Mr. Keith Pedigo
Madam Chairwoman and distinguished members of the Subcommittee, I am pleased to be here today to discuss 13 bills that would affect a variety of VA’s benefit programs, including educational assistance, housing, and employment, as well as statutory provisions providing civil and economic relief and protection for servicemembers, and certain other miscellaneous matters affecting veterans and servicemembers alike. Joining me this morning is Mr. Keith Wilson, Director of VA’s Education Service.
Madam Chairwoman, we do not yet have cleared positions on three of the bills, H.R. 1824, H.R. 1370, and H.R. 2259, but we will provide them for the record.
Education Program Amendments
Madam Chairwoman, H.R. 112, entitled the “G.I. Advanced Education in Science and Technology Act,” would amend chapter 30 of title 38, United States Code, by adding a new subchapter containing provisions through which the Secretary would, subject to the availability of appropriations, be required to pay monthly stipends to eligible doctoral candidates who are pursuing full-time doctoral degrees in the sciences of engineering, mathematics, or other technology disciplines.
For purposes of the new subchapter, the term “eligible doctoral candidate” would mean an individual who meets the requirements for Montgomery GI Bill (MGIB) entitlement under section 3011 of chapter 30 (other than the requirements relating to the reduction in basic military pay otherwise applicable under the program) and who is pursuing a full-time a doctoral degree in the sciences of engineering, mathematics, or technology disciplines, after having completed a bachelor’s degree in any academic discipline at an institution of higher learning.
The bill would limit the number of stipend payments to a total of 60 months. The amount of the stipend would be $1,200 per month, subject to annual adjustments for inflation and would be in addition to MGIB basic educational assistance allowances. Payment of the stipend would be conditioned on the eligible doctoral candidate’s: (1) acceptance into an accredited doctoral program at an institution of higher learning; (2) providing annual documentation to VA of full-time matriculation in the program; and (3) maintaining good academic standing.
Finally, the bill would provide that an eligible doctoral candidate’s entitlement to the stipend would end 10 years after the date on which the candidate is discharged or released from active duty in the Armed Forces.
Madam Chairwoman, for a number of reasons, VA does not support enactment of H.R. 112. In terms of equity among veterans receiving Chapter 30 education benefits, VA has not seen evidence that veterans who choose to pursue doctoral candidates in engineering, mathematics, and technology must have a greater benefit than other veterans using their education benefits. This bill represents a departure from the existing chapter 30 MGIB structure, which provides equivalent benefit opportunities to veterans who establish an entitlement.
In the absence of a clearly supportable rationale, we cannot support altering the existing chapter 30 benefit structure by singling out for special treatment one group of entitled veterans from others who established the same basic program entitlement.
In addition, we have not noted any savings to offset the estimated costs of this bill. We estimate the increased Readjustment Benefit (RB) cost would be $25.9 million over a 10-year period. General Operating Expenses (GOE) costs were estimated at $3 million for computer system upgrades.
Section 3674(a) of title 38, United States Code, authorizes VA to enter into contracts with State approving agencies (SAAs) to perform services necessary to ascertain the qualifications of educational institutions furnishing courses to veterans and other individuals receiving VA educational assistance. Section 3674(a)(2)(A) specifies that VA shall make payments to the SAAs out of the amounts available for the payment of readjustment benefits. The total amount made available for any fiscal year may not exceed $13 million, as outlined in section 3674(a)(4).
H.R. 2579 bill would amend section 3674(a)(2)(A) to direct VA to make SAA payments out of amounts in the RB account and amounts appropriated to VA. Essentially, SAA payments would come from both the RB and GOE accounts, rather than solely from the RB account, as is presently done. The total amount that could be available from the RB account would be $13 million.
VA does not support this legislation as written because utilizing two funding sources for this program (both GOE and RB Accounts) would create numerous complications in administering the program. SAAs are critical players in the readjustment process, and it is necessary to maintain a stable funding source and working relationship between VA and the SAAs.
This proposal would allow the GOE appropriation to pay for SAA contracts. In 2007, the RB account is authorized to pay up to $19 million for SAA contracts. In 2008 and subsequent years, the RB is authorized to pay $13 million per year for SAA contracts. This bill would allow for payment of up to $13 million for SAA contracts from RB, with any remaining funds to be paid out of GOE. Increasing funding in 2008 and the out years to the 2007 level of $19 million would cost $6 million per year.
Specially Adapted Housing Program Amendments
H.R. 675, entitled the “Disabled Veterans Adaptive Housing Act,” would increase the maximum dollar amounts available under the Specially Adapted Housing (SAH) program, as well as provide for additional increases to the grants by tying the maximum dollar amounts to an annual cost-of-construction index. VA supports the overall objective of increasing the SAH grants subject to Congress’ enactment of legislation offsetting the costs associated with the increases and with the following clarifications.
