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tion has been completely exhausted by approval of applications for the States of Georgia, Nebraska, New Jersey, Vermont, and Wisconsin. The grant for Wisconsin was only partially funded.

We now have four additional applications under review, and preliminary drawing conferences have been held with two other States. Complete funding of our 1967 request will be required to fund these projects.


Senator MAGNUSON. Now we will start at the beginning of your items and the committee can ask such questions as they wish.

On the "General operating expenses," you have a decrease from last year.

Mr. DRIVER. $1.9 million decrease.

Senator MAGNUSON. This is mainly due to what?
Mr. DRIVER. To reduction in personnel staffing.

Senator MAGNUSON. In your general operating expenses?

Mr. DRIVER. That is right.

Senator MAGNUSON. Now, would you place in the record the number of people you have in your general administration, as compared to last year? What is the total aboard?

Mr. DRIVER. The total estimated for this budget is 16,503 people, which will be 697 fewer than this year.


Senator ELLENDER. Would you attribute that more to automation, as you said?

Mr. DRIVER. A great deal is due to automation. However, some of it is due to the fact that the workloads in these programs are declining-like the NSLI reopening program, that sort of thing.

Senator ELLENDER. But what percentage of that decrease would be attributed to automation?

Mr. DRIVER. About 20 to 30 percent.

Senator ELLENDER. Would you compare the cost of this automation to what the cost would have been without it?

Mr. DRIVER. We can supply those figures.

Senator ELLENDER. We are getting a lot of requests from other departments. And I want to be frank in saying I don't recall of any statement being made that automation has actually cut back onMr. DRIVER. It has for us.

Senator MAGNUSON. We have been getting a lot of promises, but no action.

Mr. DRIVER. Let me put a table in the record.

Senator ELLENDER. All right. Let's see the difference now. That will be a good example. You said that 30 percent of the cutback is due to automation.

Mr. DRIVER. That would be the general range.

Senator ELLENDER. I would like to just compare the figures, the cost of automation in contrast to what the cost would have been had we had no automation.


Mr. DRIVER. I would like to put in the record a listing by specific programs that were automated.

Senator ELLENDER. That is all right. That will be fine.

(The information follows:)

The following table lists the programs that have been automated. As indicated,
the Veterans Administration Budget, in total would be $14.4 million more without
these savings.

Summary-Accomplishments and projects under study or development

Estimated annual

dollar savings

Conversion of compensation and pension accounts to ADP.

Conversion of Government life insurance accounts.

$1, 500, 000

Computer purchases.

3, 950, 000
Processing notices of death...

3, 268, 300
Automatic reinstatement of Government life insurance policies.

43, 000
Government life insurance underwriting changes.

128, 000

Cash surrender of Government life insurance policies..

30, 000

Sorting and reconciling insurance collections..

34, 000

Processing of TWX hold check, suspend-stop pay notices.

69, 000

Transfer of field station EAM processing -

12, 000

Shipment of transaction data by air freight-

28, 000

Processing insurance loan repayments.-

50, 000

Input and control revision (compensation and pension).

25, 000

Storage and retrieval of dividend information.-

32, 000

Transfer of data processing activities from Somerville Supply Depot

35, 000

to Philadelphia DPC.
Nutritional analysis by computer-

107, 000

Pharmacy inventory system.

25, 000

Annual patient census.-

33, 000

Conversion of insurance actuarial operations.

4, 300

Computer preparation of insurance notices..

311, 000

Management personnel inventory system.

106, 000

Automation of compensation and pension accounting system.--

12, 000

Computer preparation of school letters.--

12, 000

Consolidation of field station supply and dietetic processing-

112, 000
Tape-to-tape transfer of insurance records.
Automated management information system (AMIS)
Streamlining supply depot operations.

1, 110, 000
Release of electric accounting machine (EAM) equipment.

13, 400
Automation of insurance awards (insurance subsystem).

1, 148, 762
Computer sort of miscellaneous transactions input---

147, 000
Personnel and accounting integrated data pay system (PAID)

34, 600
(manpower administration subsystem) -

Portfolio loan accounting for delinquent accounts..

1, 800, 000

Maintaining loan guaranty real property accounting records.

38, 000

Total estimated annual recurring savings on projects com-
pleted through February 1966.--

14, 442, 362

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Senator MAGNUSON. 697 people is a good cost reduction in payroll


Senator ELLENDER. Thirty percent of that would be 180 through


Senator MAGNUSON. You say also on page 2 "We are now handling

all personnel and payroll transactions for our 167,000 employees."
It that the total aboard in the whole agency?

Mr. DRIVER. Medical, benefits, everything.


Senator Allott. While we are talking about employment, in this
particular category, in fiscal year 1965 they had 18,599 positions,
permanent. In fiscal year 1966, 17,960. In fiscal year 1967, 17,423— which is a reduction of 1,176, I believe.

Mr. SHYTLE. In permanent positions.


Mr. DRIVER. I am using average employment figures.
Mr. ALLOTT. Now I am going to average employment.

In fiscal year 1965, 17,605. Fiscal year 1966, 17,367. And in fiscal year 1967, 16,641.

Now, you have got 503 instead of 641. How do we get down to the 503?

Mr. Driver. I am afraid I don't have a ready answer for that.
Senator ALLOTT. These were taken from your records.
Mr. DRIVER. It is a difference of 138 employees.
Senator Allott. So it is something to talk about.
Mr. DRIVER. Right.
Senator MAGNUSON. Well, you supply that for the record.
(The information follows:)

The difference of 138 represents the employment equivalent of terminal leave payments in F.Y. 1967. The employment of 16,641 shown in the President's Budget, referred to by Senator Allott includes this equivalent number; the 16,503 employment shown by VA does not.


Senator ALLOTT. All right. Now, could I ask just one other while we are on general operating expenses.

At the bottom of page 2 you say—you have 167,000 employees on a central computer operation in Chicago. In the past we have had a great deal of discussion on this, where it was to be located and so forth.

Now, is the Chicago operation to be the one central computer operation for the veterans?

Mr. DRIVER. No, sir—not the one. The Chicago computer operation is principally devoted to the payment of the compensation and pension rolls—the 5 million checks a month we send out.

Now, in the course of handling that, we found we had the time on the equipment to include the VA payroll, the entire payroll. But we have other computer centers.

We have the insurance operation principally located in Philadelphia. We have a computer center in Los Angeles. We have a computer operation

Senator ALLOTT. What does the Los Angeles computer operation handle?

Mr. DRIVER. It is principally in the medical field. We will have others in the country for logistics and that sort of thing.

The location and the idea of a principal center is something that is still developing in terms of these programs. We are waiting to see what kind of equipment there is, how much you can get in.

I am sure in the years to come, in the maybe not too distant future, there will be equipment that will permit us to consolidate several of these operations. But that hasn't arrived yet.

Senator ALLOTT. All right. So the Chicago operation is chiefly benefit payments. And now you are putting your payroll on that?

Nr. DRIVER. Trying to get all of the use of the equipment we can possibly squeeze out of it.

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