The Inspector General is directing these matches and expects to have by mid-December some results from both of those.

Also the Social Security Administration made us aware of some cases in which they had matched medicare records showing the payment of medical bills following the death of the insured. We became aware of the fact that some of these beneficiaries were VA beneficiaries in addition to being social security beneficiaries when checks were recovered by social security investigators.

We have identified to date six cases in which social security beneficiaries were also VA beneficiaries and we have taken action to suspend payments in each of these and will provide the records to the Inspector General for his review to determine whether there is any possibility of fraud in the cases. We will also conduct field examinations to establish actual dates of death.

With respect to the recent court decision on the subject of ionizing radiation disability claims, pending the appeal of that decision it will be necessary that we in the Veterans' Administration ignore the existence of the documents that are in question and proceed to adjudicate claims following the regulations covering such cases. The General Counsel is working with the Department of Justice to perfect the appeal in this case, and we expect this to proceed as rapidly as possible.

With respect, Mr. Chairman, to our staffing levels, the continuing resolution which the President signed did provide for a staffing level for the Department of 16,200 positions. The nonsalary costs which we pay first, and we compute first, and then back into an employment figure, will support only a staffing level of 15,894. The 1982 budget figures for the Department and for the entire agency continue under review by both the agency and the Office of Management and Budget, and until we have a solid figure for 1982 we cannot make an estimate with respect to 1983. We do anticipate, however, that we will be permitted the 15,894 which our funding will support.

With respect to the action by the Office of Personnel Management on special salary rate employees we have in the agency approximately 4,000 employees who are affected by this. This was an 11th-hour decision on the part of OPM, and while none of the individuals covered by special salary rates will lose salary they will not be allowed to receive the 4.8 increase which general schedule employees received.

Generally I think the increase in salary that each will get will hover somewhere between 1 and 12 percent. That action has been put into our paid salary system. All of the people who are impacted by this change have been notified and so far we have not received any great outcry from particularly the rating board physicians who are affected by this.

The reason OPM did this was that they make an annual review of special salary rates to determine whether those rates continue to be valid, and they are doing, or are in the process now of concluding a current review, and while there is a possibility that the current review may result in either a raising or a lowering or perhaps just a decision to stay at the level it is today, no one who is on a special salary rate would lose salary.

Mr. Chairman, this concludes a summary of my statement. I, with your permission, would have the statement submitted for the record, and we will be more than happy to answer any questions you might have.

Mr. HALL. Without objection, your statement will be made a part of the record.1 I would like to ask a question concerning the former POW's. On page 2 you state that effort is being made to identify the former POW's and that you estimate that 43 percent of the more than 100,000 former POW's who may be eligible for benefits under the act are already on our compensation and pension rolls, and you are looking for the remaining 57 percent.

Is the 100,000 figure that you mentioned, is that a rather accurate number of the POW's of

Miss STARBUCK. That is a fairly accurate figure.

Mr. HALL [continuing]. Of World War II and Korea and Vietnam?

Miss STARBUCK. Including World War II, Korea, Vietnam, and World War I. The Department of Defense had estimated that the total count was about 125,000. During the study that was conducted, the Department of Defense provided records to us on former prisoners of war. When that listing was given to us to run against the BIRLS records, that count was about 119,000.

Now, for all of those who were identified as having a claims folder or an insurance record, the indicator showing a POW was input to the system. We wound up with about 83,000 no-record cases, the individual had not filed a claim or did not have an accurate insurance record. We took those back against the old microfilm of the central office index and we wound up eventually with, roughly, 5,000 cases that were no-record; but we have constructed records on those individuals in BIRLS.

The big problem with those cases is the ability of the Department to locate these individuals. So many veterans of World War II particularly would not have social security numbers, and it would make it very difficult for us to go to the Internal Revenue Service, for example, to ask them for current addresses on these individuals.

Mr. HALL. Do you feel that the efforts that you are making, that you outlined here, will be sufficient to try to find the biggest portion that will be recoverable?

