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The U.S. Department of Veterans Affairs Budget Request for Fiscal Year 2008.











FEBRUARY 8, 2007

Printed for the use of the Committee on Veterans' Affairs

SERIAL No. 110-1





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BOB FILNER, California, Chairman


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

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




Malcom A. Shorter, Staff Director

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.



February 8, 2007

The U.S. Department of Veterans Affairs Budget Request for Fiscal Year 2008


Chairman Bob Filner, Full Committee on Veterans' Affairs
    Prepared statement of Chairman Bob Filner
Hon. Steve Buyer, Ranking Republican Member, Full Committee on Veterans' Affairs
    Prepared statement of Congressman Buyer
Hon. Michael Michaud
Hon. Henry E. Brown, Jr., prepared statement of
Hon. Jeff Miller, prepared statement of
Hon. John J. Hall
Hon. Phil Hare
Hon. Ginny Brown-Waite
    Prepared Statement of Congresswoman Brown-Waite
Hon. Ciro D. Rodriguez
Hon. John T. Salazar
    Prepared statement of Congressman Salazar
Hon. Doug Lamborn
    Prepared Statement of Congressman Lamborn
Hon. Joe Donnelly
Hon. Gus M Bilirakis
    Prepared statement of Congressman Bilirakis
Hon. Zachary T. Space
Hon. Timothy J. Walz
    Prepared Statement of Congressman Walz
Hon. Corrine Brown, prepared statement of
Hon. Cliff Stearns, prepared statement of


U.S. Department of Veterans Affairs, Honorable R. James Nicholson, Secretary
  Prepared statement of Secretary Nicholson

American Legion, Paul A Morin, National Commander
  Prepared statement of Mr. Morin
American Veterans (AMVETS), David G. Greineder, Deputy National Legislative Director
  Prepared statement of Mr. Greineder
Disabled American Veterans, Brian Lawrence, Assistant National Legislative Director
  Prepared statement of Mr. Lawrence
Paralyzed Veterans of America, Carl Blake, National Legislative Director
  Prepared statement of Mr. Blake
Veterans of Foreign Wars of the United States, Dennis M. Cullinan, Director, National Legislative Service
  Prepared statement of Mr. Cullinan
Vietnam Veterans of America, John Rowan, National President
  Prepared statement of Mr. Rowan


Pre-Hearing Questions and Responses for the Record:

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to VA Secretary Nicholson, letter dated January 25, 2007

Post-Hearing Questions and Responses for the Record:

Written questions for the record submitted to the VA follow:

Hon. Bob Filner, Chairman, Committee on Veterans' Affairs, to VA Secretary Nicholson, letter dated March 5, 2007
Hon. John Salazar to VA Secretary Nicholson, questions dated February 8, 2007
Hon. Steve Buyer to VA Secretary Nicholson, letter dated February 20, 2007
Hon. Henry E. Brown, Jr., to VA Secretary Nicholson, questions dated February 8, 2007
Hon. Gus M. Bilirakis, to VA Secretary Nicholson, questions dated February 8, 2007
Hon. John Boozman, from VA Secretary Nicholson, questions dated February 8, 2007
Hon. Ginny Brown-Waite, from VA Secretary Nicholson, questions dated February 8, 2007
Hon. Michael R. Turner, from VA Secretary Nicholson, questions dated February 8, 2007


"The Fiscal Year 2008 Independent Budget for the Department of Veterans Affairs"

"Soldiers Returning from Iraq and Afghanistan:  The Long-term Costs of Providing Veterans Medical Care and Disability Benefits, Faculty Research Working Papers Series," by Linda Bilmes, John F. Kennedy School of Government, Harvard University, January 2007


Thursday, February 8, 2007
U. S. House of Representatives,
Committee on Veterans' Affairs,
Washington, DC. 

The Committee met, pursuant to notice, at 9:30 a.m., in Room 334, Cannon House Office Building, Hon. Bob Filner [Chairman of the Committee] presiding.

Present:  Representatives Filner, Brown of Florida,  Snyder, Michaud, Herseth, Mitchell, Hall, Hare, Salazar, Rodriguez, Donnelly, McNerney, Space, Walz, Buyer, Stearns, Moran, Baker, Brown of South Carolina, Miller, Boozman, Brown-Waite, Turner, Lamborn, Bilirakis. 


The CHAIRMAN.  Good morning.  This hearing of the House Committee on Veterans' Affairs is in order.  Thank you all for being here.  I thank the members of the Committee. 

We are here to welcome the Secretary of the VA and your staff, and we appreciate your spending the morning, maybe the afternoon, maybe all night.  I do not know.  But thank you for being here.

You have characterized the budget for fiscal year 2008, Mr. Secretary, as a "landmark budget," and we certainly are appreciative that you are submitting a budget that calls for an increase for veterans' healthcare, unlike the budget that was submitted two years ago.

And I believe it does give us a basic framework from which to begin our analysis as to whether the VA's budget submission will meet the needs of veterans in the coming fiscal year. 

Of course, our job as a Committee is to make sure that as we follow this "landmark budget," we do not get off course and lose our way.

You have requested an increase for VA medical care of $1.9 billion over the level provided in the Joint Funding Resolution for 2007.  That is a six percent increase.

