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1963 1964 1965 * Does not include $10,579,000 proposed for wage board supplemental.


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Mr. GLEASON. Mr. Chairman, and gentlemen of the committee, I am honored to appear before you with my staff to explain our 1965 budget, as well as our supplemental requirements for 1964.

Our budget estimates for fiscal year 1965, as transmitted by the President in January, totaled $5,442,971,000.' Since then, there have been two amendments: We have reduced our estimates for “General operating expenses" and "Medical administration and miscellaneous operating expenses" by $1 million and $30,000, respectively. Also, our January submission contemplated a supplemental in 1964 under the "Construction of hospital and domiciliary facilities” appropriation to provide alterations incident to activation of 2,000 nursing home beds. This requirement is now reflected as an amendment in our 1965 estimates.

Senator MAGNUSON. All right, what you are going to talk about further on in your statement are additions to the budget estimate of $5.442 billion, is that correct?

Mr. MONK. And some reductions.
Senator MAGNUSON. $1.30 million.
Mr. MONK. That is right, sir.
Mr. GLEASON. Plus the $5 million.
Senator Magnuson. Yes. Well that is what you are coming to.
Mr. GLEASON. Right.
Senator MAGNUSON. All right.


Mr. GLEAsoN. The following changes have also occurred in our 1964 supplemental requests:

(a) The request for medical care wage board increases was reduced from $10,579,000 to $10,457,000 by the President’s letter of March 23.

(b) A supplemental request under the “Compensation and pension” appropriation of $30 million has become necessary and was transmitted by the President’s letter of April 29.

(c) A request for an increase in loan guaranty revolving fund expenditure limitation from $300 to $360 million has become necessary and was transmitted by the President's letter of March 23.

(d) The supplemental for construction of Corregidor-Bataan Memorial is deleted from our request before this committee, since this item is being handled by the Subcommittee on Department of Interior and Related Agencies.


A summary table, by appropriation, of our original budget transmitted in January and amendments thereto, compared with appropriations and currently proposed supplements for 1964, is attached to this Statement.

Senator ALLOTT. Where is that?

Mr. GLEAsoN. The last page.

Senator MAGNUsoN. That is on the last page, and to get the record correct then, your amended estimates for fiscal 1965 are $5,446,941,000?

Mr. GLEAsoN. Correct.

Senator MAGNUson. Which is plus $21,700,000 over fiscal 1964?

Mr. GLEAsoN. That is right.

Senator MAGNUsoN. All right.

Mr. GLEAsoN. Amounts cited in the remainder of my statement will relate to the amended request for 1965 and currently proposed supplementals for 1964 and "| therefore, in some cases, not agree entirely with those in the January budget submission before you.


In total, our amended estimates for fiscal year 1965 of $5,446,941,000 represent an increase of $21,700,000 over amounts appropriated and supplementals currently proposed for 1964. This net increase is comprised of increases approximating $24 million in “Medical care,” $3 million in “Medical research,” and $30 million in “Construction of medical facilities:” which are offset in part by decreases in benefit appropriations of approximately $32 million, and $4 million in “General operating expenses” appropriation.


The increase in “Medical care” is attributable, primarily, to rising costs of medical care, rather than program expansion. The amount for “Medical research” represents a modest increase, consistent with program requirements. The increase in “Construction” is due to advanc: ing construction of the 720-bed hospital at San Juan, P.R., which will

also serve the Department of the Army, and for alterations to provide 2,000 nursing home beds. The decrease in benefit apropriations reflects the termination of readjustment training programs for Korean conflict veterans and completion of insurance payments to beneficiaries of casualties in this conflict. The projected reduction of $4 million in "General operating expenses” appropriation reflects our continuing effort to reduce administrative costs.


Before discussing our requirements by appropriation, I would like to mention some of the significant actions we have taken during the past year to reduce cost in the Veterans' Administration. We have

Consolidated vocational rehabilitation and education activities at selected field stations; Consolidated field offices;

rged the Department of Insurance with the Department of Veterans' Benefits;

Established a Department of Data Management to bring under a centralized organization all data processing activities of the agency; and

Completed installation of automatic data processing for insurance and compensation and pension programs.

I am proud of our accomplishments in reducing administrative costs without impairment in service to veterans. From 1961 through 1964, average employment under the "General operating expenses" appropriation was reduced approximately 3,000. We are continuing our efforts to increase productivity in all administrative areas, and our 1965 budget now before you is predicted on further improvement and economy in operations

It anticipates increased employee productivity through improved work methods and operating procedures;

It provides for extending the application of automatic data processing methods to additional VA programs and activities;

It contemplates continued study of the feasibility of consolidating activities and closing field offices wherever possible;

It provides for continued improvement in the quality of medical care;

It anticipates further reductions in employment in administrative programs; and

In line with recommendations of this committee, it reflects reductions in employee travel and printing, below our 1964 budget estimates. Turning now to our budget estimates, by appropriation item. First


This appropriation supports our staff services, the Department of Veterans Benefits, and the Department of Data Management. Our estimate of $155,524,000 is a reduction of $4,226,000 from the appropriation for the current year. Actually, the effective reduction is over $7 million, since our 1965 estimate includes additional statutory salary rate increases and data processing functions previously financed under other appropriations.


The 1965 estimate for staff services contemplates a reduction of 99 in average employment below our estimate for 1964. Most of this reduction will be accomplished in the Board of Veterans' Appeals and in Administrative Services. Public Law 87-666, which modifies appellate procedures by requiring that field offices furnish each appellant with a statement of the case," has resulted in reduced workloads in the Board of Veterans' Appeals

. In Administrative Services, a decrease in employment is anticipated through improved procedures and realinement of functions to further increase productivity of personnel.

DEPARTMENT OF DATA MANAGEMENT As I stated earlier, this Department was established to bring together in one organization all data management activities of the agency. It was implemented in 1963 with

average employment of 818. These 818 employees were merely transferred from other organizational elements into the new Department. Employment in the current year will average 872, and we are projecting an increase to 906 in 1965. We consider this prudent because of the potentials for significant cost reductions throughout the agency from further installation of automatic data processing systems. The additional manpower planned for 1965 will allow us to accelerate the development of new ADP applications and to improve existing systems. We will be happy to discuss the specific projects we have underway, or planned during the course of these hearings, if you desire.

Senator MAGNUSON. On these two items, does the committee have any questions on those ?

PAY INCREASES Senator MONRONEY. In the previous paragraph you mention the pay increases for 1965. That is in contemplation of passage of a pay increase bild by the Congress!

Mr. GLEASON. No, sir.

Senator MONRONEY. That has been absorbed in all departments. I thought this was something special.

Mr. GLEASON. That is true it has been by all departments, Senator, but if that hadn't gone through, the savings would have been that much greater.

Senator MONRONEY. You have made no provision in your 1965 budget for a pay increase, is that correct?

Mr. GLEASON. Not a further one. Just the ones that have already taken place by the Congress.

Senator MONRONEY. It is my understanding that this pay increase is budgeted by the President?

Mr. GLEASON. That is correct.

Senator MONRONEY. And a 10-percent shrinkage is mandatory in the bill. You haven't taken that into consideration.

Mr. MONK. No, sir, not in this budget at all.
Mr. GLEASON. The only pay raise that is coming up-

Senator MONRONEY. I am talking about the general pay bill which the President has budgeted for about $570 million. Part of this is

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