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Performance of Services Under Subcommittee Jurisdiction.













MARCH 7, 2007

Printed for the use of the Committee on Veterans' Affairs

SERIAL No. 110-6





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BOB FILNER, California, Chairman


VIC SNYDER, Arkansas
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
HENRY E. BROWN, JR., South Carolina
BRIAN P. BILBRAY, California




Malcom A. Shorter, Staff Director

STEPHANIE HERSETH, South Dakota, Chairwoman

JOHN J. HALL, New York
JOHN BOOZMAN, Arkansas, Ranking

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.



March 7, 2007

Performance Review of Education, Loan Guaranty, Vocational Rehabilitation and Employment and VETS Programs


Chairwoman Stephanie Herseth, a Representative in Congress from the State of South Dakota
  Prepared  Statement of Chairwoman Herseth
Hon. John Boozman, Ranking Republican Member, a Representative in Congress from the State of Arkansas
   Prepared Statement of Congressman Boozman
Hon. John J. Hall
Hon. Jerry McNerney


U.S. Department of Labor, Hon. Charles S. Ciccolella, Assistant Secretary for Veterans' Employment and Training Service
    Prepared statement of Mr. Ciccolella

U.S. Department of Veterans Affairs:
    Keith M. Wilson, Director, Education Service, Veterans Benefits Administration
        Prepared statement of Mr. Wilson
    Bill Borom, Deputy Director, Vocational Rehabilitation and Employment, Veterans Benefits Administration
        Prepared statement of Mr. Borom
    Keith Pedigo, Director, Loan Guaranty Service, Veterans Benefits Administration
        Prepared statement of Mr. Pedigo


July 23, 2007, letter and attachments, from Hon. Charles S. Ciccolella, responding to several requests for information from Committee member during the hearing.

U.S. Department of Labor's description of their Transition Training Academy entitled, "Wounded & Insured Transition, The Training Academy Model"


Wednesday, March 7, 2007
U. S. House of Representatives,
Subcommittee on Economics Opportunity,
Committee on Veterans' Affairs,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2:05 p.m., in Room 340, Cannon House Office Building, Hon. Stephanie Herseth [Chairwoman of the Subcommittee] presiding.

Present:  Representatives Herseth, Hall, Donnelly, McNerney, Boozman, Moran.


Ms. HERSETH.  Good afternoon.  The Veterans' Affairs Economic Opportunity Subcommittee hearing on the Performance, Staffing, and Services provided by the Education, Loan Guaranty, and Vocational Rehabilitation and Employment Programs of the Department of Veterans Affairs and Veterans' Employment and Training Service of the Department of Labor will come to order. 

I would like to thank Ranking Member Boozman for his leadership as past Chairman of this Subcommittee.  I look forward to again working with you in this Congress in the same bipartisan and cooperative spirit with which you led us in the 109th Congress.

I also want to welcome the new members to the Subcommittee, one of whom is here, and that is Mr. John Hall of New York who has joined us.  We also have representatives Joe Donnelly of Indiana, Jerry McNerney of California, and Jerry Moran, although not a new member to the Congress, is a new member to the Subcommittee and he is from Kansas.

I look forward to working with all of these distinguished gentlemen and the returning members of the Subcommittee on our efforts to ensure that our Nation's veterans receive the best available services as they seek to access the benefits that they have earned.

Earlier this year, the Subcommittee membership discussed the hearing topics to be covered in the 110th Congress.  I am proud to say that we have a very ambitious list that includes expanding education benefits for the National Guard and Reserve, examining the funding levels for State Approving Agencies, reviewing the VA's procurement goals with respect to veteran-owned and service-disabled small business, and other important issues.

First and foremost, Ranking Member Boozman, I look forward to working with you and our colleagues on the Armed Services Committee to update the Montgomery GI Bill for National Guard and Reserve servicemembers.  These brave service men and women continue to support our military missions in Iraq, Afghanistan, and elsewhere around the world.  Unfortunately, despite their extensive deployments and even with Chapter 1607 programs, their education benefits do not reflect their increased service to our Nation.

Again, I look forward to working with all members of the Subcommittee to effectively address this issue and to advance legislation that better ensures Guard and Reserve servicemembers essential to our total force military policy, that they are more equitably treated.

Like many of my colleagues, I have spent the last few days meeting with constituents who are members of various Veteran Service Organizations.  Those meetings have generated many questions and concerns, some of which I hope to address here today.

I am particularly interested in hearing about the VA's efforts to address the education claims workload and potential problems associated with the centralization of education claims service operations, especially if under-staffed.

I would like to thank our panelists for being here to participate in a frank dialogue with members of the Subcommittee, and I encourage you to work with us as closely as you have been so that we all may properly serve our Armed Forces, our veterans, and their families as they transition back to civilian life following their honorable service to our country.

Much progress has been made in education benefits, vocational rehabilitation services, and VA home loan programs.  However, we must insist on thorough analyses, accurate numbers, and I think everyone would agree that we must remain vigilant to protect against any declining benefits or customer service.

Thank you all again for being here.  I look forward to hearing your testimony.