We did provide this fiscal year a 12 percent increase over 2006.  Both the Independent Budget that we will discuss in the panel after you, and The American Legion, both recommend more than a 12 percent increase for fiscal year 2008.

The Vietnam Veterans of America recommend substantially more.  So I look forward to your explanation as to why you believe the six percent increase will suffice for our veterans.

Your budget submission also states that $1.4 billion of your increase for medical care is attributable to inflation.  Once this is factored in, the recommended increase leaves precious few dollars to meet the increasing needs of our nation's veterans.

And although the waiting list for new enrollees has indeed declined, and you are obviously to be applauded for that and we all appreciate that, I believe that no veteran should have to wait for healthcare appointments simply because the VA does not have the resources to care for that veteran.  I would hope that you can assure the Committee that the budget request before us has the dollars to address this problem.

Last year, your budget request claimed $197 million in efficiencies for a total of $1.1 billion.  This year's budget submission also claims "clinical and pharmacy cost avoidance," in your words.

Our Committee would like to know whether you believe you will achieve these efficiencies for 2007 and what exactly are your dollar estimates as to your efficiencies in these two areas for 2008.

I see that you are requesting an additional $56 million for a total of $360 million for your mental health initiative.  Your submission also claims that the VA plans to spend $3 billion for mental health services and, yet, the GAO reported last November that you failed to fully allocate the resources you pledged in 2005 and 2006 for that mental health initiative.

In light of this report, I hope that the VA will fully allocate the $306 million for this initiative in 2007 and $360 million for 2008, and I hope you can assure us of that.  And I would like to make sure you do answer the question, "Do you currently have the resources you need to address the mental healthcare needs of our veterans," especially in light of the significant mental issues that seem to plague those coming back from Iran and Afghanistan."

I have to note, and I know many on this Committee agree, if not all, that we are disappointed that you have once again brought forward legislative proposals as part of your budget submission.  Instituting enrollment fees and increasing pharmacy co-payments have been rejected, as you know, year after year by this Congress.

Last year, you claimed that the enactment of these proposals would reduce your need for discretionary healthcare dollars.  This year, your proposals are deemed mandatory spending and are taken out of your own mandatory spending allocation.

I hope you will explain to this Committee why you have offered these proposals again and the policy reasons for deeming the expected receipts from these proposals mandatory dollars.

We both agree, we all agree, that the VA is facing an ever greater claims processing crisis—over 600,000 backlogged as of today.  In light of this, I would expect your budget submission to aggressively request additional dollars to address this growing problem. 

But as I read the budget, and correct me if I am wrong when you testify, I see that your request for General Operating E Expenses, which funds the claims processors at the heart of the process, is close to $9 million less than the amount provided for in the 2007 funding resolution.

I would like to know what steps you are taking to meet that challenge and why the VA has not requested a sizable increase in this account to address the claims backlog.

Your VA research request seeks less than you will receive under this year's Joint Funding Resolution.  I think you should be requesting at least an $18 million increase just to keep up with inflation.  This is especially true when once again you are seeking more resources from other Federal sources and the budget for NIH is going to be static.

I look for a full explanation of also your information technology request, including transfers from other accounts.  We have to ensure that the VA is moving in the right direction in Information Technology and that the funding level you receive in 2008 will lead to better security, more innovation, and fewer incidents like the one that occurred in Birmingham, Alabama last week.

I know that you are seeking increases in both the Major and Minor Construction accounts, and I am sure we will all be interested in learning how you selected the projects for this request.

There is much work to be done to ensure that the VA has the funding it needs in the coming fiscal year and to ensure that the VA spends the resources it receives properly and diligently.

Mr. Secretary, we look forward to hearing from you this morning, to work closely with you to make sure that the needs of our veterans, especially in the midst of war and those returning from Iraq and Afghanistan and the veterans from our previous conflicts, are met.

I would like to just add a personal note for my colleagues.  As the Secretary and I have met and talked together on more than a few occasions since the change in the Congress, I appreciate that dialogue.  I appreciate your keeping me in touch with things that need to be touched upon. We will be traveling together to see some things in the VA that we want to do together.  I think we have set up a good working relationship, Mr. Secretary, and I appreciate the response to the new situation, the new majority in this Congress. 

And I want to assure our colleagues on both sides of the aisle that we have, I think, established the basis of a relationship that we will be working together and that we will seek what is best for our veterans. 

I think your commitment does not need to be questioned on that, Mr. Secretary, and this Committee will work with you to ensure that every one of our veterans is cared for properly.

I will yield to the Ranking Republican, Mr. Buyer, for a statement.

[The prepared statement of Chairman Filner appears in the Appendix.]


Mr. BUYER.  Thank you, Mr. Chairman, and good morning.  I would like to welcome everyone to the first hearing of the 110th session of Congress.

And, wow, Mr. Chairman, you have come a long way from sitting in this chair demanding that the Secretary resign nine months ago.  So I am glad you two have been able to work this out.

For housekeeping, before we move into these questions, I have sent you a letter, Mr. Chairman, requesting next week for us to bring in the VSOs and the MSOs to go over the budget. 

As you know, last year when we ended the joint hearings, we opened up the unprecedented access for the VSOs and the MSOs so we could get all of their testimonies prior to doing the budget views and estimates.  And we also then did the look back, look ahead.  So never before had the VSOs and the MSOs had such access to this Committee, and I am hopeful that you will give consideration to the request.