Section 2 would adjust the maximum dollar amounts available under the SAH program. First, it would increase from $50,000 to $60,000 the aggregate dollar amount for grants authorized under sections 2101(a) and 2102A, leaving unchanged the $14,000 cap on a single section 2102A grant. Next, it would raise from $10,000 to $12,000 the maximum amount of assistance available for grants authorized under section 2101(b). Finally, it would increase from $10,000 to $12,000 the aggregate dollar amount for grants authorized under sections 2101(b) and 2102A, but would leave unchanged the $2,000 cap on a single section 2102A grant. These amounts would be effective immediately upon enactment.
Madam Chairwoman, VA supports enactment of section 2, with the following clarification and subject to Congress’ enactment of legislation offsetting the costs associated with the increases. VA notes that, since the existing statutory limit on grants made pursuant to section 2101(a) is an aggregate that includes grants made under section 2102A, an authority which is due to expire June 14, 2011, an ambiguity may arise at the time of expiration with regard to the amount of assistance available under section 2101(a). To avoid such an effect, VA recommends amending the introductory paragraph of section 2102(a) by adding a maximum dollar amount allowable for grants authorized under section 2101(a).
Section 3 of this bill would mandate that the Secretary increase the SAH assistance caps (except for grants made under section 2102A) each fiscal year, commencing October 1, 2007. Such increases would be based on the percentage by which the residential home cost-of-construction index for the preceding calendar year exceeds the index for the year immediately preceding that calendar year. As with similar provisions offered in other legislation, VA adamantly opposes indexing programs such as the Specially Adapted Housing grants. As VA closely monitors the sufficiency of grants provided under this program, and as it will be very difficult to find a suitable index which adequately captures the unique nature of SAH, it is best to provide adjustments on an ad hoc basis.
VA estimates that enactment of sections 2 and 3 of this bill would result in a benefit cost of $68.6 million in the first year and $194.2 million over 10 years.
H.R.1315 would make Specially Adapted Housing (SAH) assistance available to disabled, active-duty members of the Armed Forces residing temporarily in housing owned by a family member. VA supports enactment of this technical correction. However, VA would like to point out that, as drafted, this provision would continue to require specific legislation in order to make active-duty members of the Armed Forces eligible any time newly enacted assistance may become available.
Insofar as these disabled active-duty servicemembers are already eligible for SAH benefits, there would be no additional cost. Any amounts received as part of a temporary grant would be deducted from the total amount of SAH grants for which recipients might be eligible.
Servicemembers Civil Relief Act Amendments
H.R. 513, entitled the “National Heroes Credit Protection Act,” would add to the Servicemembers Civil Relief Act a provision to protect the credit rating of ”a person in military service.” This bill would require a person or entity who is engaged in the practice of assembling or evaluating consumer credit information, and who receives from a creditor a negative report of a servicemember’s nonpayment or late payment on an account, to annotate the negative report that the account is delinquent or paid slowly due to military service. It would also require that any future potential creditor of the servicemember who receives such an annotated credit report to disregard that negative information. Because this bill would not affect the provision of VA benefits, VA defers to the Department of Defense (DoD) concerning this bill.
H.R. 1598, entitled the “Servicemembers Credit Protection Act,” would also add to the Servicemembers Civil Relief Act (SCRA) provisions to protect the consumer credit of servicemembers. The new provisions would: (1) require that the Secretary of Defense notify the major consumer credit reporting agencies of a servicemember’s deployment from his or her usual duty station to a combat zone and return from such a deployment; and (2) increase the penalties for violations of the SCRA in cases where the consumer report contains a combat zone duty alert. This bill would also make various amendments to the Fair Credit Reporting Act to accommodate these changes. Because this bill would not affect the provision of VA benefits, VA defers to DoD and the Federal Trade Commission concerning this bill.
H.R. 1750 would amend the Servicemembers Civil Relief Act to expand the law’s protection against mortgage foreclosure when active military service has contributed to the borrower’s inability to repay the obligation. Under current law, such protection is limited to 90 days; under the proposed legislation, this period would be extended to 12 months. Because the legislation would not affect the provision of VA benefits, VA believes that substantive views on the merits of this proposal should be presented by DoD.
H.R. 1240 would require the Secretary, subject to the availability of appropriations, to establish and carry out a scholarship program to provide financial assistance to an individual who is enrolled in an education program leading to a degree or certificate in visual impairment or orientation and mobility, or a dual degree or certification in both such areas at an accredited educational institution. We note this program would be established apart from the Employee Incentive Scholarship Program (EISP) for VHA employees, which is authorized by 38 U.S.C. §§7671, et seq.