[The prepared statement of Chairwoman Herseth appears in the Appendix.]

Ms. HERSETH.  And I now recognize our Ranking Member, Mr. Boozman, for any opening remarks that he may have.


Mr. BOOZMAN.  Thank you, Madam Chairman.

Again, good afternoon.  Thanks to each of our witnesses for taking the time to be here today.  Budget season is certainly always a busy time, but these sometimes hectic schedules serve a good purpose in allowing us to better understand and get a thorough understanding of the budget for the next fiscal year.

Before I begin my remarks, last year at the end of the year, I thought I was joking in the sense that I alluded to the fact that Ms. Herseth might be taking over.  And sure enough, she is. 

And, you know, certainly I very much have enjoyed working with you in the past, and, you know, I certainly pledge, as you were so gracious to me, that we talk a lot about bipartisanship around here, but truly we will do anything we can to be supportive and really look forward to a good year.

The President has sent us a budget.  It is a good template.  It is certainly not perfect, but it is a good start.  Both sides of the aisle have presented their views and estimates to the Budget Committee.  Now it is up to them to pass a budget resolution that works.

I believe that we were in agreement with the Majority when it came to suggesting a thousand additional FTE for VBA.  We also suggested additional funding for IT programs and the need to conduct significant business process reform because just piling more FTE every year will not necessarily solve the structural issues preventing rapid processing of claims of all types.

The challenges before VA and VETS is to make programs work.  It is clear that people expect not just programs but ones that actually deliver the goods to the beneficiaries.  We need to get the processing time down for both VR&E and education.

The last session, we mandated a report on streamlining education processing, and I hope the Department will send us a legislative proposal to change the way they do business if that is required.

The Veterans' Employment and Training Service still lacks sufficient data in many areas, and I look forward to Mr. Ciccolella's testimony on how they propose to do better in that area.

One thing I am disappointed in is the flat budget recommendation for the National Veterans Training Institute in Denver.  As you know, Public Law 109-461 imposed new training requirements for DVOPs and LVERs.  And when the staff visited NVTI last year, they were told that they probably need an additional one million to meet the additional throughput.  So I would appreciate if you might address that shortfall here today.

Thank you very much, Madam Chairman.  I yield back.

[The prepared statement of Congressman Boozman appears in the Appendix.]

Ms. HERSETH.  Well, thank you, Mr. Boozman.

I would now like to recognize Mr. Hall from New York for any opening remarks he may have.


Mr. HALL.  Thank you, Madam Chairman.  Madam Chair, I suppose I should say.

In short, I do not want to make many remarks because the hearing, I think, is for us to hear from you.  So I will just say that I am double-booked with the Water Resources Subcommittee meeting.  So if I dash out in a little while, it is not a sign of disrespect.  I did choose to come here first.    And I am concerned especially in my district with the fact that in the most affluent district in the State of New York and in the Westchester County, which is the most affluent county in the State of New York and one of the five most affluent in the United States, we still have 20 percent of the homeless population who are veterans.

And so anything we can do to improve the job training and transition for them to give them a better shot at staying on their feet and to prevent them and their families from teetering over that cliff into bankruptcy and/or homelessness is something that I will work very hard to do.

Thank you.

Ms. HERSETH.  Thank you, Mr. Hall.

Mr. McNerney, welcome to the Subcommittee.  We are pleased to have you with us working on important issues that we have had a chance to discuss more informally, but welcome to the first hearing of this Subcommittee.

I recognize you for any opening remarks you may have.


Mr. MCNERNEY.  Thank you, Madam Chairwoman.  I appreciate your remarks and, Ranking Member Boozman, thank you for your remarks.

One thing that I am very interested in after reading your testimony is how we can improve the opportunities for veterans.  And as I look back over what happened in my father's generation, the veterans were given a tremendous opportunity that allowed them to buy houses, to get education, and really help develop our country. 

And nowadays, if we look at what is being offered to veterans, it is falling far short of that goal.  That really did give our country a boost economically.  It helped us develop a strong middle class and it gave our veterans back some of what they sacrificed for this country.

And so I think it is incumbent upon us to look at what we are offering and find a way to increase that so that it does measure up in some way to what our prior generations offered.

And I yield back.

Ms. HERSETH.  Well, thank you very much.

Thanks to all of you.  Our distinguished panel of witnesses is well-qualified to highlight the programs of interest today.

Joining us are Mr. Charles Ciccolella, Assistant Secretary for Veterans' Employment and Training Service of the U.S. Department of Labor; Mr. Keith Wilson, Director of Education Service; Mr. Bill Borom—am I pronouncing that correctly?

Mr. BOROM.  Correct.

Ms. HERSETH.  Deputy Director of Vocational Rehabilitation and Employment; and Mr. Keith Pedigo, Director of Loan Guaranty Service of the U.S. Department of Veterans Affairs respectively.

So, Mr. Ciccolella, let us begin with your testimony if you might.



Mr. CICCOLELLA.  Thank you, Madam Chair.

Ranking Member Boozman, Congressman McNerney, Congressman Hall, thank you for the opportunity to appear before the Committee to testify on the Veterans' Employment and Training Service.