Secondly, you still have not submitted to the minority a proposed budget for the operations of this Committee, and so you and I need to start out at a bipartisan basis and you do that by talking about the budget of this Committee.  So I am still utterly dumbfounded, and so I still await that draft budget so you and I can move on with business.

Mr. Secretary, I am glad you could be with us today to share with the Committee the President's proposed budget for 2008.  I commend you yet again for embracing the challenge of improving the VA's budget process.

Building on last year's progress, when we had that hearing to examine the budget modeling and you disclosed the shortfall on a budget that you had inherited, you said you were going to take ownership of that budget, and you did that.  And you are a man of your word, and you submitted to us a pretty big budget increase. 

Obviously with the challenges last fall, the Senate not completing its work, I compliment the Democrat majority in working with the budget that we had last year and we got that CR.  We are interested in your input from us. 

I am sure you have had some management challenges over those last four months and what impact that is going to have upon your budget and whether or not you expect any carry-over funds into next year would be interesting to find out.

Mr. Secretary, as you observe your second anniversary as the chief steward of our nation's veterans, we can look back and note it has been a year of challenges and successes.  I thank you for your willingness to squarely meet the challenges and commend you on your successes as you work with all members of this Committee.

Based on the priorities in the last Congress, this Committee focused on the disabled veterans, those with special needs, and the indigent veterans.  We passed major legislative initiatives, Public Law 109-461, the "Veterans Benefits, Health Care, and Information Technology Improvement Act." This bill was the result of a strong bipartisan effort of this Committee in concert with our colleagues in the Senate.  They brought issues to the table.  We brought issues to the table.  And the democratic process worked.

We also listened to 20 VSOs and MSOs and incorporated many of their suggestions.  We authorized 24 major construction projects in 15 States, approved continued leasing of eight medical facilities and required VA to explore options for construction of a new medical facility in San Juan, Puerto Rico.

With regard to our returning Iraq and Afghanistan veterans, we added 65 million to increase the number of clinicians treating posttraumatic stress disorder and improve their training.  Public Law 109-451 further authorized spending for collaboration in PTSD diagnosis and treatment between the VA and DoD.

We authorized more funding for additional blind rehabilitation specialists and increased the number of facilities where these specialists could be located.

We expanded the eligibility for dependents' education assistance to the spouse and child of a servicemember hospitalized or receiving outpatient care before the servicemember's discharge for a total permanent service-connected disability.  The intent here was to help enhance the spouse's earning power as early as possible before discharge of the servicemember.  We made Chapter 35 more flexible for you, Mr. Secretary, so you can be responsive to the spouses and the dependents. 

We restored entitlements for members of the National Guard and Reserves who care for the active duty during the school year.  We extended work study provisions to ensure a veteran did not lose a job during the school year, and required the VA to report ways to streamline administration of the GI Bill to shorten the time to get that first check.

And I look forward to working with the Chairman on his proposed improvements to the GI Bill.

Listening to the VSOs and MSOs who expressed concerns about the veteran's ability to afford a home, we authorized VA to guarantee co-op housing units which are often the most affordable housing in many areas.  And so if you have any comments on it, Mr. Secretary, please let us know.

This Committee also focused on the disabled veteran-owned businesses, so we gave the VA the tools to increase the amount of business they do with veterans by giving service- disabled veterans-owned business preference over all other set-side groups and ensuring that the survivors of veterans business owners who acquired ownership continue their veteran-owned status with the VA.

The VSOs and MSOs also expressed the need to revitalize the veterans employment programs at the Veterans Employment and Training Service, so we made several changes to strengthen mandatory training for DVOPs and LEVRs, revise the incentive program to make it more effective, and establish a pilot licensing and credentialing program.

And the VVA especially noted that the Department of Labor needed to develop regulations to implement the "Jobs For Vets Act," so we did that too.

Since this time last year, we have seen the Department embrace the idea of centralizing its IT under the VA's CIO.  I believe that this innovation has been seen as part of your legacy, Mr. Secretary, to the Department of Veterans Affairs, and I congratulate you.  And I am sure Mr. Filner joins all members of this Committee who unanimously supported and endorsed that move, and we congratulate you.

As part of our work on IT, we engaged in a bipartisan fashion to increase data security in order to protect our nation's veterans.  Recognizing that as you centralize that system, that breaches are still going to occur, we set forth those mitigation efforts and gave you the tools. 

And so that is why we recognize that when you had this latest breach in Alabama, you did not see the outrage of alarm from Mr. Filner and myself because we pragmatically have given you the tools and we understand these things are going to happen, and we want to work with you when they do.  And we appreciate also the notification process that you have been giving to the Committee and to the Senate and the Armed Services Committee.

We also worked through the complexities and will continue to work with the Charleston model, whether it is in Charleston, South Carolina or as we move with the facility in New Orleans.  This is a new way and exciting way to build a hospital, and we want to work with you.

It is our job also to preserve those areas of excellence and to work together in a bipartisan fashion to ensure every service of the Department meets its highest standards.  One of the most important services remains the determination awarding of benefits, and I think, Mr. Chairman, you said it about right.  The claims backlog has reached an all-time high.  It is the big elephant in the room, and we have to go after this.

