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Curtis L. Coy, Deputy Under Secretary for Economic Opportunity, Veterans Benefits Administration, VA

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

Good morning, Chairman Miller, Ranking Democratic Member Filner, and Members of the Committee.  I am pleased to present the views of the Department of Veterans Affairs (VA) on three bills that would affect rehabilitation, training, education, and employment programs for Veterans and Servicemembers.  I am accompanied today by Mr. John Brizzi, Deputy Assistant General Counsel, Office of the General Counsel.

H.R. 2433

H.R. 2433, the “Veterans Opportunity to Work Act of 2011,” would make changes in the laws relating to the employment and training of Veterans.  We are pleased to provide our views regarding sections 101 and 501 of the bill, but respectfully defer to other departments or entities, including the Department of Defense (DoD), the Department of Labor (DOL), and the Government Accountability Office, regarding the bill’s remaining provisions.

Section 101(a) would require, during the period beginning on January 1, 2012, and ending on March 31, 2014, the Secretary of Labor, through the Secretary of Veterans Affairs, to provide for monthly payments of retraining assistance to certain eligible Veterans.  The number of eligible Veterans who could participate in this program would be limited to 45,000 during fiscal year 2012 and 55,000 during the period beginning on October 1, 2012, and ending on March 31, 2014.

Section 101(b) would provide, generally, that each Veteran participating in the retraining program would be entitled to up to 12 months of retraining assistance, as determined by the Secretary of Labor.  Such assistance could only be used by a Veteran to pursue a VA-approved program of education or training on a full-time basis offered by a community college or technical school that would lead to an associate degree or a certificate and is designed to provide training for a high-demand position, as determined by the Secretary of Labor.

Under Section 101(c), each Veteran participating in the retraining program would be responsible to self-certify to VA his or her enrollment in an approved program of education for each month in which he or she participates in the program.

Section 101(d) would provide that the amount of the retraining assistance under the program would be the amount payable under the Montgomery GI Bill-Active Duty.

Section 101(e) would define an eligible Veteran as a Veteran who is at least 35 years of age but not more than 60 years of age; was last discharged from active-duty service in the Armed Forces with an honorable discharge; as of the date of application for assistance, has been unemployed for a period of time determined by the “Secretary” (unspecified, but most likely the Secretary of Labor), with special consideration given to a Veteran who has been unemployed for at least 26 continuous weeks; is not eligible for assistance under chapters 30,31, 33, or 35 of title 38, United States Code; and applies for the retraining assistance by not later than October 1, 2013.

Subsections (f), (g), (h), and (i) of section 101 would provide, respectively, for:

(1) a report by the Secretaries of Labor and Veterans Affairs (to be submitted not later than June 1, 2014) that would reflect specified data or information regarding the retraining program’s usage by Veterans; (2) entry into an agreement between DOL and VA for the purpose of carrying out the retraining program; (3) funding for payments under the retraining program from VA’s readjustment benefits account; and (4) the termination of the authority to make payments under section 101 to be effective on March 31, 2014.

While VA supports the intent of providing Veterans with educational retraining assistance, VA has several significant concerns regarding the implementation and administration of this proposed benefit. 

It is unclear whether DOL or VA would make the final eligibility determination under the program.  As written, we interpret the language to indicate that DOL would accept applications and determine eligibility.  However, VA would be required to determine if an individual is eligible for certain VA educational assistance programs prior to issuing payments.  This decision could potentially change DOL’s initial eligibility determination.

Additionally, it would be very cumbersome for VA to determine that an individual remains ineligible for VA educational assistance while in receipt of the training assistance.  This would require VA to review eligibility under multiple educational assistance programs prior to issuing each payment.  This is even more complicated since individuals may become eligible or lose eligibility for certain assistance without notice.  For example, under the Post-9/11 GI Bill (chapter 33) program, there is a transfer of entitlement provision that allows a Servicemember to transfer entitlement to a dependent.  Although VA could determine that a Veteran is not receiving chapter 33 benefits from their Servicemember-spouse at the time of application, the Veteran could subsequently become eligible under chapter 33 based on a transfer of entitlement.  A Veteran could also potentially gain eligibility under the Survivors’ and Dependents’ Educational Assistance (chapter 35) program as a surviving spouse or a spouse of a Veteran. 