Miss STARBUCK. Yes, Mr. Chairman, we do.

Mr. HALL. What do you estimate the time to be on that discovery?

Miss STARBUCK. If we get all of this done in a year I think that we will have accomplished a very great deal, sir.

Mr. HALL. All right.

On the second question, it deals with page 6, next to that last paragraph, next to the bottom, you say that a social security field. investigation, prompted by a match of medicare death records and active social security files, turned up 3 uncashed insurance checks and 244 uncashed benefit checks, totaling $29,000.

Now, as I understand it, that seems like a very small figure to me, that such a search would turn up only 247 checks.

1 See p. 43.

Miss STARBUCK. Well, those were VA checks and, of course, were matched in the instance. The first case that came to

Mr. HALL. Do you think there are more than that?

Miss STARBUCK. There should be more than that because approximately 75 percent of the persons on the pension rolls are recipients of social security, and there is every chance that there would be more than that.

I think the Inspector General is contemplating getting from social security that medicare file used to match against the active security file to conduct yet a third match against the C. & P. records.

But the first case that was turned up turned up in California, and the investigator from social security went with an investigator from VA to the home of the deceased beneficiary. Her son was there and his comment was, when he turned over all of these checks to the two investigators, was "I knew you would come after them some time." He had no intention of cashing those checks. He had just failed to notify both agencies that his mother was deceased and the checks, of course, were continuing to go there.

Mr. HALL. My third question deals with this recent court decision you mentioned, and it stated that the court here in the District of Columbia, discounting what VA's position was on these challenged documents, held that they were not promulgated in accord with the rulemaking procedures of the Administrative Procedures Act.

Are we having to change any method in the Department dealing with records of this nature that might be subject to litigation in the future, that might not be carried or promulgated subsequent to the procedures of this act?

Miss STARBUCK. Well, Mr. Chairman, we must, of course, observe pending the appeal, the outcome of the appeal, the judge's ruling. However, our basic responsibility is the adjudication of claims and, absent recognition of the documents involved, we intend to go ahead and proceed with the adjudication of claims and the obtaining of records from the Department of Defense without recognition of a memorandum of understanding.

Mr. HALL. Well, your last paragraph on 7 says:

We acknowledge our responsibility to issue regulations pursuant to the APA, but believe that the documents challenged are not regulatory and do not fall within the APA's requirements.

Until this case has been finally decided by a higher court, or the U.S. Supreme Court, I presume that what you will do is to promulgate these questioned documents in accordance with this rulemaking procedure. Is that not an accurate statement?

Miss STARBUCK. Norm, do you want to speak to that?

Mr. PAULSON. Mr. Chairman, pending the result of the appeal, we do not intend to do that. It would be an admission of the plaintiffs' contentions.

Mr. HALL. When you issue new regs on other matters how you are going to handle it.

Mr. PAULSON. We will continue to adjudicate under the VA regulations, which we have all along. These are supplemental documents to acquire information useful in the adjudication of the claims in accord with the VA regulations, and they are specifically stated not to be regulatory, they never have been considered that,

and we believe it is entirely a misunderstanding or misinformation by the court as to the nature of these documents.

Mr. HALL. You feel pretty comfortable with the position you are taking on appeal?

Mr. PAULSON. We certainly do.

Mr. HALL. Mr. Wylie.

Mr. WYLIE. Thank you, Mr. Chairman.

Miss Starbuck, in the testimony prepared for this morning by Mr. Egan, the representative of the American Legion, he indicates that the Department of Veterans' Benefits may lose up to 2,373 employees in fiscal year 1982. That is a rather disconcerting statement, I would have to say.

What would be your comment on that?

Miss STARBUCK. That would be true, Mr. Wylie, only if the Department were, in any budget reduction, forced to go back to the level that had been proposed by the administration in March. And that would be the reduction that would have to be taken from the current on duty strength of the Department.