To help lead the way, Mr. Chairman, I organized a Compensation of Benefits Accountability Task Force in December of 2005, and it had almost one year of work.  They provided me a powerful work product with numerous recommendations, and I want to commend those who spent many hours working on this valuable product. 

Mr. Wartman, the Associate Legislative Director of PVA; Mr. Dorn, the National Service Director of AMVETS; Rick Wiedman the National Legislative Director of Vietnam Veterans of America; John Lopez, Chairman of the Association of Service-Disabled Veterans; and Mr. Smithston, the Assistant Director of the National Veterans Affairs and Rehabilitation Commission of The American Legion.

Gentlemen, I thank you for your efforts.  We will take that.  We will work with the Chairman as we approach these issues along with the Secretary.

It is also worth noting again this year, the President proposed substantial increases in the budgets of agencies focused on fighting the War on Terror, the Department of Defense and the Department of Homeland Secretary. 

I am pleased again this year, the Department of Veterans Affairs, an agency focused on caring for those who have borne the battle, also received a substantial increase of approximately eight percent over the level contained in House Joint Resolution 20. 

At a time when much of the rest of the government received a 2.2 percent increase, I believe this reflects a commitment of you, Mr. Secretary, and of the Administration to care for our nation's veterans during time of war.

As you know, Mr. Secretary, a budget is more than numbers and in the end, it must translate into real actions on the ground, for a positive effect on America's veterans.  As I look at this budget, I view it in light of my three top priorities which I discussed, focusing on the disabled, caring for the special needs, and the indigent.

We have an obligation to those who bear those burdens of war and military service and their survivors, and our work must move toward fulfillment of that obligation.  Therefore, I will judge this budget not just by the numbers but what it does for America's veterans given these priorities.

When you send us a budget of this magnitude, Mr. Secretary, I expect also to find those outcomes you seek successful.  This Congress is not a blank check.  We will be looking for accountability.  Generally I think this is a good budget.

As we look at desired outcomes, we will work with the VSOs and the MSOs.  I am hopeful we can do those hearings.  If we cannot do those hearings, I invite all the VSOs and MSOs to be in touch with me to get your input.  If you choose not to be in touch with me, then I understand what your positions are.

Mr. Secretary, I applaud you for the direct and forthright budget process that you have used in developing this year's budget.  It appears to be the gimmicks of years past have been removed.  And so I want to applaud you for that.  That is a leadership statement that I took out of this budget when I looked at it.

Mr. Secretary, last year, you brought us similar requests for the enrollment fees and co-pays.  I recognize I am a minority here in Congress.  I support co-pays.  I support enrollment fees.  When I created TRICARE for Life, I included those. 

There was an error that we made.  When we opened up the process here on this Committee, we did not give sufficient management tools to the Executive Branch.  That is an error that we made.  And there was a lack of will for people to now give you those tools.  So I understand what you are doing.

At this point, I will yield back.

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

The CHAIRMAN.  Thank you, Mr. Buyer.

I will entertain short opening statements from our colleagues. 

Mr. Michaud.


Mr. MICHAUD.  Thank you very much, Mr. Chairman. 

This is an extremely important first hearing for our Committee.  We have a responsibility to make sure that the VA is provided with the dollars that it needs and that the VA spends those dollars in a wise manner. 

Budgets do reflect our priorities and I think it is important for this Congress to make sure that veterans are high on our priority list.  We have a lot of work to do in this Congress dealing with PTSD, homeless veterans, and making sure that the CBOCs under the CARES process are implemented. 

So with that, Mr. Chairman, I look forward to working with you and Ranking Member Buyer and the Ranking Member of my Subcommittee, the Subcommittee on Health, Mr. Miller, as we move forward in this Congress.  Thank you very much, and I am looking forward to hearing both panels today as well.

I yield back.

The CHAIRMAN.  Mr. Moran?

Mr. MORAN.  I have no opening statement.

The CHAIRMAN.  Thank you.

Mr. Baker?

Mr. BAKER.  No statement at this time.

The CHAIRMAN.  Mr. Brown?


[The prepared statement of Congressman Brown of South Carolina appears in the Appendix.]

The CHAIRMAN.  Mr. Miller?

Mr. MILLER.  No statement.

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

The CHAIRMAN.  Mr. Boozman?

Mr. BOOZMAN.  I have got a statement that I would like to submit—

The CHAIRMAN.  Thank you.

Mr. BOOZMAN.  —in the interest of time.  Thank you.

[No statement was submitted.]

The CHAIRMAN.  Mr. Mitchell, Chairman of our Oversight Investigations Committee?


The CHAIRMAN.  Mr. Hall, Chairman of our Disability Committee?


Mr. HALL. I would just say that I am looking forward to working with you, Mr. Chairman, and Mr. Ranking Member and the Secretary and staff in providing a more seamless transition from active duty to veteran status, in retaining the facilities and not prematurely closing or discarding of Veterans Administration facilities before we know what the true demand will be in returning veterans coming back from the wars that we are currently fighting, and mainly in reducing what most people consider to be a scandalous backlog of claims and also a scandalous number of homeless veterans.  So those are the priorities that would leap to the top of many for me, and look forward to working with you and thank you.

The CHAIRMAN.  Thank you, Mr. Hall.

Mr. Hare?


Mr. HARE.  Thank you, Mr. Chairman.  I look forward to serving with you on the Committee. 