Under the proposed legislation, Veterans eligible for education benefits under chapters 30, 31, 33 or 35 will not be eligible for the retraining assistance.  However, Veterans eligible for benefits under chapter 32 of title 38, United States Code, or chapters 1606 and 1607 of title 10, United States Code would be eligible for this new benefit because the proposed legislation is silent on whether or not these Veterans would be eligible. 

The proposed legislation would provide retraining assistance for 12 months towards a pursuit of program of education that leads to an associate’s degree or certificate.  However, we note that most associate’s degrees require two years of study. 

It is unclear whether a person who has previously used VA education benefits and either exhausted their benefits or reached the end of their period of eligibility would be considered eligible for the Veterans Retraining Assistance Program.  VA recommends adding language to the proposed legislation to clearly state the eligibility criteria for the program and the agency responsible for making the determination. 

The proposed legislation requires that VA enter into an agreement with DOL to carry out the program.  VA would need to modify existing processing systems to accommodate the Veterans Retraining Assistance Program as well as hire and train 120 additional FTE in year one and another 12 employees in year two (132 total FTE) to accommodate the anticipated increase in claims received.  This estimate is based on the assumption that applications are received evenly throughout the year.  However, given the annual limit on the number of beneficiaries, VA expects that the bulk of the workload would be received at the start of each fiscal year.  To process this surge (estimated 65% of annual limits) in applications, we would need 62 permanent employees, as well as additional temporary employees at the beginning of each year.  Without this level of FTE and temporary employees to administer the proposed benefit, the timeliness for processing of Veterans’ claims for other VA education programs would be severely and negatively impacted. 

To accommodate the time needed to develop an agreement, hire and train new employees, and amend or develop systems for processing the benefit, VA recommends an effective date of June 1, 2012.

We will provide an estimate of the cost of enactment of section 101 for the record. 

Section 501(a) of the bill would amend 38 U.S.C. § 3710(a)(12) to extend the Secretary’s authority to guarantee loans secured by stocks or certificates in cooperative housing.  Currently, the law is scheduled to expire on December 21, 2011.  Subsection (a) would extend the provision through December 21, 2016.

VA supports subsection (a), provided Congress identifies the necessary cost offsets.  Allowing the authority to expire would limit housing options available to certain Veterans, especially those living in larger, urban housing markets.  

VA estimates that enactment would result in insignificant costs the first year, $0.8 million over the period of FY2012 through FY2016, and $2.2 million over ten years.

Section 501(b) would amend 38 U.S.C. § 3729(b)(2) to maintain statutory loan fees at their current rates through October 1, 2021, and to delay the timeframe in which the loan fees are scheduled to be further reduced.  Currently, loan fees applicable to various types of loans, including initial loans with little or no downpayment, loans for which Veterans contribute more substantial downpayments, and subsequent loans, are all scheduled to decrease as of October 1, 2011.  Another reduction of such fees is set to occur on October 1, 2013.  If enacted, subsection (b) would extend through calendar year 2021 the current fee structure for the first two types: initial loans with little or no downpayments and loans for which Veterans will contribute more substantial downpayments.  Subsequent-use loans would not be affected, and would decrease as currently scheduled. 

VA does not oppose enactment of subsection (b).  If Congress were to allow the funding fees to reduce as scheduled under current law, the program would require a larger appropriation to cover expected loan-subsidy costs associated with newly guaranteed loans. 

VA estimates enactment of subsection (b) would provide loan-subsidy savings in the amount of $206.9 million in the first year, $1.0 billion over five years, and $2.1 billion over ten years.