However, we do not anticipate that happening at all. The administrator is really very firm in his position, which is supportive of the Department's position, that it was the intent of the Congress that the continuing resolution which included the Gramm-Latta provisions were to be applied to the Veterans' Administration, and he has not hesitated to make this position known to the Office of Management and Budget, and I feel that he will prevail.

Mr. WYLIE. In your statement that is a little bit contrawise to the statement which you made in which you say that there is—you have, 16,200 employees now, and you used that figure, and that you have budget amounts which would allow for increases in salary and so forth. So that over the year you would expect that you could staff up to 15,894, which is a rather precise figure. But that is a reduction of 306 employees as distinguished from 2,373 employees.

So what you are saying is that although the Office of Management and Budget in the first round of Gramm-Latta I, and before budget reconciliation and so forth, and before this committee had acted, had suggested a diminution in the size of your staff which might result in up to 2,300 employees having to look elsewhere. Now you are thinking that in terms of some somewhat significantly less figure?

Miss STARBUCK. Yes, sir. I think that we will be dealing very close to the 15,894. Now, the reason for that reduction from the 16,200, which is in the continuing resolution, is the fact that we must absorb within the funding level the increases in our standard level user charges, and we must absorb the increase in postal rates that takes place in this fiscal year, and we must absorb also an increase of about 16 percent in our telecommunications costs. In the March budget guidance to the agency which involved centralization, there was about a $12 million figure in savings in SLUC as a result of release of space, and we will have to, as long as we are keeping all of our installations, absorb that.

Now in addition to that there is some unknown at this time, a probability that we will have to absorb some percentage of the October 4 pay increase, but we have no information on that.

Mr. WYLIE. Well, you have ancillarily answered my next question which I want to hone in on.

Have you been specifically requested by OMB recently, say within the last 60 days, to take any additional budget reductions? Miss STARBUCK. No, sir, we

Mr. WYLIE. There is no implication intended in that. We just want the information for the record.

Miss STARBUCK. Of course, the agency was asked to take additional cuts, and this cut is now a matter of conversation between the Administrator and the Office of Management and Budget. But from the indications that I have from the Administrator's office, there is little likelihood that the Department of Veterans' Benefits will be impacted by that reduction with respect to our personnel for the regional offices.

Mr. WYLIE. No specific figures have been mentioned in those▬▬ Miss STARBUCK. We are waiting to get figures from the Comptroller's Office, and as soon as we have that figure, we will advise the committee of that employment level.

Mr. WYLIE. Thank you.

Miss STARBUCK. Mr. Wylie, if I may, you had asked in your opening remarks about the compensation increase.

Mr. WYLIE. Oh, right; yes, of course.

Miss STARBUCK. The tapes for that increase have been released to the Treasury. The Treasury Department intends to date those individual retroactive checks the 2nd of November. They hope to have them in the Post Office Department by close of business October 31 to avoid the November 1 increase in rates, and so the recipients of that retroactive increase should begin to get their checks on the 2nd, and 3rd, and 4th, depending on their location.

November is one of the months in which the 1st falls on a Sunday, so the regular check for the month of October will be dated the 30th and should be received on either Friday or Saturday, so they are going to get two checks in very rapid succession, one the retro, and one the regular, and the next month the new rate will be in the check received in December.

Mr. WYLIE. Thank you for that information. That will be good

news.

With respect to the payment of checks to deceased beneficiaries, many of those checks are sent in the middle or end of a given month, in which case the beneficiary is already deceased.

What percentage of the money sent out under those circumstances is recouped?

Miss STARBUCK. I would estimate, Mr. Wylie, that we probably get back about 90 percent of that.

Mr. WYLIE. But you do have some cases where the checks are cashed and you--

Miss STARBUCK. And an overpayment would be set up against whoever negotiated the check.

Mr. WYLIE. A lot of times you can't find them and it costs more to pursue it probably than to write it off?

Miss STARBUCK. That is correct, sir.

Mr. WYLIE. But you do collect about 90 percent of it?
Miss STARBUCK. Yes, sir.

Mr. WYLIE. Good.