VETS was created in 1980.  We have 240 full-time Federal staff deployed around the country.  The majority of our staff are not in Washington.  They are in the field in the States.

We deliver our programs and services to veterans three ways, directly to veterans, through the State workforce agencies, and through competitive grants.  To assist us, we have six regional administrators and we have a Federal Director of State Veterans' Employment and Training in each one of the States.

VETS has three missions.  First, we provide employment assistance to veterans in America's publicly-funded workforce system.  Secondly, we provide employment assistance to transitioning military members while they are still in the military before they get out.  And, finally, we protect servicemembers' employment and reemployment rights, which, of course, is so much more important today with the activation of nearly 600,000 Guard and Reserve since 2001.

My testimony describes our programs in pretty good detail, so what I will do is just talk about some of the highlights of our programs.

Our first mission is to provide employment assistance to veterans through America's publicly-funded workforce system.  The law, as you know, requires that veterans receive priority in that system.  In addition, there are over 2,100 veteran employment representatives, DVOPs and LVERs who provide specialized employment services to veterans.  Those veteran employment representatives are provided through the Jobs For Veterans Grant.

The DVOPs and LVERs, veteran employment representatives are critical to the process.  The majority of them, 99 plus percent, are veterans.

We have several initiatives including the Key to Career Success Initiative and our Hire Vets First Campaign that we use to link transitioning servicemembers to the career one-stop centers in the public workforce system.  As a result of these services, 611,000 veterans were employed last year through the workforce system.

I would also like to say that we work closely with the VA on their Vocational Rehabilitation and Employment Program.  We have a very effective partnership with VA and that is codified in a formal agreement. 

Both agencies focus on a team effort to place more Chapter 31 veterans into employment.  We also forward position veteran employment specialists at the VETS centers and other VA locations.  Seventy-one of them are forward positioned.

Our second mission is to provide employment assistance for separating military members.  We work in collaboration with the Department of Defense and the Department of Veterans Affairs, and we provide a transition assistance employment workshop for members of the military who are separating.

We focus the TAP Program on helping servicemembers to build a plan for making the jump from the military into civilian life.  That means we teach the TAP participants how to translate their skills, education, and experience onto resumes and actually have a draft resume when they leave the TAP Program.  We teach them interviewing skills and also how to use the one-stop career system. 

We are working very hard with the Department of Defense to increase participation in the TAP Program.  In 2001, we put 100,000 servicemembers through TAP.  Last year, we put 150,000 through TAP.  As you know, there are about 220,000 who leave the military each year.

We also offer TAP to the National Guard and Reserve when they return from their deployments, and we have budgeted additional money in the President's 2008 budget to handle increased participation in TAP.

We provide personal face-to-face transition employment assistance to our wounded and injured servicemembers through our REALifelines Program, our Recovery Employment Assistance Lifelines Program.

The program provides on-site job counseling, referral, training, and assistance while they are still in the military and then after they leave the military.

We have three Federal staff members out-stationed at the Department of Defense's Military Seriously-Injured Center.  We have six forward positioned staff at the key military major medical facilities.  We have helped 2,800 participants with employment assistance through our REALifelines Program.

Our third mission is to protect servicemembers' civilian job rights under the "Uniform Services Employment and Reemployment Rights Act."  The USERRA law prevents discrimination against veterans or any member of the service, and it provides reemployment rights to servicemembers.  It is especially important today with the activation of so many National Guard and Reservists.

Our Department administers the law.  We educate employers and we conduct investigations of complaints.  We also work very closely with the Department of Defense and the Department of Justice and the Office of Special Counsel in order to enforce that law when employers do not understand it or are not compliant.  Today employers understand that law much better because we have put out very easy to understand rules, and regulations, which make the law extremely understandable.

As an example, during the first Gulf War, we mobilized 265,000 Guard and Reservists for that war.  The two years following, we had 2,500 formal investigations of USERRA complaints.  After 9/11, the complaint rate went up about 1,500 complaints a year.  That is about where we are now.  I think that is going to sort of level off.

During the first Gulf War, we had one complaint for every 54 returning Guard and Reservists.  Today that is one in 96.  That is still not good enough, but it goes to show the improvement that we have made.

We also have a responsibility for enforcing veterans' preference.  We conduct the investigations.  Of course, OPM has the responsibility for veterans' preference in Federal hiring.

There are two other programs that I would like to mention.  The first one is that VETS operates a very, very important program under a competitive grant called the Homeless Veterans Reintegration Program.

Congressman Hall spoke briefly about the homeless veterans situation in New York.  Approximately 10,000 homeless veterans will be placed in employment in 2006 and 2007.  We plan to put 11,000 homeless veterans into jobs, and not poor-paying jobs, but into good jobs in 2008.

We also sponsor a highly successful Hire Vets First Campaign that promotes the skills of veterans and the public workforce system because that is what employers need to know, the challenge is to hook up the employer with the veteran.

We promote, sponsor, and brand veteran job fairs.  Last year, we promoted and sponsored 17 veteran job fairs, and we held a national veterans employment summit right before the end of the year.  This year, we are going to co-sponsor over 120 veteran job fairs.

