Veterans' Benefits
More Transparency Needed to Improve Oversight of VBA's Compensation and Pension Staffing Levels
Gao ID: GAO-05-47 November 15, 2004
The Chairman and Ranking Minority Member, Senate Committee on Veterans' Affairs, asked GAO to assist the committee in its oversight of the Veterans Benefits Administration's (VBA) disability compensation and pension programs. This report examines (1) VBA's determination and justification of claims processing staffing levels, and the role of productivity in such determinations, and (2) VBA's projections of future claims workload and complexity.
VBA's fiscal year 2005 budget justification did not clearly explain how the agency would achieve the productivity improvements needed to meet its compensation and pension claims processing performance goals with fewer employees. According to VBA officials, productivity improvements, workload changes, and employee attrition were considered in developing its fiscal year 2005 budget request. While some of these factors were identified in VBA's budget justification, they were not linked to the requested full-time equivalent (FTE) employment levels. Also, VBA's justification did not specifically address its claims processing productivity or how much VBA planned to improve productivity. Finally, VBA does not explain the impacts of VBA budgetary decisions on long-term productivity. VBA officials identified information technology improvements and training programs that could help improve productivity but have been delayed because VBA shifted funding from these initiatives to support higher staffing levels. This was done to help meet VBA's shorter-term goal to improve claims decision timeliness, in particular the Secretary of Veterans Affairs' goal to reduce decision time for rating-related claims to an average of 100 days. More transparent budget justifications would better inform congressional oversight of VBA by making it easier to evaluate whether the agency's budget requests reflect the resources, particularly staffing, needed to achieve expected performance. V BA estimated the number of claims it expects to receive (receipts) in fiscal year 2005 based on historical workload trends, with adjustments for factors that could affect future receipts, notably the impact of legislation allowing some military retirees to concurrently receive Department of Veterans Affairs (VA) disability compensation and military retirement pay. The accuracy of VBA's projections of rating-related receipts for fiscal years 2000 through 2004 was mixed, varying from underprojecting by about 11 percent to overprojecting by about 19 percent. Actual receipts in fiscal year 2004 exceeded VBA's projections. Meanwhile, VBA did not project claims complexity in its fiscal year 2005 budget justification and did not explain how it expected claims complexity to affect its productivity and requested staffing levels. A claim's complexity can be affected by many factors, such as the number and types of disabilities claimed. VBA's budget justification could be improved if the agency explained how changes in complexity affect workload and staffing requirements.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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GAO-05-47, Veterans' Benefits: More Transparency Needed to Improve Oversight of VBA's Compensation and Pension Staffing Levels
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GAO:
November 2004:
Veterans' Benefits:
More Transparency Needed to Improve Oversight of VBA's Compensation and
Pension Staffing Levels:
GAO-05-47:
GAO Highlights:
Highlights of GAO-05-47, a report to the Committee on Veteran‘s
Affairs, U.S. Senate:
Why GAO Did This Study:
The Chairman and Ranking Minority Member, Senate Committee on
Veterans‘ Affairs, asked GAO to assist the committee in its oversight
of the Veterans Benefits Administration‘s (VBA) disability compensation
and pension programs. This report examines (1) VBA‘s determination and
justification of claims processing staffing levels, and the role of
productivity in such determinations, and (2) VBA‘s projections of
future claims workload and complexity.
What GAO Found:
VBA‘s fiscal year 2005 budget justification did not clearly explain how
the agency would achieve the productivity improvements needed to meet
its compensation and pension claims processing performance goals with
fewer employees. According to VBA officials, productivity improvements,
workload changes, and employee attrition were considered in developing
its fiscal year 2005 budget request. While some of these factors were
identified in VBA‘s budget justification, they were not linked to the
requested full-time equivalent (FTE) employment levels. Also, VBA‘s
justification did not specifically address its claims processing
productivity or how much VBA planned to improve productivity. Finally,
VBA does not explain the impacts of VBA budgetary decisions on long-
term productivity. VBA officials identified information technology
improvements and training programs that could help improve productivity
but have been delayed because VBA shifted funding from these
initiatives to support higher staffing levels. This was done to help
meet VBA‘s shorter-term goal to improve claims decision timeliness, in
particular the Secretary of Veterans Affairs‘ goal to reduce decision
time for rating-related claims to an average of 100 days. More
transparent budget justifications would better inform congressional
oversight of VBA by making it easier to evaluate whether the agency‘s
budget requests reflect the resources, particularly staffing, needed to
achieve expected performance.
