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Witness Testimony of Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, Veterans Benefits Administration, U.S. Department of Veterans Affairs

Good afternoon, Mr. Chairman, Ranking Member Braley, and Members of the Subcommittee. I am pleased to present the views of the Department of Veterans Affairs (VA) on a number of bills that would affect our housing and education programs, as well as our mission of service to our Nation’s Veterans.  I am accompanied today by Mr. John Brizzi, Deputy Assistant General Counsel, Office of the General Counsel.

HOUSING MATTERS

H.R. 120

H.R. 120, the “Disabled Veterans’ Surviving Spouses Home Loans Act,” would amend section 3701(b) of title 38, United States Code, to expand eligibility for VA’s guaranteed loan program to surviving spouses of certain totally disabled Veterans. Currently, a surviving spouse is eligible for home loan benefits if he or she was married to a Veteran who either died from a service-connected disability or is listed for more than 90 days as (i) missing in action; (ii) captured in the line of duty by a hostile force; or

(iii) forcibly detained or interned in line of duty by a foreign government or power. Subsection (a) of section 3 would expand eligibility for home loan benefits to surviving spouses who were married to certain severely disabled Veterans who died from other than service-connected causes. For the surviving spouse to be eligible, the Veteran’s disability must have been service connected and rated totally disabling for (i) a period of 10 or more years immediately preceding death, (ii) a period of not less than five years from the date of the Veteran’s discharge or other release from active duty, or (iii) a period of not less than one year immediately preceding death, if such Veteran was a former prisoner of war who died after September 30, 1999. Subsection (b) would make the amendment to section 3701 apply with respect to any loan guaranteed after the date of the Act’s enactment. Subsection (c) would clarify that a loan fee must be collected pursuant to 38 U.S.C. § 3729 in the same manner as such fees are collected from surviving spouses who were married to Veterans who died from service-connected disabilities.

Enactment of H.R. 120 would give a covered veteran the peace of mind that his or her surviving spouse will be able to receive VA home loan benefits, regardless of the veteran’s cause of death. However, before VA can offer a position on the merits of this bill, it must first determine its full impact on the Veterans Benefits Housing Program Fund. We have not yet had the opportunity to do so, and will provide our estimate of the cost of enactment of the bill at a later date.

H.R. 1263

H.R.1263 would amend section 303 of the Servicemembers Civil Relief Act by expanding the Act’s mortgage protections to include a surviving spouse of a Servicemember whose death was service-connected. Currently, the protection is limited only to Servicemembers who are on active duty or those whose active duty ended within the covered period.

VA defers to the Department of Defense regarding the merits of this bill.

H.R. 1911

H.R.1911, the “Protecting Veterans’ Homes Act,” would amend section 303 of the Servicemember’s Civil Relief Act to extend the period to which the Act’s mortgage protections apply.

Section 2(a) of the bill would extend the period within which a court may stay proceedings and adjust obligations relating to real or personal property.  It would also extend the period within which a court may provide relief from a sale, foreclosure, or seizure resulting from a defaulted obligation. Before 2008, a court was permitted to exercise such protections if the legal action to enforce the obligation was filed during, or within 90 days after, the Servicemember’s period of military service. With the enactment of Public Law 110-289, the “Housing and Economic Recovery Act of 2008,” the protection was temporarily extended from 90 days to 9 months. Subsection (a) would further extend such period another 3 months, so that a Servicemember could rely on the Act’s mortgage protections for a total of 12 months after his or her period of military service ended.

Section 2(b) would eliminate the December 31, 2012, sunset date that the Housing and Economic Recovery Act of 2008 imposed on the extended protection and make it permanent.

Subsection 2(c) would specify that the amendments made by the Act shall take effect on the date of enactment.

VA defers to the Department of Defense regarding the merits of this proposal.

H.R. 2329

H.R. 2329, the “Ensuring a Response for Servicemembers Act,” would amend section 207 of the Servicemembers Civil Relief Act to require lending institutions to designate an employee of the institution as a compliance officer responsible for ensuring the institution’s compliance with the maximum interest rate requirements and for distributing information to Servicemembers whose obligations and liabilities are covered by such requirements. The bill would further require lending institutions that hold more than $10 million in assets during a fiscal year to establish and maintain the next fiscal year a toll-free telephone number, and to make such number available on the institution’s primary Internet website.

VA defers to the Department of Defense regarding the merits of this bill.