The job fairs are very important.  A lot of people do not think they work.  They do work.  About 15 percent of the veterans who attend job fairs actually get jobs.  But more importantly, when you have a veteran-only job fair, what it does is it brings the veterans, the employers, the press, and workforce system together and it raises the awareness among that community or in that community, particularly in the business community, about the value that veterans bring to the workforce.

Forty-eight governors to date have signed Hire Vets First Proclamations and the Hire Vets First web site gets 35,000 unique visitors every month.

And we look forward to continuing to work with this Committee to make these programs more successful.  I would be happy to respond to your questions.

[The prepared statement of Mr. Ciccolella appears in the Appendix.]

Ms. HERSETH.  Thank you very much, Mr. Ciccolella.

Mr. Wilson, we will take your testimony, please.


Mr. WILSON.  Thank you.

Good afternoon, Chairwoman Herseth, Ranking Member Boozman, and members of the Subcommittee.  I appreciate the opportunity to appear before you today to discuss VA's education programs. 

My testimony will highlight workload, staffing, and services provided under the Montgomery GI Bill Active Duty, the Montgomery GI Bill Selected Reserve, the Reserve Educational Assistance Program known as REAP, and the Survivors and Dependents Educational Assistance Program.  I will also discuss outreach efforts related to the education benefits as well as automation tools that support our programs.

Chapter 30 and Chapter 1606 MGIB programs provide veterans, servicemembers, and members of the Guard and Selected Reserve with educational assistance generally in the form of monthly benefits to assist them in reaching their educational and vocational goals.

The Reserve Educational Assistance Program provides an enhanced benefit for Reservists and those in the National Guard who are activated for more than 90 days due to an emergency or contingency operation as defined by the President or Congress.

Together these programs assist in the readjustment to civilian life, support the Armed Services recruitment and retention efforts, and enhance the Nation's competitiveness through the development of more highly-educated and productive workforce.

The Chapter 35 DEA Program is the only VA educational assistance program specifically designed for spouses, surviving spouses, and eligible children of certain veterans.  This program offers up to 45 months of educational benefits.

The educational workload has been steadily increasing.  From 2000 until 2006, the number of education claims rose by 46 percent.  Total claims for 2007 are expected to be 1.4 million, which represents a two percent increase over 2006.

During the first quarter of 2007, original claims for educational benefits increased by about 13,000 or almost 20 percent over the same period in fiscal year 2006.  We believe this could be an indicator of continuously increasing usage rates in our programs.

We have developed a threefold strategy to manage the pending inventory and improve claims processing timeliness involving maximization of current resources, increased staffing, and information technology enhancements.

We initiated a Contact Management Support Center in September 2006.  This has allowed the Education Service to allocate 60 additional employees, trained employees, to process and decide education claims.

We have also increased staffing to handle the additional work claims from 2000 until 2006 direct FTE increase by 22 percent from 591 to 726.  In fiscal 2006, additional hiring resulted in a net increase of 39 additional FTE.

In the long term, we are pursuing IT enhancements and capabilities that will allow us to further automate claims processing as well as inquiry resolution. 

We are enhancing our current self-service internet application known as WAVE.  This application used by individuals to verify attendance and change addresses is being updated to allow claimants to view their electronic claims folders and confirm VA receipt of submitted documents.

It is also being expanded to automate changes in direct deposit information.

The Electronic Certification Processing System known as ECAP automatically processes enrollment certification submitted by schools.  In fiscal 2006, nine percent of our incoming supplemental claims, more than 105,000 claims, were processed through this electronic method thereby eliminating the need for human intervention.  We are currently pursuing strategies to update ECAP and increase the percentage of claims processed automatically.

This year, we are beginning to make progress toward achievement in our performance goals.  Our targets for the end of fiscal 2006 are to process original claims in 35 days and process supplemental claims in 15 days.  Timeliness has improved for supplemental claims processing. 

Average days to complete has dropped from 20 days in 2006 to 16 days in the first quarter of 2007.  Average days pending for those claims that have not been decided yet has dropped from 23 days to 15 days.  Average days to complete original claims has increased from 40 to 46 days from 2006 until the first quarter of 2007.  This was the result of being able to process more older work since we were able to focus more resources on claims processing due to the Call Center Initiative.

However, the reduction in average days pending for original claims from 39 days in 2006 to 32 days in 2007 reflects improvement in timeliness that will be reflected in improved average times to complete in our future workload.

Expanded outreach to separating servicemembers has led to increased benefit usage.  We distribute a series of informational brochures targeting servicemembers at 12 months following activation on active duty as well as 24 months after entering active duty and then a third time six months prior to separation. 

These brochures and targeted mailings are specifically tailored toward servicemembers who are eligible for the Chapter 30 MGIB Program.  Mailings are sent to approximately 90,000 active-duty members on a quarterly basis.  In 2006, VA has conducted more than 8,500 transitional assistance briefings for nearly 395,000 attendees.

For REAP, our newest benefit, we have distributed more than 300,000 copies of our REAP brochure to activated Guard and Reserve units.  Soon we will be doing direct mailings to REAP participants just as we now do for our Chapter 30 program participants.

