to shorten audit cycles; 52 employees at the Board of Veterans' Appeals to reduce their backlog of appeals and reduce response time. It is estimated that the increase will enable the Board to lower their 1983 average response time by 28 percent to 273 days, with an ultimate goal of reducing response time to 120 days. Twelve additional employees are required for increased debt collection activities in the Office of the General Counsel; 7 additional employees in the Office of Public and Consumer Affairs; 1 additional employee in the Office of Congressional Affairs; 66 additional employees in the Office of Budget and Finance to expand the Centralized Accounting for Local Management (CALM) conversion project to 42 additional Department of Medicine and Surgery facilities; 6 new employees in the Office of Reports and Statistics; and 5 additional investigative unit employees in the Equal Opportunity Staff for processing the discrimination complaint backlog.

DEPARTMENT OF VETERANS' BENEFITS

A. Income security for veterans

For the third year, the Administration proposes dividing the Compensation and Pensions appropriations into three separate accounts-Compensation, Pensions, and Burial Benefits and Miscellaneous Assistance. The Administration believes that this structure would achieve a more informative presentation of budgetary requirements for these major benefit programs, and that adoption of this new structure would more closely correspond to a government wide functional program classification and facilitate program pres

entation.

In fiscal year 1984, 2.3 million veterans with service-connected disabilities will receive monthly compensation under existing legislation totaling $9.8 billion. Included in the $9.8 billion total are approximately 358,000 survivors of veterans whose deaths were service-connected or related to service-connected disabilities who will receive benefits amounting to over $1.8 billion. For fiscal year 1984, legislation is proposed by the Administration for a 5.1 percent costof-living increase in compensation payments to be effective April 1, 1984. The net cost of this legislation will add $238 million to the monthly benefits described above and will bring total compensation payments for fiscal year 1984 to $10.0 billion.

Approximately 775,000 wartime veterans and 885,000 survivors will receive monthly pensions totaling $3.8 billion in 1984. Pension payments are based upon financial need, and this estimate includes a cost-of-living adjustment of 5.1 percent effective December 1, 1984.

The life insurance programs administered by the Veterans' Administration will provide coverage of $145.9 billion to the families of 7.4 million servicepersons and veterans.

The purpose of the General Operating Expenses (GOE) account is to administer non-medical veterans' benefit programs. The account primarily supports payroll expenses of personnel responsible for administering non-medical benefits to the veteran population. These benefits include the administration of the VA compensation, pension, education, GI loan, and insurance programs as well as the maintenance of the National Cemetery System.

The 1984 request for general operating expenses includes funds for the expansion of the Centralized Accounting for Local Management (CALM) conversion project to 42 additional Department of Medicine and Surgery facilities, thus completing conversion of all Department of Medicine and Surgery facilities to the CALM project. Funding is also requested for expansion of the Inspector General's fraud detection and prevention activities and to improve the timeliness of their audit cycles. The Board of Veterans Appeals requests funding to increase the number of Board sections to 19, an increase of 3 sections over the current number, in order to reduce average response time. Funding is also requested by the Office of Reports and Statistics to conduct a comprehensive assessment of agency information needs and to conduct a national survey of female veterans. The Office of Data Management and Telecommunications requests funds for upgrading data processing center facilities at Austin, Texas and the Loan Guaranty Rapid Access System. In the Department of Veterans' Benefits, compensation and pension claims are expected to decrease slightly. The number of education trainees is expected to continue to decrease significantly. Loan guaranty activity is expected to increase. Servicing of insurance policies will maintain workloads as the slightly decreasing number of policies is more than offset by loan actions and by time-consuming death claim activities. The Department of Veterans' Benefits will operate a network of 59 regional office/medical-regional office centers nationwide, conduct over 14 million personal interview and telephone actions, provide funding for 533,300 veteran and 85,780 dependent education trainees, process 309,975 housing loan guarantees and service 2.9 million life insurance policies.