VBA estimated the number of claims it expects to receive (receipts) in
fiscal year 2005 based on historical workload trends, with adjustments
for factors that could affect future receipts, notably the impact of
legislation allowing some military retirees to concurrently receive
Department of Veterans Affairs (VA) disability compensation and
military retirement pay. The accuracy of VBA‘s projections of rating-
related receipts for fiscal years 2000 through 2004 was mixed, varying
from underprojecting by about 11 percent to overprojecting by about 19
percent. Actual receipts in fiscal year 2004 exceeded VBA‘s
projections. Meanwhile, VBA did not project claims complexity in its
fiscal year 2005 budget justification and did not explain how it
expected claims complexity to affect its productivity and requested
staffing levels. A claim‘s complexity can be affected by many factors,
such as the number and types of disabilities claimed. VBA‘s budget
justification could be improved if the agency explained how changes in
complexity affect workload and staffing requirements.
What GAO Recommends:
To assist the Congress in its oversight of VBA‘s compensation and
pension claims processing operations, GAO recommends that the Secretary
of Veterans Affairs direct the Under Secretary for Benefits to prepare
several types of information and work with the appropriate
congressional committees and subcommittees on how best to make it
available for their use. This includes information on (1) the expected
impact of specific initiatives and changes in incoming claims workload
on requested staffing levels; (2) claims processing productivity,
including how VBA plans to improve productivity; and (3) how claims
complexity is expected to change and the impact of these changes on
productivity and requested staffing levels.
VA concurred with GAO‘s recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-05-47.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Cynthia A. Bascetta at
(202) 512-7215 or bascettac@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
VBA's Budget Justification Did Not Clearly Explain the Basis for Its
Fiscal Year 2005 Compensation and Pension Staffing Estimates:
VBA Projected Claims Workload Is Based on Historical Trends and Other
Factors but VBA Did Not Project Claims Complexity:
Conclusions:
Recommendation:
Agency Comments and Our Response:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Secretary of Veterans Affairs:
Table:
Table 1: VBA Projected versus Actual Rating-Related Claims Receipts,
Fiscal Years 2000-04:
Figure:
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2005:
Abbreviations:
BDN: Benefits Delivery Network:
DOOR: Distribution of Operational Resources:
FTE: full-time equivalent:
IDA: Institute for Defense Analyses:
OMB: Office of Management and Budget:
RBA: Rating Board Automation:
STAR: Systematic Technical Accuracy Review:
TPSS: Training and Performance Support Systems:
VA: Department of Veterans Affairs:
VBA: Veterans Benefits Administration:
VSR: Veterans Service Representative:
United States Government Accountability Office:
Washington, DC 20548:
November 15, 2004:
The Honorable Arlen Specter:
Chairman:
The Honorable Bob Graham:
Ranking Minority Member:
Committee on Veterans' Affairs:
U.S. Senate:
In fiscal years 1998 through 2003, the Veterans Benefits Administration
(VBA) added significant numbers of employees to process veterans'
disability compensation and pension benefit claims. With these
additional employees, VBA significantly increased its production of
rating-related claims decisions in fiscal years 2002 and 2003, and this
increase in turn reduced the agency's claims inventory and led to
improved decision timeliness.[Footnote 1] Also, according to VBA, these
employees' increased proficiency, due to experience and training, will
lessen the impact of attrition of its most experienced employees. In
its fiscal year 2004 and 2005 budget justifications, VBA requested
funding to support lower staffing levels than in fiscal year 2003 while
maintaining ambitious performance goals, in particular the Secretary of
Veterans Affairs' goal to complete rating-related decisions within an
average of 100 days.