Madam Chairman, this concludes my statement.  I would be pleased to answer any questions you or any other member of the Subcommittee may have.

[The prepared statement of Mr. Wilson appears in the Appendix.]

Ms. HERSETH.  Thank you very much, Mr. Wilson.

Mr. Borom.


Mr. BOROM.  Good afternoon, Madam Chairwoman, members of the Subcommittee.  Thank you for inviting me here today to discuss the Vocational Rehabilitation and Employment Program (VR&E);.  My testimony will provide an overview of the VR&E services and performance.

The VR&E provides veterans with service-connected disabilities the necessary services to assist them in preparing for, finding, and maintaining suitable employment or achieving maximum independence in their daily living.

The VR&E is an employment program that offers a wide variety of formal education, on-the-job training, apprenticeships, and internships to meet veterans' individual career goals.

The VR&E has implemented several programs and initiatives to ensure that servicemembers and veterans are informed about the program and are provided the services necessary to transition from the military to civilian life.

In 2004, former VA Secretary, Anthony J. Principi, established a task force to study the VR&E Program.  As a result of their recommendations, VR&E implemented the five-track employment process.  The five-track process standardizes program practices and places the emphasis on employment up front and early on.

In 2005, VR&E stationed 72 employment coordinators at regional offices across the country.  Additionally, we established job resources labs at each regional office and an on-line employment web site called  These resources provide vital vocational and employment support leading to successful employment outcomes.

The Disabled Transition Assistance Program is a vital component of transition assistance for servicemembers with disabilities.  DTAP assists potentially eligible servicemembers in making an informed decision about VA's Vocational Rehabilitation Program.  In fiscal year 2006, VA conducted over 1,400 DTAP briefings with over 28,000 participants. 

VR&E has expanded its outreach to Operation Iraqi Freedom and Operation Enduring Freedom servicemembers through an early intervention program known as Coming Home To Work.  This program provides valuable civilian work experience in government facilities to servicemembers facing medical separation from the military.  Currently the program has 121 participants receiving these early intervention services.

Priority outreach and case management services are provided to OIF/OEF servicemembers and veterans who apply for the program.  Vocational Rehabilitation and Employment case coordinators ensure that servicemembers and veterans receive priority attention through the application, entitlement, and five-track employment process.

VR&E and the Department of Labor's Veterans' Employment and Training Service continue to work together and have adopted a team approach to job development and placement activities to improve vocational outcomes for program participants.

Currently 38 VA regional offices have 71 DVOPs or Local Veterans Employment Representatives collocated at their stations.  Having these resources on-site is a best practice that enhances the efficiency of team work between the two agencies.

VR&E has significantly improved services to veterans and servicemembers applying for and participating in VR&E programs.  The rehabilitation rate, which is the number of veterans with disabilities that achieve their VR&E goals, as compared to the number that discontinue or leave the program before their completion, has improved. 

In fiscal year 2006, nearly 70 percent of program participants achieved rehabilitation status.  Currently in fiscal year 2007, that rate has risen to over 74 percent. 

We have also seen improvement in the number of days it takes the veterans to enter the program.  One way of measuring is by the days the veteran spends in applicant status.  In fiscal year 2006, veterans spent an average of 58 days in applicant status.  Currently in fiscal year 2007, the average is down to 53 days.

Last fiscal year, approximately 9,000 veterans achieved their rehabilitation employment goals through the program.  The majority of these individuals entered professional, technical, and managerial careers.

VR&E workload is expected to increase as a result of individuals returning from OIF/OEF.  To meet this need, we plan to hire additional staff in fiscal year 2007, increasing our on-board strength by over 100 employees.  Additional FTE will reduce case management workloads by approximately ten percent and will improve the timeliness of services provided to program participants.

Madam Chairwoman, this concludes my statement.  I would be pleased to answer any questions you or any of the members of the Subcommittee may have.

[The prepared statement of Mr. Borom appears in the Appendix.]

Ms. HERSETH.  We thank you for your testimony.

Mr. Pedigo, and I hope I am pronouncing that correctly?

Mr. PEDIGO.  Yes, that is correct.

Ms. HERSETH.  Okay.  Thanks.


Mr. PEDIGO.  Madam Chairwoman and members of the Subcommittee, I appreciate the opportunity to appear before you today to discuss the VA Home Loan Program.  In my testimony, I will highlight VA's commitment to meeting the housing needs of our Nation's veterans.

The Loan Guaranty Program serves a clientele that is diverse in many ways.  The only common denominator of this clientele is service in the Armed Forces of our Nation.  We make it possible for veterans to compete in the marketplace for credit with persons who were not obliged to forego the pursuit of gainful occupations by reason of military service.

The Loan Guaranty Program provides a guarantee to private lenders making loans to veterans.  This guarantee enables veterans to purchase a home without the need to make a down payment.

Other important program benefits include making direct loans to Native-American veterans living on trust lands and providing specially-adapted housing grants to severely-disabled veterans.