Section 501(c) of the bill would amend section 501 of the Veterans’ Benefits Improvement Act of 2008 (Public Law 110-389) by delaying the sunset date affecting temporary increases in the maximum guaranty amounts.  In 2004, as part of Public Law 108-454, Congress amended 38 U.S.C. § 3703(a)(1) by adding a new subparagraph (C) to redefine the maximum guaranty amount as “the dollar amount that is equal to 25 percent of the Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. § 1454(a)(2)) for a single-family residence, as adjusted for the year involved.”  Public Law 110-389 temporarily increased such amounts, through December 31, 2011, to the greater of either 25 percent of the Freddie Mac conforming loan limit or 25 percent of 125 percent of the area median price for a single-family residence.  In no case, however, could a guaranty amount exceed 25 percent of 175 percent of the Freddie Mac conforming loan limit.  If section 501(c) were enacted, the temporary increase would be extended through December 31, 2014.  If it were not, the definition of the maximum guaranty amount would again be limited, as of January 1, 2012, solely to 25 percent of the Freddie Mac conforming loan limitation. 

Provided Congress identifies necessary cost offsets, VA supports extending the temporary increase in the maximum guaranty amount enacted in the Veterans Benefits Improvement Act of 2008. 

VA estimates enactment of subsection (c) would result in an increase to loan subsidy costs by $642,000 in the first year, $6.0 million over five years, and $24.6 million over ten years.

H.R. 1941

We are pleased to provide our views on sections 2, 3, 4, 5, and 9 of H.R. 1941, the “Hiring Heroes Act of 2011,” but respectfully defer to the views of the DoD regarding sections 6, 7, and 12; the DOL regarding sections 8, 11, and 13; and the Office of Personnel Management (OPM) regarding section 10.

Section 2 of the bill would extend through 2014 a provision enacted in Title XVI of Public Law 110-181, known as the Wounded Warrior Act, which authorizes VA to provide rehabilitative services and assistance to certain severely disabled active-duty Servicemembers in the same manner as to Veterans.  VA proposed a similar provision in its draft Veterans Benefits Improvement Act of 2011, transmitted to Congress on

May 19, 2011.  While the provisions differ in the length of the extension, VA supports section 2.

Section 3 of the bill would amend section 3116(b)(1) of title 38, United States Code, to expand VA’s authority to pay employers for providing on-job training to Veterans.  Under current law, VA is authorized to make payments to employers for providing on-job training to Veterans who have been rehabilitated to the point of employability in certain cases.  By removing the requirement that Veterans be rehabilitated to the point of employability before VA can make payments to employers for providing on-job training, this section would allow VA to make these payments to employers for providing on-job training to many more Veterans.  VA supports this provision.  VA estimates benefit costs to be $792,000 for the first year, $4.2 million for five years, and $9.1 million over ten years.

Section 4 of the bill would provide for additional rehabilitation programs for persons who have exhausted rights to unemployment benefits under state law.  Under section 3102 of title 38, United States Code, as amended by this section, a person who has completed a chapter 31 rehabilitation program would be entitled to an additional rehabilitation program if the person meets the current requirements for entitlement to a chapter 31 rehabilitation program; has, under State or Federal law, exhausted all rights to regular compensation with respect to a benefit year; and satisfies certain other requirements.

Section 4 of the bill would also amend sections 3105 and 3695 of title 38, United States Code, to limit the period of an additional rehabilitation program to 24 months, but also to exempt Veterans pursuing an additional rehabilitation program from certain other limits.  Under current section 3105, a rehabilitation program may not be pursued after 12 years following a Veteran’s discharge or release from active service.  Under current section 3695(b), assistance under chapter 31 in combination with certain other provisions of law is limited to 48 months.  Section 4 of the bill would amend sections 3105 and 3695(b) to make these limitations inapplicable to an additional rehabilitation program.

VA supports this provision because it would help VA serve more Veterans in need of assistance.  VA estimates benefit costs to be $51,000 in the first year, $294,000 for five years, and $724,000 over ten years.