H.R. 1240 would require that in exchange for scholarship assistance the individual must, among other things, enter into a written agreement to serve as a full-time VA employee for a period of three years. This service obligation would have to be completed within the first six years after the individual has completed the VA-sponsored degree and received a degree or certificate. H.R. 1240 would also require the Secretary to publicize this scholarship program throughout the country, with an emphasis on disseminating information to institutions with high numbers of Hispanic students and to Historically Black Colleges and Universities.
Additionally, this bill would establish detailed application requirements and require the Secretary to include specified information with each application. It would also require certain information to be incorporated into the written agreements used in the program. H.R. 1240 would also authorize the Secretary to determine the funding amount necessary to pay the tuition and fees of an individual participating in the program. However, if the individual is enrolled in a dual degree or certification program, the bill would limit the amount that could be awarded to that which is needed to obtain the minimum number of credit hours to achieve the approved dual degree or certification. Financial assistance awarded under this program could be supplemented by other educational assistance, as long as the total amount of educational assistance received by a participant in an academic year does not exceed the total tuition and fees for that academic year.
H.R. 1240 would limit the maximum amount of financial assistance that could be provided to a participant who is a full-time student to $15,000 per academic year. (Such amount would be pro-rated for participants who are part-time students.) The maximum dollar amount that could be awarded to a participant in the program would be $45,000, and the bill would limit the duration of scholarship assistance that could be provided to a participant to six years.
The measure would also identify information that must be included in the written agreement entered into by VA and the participant. A participant’s breach of an obligation under the agreement would require the participant to repay the Department an amount equal to the unearned portion of such assistance, except in circumstances authorized by the Secretary. The Secretary would be required to establish, by regulation, the procedures to be used in determining the amount of repayment required in the case of breach as well as the circumstances under which an exception could be granted. Further, the Secretary would be required to prescribe regulations providing for the waiver or suspension of any service or payment obligation whenever noncompliance by the individual is due to circumstances beyond the control of the individual, or whenever the Secretary determines that the waiver or suspension of compliance would be in the best interest of the United States. A payment obligation that is not waived or suspended under the program would be considered, for all purposes, a debt owed the United States. Such a debt could not be discharged in bankruptcy under title 11 if the discharge order is entered less than five years after the date of the termination of the agreement on which the debt is based. Finally, H.R. 1240 would require the Secretary to implement this scholarship program no later than six months after the date of enactment.
VA supports this legislation. However, we would note that this scholarship program should be authorized under chapter 76 of title 38, United States Code (“Health Professional Educational Assistance Program”), rather than under a new chapter 80.
We estimate the total cost of S. 1240 to be $349,233 for FY 2008, and $3.7 million over a 10-year period.
H.R. 1632 would add informational requirements to the annual report that the Secretary of Labor must submit to Congress concerning employers’ compliance with the laws governing the reemployment rights of members of the Armed Forces. Given that this reporting requirement applies only to the Department of Labor, we defer to the Secretary of Labor on the merits of this bill.
H.R. 2475 would authorize VA to guarantee Home Equity Conversion Mortgages (HECMs) made to elderly veteran homeowners. We are opposed to the bill, as written, for several reasons.
First, the original intent of the VA home loan program was to provide homeownership opportunities for veterans and active duty servicemembers who forego such an opportunity in order to serve the nation’s Armed Forces. While the program has been modified over the course of 60 years of legislation, all program changes have been designed to enable veterans to acquire and retain homes. In contrast, the proposed VA HECM program centers on the ability to extract equity prior to disposal of the property.
In addition, FHA currently has a very active and successful HECM program. We fail to see what a VA HECM program would have to offer that would not be a duplication of this existing federal loan program. Further, FHA fully insures its lenders against all losses; whereas, by statute, VA is only able to guaranty the lender against a percentage of its potential loss. As a result, we do not believe this proposed VA HECM Program would be as attractive to the lending community as the existing FHA Program.
Finally, we note that the text of the bill contains certain inconsistencies and ambiguities that would require clarification.
We are unable to provide a cost estimate for this proposal at this time. Given that this bill would create a new mortgage product for VA, and one that is very distinct from existing products in our portfolio, we will need to collect data from HUD and the conventional market to adequately project costs. Further, this proposal has many undefined variables, such as administrative costs and the funding fee structure to be charged veterans under this program, which will require additional analysis. Once we have prepared a cost estimate, we will be pleased to submit it for the record.
Madam Chairwoman, this concludes my statement. Mr. Wilson and I would be pleased to respond to any questions you or other members of the Subcommittee may have.