Since the inception of the Loan Guaranty Program in 1944, VA has guaranteed more than 18 million loans totaling in excess of $914 billion.  We believe that most of these veterans would not have been able to purchase a home at the time they did without the assistance of the no down payment feature of this program.

In the last five years, VA has assisted more than 1.4 million veterans in obtaining home loan financing totaling almost $197 billion.

While there is no maximum VA loan amount set by law, most lenders presently limit these loans to $417,000.  This limit is set by the secondary mortgage market which purchases most VA loans once they are made.

Effective with enactment of Public Law 108-454 in December of 2004, the maximum VA guarantee was indexed to the conventional conforming loan limit which is adjusted each January by the Office of Federal Housing Enterprise Oversight.  In practical terms, this means that the maximum VA no down payment loan amount will always be the same as the conventional conforming loan limit.  This amount has been set at $417,000 for calendar year 2007.

Like other homeowners, some veterans experience financial hardships that affect their ability to make mortgage payments.  When this occurs, we help veterans retain their homes through supplemental servicing efforts.  VA offers financial counseling and may intervene directly with a lender on the veteran's behalf to set up a repayment plan.

When VA is successful in establishing a repayment plan that results in the delinquency being brought current, we call this a successful intervention.

In fiscal year 2006, VA accomplished more than 8,700 successful interventions which translated into a savings to the government of $175 million in avoided claim payments.

Madam Chairwoman, we are very honored to be able to administer the Specially-Adapted Housing Program.  Veterans who have certain service-connected disabilities may be entitled to a Specially-Adapted Housing Grant or a Special Home Adaptation Grant depending on the nature of their disability.

Both grants can be used to make adaptations to a home being constructed or to modify an existing home in order to meet their specific needs. 

The Specially-Adapted Housing Grant is limited to $50,000 and is generally used to create a wheelchair-accessible home.  The Special Home Adaptation Grant is limited to $10,000 and is generally used to assist veterans who are blind or who have lost or lost the use of both hands or extremities below the elbow.

The goal of these grant programs is to provide a barrier-free living environment which affords the veteran a level of independent living that he or she may not otherwise enjoy.  In fiscal year 2006, we served 528 veterans through these grant programs, expending $24.6 million.

Until enactment of Public Law 109-233 in June of 2006, grant recipients could only receive their grant benefit from VA one time.  Now eligible veterans or active-duty servicemembers may receive up to a total of three such grants. 

In December of 2006, VA mailed letters to more than 16,000 living veterans who have received grants since 1948 notifying them of the statutory change which might entitle them to another Specially-Adapted Housing Grant.  Primarily as a result of this outreach effort, we have already received over 2,000 formal inquiries requesting subsequent grant usage.

Historically VA has completed between 400 and 600 grants a year.  Because of the labor-intensive nature of the grant process, a substantial increase in workload will ensue.  However, we are reallocating resources and streamlining program requirements to ensure that these veterans receive the high-quality personalized service that they deserve.

Madam Chairwoman, this concludes my testimony.  I greatly appreciate the opportunity to be here, and look forward to answering any questions that you or the other members of the Committee may have.

[The prepared statement of Mr. Pedigo appears in the Appendix.]

Ms. HERSETH.  Well, thank you very much to all of you.

Mr. Wilson, if I may start with you.  During a Subcommittee hearing last year, February 14th of 2006, this Subcommittee had a hearing which Mr. Ron Aument, the VA Deputy Under Secretary for Benefits, stated that the average number of days to complete original claims for 2005 was 33 days.  I believe he also predicted this number to go down by the end of 2006 to an average of 27 days.

But today in your testimony, you mentioned that you are setting a target of 35 days to process original claims for fiscal year 2007.

My question is, why is the time that it is taking to process the original claims expected to go up this year?

Mr. WILSON.  We saw a higher usage rate in 2006 than we had anticipated.  So we did see more claims coming in than we anticipated and in order to counter that, we hired additional staff.  We hired about 80 FTE in 2006, claims processors.

It took a while for those individuals to get up to speed.  So in some respects, they were more of a burden than a help in terms of getting the workload under control.  So our pending inventory did get higher than we anticipated, which meant the processing time exceeded what we expected to see in 2006.

In order to bring that down to where we wanted to be, one of the things that we did in addition to the hiring initiative was create the call center, National Call Center.  We have been able to process in excess of 100,000 additional claims because of the resources that we were able to free up during that call center.

And we have seen timeliness improvements.  In fact, I just yesterday received the numbers for February and our processing time for original claims in February was actually 35 days, which was a significant improvement. 

Although it does not get us back in line with our original projections of 27 days, it is a significant improvement over what we saw in 2006.  And I believe it positions us to continue to see that continued improvement in the processing time limits.

Ms. HERSETH.  Well, I hope you are right.  And I would like you to, if you would, provide for the Subcommittee a quarterly analysis—

Mr. WILSON.  Sure.

Ms. HERSETH.  —of the time that it is taking.  My hope is that the Budget Committee will review favorably our request for up to an additional thousand FTEs for VBA which hopefully would give you some discretion to add more. 

[The following was subsequently received from Mr. Wilson.]

Education Service: A quarterly analysis of the time it is takes to process an education claim.