EDUCATION MATTERS

H.R. 2274

Subsection (a) of H.R. 2274 would amend chapter 33 of title 38, United States Code, by adding a new section 3325 that would require (in subsection (a)) the Secretaries of Veterans Affairs and Defense to submit to Congress at least once every year (through January 1, 2021) separate reports on the operation of the Post-9/11 GI Bill (also referred to as “Chapter 33”).

Pursuant to subsection (b) of proposed new section 3325, the Secretary of Defense would be required to include information in each report indicating:  (1) the extent to which the benefit levels provided under chapter 33 are adequate to achieve the purposes of inducing individuals to enter and remain in the Armed Forces and of providing an adequate level of financial assistance to help meet the cost of pursuing a program of education; (2) whether it is necessary for the purpose of maintaining adequate levels of well-qualified active-duty personnel in the Armed Forces to continue to offer the opportunity for educational assistance under chapter 33 to individuals who have not yet entered active-duty service; and (3) describing the efforts under section 3323(b) of title 38, United States Code, to inform members of the Armed Forces of the active-duty service requirements for entitlement to educational assistance benefits under chapter 33 and the results from such efforts. The Secretary would also be required to include such recommendations for administrative and legislative changes regarding the provision of educational assistance to members of the Armed Forces and Veterans, and their dependents, as the Secretary considers appropriate. VA defers to the Department of Defense regarding these proposed reporting requirements.

Pursuant to subsection (c) of proposed new section 3325, the Secretary of Veterans Affairs would be required to include in each report:  (1) information concerning the level of utilization of educational assistance under chapter 33 and the expenditures under that chapter; (2) the number of credit hours, certificates, degrees, and other qualifications earned by beneficiaries under chapter 33 during the fiscal year preceding the fiscal year in which the report is submitted; and (3) such recommendations for administrative and legislative changes regarding the provision of educational assistance to members of the Armed Forces and Veterans, and their dependents, as the Secretary considers appropriate.

VA concurs, in principle, with the requirement to report annually on the Post-9/11 GI Bill.  However, we do not currently collect the number of credit hours, certificates, and other qualifications earned by individuals under the Post-9/11 GI Bill.  We estimate that we would need at least 12 months to develop a mechanism to track and report such information.

Subsection (b) of the bill would repeal section 3036 of title 38, United States Code, which requires the Secretaries of Defense and Veterans Affairs to submit to Congress at least once every two years separate reports on the operation of the Montgomery GI Bill – Active Duty, codified in chapter 30 of title 38. VA supports this repeal.

We will provide an estimate of the cost of enactment for this bill for the record.

H.R. 2301

H.R. 2301, entitled the “Streamlining Educational Claims Processing Act of 2011,” includes a requirement that VA make payments to educational institutions under the Post-9/11 GI Bill at the end of a quarter, semester, or term.

Section 2 of the bill proposes to amend section 3301 of title 38, United States Code, to provide definitions for the terms “quarter, semester or term,” and “full-time pursuit.”  A “quarter, semester, or term” would be defined as the academic period during which a course of education is pursued, as established by the educational institution. The legislation would define “full-time pursuit” as the pursuit of a program of education during any quarter, semester or term, as established by the educational institution. Currently these terms are not defined under section 3301.

VA does not support section 2 as presented because the legislation would allow each educational institution to establish a definition for a quarter, semester, or term. Allowing educational institutions to establish their own definitions would add an additional level of complexity to understanding the program. If enacted, this change would also have a significant negative impact on VA’s Long-Term Solution (LTS) for processing Post-9/11 GI Bill claims.  Currently, VA has standards regarding how many weeks of training constitute quarters and semesters. VA would have to make adjustments to the LTS to accommodate educational institutions’ definitions of quarter, semester, or term.

Section 3 of the bill would amend section 3313 of title 38 to require VA to make payments under the Post-9/11 GI Bill to educational institutions not later than 30 days following receipt of charges incurred by the individual at the end of the term. Currently, VA makes lump sum payments to the educational institutions for tuition costs on behalf of an individual pursuing a program of education upon receipt of an enrollment certification from the educational institution concerned. The changes made by this section would be effective for any quarter, semester, or term that begins on or after August 1, 2011.