The Committee notes the Administration proposal, beginning in April 1985, to pay compensation cost-of-living increases in accordance with the following graduated schedule:

Service-connected disability compensation is intended to compensate veterans for loss of earning capacity caused by service-incurred disabilities, and this is accomplished through ten graduations related to a schedule of evaluations maintained by the Administrator. The monthly rates currently range from $62 for a disability rated at 10 percent to $1,213 for a totally disabled veteran, with additional statutory awards payable for extremely severe multiple disabilities. While it is difficult to maintain a completely statistical valid relationship of disability to decimal evaluations, the VA rating schedule has nevertheless been notably successful and has withstood the test of time.

Because of the profound disability associated with 100 percent disablement, current law provides a significant gap between the grades from 10-90 percent and the one-step increase from 90-100 percent. The Committee believes this to be sound, based on economic factors. We know, however, of no scientific, statistical, or demographic basis for assigning arbitrary percentage changes in

increased compensation to disability levels below 100 percent. Therefore, we know of no sound rationale for grouping evaluations from 60-90 percent and assigning them an arbitary increase of 85 percent. This would be a distortion without meaning and by converting ten statutory steps to 4 groupings for increase purposes, a distortion of rates results which could, in the long run, destroy the current relationship between disablement and compensation. The Committee rejects this proposal.

Provision is also made in the 1984 budget request for the maintenance and operation of 140 cemetery activities including the opening of four additional cemeteries. The regional cemetery at Indiantown Gap, PA opened in September, 1982. The Quantico, Virginia National Cemetery is scheduled to open during mid 1983. The post cemetery at Ft. Custer, Michigan opened in June, 1982. This cemetery will serve interment requirements for the Region V National Cemetery pending the opening of the Ft. Custer National Cemetery in early 1984. Resources are also included to operate as a national cemetery the post cemetery at Ft. Richardson in Anchorage, Alaska. It is anticipated that the land will be developed and the cemetery will be operational on a contractual basis by early 1984. B. Veterans' education, training and rehabilitation

The Veterans' Administration administers four education, training and rehabilitation programs for veterans and their dependents. The largest of these programs is the G.I. Bill for persons who served on active duty during the Vietnam era. The number of Vietnam-era veterans in this program is expected to continue to decrease as more veterans reach their delimiting date, which is 10 years following their date of discharge or separation from the Armed Forces. Total G.I. Bill trainees in 1984 are estimated at 555,500, a decrease of 127,900 since 1983.

The Post-Vietnam Era Veterans Educational Assistance Program (VEAP) is a voluntary contributory matching program for persons who entered the Armed Forces on or after January 1, 1977. The number of active duty serviceperson participants in fiscal year 1984 is estimated to be 355,900. Approximately 35,100 are estimated to participate in training under this program, an increase of 9,800 over fiscal year 1983. The rate of participation in this educational benefit program continues to be low-25 percent of the eligible population. The number entering training will increase and there will be a decline in the number of participants disenrolling in 1984.

The number of trainees in the education and training program for spouses and children of a veteran with a permanent and total service-connected disability or the spouses and children of veterans who died of a service-connected disability is estimated to be approximately 85,800 in fiscal year 1984, a decrease of 2,800 over fiscal year 1983.

The vocational rehabilitation for service-connected disabled veterans whose disabilities resulted in a vocational handicap is the oldest education and training program administered by the Veterans' Administration. This is a continuous, open-ended program which includes the payment of a monthly subsistence allowance, plus educational expenses, to eligible veterans who need this special assistance. It is estimated that 32,500 veterans will receive

training under this program in fiscal year 1984, an increase of 500 over fiscal year 1983.

Legislation introduced during the 97th Congress, H.R. 1400, the Veterans' Educational Assistance Act of 1981, would have, in addition to other benefits, established a new G.I. Bill program of up to 36 months of educational entitlement for members of the Armed Forces who serve 3 years or longer following enactment of the bill. The legislation was jointly referred to the Committee on Veterans' Affairs and the Committee on Armed Services. The measure was reported by the Committee on Veterans' Affairs on May 19, 1981, and by the Armed Services Committee on May 17, 1982. Similar legislation has been introduced during the first session of the 98th Congress with the same bill number, and the Committee hopes that it will be acted upon promptly. Since only minimal benefits are payable under the provisions of this legislation until the third year, there would be no substantial costs for the measure until 1986.