For the first quarter of FY07, overall Education claims processing timeliness is as follows:

First Quarter FY07 (average days to complete)



Chapter 30 (MGIB-AD)



Chapter 1606 (MGIB-SR)



Chapter 1607 (REAP)



Chapter 35 (DEA)



All Benefits



Ms. HERSETH. You know, back when I first joined the Committee working with Mr. Boozman and former Chairman of the full Committee, now Ranking Member, Mr. Buyer, I had some concerns with the Administration's proposal for fiscal year 2006, which actually proposed cutting FTEs for the Education Service. 

We were able to negotiate no cuts.  I was hoping we could add, but at least the Administration anticipated the increased usage proposed for fiscal year 2007, an increase saying now of, I think, 14 FTE for fiscal year 2008.  I want to monitor this very closely.

And before I ask you a question about the new customer service, the contract, because I have a constituent who had a particular experience that was not good, let me just have you clarify. 

On page six of your written testimony, on the second full paragraph, it says, "Average days to complete original claims increased from 40 days in fiscal year 2006 to 46 for the first quarter of 2007.  However, the reduction in average days pending for original claims from 39 days in fiscal year 2006 to 32 days."

What is the difference in average days to complete original claims and average days pending for original claims?

Mr. WILSON.  Sure.  When we look at our workload in terms of how effectively we are meeting our timeliness goals, we look at it from two perspectives.  We look at it from the historical perspective in terms of how we have been doing and what future indicators lend us to believe we will be able to do in the future. 

And the two mechanisms we use to measure that are average days to complete, which means for those decisions that we have completed and the individual has been paid, that is how long it took us to process that work. 

Ms. HERSETH.  Okay.

Mr. WILSON.  Those things are already completed.

Average days pending is the measurement of the claims that we have pending that have not yet had decisions rendered on them.

Ms. HERSETH.  All right. 

Mr. WILSON.  So it gives us an indicator of what our future timeliness is going to be.  Ultimately what we try to do is drive down average days pending as much as possible because that is our leading indicator of how we are going to be doing in the future.

Ms. HERSETH.  Okay.  And the average days pending, when does the clock start ticking?

Mr. WILSON.  When it is received in the processing office, the day it is received in the processing office.

Ms. HERSETH.  And the day that it is received in the processing office is the same day it gets entered into the system?  There is no lag time, right, from when—

Mr. WILSON.  Correct.

Ms. HERSETH.  Okay.  All right.  I will come back for a few questions during the second round, but I would ask Mr. Boozman if he has some questions.  I am pretty sure he does.

Mr. BOOZMAN.  Thank you.

I want to ask all of you.  One of our concerns last year, one of our ongoing concerns, and this is truly a concern of the Committee's, a concern of Congress, is the unemployment rate among our veterans.  Especially there is a subset in there that was pretty high and we were kind of scratching our heads trying to figure out what was causing that.

Can you tell us kind of how that is going and get into some of the things that you are doing to try and address that?  You mentioned the job fairs and some of the other things along with the standard things that we have been doing for years. 

But I guess my concern is, you know, we are in a situation now where the country economically is doing well.  The economy is strong.  Unemployment is low. 

And I think it is great, Mr. Wilson, you mentioned the 20 percent increase in whatever.  So it sounds like people are using, you know, the opportunity to pursue education, which in the future is going to help us with those things.

But if you all could just comment real quick on that, I would appreciate it. 

Mr. CICCOLELLA.  The unemployment rate for young veterans 20 to 24 years old has traditionally been higher than the unemployment rate for non veterans in the same cohort.  For the past 20 years, the unemployment rate for veterans in general is about one percentage point below the national average.  Right now it is about 3.8 percent.  The national average is about 4.7.

It is a not a new phenomenon.  The unemployment rate for nonveterans who are 20 to 24 is also up there, but it is not quite as high.

The difference we think is this.  Young people come in the military about 18 or 19 years old, so they are going to get out when they are 22, 23, 24.  When they get out, they are generally going to go into their first full-time civilian job. 

Now, when they are in the military, they are not writing resumes and interviewing for jobs.  And they do not understand there is a career workforce system and they are not going to college.  They may take some college and on-line courses while they are in the military, but generally do not have college degrees. 

The kids coming in the military today are very smart.  They all have high school educations and they all score well on the Armed Forces Qualification Test.  We have very high-quality individual servicemembers in the military.

So when they come out of the military, they are slightly behind their contemporaries in terms of applying for jobs.  This is why transition assistance is so important when they make the jump from the military to civilian life.

When you look at the barriers for young veterans coming into the workforce, the first barrier is that they have trouble translating their skills, experience, and education on to their resumes.  And this is not just true of young veterans who are 20 to 24 years old.  This is true of colonels, generals, and sergeant majors. 

And the reason is, and when you look at one of their resumes, it says that they were the "CINC" of JTF, alpha, or something like that.  Nobody can understand that.  Employers just simply do not understand that.

When you are in the military, you do not interview for jobs.  You are usually assigned your jobs, so veterans when they first come out do not do well on their interviews.