I actively sought this Committee out because after working for Congressman Evans for 23 and a half years, I saw firsthand what veterans go through in our district and whether they are homeless and having to do stand-downs or whether it is the backlog, as my colleague has mentioned on the disability claims, you know, we can do better. 

And I think we have a responsibility to the veterans.  I am concerned about the numbers of veterans that are coming back, whether or not we have the personnel and the facilities. And also, as you said, Mr. Secretary, in your statement for those who have given the ultimate price to make sure that our veterans are honored with the services and the type of funeral befitting heroes. 

So I look forward to serving on the Committee, and thank you very much, Mr. Chairman.

The CHAIRMAN.  Thank you, Mr. Hare.

Ms. Brown-Waite.


Ms. BROWN-WAITE.  Thank you, Mr. Chairman.  I have a statement that I will submit. 

Once again, we are seeing the imposition of enrollment fees for category seven and eight.  The Committee has rejected it soundly in the past and probably will again, and I am sorry to see that this keeps popping up.

I look forward to hearing from the Secretary, but I will submit the full statement.  I think we are all here to hear the Secretary and discuss the budget.

The CHAIRMAN.  Thank you.

Ms. BROWN-WAITE.  But thank you for the opportunity.

[The prepared statement of Congresswoman Brown-Waite appears in the Appendix.]

The CHAIRMAN.  And all the opening statements will be printed as part of the record.

The CHAIRMAN.  Mr. Rodriguez?


Mr. RODRIGUEZ.  Thank you, Mr. Chairman, for being here and thank you for allowing me just a few comments.

I know my concerns, I still have a district that is spread some 700 miles.  We still have people that have to travel two, three hundred miles for services, and so I am going to continue to work on trying to get access to some of those individuals, as well as now the concerns that I personally have in terms of a lot of our National Guard and Reservists that are out there doing the Lord's work and representing us in Iraq. 

Over 40 percent of our soldiers are out there and, yet, when they do retire will not have similar access to veteran services, and I think it is an area that we need to kind of revisit and check out. 

And in addition, I am also extremely concerned in terms of the waiting list that we are seeing and also the vacancies throughout our hospital systems and those areas that have not filled those vacancies. 

Thank you.

The CHAIRMAN.  Thank you.

I skipped Mr. Salazar.  I apologize.


Mr. SALAZAR.  Thank you, Mr. Chairman.  And I will submit my full statement for the record.

Mr. Secretary, I have enjoyed working with you over the years, you being a member from Colorado as well.  Two things that really have concerned me. 

I was out at Walter Reed Hospital on Monday and saw many of our soldiers returning from Iraq and Afghanistan.  I spent time with a 25-year-old double amputee.  I also met with a third soldier, a native from Colorado out from Burlington, who was recently fitted with a prosthetic leg.  And it is my understanding that this budget cuts funding for research of prosthetic limbs.  I would certainly appreciate you looking into that and making sure that we can now fit our returning troops.

So with that, Mr. Chairman, I yield back.

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

The CHAIRMAN.  Thank you.

Mr. Lamborn?


Mr. LAMBORN.  Thank you, Mr. Chairman.  I do have a full statement that I will submit for the record.

But very briefly, I just want to say I am honored to be on this Committee and to be helping where I can with my other colleagues here for those who have served our country.  And so I am just very excited and honored to be on this Committee.

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

The CHAIRMAN.  Thank you.

Mr. Donnelly?


Mr. DONNELLY.  Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here.

During the time I was back home in the past few years, in our district, we had a complete meltdown in clinic service and wait times, and the pledge I gave to the folks back home was that I would come here to try and make sure that never happens again.  And I actively sought out the opportunity to be on this Committee.

In addition, we have been in limbo in our State in regards to our VA Hospital in Fort Wayne for a long, long time.  And my commitment is to try to make sure, Mr. Secretary, with your help that we end that limbo and that we make sure that Fort Wayne is buttoned down and will be in service to us for a long, long time in the VA system in the years ahead.

It is an honor to be on this Committee, and I want to make sure that those who are serving not only from my district but from all across the country that when they come back, they can get not only the physical care they need but the counseling that they may require as well.

Thank you very, very much, Mr. Chairman.

The CHAIRMAN.  Thank you, Mr. Donnelly.

Mr. Bilirakis?


Mr. BILIRAKIS.  Yes.  Thank you, Mr. Chairman.  Thanks for scheduling this hearing. 

And I want to welcome the Secretary.  And it is a top priority of mine to take care of our true American heroes, and it is an honor to serve on the Committee.  And I will submit my statement to the record.  Thank you.

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

The CHAIRMAN.  Thank you.

Fresh from his appearance on the "Colbert Report," Mr. Space.


Mr. SPACE.  Thank you for reminding me, Mr. Chairman.

The CHAIRMAN.  You may speak as a Republican if you want.  You had to watch the show to know what it is.

Mr. SPACE.  Rather than simply reiterate the remarks of my colleagues, let me state that I am just honored to be on this Committee and looking forward to the challenges that it represents.

The CHAIRMAN.  Thank you.

Mr. Walz?


Mr. WALZ.  Thank you, Mr. Chairman, and thank you, Mr. Secretary, and all the gentlemen joining us today.

I would like to give a special thank you to those of you who are from our VSOs who are setting out here.  For many years, I am a member of multiple organizations with you.  I am a life member of some of those, and I spent a lot of years trying to make sure the people setting here heard what you had to say. 

