Having said this, I do feel there are some reductions proposed by the President that we can accept without a serious adverse impact on veterans. I feel that every committee must be willing to assist the President in bringing about an overall reduction in Federal spending. I don't think we can simply sit here and say we are unwilling to accept any cuts. I don't believe the overwhelming majority of our Nation's veterans feel that we can't accept any cuts. They do feel the reductions should be moderate and reasonable. I communicate with veterans in my state, and I appear before them many times each year to discuss issues that affect them. There is no question in my mind that the overriding issue with them is inflation. Veterans, especially those drawing compensation and pension benefits, know what impact inflation has on their lives. They want Congress to reduce the Federal budget, even if it may have some effect on their benefits and services.

I think we have a responsibility to see that the budget is balanced, and I don't think we can do that without biting the bullet and taking positive action to get the job done. I personally feel an obligation to help bring it about. As the Chairman of the Committee, I feel some obligation to make recommendations to you to reduce Federal expenditures, and I am prepared to do so. In that regard, I have carefully reviewed the President's proposals, and am recommending that the Committee accept the following cost-saving provisions in fiscal year 1982:

1. Reduce the cost-of-living compensation rate increase from 12.3 percent, as proposed by former President Carter, to 11.2 percent. This reduction is based on new economic assumptions since President Carter submitted his budget to the Congress in January. This would provide a savings of $104 million in budget authority and a savings of $96.2 million in outlays.

2. Terminate flight and correspondence training, realizing a reduction of $32 million in budget authority and outlays.

3. Limit non-service-connected burial benefits to those cases where the adjusted income of the deceased veteran and spouse did not exceed $20,000 12 months prior to the veteran's death. The recommendation is the same as that which passed the House last year when we were directed to enact costsaving legislation totaling $400 million. According to the Congressional Budget Office in its estimate last year, enactment of this recommendation would result in savings of about $80 million in budget authority and outlays. This recommendation is not among the President's proposed reductions. 4. Reduce the interest subsidy on veterans' insurance policy loans. This would realize savings of $96 million in outlays. 5. Eliminate presumptive service-connection for class II outpatient dental treatment for individuals within 12 months from date of discharge. This would save $32 million in budget authority and outlays.

6. Defer certain minor construction projects at a savings of $32 million in budget authority and $8 million in outlays.

7. Delay certain major construction from 1 to 2 years at a savings of $71 million in budget authority and $91 million in outlays.

8. Termination of the education loan program which would realize a savings of $6 million in outlays. This provision was not recommended by the President.

All of these proposed reductions would result in savings of $351 million in budget authority and $441 million in outlays. This is roughly one-half of the amount of savings proposed by the President. The main difference between what I am recommending to the Committee and that proposed by President Reagan is that my reductions will not have any major impact on the quality and quantity of health care to be provided our veterans and my recommendations, if accepted by the Budget and Appropriations Committees, will assure that all functions at our 58 regional offices will be continued at the current level.

Although the possibility exists that the Budget Committee may accept more of the cuts proposed by the President, if my recommendations are accepted, in my view, the Budget Committee will take note of our good faith efforts to help reduce Federal spending.

In the eyes of the Office of Management and Budget and some others, my cost-saving proposals do not go deep enough. To others, I'm certain my recommendations go too far. I think it is a reasonable compromise and I offer it as such.

Following extensive debate, the Committee adopted Mr. Montgomery's recommendations and submitted its report to the Committee on the Budget on March 30, 1981.

COMMITTEE ACTION

In order to conform with the reconciliation instructions of the First Concurrent Budget Resolution for Fiscal Year 1982, the Committee on Veterans' Affairs recommends the following changes in title 38, United States Code:

TERMINATE FLIGHT AND CORRESPONDENCE TRAINING PROGRAMS

Under current law veterans who served on active duty for more than 180 continuous days, any part of which occurred after January 31, 1955, but before January 1, 1977, and who were released under conditions other than dishonorable, or continue on active duty, are eligible to receive education and training benefits under the Veterans Readjustment Benefits Act of 1966, as amended.

Flight Training

An eligible veteran may take an approved course of flight training generally accepted as necessary to attain a recognized vocational objective in the field of aviation or where recognized as ancillary to the pursuit of another vocation. The veteran must first possess a valid private pilot's license and meet the necessary medical requirements.

Educational assistance allowance for flight training is computed at the rate of 60 percent of the established charges for tuition and fees which non-veterans are required to pay. Entitlement will be reduced at the rate of one month for each $302 paid to the veteran.

Flight training as a part of an approved college degree program is also available.

Correspondence Program

Eligible veterans may also pursue a course of education through correspondence programs offered by various institutions. Allowance for a program of education pursued exclusively by correspondence and paid quarterly is computed on the basis of 70 percent of the established charge paid by nonveterans for the same course or courses. Entitlement will be reduced at the rate of one month for each $327 paid to the veteran.

Committee Recommendation

Section 14001 of the bill would amend title 38, United States Code, to terminate authority for the Veterans' Administration to provide educational assistance to veterans for pursuit of flight training and to veterans, spouses, and surviving spouses to pursue correspondence training.

This legislative "cost-saving" proposal is contained in the Presi dent's proposed budget for fiscal year 1982.

In his transmittal letter and proposed draft bill to the Speaker of the House dated January 19, 1981, proposing that the current law be changed, the former Administrator of the Veterans' Administration, Max Cleland said:

It is the position of the Veterans' Administration that the flight and correspondence training programs have not met the objective of providing substantial employment for those trained, and that many individuals have used these programs primarily for recreational or avocational purposes. This position is supported by three studies made in recent years concerning these two programs.