This is why in the Transition Assistance Program we have to focus it on translating the skills that they have onto resumes so employers can understand it, and they have to do practice interview sessions so that they practice looking people in the eye, having the proper posture, and they can respond to questions.

Now, this is what we are doing with the Transition Assistance Program. 

There has not been a lot of research done on these young veterans.  The VA, the Department of Labor, and Defense are working together on this. 

VA has got a study now.  They are going to look at 2,000 servicemembers, 1,000 who are active duty, 1,000 who are Guard and Reserve, and they are going to ask them some questions about when did you get your job, how long did it take, did you use your military skills, so that we will have a better insight into them. 

I commissioned a study last year with the University of Chicago.  And we took a look at the Bureau of Labor Statistics' national longitudinal study of youth, and that is 9,000 youth who were age 12 to 16 in 1997.  So they are 22 to 24 years old now.

What we found was that the first week they get out of the military, their unemployment rates are very high, about 32 percent.  Every month after that, the rates go down.  They go down dramatically.  So at the third month, they were at about 24 percent.  At the sixth month, they were 11 percent.  At the ninth month, they were consistent with veterans in general.

Now, you have to be careful what sort of conclusions you draw from that.  We have a phase two of that study.  We need to go back to those veterans.  They do a 90 minute interview with them every year so we can find out a lot of stuff from them. 

But it suggests to us that veterans take their time, young veterans take their time when they get out of the military, and they may not take the first job.  It suggests, and the Defense Department can corroborate this, that they use their unemployment compensation for ex-servicemembers while they are looking for a job.  And that is fine.  That is what it is there for.  It provides a cushion.

But it also tells us that some of them may go to school and go to training or something like that.  But it also tells us that some may take a break because of post-traumatic stress because of the combat that they have been in.  And it may suggest that some of them do not have the confidence and do not think that they are highly skilled and can enter the workforce.

So those are the individuals that we have to get into the career one-stop centers to connect directly with our veteran employment representatives because our veteran employment representatives can look those folks in the eye, most of them are veterans themselves, and they can tell whether they are touched by post-traumatic stress and they can refer them to the VA or they can help them with their resumes and help them get into the workforce that way.

If you have only a high school education and you are in the combat arms, maybe you do not think you have a lot of skills, but our veterans today have great skills.  They come in.  They are highly qualified.  While they are in, they train, they learn.  And when they come out, they are exactly what employers are looking for.

And we talk to employers all the time, and employers are looking for not only the hard skills like the medics and the technical skills, but they are more often looking for people who come to work on time, who are drug free, who have initiative, they are success oriented, they have got loyalty, and they have got integrity.  And so employers want to hire veterans.  The issue is connecting them with veterans. 

We need more research so we have a better window into the 20- to 24-year-old veterans, but what we really need to do is we need to get more troops to go through the transition employment workshop and we need to help those troops translate their skills on to resumes.  We need to practice interviewing skills and we need to make them aware that there is a workforce system out there and there are VA services out there and those services are for them.  And we need to connect them to those services.

Now, the unemployment rate for young veterans in 2004 was 13.6 percent.  In 2005, it was nearly 16 percent.  Then in 2006, it has gone down.  It is about 10.4 percent.  So we think we are addressing it in the right way, but we have got to get more troops to the transition employment workshop.  We have to make sure the transition employment workshop has deliverables so they come out with a resume and they come out having done an interview so when they go for a job, it is not the first time they have written a resume and it is not the first time they have interviewed.

And this is not, you know, rocket science.  This is real easy to figure out.  So that is what we are trying to do.

Mr. BOOZMAN.  Thank you.

Thank you, Madam Chairman.

Go ahead if you would like.

Mr. BOROM.  Adding from the VR&E side on that, we have had some similar experiences.  I was a field counselor for many years.  And as I have worked with many field counselors, the experience that Labor has seen with what we refer to as soft skills, interview skills, ability to write a resume, it does hamper employment initially.

We do work with the veterans that come into the voc rehab program, the servicemembers who work with the Labor Department, on trying to improve their soft skills and improve resumes, interview skills, do mock interviews, whatever we need to help them get through that interview process.

Though we work with a smaller set of veterans, you know, the disabled group as compared to the Labor Department, oftentimes due to the disabilities that the veteran servicemember has, they may not be able to go back to the kind of work they did before.  And so we often are looking at assisting the individual with getting into more suitable work. 

We want to capitalize where we can on their skills that they have had, but oftentimes that may have been of a physical nature and they perhaps cannot do that kind of work anymore and additional training may be needed.  Hence, they are not moving into the labor force at that point.

Mr. BOOZMAN.  Thank you.

Thank you, Madam Chair.

Ms. HERSETH.  Mr. McNerney, do you have questions for the panel?

Mr. MCNERNEY.  Sure.  Thank you, Madam Chairwoman.

Mr. Borom, listening to your testimony concerning the Coming Home to Work Program, you mentioned that in fiscal year 2007 through January 31st, and I realize that is a fairly short time frame, but the 121 servicemembers participating seemed extraordinarily low compared to the number of veterans out there that might need this service.

Is there any explanation why that is such a small number?

Mr. BOROM.  At this point, it is a small program.&n