VA generally supports this section. We believe this amendment would minimize the probability of overpayments of educational assistance under the Post-9/11 GI Bill. However, we note that its enactment would potentially impact the timeliness of processing claims.  Currently, VA processes tuition and fee payments upon receipt of an enrollment certification from a school.  Requiring VA to hold tuition and fee payments to the end of the enrollment period would allow the educational institution time to submit changes or updates; however, holding the claim open during such period would, by definition, increase the amount of time it takes for VA to complete the claim. Additionally, if educational institutions submit enrollment certifications before the final charges are determined, VA may experience a significant increase in the number of claims submitted, which could negatively impact the average days to process claims.

We also have concerns with the effective date of the legislation. Educational institutions begin submitting enrollment certifications as early as the month of June for terms that begin in August.  If VA has already processed enrollments for terms that begin after August 1, 2011, educational institutions may have already received payments for terms that have not yet begun. Therefore, VA recommends postponing the effective date of this provision until August 1, 2012.

Section 4 of the bill would amend subsection (h) of section 3313. It is unclear, however, whether the drafters intend to amend subsection (h) as currently in effect or whether they intend to amend that subsection as it will be in effect as of October 1, 2011 (by virtue an amendment to section 3313 by section 105 of Public Law 111-377). Effective October 1, 2011, section 105(b) of Public Law 111-377 will operate to strike current section 3313(h) (Established charges defined) and redesignate current section 3313(g) (Payment of established charges to educational institutions) as section 3313(h). Finally, also effective on October 1, 2011, section 105(b) of the Public Law will add a new subsection (g) to section 3313 (Assistance for pursuit of programs of education other than programs of education leading to a degree). The text of section 4 is confusing in that it would amend section 3313(h) by striking “(h) Payment of Established Charges to Educational Institutions.—Amounts” and inserting

(g) Payment of Established Charges.—

“(1) Payment to Educational Institutions—Amounts”. (Emphasis added). We believe the drafters intended the first portion of the amendment to read “(h) Payment of Established Charges.—”. Otherwise, this could be construed as supplanting the newly added language of subsection (g) discussed above. In addition, the affected subsection would be amended by the addition of a new paragraph (2), to require that VA determine the established charges for each credit hour of a program of education for any term, quarter or semester by dividing the total cost of the tuition for enrollment in the program of education on a full-time basis for that term, quarter or semester by the number of credit hours the educational institution is offering for the program course.

It is not clear how this amendment would affect VA’s determinations of payments to educational institutions once various amendments that were made by Public Law 111-377 become effective. Given the uncertainty surrounding section 4 of the proposal, VA is unable to provide views regarding that section at this time. We will seek clarification from the Subcommittee staff and provide comments on this section at a later date.

We are unable to provide an estimate of the cost of enactment of H.R. 2301 at this time.  However, once we clarify the drafters’ intent regarding section 4, we will provide that estimate for the record.

OTHER MATTERS

H.R. 2345

Title VII of Public Law 110-389 included provisions authorizing the Secretary of Veterans Affairs to:  (1) provide assistance to the United States Paralympics (USP) to plan, develop, manage and implement an adaptive sports program for disabled Veterans and disabled members of the Armed forces (codified at 38 U.S.C. § 521A); and (2) award a monthly assistance allowance to Veterans training for or selected to compete on the U.S. Paralympic team (codified at 38 U.S.C. § 322). The respective funding authorities for these provisions are set to expire at the end of fiscal year 2013.

Section 1 of H.R. 2345 would amend section 322(d)(4) to extend, for a period of 5 years (through FY 2018), the authority for appropriations to fund VA’s payment of monthly monetary allowances.  Section 2 of the bill would amend section 521A(g) to extend, for a period of 5 years (through FY 2018), the authority for appropriations to fund VA’s above-described provision of assistance to the United States Paralympics; it also would amend section 521A(l) to similarly extend the termination date for provision of such assistance (through FY 2018).

Extending these authorities would allow VA and the US Paralympics to continue developing their adaptive sports programming while building stronger relationships with partner organizations in Veterans’ communities, allowing Veterans to continue their rehabilitation through sports for years to come. Thus, subject to the availability of funding, we fully support these extensions.

By its own terms, the cost of enactment of this bill would be $10 million in fiscal year 2014, with a total 5-year cost (FY 2014 through FY 2018) of $50 million.

H.R. 240

Section 1(a) of H. R. 240 would change the wording in section 8127 of title 38, United States Code, from “may” to “shall,” to require contracting officers to contract with service-disabled Veteran-owned or Veteran-owned small businesses for all VA procurements under $5 million using other than competitive procedures for purposes of meeting the contracting goals and preferences established by the Secretary.  The businesses must be deemed responsible and VA has to make an award at a fair and reasonable price.  In addition, Section 1(b) would require VA to issue interim policy guidance to carry out this authority within 30 days of enactment.