So I cannot tell you how much I appreciate you being here.  The only thing better is if you were sitting right alongside me.  I am not quite sitting high enough on this thing to make that decision, but we appreciate you being here. 

Please know that this Committee is absolutely committed to solving these problems in a nonpartisan—it does not need to be bipartisan.  These are nonpartisan issues of taking care of our veterans. 

And I thank the Chairman profusely for giving me this opportunity to do exactly that.

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

The CHAIRMAN.  Mr. Secretary, again, welcome.  We hope you will introduce your staff at the table and then the floor is yours.


Secretary NICHOLSON.  Thank you, Mr. Chairman, and good morning all.  I have a written statement that I would like to submit for the record of this hearing, Mr. Chairman.

The CHAIRMAN.  So ordered.

Secretary NICHOLSON.  And I would like to introduce my colleagues that are with me at the table.  I will start at my left and your right with the Under Secretary of Veterans Affairs for the National Cemetery Administration, Mr. Bill Tuerk. 

Next is the Under Secretary for Veterans Benefits Administration, Admiral Dan Cooper.  You will have to grant him some indulgence.  He spent most of his life below the sea in a submarine, but he is doing a great job.  Next is the Acting Under Secretary for the Health Administration, Dr. Mike Kussman.  Mike has had a lot of experience including that of commanding Walter Reed Hospital.  To my far right and your left is the Acting General Counsel of the VA, Mr. Paul Hutter. 

Next is the Assistant Secretary of the VA for Information Technology and he is the Chief Information Officer of the VA, Mr. Bob Howard, or I should probably say General Bob Howard. 

And next to me is Assistant Secretary for Management of the VA.  He is also the Chief Financial Officer of the VA, Mr. Bob Henke.

Mr. Chairman, if you would permit me to preface my remarks by saying that I look forward very much to working with you in the 110th Congress and particularly our Veterans Committee in a bipartisan, bicameral way as someone said, and I believe it strongly that taking care of veterans is not a partisan matter.  It is a patriotic matter.

And I look forward very much in that vein to working together, for us benefiting from your scrutiny, your oversight, and your support.

I am here today to discuss President Bush's 2008 budget proposals for the Department of Veterans Affairs.  The President is requesting, using your term and mine, Mr. Chairman, a landmark budget of nearly $87 billion to fund our nation's commitment to America's veterans.

This budget will allow us to expand the three core missions of the VA, those being to provide world-class healthcare, provide broad, fair, and timely benefits, and dignified burials in shrine-like settings for our nation's veterans.

This budget will allow us to continue our progress toward becoming a national leader in information technology and data security.  I believe that with the right resources in the hands of the right people, anything and everything is possible when it comes to taking care of America's veterans.

At the VA, we have the right dedicated people.  With the President's proposed budget, we have the right resources too.  The $87 billion requested for the VA represents a 77 percent increase in veteran spending since this President took office on January 20th, 2001.  Medical care spending is up 83 percent.

Mr. Chairman, I will outline the major portions of our proposed budget at this time.  For the Veterans Health Administration, our total medical care request is $36.6 billion in budget authority for healthcare.  VA healthcare is the best care anywhere.  That sounds boastful.  It is perhaps.  Where I come from, they used to say it is not bragging if it is true. 

We have asked your staff to distribute to you some materials for you to peruse about what others are saying about the VA and the quality, the supremacy of its healthcare, medical journals, national media, institutions such as the Harvard University, who twice in the last 12 months cited the VA as providing the best healthcare and leading this Nation in healthcare delivery, safety, and technology.

During 2008, we expect to treat about 5.8 million patients.  This total is more than 134,000 or 2.4 percent above the 2007 estimate.  Patients in priorities one to six, veterans with service-connected conditions, lower incomes, special healthcare needs, and service in Iraq and Afghanistan will comprise 68 percent of the total patient population in 2008.  They will account for 85 percent of our healthcare costs.  I repeat, 68 percent of them will take 85 percent of our resources.

The number of patients in priorities one to six will grow by 3.3 percent from 2007 to 2008.  In 2008, we expect to treat about 263,000 veterans who served in Operation Iraqi Freedom and Operation Enduring Freedom.  This is an increase of 54,000 or 26 percent above the number of veterans from these two campaigns that we anticipate will come to the VA for healthcare in this fiscal year.  And it is 108,000 or 70 percent more than the number we treated in 2006.

Regarding access to care, with the resources requested for medical care in 2008, the Department will be able to continue our exceptional performance dealing with access to healthcare.  Ninety-six percent of primary care appointments and 95 percent of specialty care appointments will be scheduled within 30 days of the patient's desired time for an appointment. 

We will minimize the number of new enrollees waiting for their first appointment to be scheduled.  In the last eight months, we reduced this number by 94 percent, and we will continue to place strong emphasis on this effort.

Regarding mental health services, the President's request includes nearly $3 billion to continue our effort to improve access to mental health services across the country.  The VA is a respected leader in mental health and PTSD research and care.  About 80 percent of the funds for mental health go to treat seriously mentally ill veterans, including those suffering from posttraumatic stress disorder.

On medical research, the 2008 budget includes $411 million to support the VA's unparalleled medical and prosthetic research program.  This amount will fund nearly 2,100 different high-priority research projects to expand knowledge in areas most critical to veterans' particular healthcare needs. 

