospital at Loma Linda, California.

The full impact of these reductions will not be realized until April or May, at which time thousands of veterans, including some serviceconnected veterans, will not be able to obtain treatment in existing VA medical facilities because of lack of staff, or funds, or both.

DEPARTMENT OF MEDICINE AND SURGERY (FY-80)

Funding for veterans' medical care programs will be $5.6 billion in fiscal year 1980. This will provide inpatient hospital, nursing home or domiciliary treatment and services for 1.3 million veterans and outpatient/ambulatory care totalling 17.8 million visits.

Additional operating beds are expected to be reduced in VA hospitals, and domiciliaries during the next fiscal year.

In addition to the decrease in the current fiscal year, the President's fiscal year 1980 budget request calls for further reductions of 1,650 FTEE in existing VA medical facilities. This reduction is planned so that increased staffing for new medical programs can be implemented without increasing the total medical care employment. Later in this report there will be further reference to specific areas of concern of the Committee.

Average daily patient census (ADPC) is decreasing by 1,634 in VA facilities.

Support of on-going institutional research programs is decreasing by almost $1 million.

There is no additional funding requested for Initiation of New Institutional Programs, Cooperative Studies, or Career Development. Post-Graduate and In-Service Training is reduced by $1 million (8.5 percent).

VETERANS ADMINISTRATION PROGRAMS BY FUNCTIONAL

DISTRIBUTION

The programs under the Committee's jurisdiction are administered by the Veterans Administration and are broken down into several subfunctional classifications. There follows a list of the functions and programs included in the Veterans Administration budget for fiscal year 1980, including a comparison of total budget authority and outlays recommended by the Administration and that proposed by the Committee on Veterans' Affairs.

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