At your request, we reviewed the basis for the agency's estimation of
its disability compensation and pension claims processing staffing
needs and workload levels. Specifically, we assessed how VBA (1)
determined and justified its staffing requests for fiscal year 2005,
including the extent to which productivity was considered, and (2)
projected the volume and complexity of future workloads.
We focused our review on VBA's fiscal year 2005 budget justification to
the Congress, specifically the request for funding of compensation and
pension administration. We also reviewed VBA's budget justifications
for fiscal years 2000 through 2004 to compare the fiscal year 2005
justification with previous justifications, identify trends in
requested and actual funding and staffing, and obtain background
information on specific management initiatives and workload trends. We
discussed VBA's fiscal year 2005 budget and staffing estimates with VBA
officials. To review VBA's estimation of the number of claims it
expects to receive (receipts) in fiscal year 2005, we interviewed VBA
officials and reviewed records of how they developed the receipts
estimates for its fiscal year 2005 budget justification. To assess the
accuracy of VBA's estimates, we compared original estimates with actual
rating-related receipts for fiscal years 2000 through 2004. We also
interviewed VBA and Institute for Defense Analyses (IDA) officials and
reviewed documentation on the IDA receipt projection model. Finally, we
interviewed VBA officials on the agency's capability to measure
disabilities per claim. We assessed the reliability of VBA's workload
data and found it adequate for purposes of this report. For additional
scope and methodology information, including data reliability, see
appendix I. We conducted our review from April through September 2004,
in accordance with generally accepted government auditing standards.
Results in Brief:
Although VBA officials said they considered productivity improvements,
claims workload changes, and employee attrition in developing its
compensation and pension fiscal year 2005 budget request, VBA did not
clearly explain the impacts of these factors on meeting its claims
processing performance goals with fewer employees. VBA officials said
they considered productivity, workload, and attrition when developing
VBA's fiscal year 2005 compensation and pension budget estimate,
including its estimated staffing levels. The justification identified a
number of factors that could affect VBA's staffing requirements, such
as implementation of specialized claims processing teams in VBA's
regional offices, projected increases in receipts of compensation
claims, and expected attrition of experienced claims processing staff.
However, VBA did not clearly explain how each of these initiatives and
projections affected its estimated staffing requirements and funding
request for fewer employees in fiscal year 2005. Also, VBA's budget
justification did not provide information on its productivity or
identify how it planned to improve productivity. Without such
information, it is difficult to assess whether the agency can make the
productivity improvements needed to process more claims faster with
fewer staff resources while improving accuracy. Finally, VBA did not
clearly explain the impacts of budget decisions that delayed training
and information technology initiatives that could improve productivity.
The lack of transparency in VBA's budget makes it difficult for the
Congress to assess whether VBA has requested the resources it needs to
meet its performance goals.
VBA estimated the number of rating-related claims it expects to receive
in fiscal year 2005 using historical trends and VBA judgments about the
impacts of various factors on receipts, such as enactment of
legislation allowing some military retirees to receive both military
retirement pay and Department of Veterans Affairs (VA) disability
compensation. VBA's projections in the recent past have been mixed in
their accuracy. For fiscal years 2000 through 2004, the variances
between VBA's original projections of the number of rating-related
claims it would receive and actual receipts ranged from an
underprojection of about 11 percent to an overprojection of about 19
percent. Actual compensation receipts in fiscal year 2004 exceeded
VBA's original projections for that fiscal year. VBA has been working
to improve its ability to project rating-related claims receipts
through a model developed by IDA. Meanwhile, VBA did not provide
projections of claims complexity in its fiscal year 2005 budget
justification and did not explain the impact of complexity on
productivity and requested staffing levels. A claim's complexity can be
affected by many factors, such as the number and types of disabilities
claimed. For example, the Congress and VA have established presumptions
of eligibility for some types of disabilities that can make a claim
easier to complete because less evidence is needed to support the
decision. Like information on productivity and workload, information on
complexity and its impact on staffing requirements could help the
Congress better evaluate VBA's staffing requests.