Most notably, research in areas of mental illness, 49 million; aging, 42 million; health services delivery improvement, 36 million; cancer, 35 million; and heart disease, 31 million.  Nearly 60 percent of our research budget is devoted to OIF-OEF healthcare issues.

Regarding polytrauma care, I have traveled to three of our four polytrauma centers, and there is no doubt that these centers of compassion are where miracles are performed every day. 

In response to the need for such specialized medical services, the VA has expanded its four traumatic brain injury centers, which are in Minneapolis, Palo Alto, Richmond, and Tampa, expanded the system to have regional polytrauma centers, 17 additional of those accompanying the specialties of these traumatic brain injury centers, but in 17 more locations making them more accessible, more convenient to veterans who settle outside and around the country.

These expanded 21 polytrauma network sites and clinic support teams will provide state-of-the-art treatment and, as I said, will provide it closer to the injured veterans' homes.

On seamless transition, one of the most important features of the President's 2008 budget request is to ensure that servicemembers' transition from active duty to veteran status or a demobilized National Guard or Reserve person to civilian life is as smooth and hassle-free, as seamless as possible.

And we will not rest until every seriously injured or ill service man or woman returning from combat in Iraq or Afghanistan receives the treatment that they need in a timely way and in a manner free of tension and hassle.

The Veterans Benefits Administration, let me focus on veterans' benefits and VA's primary focus within the administration of benefits remains unchanged.  As I said, delivering timely and accurate benefits to veterans and their families and improving the delivery of compensation and pension benefits has become an increasingly challenging issue, as several of you have noted so far, during the last few years. 

The volume of claims applications has grown substantially during just the last few years and is now the highest that it has been in a decade and a half.  We received more than 806,000 claims in 2006.  We expect this high volume of claims to continue as we are projecting to receive about 800,000 claims a year in both 2007 and 2008.

However, through a combination of management and productivity improvements and our 2008 request to add approximately 450 additional staff, we will improve our performance while maintaining the high quality that we have today. 

We expect to improve the timeliness of processing claims to 145 days with this 2008 budget.  We will make better use of new technologies and have more trained people to process and evaluate claims.  With this budget, we project that we can reduce our claims processing time by 18 percent.

For the National Cemetery Administration, we expect to perform nearly 105,000 interments in 2008 or 8.4 percent higher than those done in 2006.  This is primarily the result of the aging of the World War II and Korean War veteran population and the opening of new cemeteries.  Parenthetically, especially for those of you who are new in the Committee, every day in our country now, about 1,800 veterans die.  There are slightly more than 24 million veterans and about 1,800 every day pass away.  About 600,000 a year pass away.  And on a net basis, the veteran population in our country decreases between 400 and 500,000 a year currently.

The President's 2008 budget request includes $167 million in operations and maintenance funding to activate six new cemeteries and to meet the growing workload at existing cemeteries by increasing staffing and funding for contract maintenance, supplies, and equipment.

For capital programs relating to the National Cemetery Administration, this budget request includes overall 1.1 billion in new budget authority for capital programs.  It includes $727 million for major construction projects, $233 million for minor, $85 million in grants for State extended- care facilities, and $32 million in grants to build State veterans' cemeteries.

The 2008 request for construction funding for healthcare programs is $750 million.  These resources will be devoted to the continuation of the Capital Asset Realignment for Enhanced Services or CARES Program.  Over the last five years, $3.7 billion in total funding has been provided for CARES.  Within our request for major construction, resources are there to continue six medical facility projects that are already underway.  They are in Pittsburgh, Las Vegas, Denver, Orlando, Lee County, Florida, and Syracuse, New York. 

Funds are also included for six new national cemeteries in Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, South Carolina; Jacksonville, Florida; southeastern Pennsylvania; and Sarasota County, Florida.

For information technology, the VA's 2008 budget request is $1.8 billion, which includes the first phase of our reorganization of IT functions within the Department, and establishes a new IT management system in VA.  This major transformation of IT will bring our program in line with the best practices in the IT industry.  Greater centralization will play a significant role in ensuring that we fulfill my promise to make the VA the gold standard for data security within the Federal government.  To that end, our 2008 IT budget includes almost $70 million for enhanced cyber-security.

Mr. Chairman, I know the Committee shares with me the concern about the VA's ability to secure all our veterans' personal information.  There have been security incidents that are simply unacceptable, and I have made it a priority to assure our veterans that we are addressing their concerns.  It is not that these incidents will never occur.  But when they do, the VA now has a process to properly respond to them. 

We are encouraging all of our employees to report, including self-reporting, thefts or other losses of equipment whether in the workplace, at home, or on travel, so that we can strengthen our information security procedures through lessons learned, reviews, and personal accountability.

The most critical IT project for our medical care program is the continued operation and improvement of the Department's electronic health records.  I have made it a point for the past year to praise our electronic health records for their ability to survive hurricanes Katrina and Rita, for example, where we had over 50,000 veterans affected and not one of them lost a health record.  Compare that to the civilian record, where over a million people lost health records.

Electronic health records are a presidential priority, and VA's electronic health record system has been recognized nationally for increasing productivity, quality, and patient safety. 