VA opposes this legislation because the proposed language would be too restrictive, and would remove necessary business judgments that must be made at the discretion of VA contracting officers to acquire goods and services by the best means available for each applicable acquisition.  Moreover, full and open competition, not the use of other-than-competitive procedures, is the most preferred acquisition methodology, as competition is the best means to achieve a fair and reasonable price. Pursuant to 38 U.S.C. § 8127(d), VA is currently required to set-aside acquisitions over $3,000 on a full and open competitive basis for service-disabled Veteran-owned or Veteran-owned small businesses on a priority basis when two or more such businesses are found in market research and an award can be made at a fair and reasonable price. Furthermore, pursuant to this existing authority, VA has consistently achieved its socio­economic contracting goals for service-disabled Veteran-owned and Veteran-owned small businesses since the enactment of 38 U.S.C. § 8127 in 2006.

H.R. 2302

H.R. 2302 would amend title 38, United States Code, by adding a new section 517 to require the Secretary (VA) to notify Congress in advance of certain “covered” conferences sponsored by VA that would cost the Department at least $5,000.

Subsection (a) of proposed new section 517 would provide that, not later than 180 days before the date on which a covered conference begins, the Secretary shall notify the Committees on Veterans’ Affairs of the House and Senate of such conference, including the estimated costs to the Department.

Subsection (b) of the proposed new section would provide that, not later than 60 days after the date on which a covered conference ends, the Secretary shall submit to the Veterans’ Affairs Committees a report that includes an accounting of the final costs of the conference to the Department.

Subsection (c) of the proposed new section would define the term “covered conference” to mean a conference, meeting, or similar forum that is sponsored or cosponsored by VA and is:  (1) held for a period of 3 or more days (beginning at the time of the initial on-site registration and ending at the time the final event is completed);

(2) attended by 20 or more individuals, including one or more VA employees; or (3) estimated to cost the Department at least $5,000, including costs related to transportation and parking, per diem payments, lodging, rental of halls, auditoriums, or other spaces, rental of equipment, refreshments, entertainment, contractors, and brochures and other printed media.

VA opposes this bill as it would impose burdensome notification and reporting requirements on the Department. It would also discourage legitimate and beneficial conference activities, including in-person gatherings within VA, and with other Federal agencies, Veterans Services Organizations and Veterans advocates, and businesses encouraged to hire Veterans. In addition, the 180-day notification requirement would limit VA leadership’s ability to promptly and appropriately respond to training, planning, or other emergent operational needs.

All VA national events require notice to and/or approvals from VA Executive Management. Any conference that will be attended by more than 100 individuals must be approved in advance by VA’s Chief of Staff. When VA determines a face-to-face conference is the most preferred manner of conducting training, it complies with Government-wide regulations to identify potential locations and hotels. All proposed conference contracts for amounts exceeding $25,000 are reviewed by VA’s Office of General Counsel. Conference contracts also undergo technical review. The process for determining conference locations is consistent with the Federal Acquisition Regulation and is driven by the specific requirements of each conference.

The definition of “covered conferences” in H.R. 2302 captures the majority of operational meetings that are planned in the day-to-day administration of VA’s large health care, benefits and cemetery systems. Because of the low participant and dollar thresholds, it would include minor gatherings and those events that feature a substantial virtual component. The bill’s requirements would hinder the Department’s ability to effectively plan day-to-day business activities and meet emerging business needs, and would not provide any additional value to the current review process.  For example, VA medical center directors could not conduct timely town hall meetings, the Deputy Secretary could not conduct a timely Operational Management Review, and VA medical centers could not conduct timely grand rounds.

In addition, conferences are an indispensable tool for VA training. The success of VA transformation, cultural change, and effective implementation of new policies (as well as carrying out changes in programs resulting from legislative enactments) are dependent on the ability of VA to carry out effective training.  VA conferences also address maintenance and appearance of 131 national cemeteries, accountability and quality control procedures, and the administration of VA benefits related to burial and memorializing of our Nation’s fallen heroes and their eligible family members. Moreover, VHA provides workforce development and continuing education for more than 239,000 health care professionals and support staff at over 1,400 sites of care nationwide. Much of this training is necessary for these health care professionals to obtain and maintain their required licensing and certifications.

VA is unable to estimate the costs associated with this bill.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to respond to any questions you or other Members of the Subcommittee may have.