In March 1979, the General Accounting Office surveyed a representative sample of veterans who had completed flight and correspondence courses to determine whether their fulltime occupations were related to the training they had received under the GI Bill. In his report of August 24, 1979, the Comptroller General stated that, upon reviewing a random sample of recent flight trainees, the GAO found only about 16 percent had full-time jobs directly related to such training. Additionally, the GAO study showed the number of veterans who had taken flight training under the GI Bill substantially exceeded the number of pilot jobs available or expected to be available through 1985 and that the benefit cost ran into hundreds of millions of dollars.

The August 1979 GAO report also showed that only about 34 percent of those who completed correspondence training had full-time jobs directly related to their training and that the overall completion rate for correspondence training courses was less than 50 percent.

A second audit of the utilization of educational assistance benefits for pursuit of flight and correspondence courses was conducted between November 1978 and March 1979 by the VA Inspector General. In his September 1979 report, the VA Inspector General stated that 57 percent of the flight students reviewed were found to be using the training avocationally. Additionally, a survey of veterans who had completed correspondence courses disclosed that less than half were directly employed in the field for which they trained.

Thus, these two studies substantiated the findings of the July 11, 1978, report the Veterans' Administration sent to the Congress entitled, "Study of Vocational Objective Programs Approved for Enrollment of Veterans." That report contained data which revealed that flight and correspondence training programs were not achieving their intended purpose to help provide a source of continuing substantial professional employment for veterans and dependents. For example, the 1978 study showed that, while completion rates in flight training were 76 percent, graduates were quick to accept very limited, part-time employment for the purpose receiving free or reduced rate flying rather than for professional employment. Therefore, while the placement data for flight schools appeared high, where full-time jobs were concerned, placement statistics were significantly lower. Similarly, the report went on to note that completion statistics for correspondence courses indicated an average completion rate for vocational courses offered by correspondence was only 41 percent.

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In summary, our years of experience in administering education programs for veterans and other eligible persons convince us that flight and correspondence courses have not fulfilled their intended purpose of aiding the beneficiary to adjust to his or her changed circumstances by providing the training required for employment. It is our conclusion that the ineffectiveness of these programs, along with the potential for their continued misuse, warrants their termination. Therefore, we strongly urge that the Congress enact our proposal to terminate the authority for the VA to provide educational benefits for pursuit of these training courses.

It is estimated that enactment of this measure would result in direct benefits cost savings in fiscal year 1982 of $32 million and in direct benefits cost savings over the first 5 fiscal years of $120.9 million.

A major purpose of the GI Bill is to assist veterans in readjusting to civilian life. Over the years, there have been a number of changes in the law intended to minimize what has been described as an aimless pursuit of education and training goals. For example, the GI Bill prohibits courses that are avocational or recreational in nature. In this regard, two programs which have received continuous Committee attention to determine if veterans are attaining the educational, vocational, or professional goals for which trained or educated are flight and correspondence courses for veterans.

For several years the administration has proposed the elimination of flight and correspondence training benefits for veterans. These benefits are designed to enhance readjustment to civilian life and to provide training for employment. The Veterans' Administration, however, has repeatedly informed the Committee that its experience in administering education programs for veterans and their dependents has convinced them that flight and correspondence courses have not fulfilled their intended purpose of aiding the veteran or dependents to obtain employment for which they were trained.

In the First Concurrent Budget Resolution on the Budget for Fiscal Year 1981 the House Budget Committee, after stating that the training for these two programs is used for recreational purposes and does not lead to professional full-time employment, recommended that both programs should be eliminated (H. Rept. 96-857). Subsequently, the assistance for these two programs was reduced by P.L. 96-466, the Education and Training Amendments of 1980.

Again, this year former President Carter and President Reagan have recommended that flight and correspondence training be eliminated. Former President Carter recommended termination effective after September 30, 1981. President Reagan would terminate these programs after June 30, 1981.

The Committee does not necessarily agree with the views of the Veterans' Administration regarding these two programs. On the contrary, the Committee has consistently held that these two programs should be available for the remainder of the life of the present GI Bill, which will terminate for all purposes on December 31, 1989. The Committee has not acted favorably on the recommendation to eliminate these two programs. However, it is the view of the Committee that in order to assist the President in his efforts to reduce total Federal spending in fiscal year 1982, the Committee has reluctantly agreed to the President's proposal to terminate these two programs effective after September 30, 1981.

The Congressional Budget Office estimates that enactment of this provision will result in cost savings of $32 million in budget authority and outlays in fiscal year 1982: $28 million in budget authority and outlays in fiscal year 1983; and $24 million in budget authority and outlays in fiscal year 1984.

TERMINATE EDUCATION LOAN PROGRAM

Under section 1798 of title 38, United States Code, an eligible veteran or person may borrow up to $2,500 per academic school year to pursue a course leading to a standard college degree, or if enrolled in flight training, or if enrolled in a course leading to a professional or vocational objective which requires at least 6 months to complete.

The program is designed to assist veterans and eligible dependents in training under chapters 32, 34 and 35, United States Code, whose education-related expenses exceed their resources. It is an interest bearing loan program with a current rate of 7 percent per year.

The Veterans' Administration has continued to experience great difficulty in collecting loans that have matured. Due to the serious concerns expressed by the Committee, the agency changed its regulations to limit loans to those students attending high cost institutions.