Within this overall initiative, we are requesting $131.9 million for ongoing development and implementation of the Healthy Vet-VISTA system.  This is the program to modernize our existing electronic health records.  It will make use of standards that will enhance the sharing of data within VA as well as with other Federal agencies and public and private organizations.

Additionally, Mr. Chairman, in closing, I want to take this opportunity to inform you and the members of the Committee of my plan to create a new Special Advisory Committee to the Secretary.  We have several of these committees, some chartered by statute, some by regulation.  This will be a very important Advisory Committee to me.  It will be on the subject of OIF, OEF veterans and their families. 

The panel of the Committee will include veterans, spouses, parents, combat veterans, and survivors.  It will report directly to me and will focus on ensuring that all men and women with active military service in Iraq and Afghanistan are transitioned to the VA in that seamless manner that I spoke of earlier, seamless and informed.  The Committee will pay particular attention to severely disabled veterans and their families.

Mr. Chairman, this concludes my remarks.  I look forward to your questions.  Thank you.

[The prepared statement of Secretary Nicholson appears in the Appendix.]

The CHAIRMAN.  Thank you, Mr. Secretary, and I think all of us have had experience with advisory committees.  They can really work well, so we congratulate you on setting that up.

We will have a first round of questions, five minutes from each member.  That will include the Chair and the Ranking Member.

The audience cannot see it, but we have a green, yellow, and red light system in front of us.  So when you see the yellow light, you have got one more minute.  And we will have a first round and if there is a need for a second, we will do that too.

Mr. Secretary, on the enrollment fees, last year you estimated that the proposal would cause almost 200,000 veterans to leave the VA.  This year, you do not have an estimate as to the number of veterans who might leave the VA if the proposal is enacted and we start charging an enrollment fee in 2009.

In addition, differently than last year, you deem any revenue that would be collected from an enrollment fee to be mandatory instead of discretionary revenue and subtracted, therefore, from the VA mandatory amounts.

Do you have an estimate for how many veterans would leave the system if the enrollment fee was proposed?  What is the policy that led you to change from the use of those fees from discretionary to mandatory? 

And I guess the same question enters all of our minds.  Every year that you have been there, you have submitted an enrollment fee proposal.  Each year, we reject it.  Do you think this year will be any different, and why is it still in there?  Why does it keep popping up like this?

Secretary NICHOLSON.  You are right, Mr. Chairman, we had had this discussion in the two previous times I have been up here on the budget.  And I will tell you and the members of the Committee that I support this system of a modest enrollment fee and co-payments.

I think there is an equity there with retired military, for example, who go on TRICARE, and pay an enrollment fee and they pay a co-pay.  These are people that may have served 30 or 35 years in the active military.  And to ask a person to whom the VA is providing full medical care, which are only people, by the way, who have no service-connected disabilities, and who are working and have jobs and have incomes, to pay these modest fees to participate in this great system, to me, makes sense.  It makes sense because of the equity that I have described, and it allows the VA again to give better care, have a system that serves those that really need it better.

And as to your question about we did not have it in our proposal, again, it only applies to categories seven and eight.  And the thing that is different about this year—there are two, I think, substantial differences. 

One, the approval of it is not assumed in this budget.  So if you do not approve it, you the Congress, it will not work a deduction from this budget and the application of the funds in this budget.  That is a change.

Secondly, we have a progressive schedule in here.  There would be no enrollment fee for anyone—and, again, we are only talking about people that have no service-connected injuries—but there would be no enrollment fee for anyone making less than $50,000, and that is new.  For those that are in the income of 50 to 75,000, it would be $250 a year and so forth. 

Because we are not showing it as a policy initiative with efficiencies that would help fund this budget, it would take 18 months to implement and the funds would go to the Treasury in 2009 and subsequent years.  And for a ten-year period, it would accrue to $1.1 billion.

The CHAIRMAN.  Thank you.  I agree it is better than last year's.  If it does not go through the mandatory budget, somewhere in the budget it is affected.  So it is not as if it is free money somewhere that the President has not counted on in his mandatory budget.  But I think it is dead on arrival, and you can tell the President he is going to have to make it up somewhere else.

Mr. Buyer, you have five minutes.

Mr. BUYER.  Mr. Secretary, that is the attitude that I said that is here in Congress.  We erred, yet Congress never likes to live up to our err when it is our fault.  We love to bash you.  We love to bash other people, blame other people for our mistakes.  But these management tools are necessary.  And we did not put them in and we should have.

And I erred when I created TRICARE for Life.  I should have given some more of these cost containment management utilization tools to the Secretary of Defense and asked for these annual increases.  That did not happen.  Congress is unwilling to do that and especially at a time of war. 

And so the political speeches that could be used against a member are so easy.  So they are frightened, members are.  And so they would rather then throw their arm around the veteran and say I am going to stand with you rather than effectively managing government programs that we created.

Now, I do compliment you because you adapted the recommendations that I did on the tiered process with regard to enrollment fees.  And I agree with you, Mr. Secretary.  I am the first to apologize because when I created the TRICARE for Life, I created those enrollment fees and co-pays, and now you have got that military retiree that you described, 30-year military retiree paying those things sitting next to someone who served one tour of duty who does not have to.

And then there are members of Congress who would tell that person who had one tour of duty, oh, well, you are entitled to lifetime healthcare.  And then there are veterans' groups out there that are advocating, well, that is the cost