Section 5 of the bill would amend section 3106 of title 38, United States Code, to require an assessment and follow-up on Veterans with service-connected disabilities who participate in VA training and rehabilitation.  In addition, section 5 would require VA to ascertain the employment status of a participating Veteran and assess his or her rehabilitation program not later than 180 days after completion of, or termination of, his or her participation in that program, and at least once every 180 days thereafter for a period of one year.  VA supports this provision.  We believe that providing follow-up is an important endeavor.  No benefit costs would be associated with this provision.  VA estimates administrative costs to be $4.7 million in the first year, $24.2 million over five years, and $55 million over ten years.  In addition, VA estimates that $250,000 will be needed in FY 2012 to develop an IT solution to automate follow-up activity.

Finally, section 9 of the bill would require VA, DoD, and DOL to select a contractor to conduct a study to identify equivalencies between skills developed by members of the military through various military occupational specialties (MOS) and the qualifications required for private-sector civilian employment positions and report on the results of the study.  This section would also require Federal government departments and agencies to cooperate with the contractor.  VA, DoD, and DOL would be required to transmit the report with appropriate comments to Congress.

Section 9 would also require DoD to use the results of the study and other information to ensure that each member of the military participating in the Transition Assistance Program (TAP) receives an assessment of the various private-sector civilian employment positions for which the member may be qualified as a result the member’s MOS.  DoD would have to transmit the individualized assessment to VA and DOL to use in providing employment-related assistance in the transition from military service to civilian life and to facilitate and enhance the transition.

VA does not support this provision to enter into a joint contract to identify civilian equivalencies of military jobs.  Software applications that analyze military occupational data and provide equivalent civilian jobs currently exist.  Therefore, VA believes a contract to conduct a study to identify this information is not necessary.  VA is currently utilizing web software available in the public domain that translates military skills to equivalent civilian jobs.  VA will continue to closely monitor the marketplace to identify software that may improve our ability to identify civilian equivalents of military jobs.

VA estimates that if section 9 of H.R. 1941 were enacted there would be no benefit cost to VA; however, general operating expense costs would be approximately $175,000.

H.R. 169

H.R. 169 would require that, not later than 60 days after the date of enactment of the Act, the Secretary include on the main page of VA’s Internet website a new hyperlink with a drop-down menu entitled “Veterans Employment” that will include direct access to the VetSuccess Internet website, the USA Jobs Internet website, the Job Central website, and other employment websites that focus on jobs for Veterans.  It would also require the Secretary to promote awareness of the VetSuccess Internet website by advertising in national media and to inform Veterans of Operation Iraqi Freedom and Operation Enduring Freedom of the VetSuccess Internet website through outreach efforts.

VA supports efforts to increase Veterans’ awareness of the website and to promote opportunities for employment of Veterans through links to appropriate resources.  Although we believe we are currently accomplishing the purpose of this legislation, we do not object to the enactment of this bill.  VA’s Vocational Rehabilitation and Employment (VR&E) program currently conducts outreach to OEF/OIF Veterans through the Coming Home To Work (CHTW) initiative and through other avenues such as Disabled Transition Assistance Program (DTAP) presentations.  VR&E informs Veterans of the website through CHTW and by other means, including DTAP presentations and the distribution of QuickBooks.

One-time costs associated with advertising in national media outlets are estimated to be $900,000 during the first year.  To conduct a recent media campaign, VA’s Education Service spent approximately $380,000 on developing concepts and materials, identifying and targeting appropriate markets, and developing a marketing plan.  An additional $520,000 was spent on implementation of the marketing plan.   Implementation included advertising on radio, social media sites including Facebook and MySpace, Internet sites including Google and Yahoo, print outlets and text messaging services.  VA would expect to incur similar costs to conduct a media campaign to advertise the website.

No additional costs are related to conducting outreach to OEF/OIF Veterans to inform them of the website because this is currently done by VR&E.  No additional costs are associated with including hyperlinks on the VA main Internet page because VA has already budgeted for these types of minor changes.

Mr. Chairman, this concludes my prepared remarks.  Thank you for the opportunity to share the Department’s views.  I would be pleased to respond to any questions you or other Members of the Committee may have.