Veterans are suffering a high rate of unemployment which, in some age groups, is much higher than non-veterans in the same age group. Many veterans have been trained or educated under the G.I. Bill. Now, they are unemployed with little likelihood of regaining their jobs because of shifts in our Nation's needs or decline or obsolescence in the so-called "smoke stack" industries. The Committee, therefore, is developing legislation to provide training or retraining for certain veterans who have been unemployed for long periods of time with special emphasis on training for a job which can be certified as providing a good opportunity for long-term or life-long employment.

The Administration again proposes to eliminate authorization for correspondence school training under the G.I. Bill, with an estimated cost savings of $4.9 million in fiscal year 1984 and a reduction in trainees of 22,220. Additional cost savings of $15.6 million are projected in fiscal year 1984 with the elimination of the advance payment of educational assistance allowances.

C. Veterans' housing

The Loan Guaranty program provides housing credit assistance to eligible veterans and service personnel through guaranties of loans made by private lenders and through direct loans to severely disabled veterans on more liberal terms than generally available to non-veterans, without the assumption of undue risks by the Government.

The Loan Guaranty Revolving Fund finances the operation of the Loan Guaranty Program, excluding administrative costs. The guarantee may be applied to buying, building or repairing a home, condominium or mobile home in an amount not to exceed 60 percent of the loan or $27,500, whichever is lesser.

Assistance is provided chiefly through substituting the Government's guaranty on loans in lieu of the substantial downpayments, relatively short terms, and other investment safeguards applicable to conventional mortgage transactions. The program also assists certain totally disabled veterans in receiving specially adapted housing grants.

The Direct Loan program was originally funded to provide credit assistance to eligible veterans, certain surviving spouses and active

duty servicepersons in rural areas and small towns or cities where the availability of private mortgage funds was limited. The Direct Loan Revolving Fund finances all operation of the Direct Loan program. The maximum Direct Loan is $33,000. New Direct Loans are presently restricted to disabled veterans requiring specially adapted housing assistance. Prior loans will continue to be serviced with funds from the Revolving Loan Fund. For fiscal year 1984, the Administration requested that the limitation for specially adapted housing direct loans be removed, as the number of severely disabled veterans applying for loans under this program has been less than anticipated. The Veterans' Administration estimates the number of Direct Loans in fiscal year 1984 to be 27 at a cost of $810,000.

During 1982, 103,439 loans were guaranteed, of these 9,952 were for loans in which restored entitlement was used. The decrease in loan activity was primarily a result of higher interest rates and prevailing economic conditions. Vietnam-era veterans continue to account for the largest portion of participation in the program.

Declining interest rates coupled with the demand for housing should support a high level of loan activity in 1984. In addition, veterans who obtained GI loans in earlier years at historically high interest rates will have the opportunity to refinance their loans without use of additional loan entitlement pursuant to Public Law 96-385. Regulation changes effective October 27, 1982, allow veterans to acquire homes, condominiums or manufactured homes with the assistance of a GI loan in communities that restrict purchase or occupancy of the property on the basis of age. Therefore, an increasing number of older veterans will be utilizing their housing benefits to acquire properties in retirement communities with specific facilities for the elderly.

Cumulatively, since the inception of the program, through September 30, 1982, 11,585,469 loans totaling $205.6 billion have been made or guaranteed to purchase conventional housing, condominiums, and mobile homes. In addition, 18,187 severely disabled veterans have obtained $276.8 million in approved grants to purchase housing specially adapted to their particular needs.

Since the inception of the program, 439,297 claims have been settled for $3.2 billion. Incident to those claims, and as a result of foreclosures of direct loans, 476,045 properties have been acquired. 453,024 of these properties have been sold for $6.8 billion. In addition, 5,752 properties were redeemed.

Defaults on GI loans in 1984 are expected to decline from the high levels experienced in 1982 and 1983. Nevertheless, an agressive program of supplemental serving for veterans in default will be necessary to prevent excessive claims.

Property management activity will be stressed in 1984. When the VA acquires a home or condominium unit, the property must be put in saleable condition and marketed as soon as possible, since management fees are increased during longer holding periods. As of September 30, 1982, the inventory of acquired properties stood at 17,269, which represents an increase of 50 percent over the beginning of the year. During 1982, 10,827 properties were sold, an increase of 23 percent over 1981. The Veterans' Administration must