This report contains a recommendation to the Secretary of Veterans
Affairs to direct VBA to provide additional information to support its
staffing requests and work with appropriate congressional committees
and subcommittees on how best to make it available for their use.
Background:
When a veteran submits a claim for disability benefits to a VBA
regional office, Veterans Service Center staff process the claim in
accordance with VBA regulations, policies, procedures, and guidance. A
Veterans Service Representative (VSR) in a Pre-Determination Team
develops the claim; that is, assists the claimant in obtaining
sufficient evidence to decide the claim. The claim then goes to a
Rating Team, where a Rating Veterans Service Representative (also known
as a Rating Specialist) makes a decision on the claim, based on the
available evidence and VBA's criteria for benefit entitlement. VSRs
also perform a number of other duties, including establishing claims
files, authorizing payments to beneficiaries and generating
notification letters to claimants, conducting in-person and telephone
contacts with veterans and other claimants, and assisting in the
processing of appeals of claims decisions.
VBA's administrative costs, including personnel costs, are funded
through VA's General Operating Expenses account. VBA, as part of VA's
annual budget justification, asks for specific amounts for each of its
programs, including compensation and pension programs. Funding is
requested to support an estimated full-time equivalent (FTE) employment
level.[Footnote 2] In fiscal year 2003, VBA spent about $878 million to
administer its compensation and pension programs. This funding included
support for about 9,350 FTEs.
From fiscal year 1998 through 2003, staffing levels for VBA's
compensation and pension programs increased significantly,
particularly for staff who process compensation and pension claims at
VBA's 57 regional offices, as shown in figure 1 below. In fiscal year
1998, VBA had 6,770 compensation and pension FTEs; by fiscal year 2003,
employment had increased by about 38 percent to 9,352 FTEs.
Compensation and pension FTE levels rose by about 900 in fiscal years
2001 and 2002. Staffing levels increased because VBA hired hundreds of
new rating specialists and VSRs in anticipation of a large number of
future retirements. Also, these additional staff helped VBA respond to
a sharp drop in the production of rating-related claims decisions in
fiscal year 2001. In fiscal year 2002, these decisions rose from about
481,000 to about 797,000, and to about 827,000 in fiscal year 2003.
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2005:
[See PDF for image]
[End of figure]
In fiscal year 2003, VBA's 57 regional offices received about 735,000
rating-related claims from veterans and their families for disability
benefits. This included about 167,000 original claims for compensation
of service-connected disabilities (injuries or diseases incurred or
aggravated while on active military duty) and about 434,000 reopened
compensation claims.[Footnote 3] In addition, about 90,000 original and
reopened claims were filed for pensions for wartime veterans who have
low incomes and are permanently and totally disabled for reasons not
service-connected and for their survivors.[Footnote 4] In addition, VBA
received about 28,000 original claims for dependency and indemnity
compensation by deceased veterans' spouses, children, and parents and
to survivors of service members who died on active duty.
VBA's Budget Justification Did Not Clearly Explain the Basis for Its
Fiscal Year 2005 Compensation and Pension Staffing Estimates:
VBA officials stated that productivity improvements, workload changes,
and attrition of experienced claims processing staff are considered
throughout the annual budget process. However, VBA's budget
justification did not clearly explain how these factors affected its
request. Early in this process, the Compensation and Pension Service
makes a budget request that is reviewed by VBA's Office of Resource
Management, under the direction of VBA's Chief Financial Officer and
becomes part of VBA's total request. VBA's request eventually becomes
part of VA's overall budget request, which is submitted to the Office
of Management and Budget (OMB) for review.[Footnote 5]
VBA's fiscal year 2005 budget justification identified a number of
initiatives and projections that could affect its staffing levels. For
example, implementing specialized claims processing teams in VBA's
regional offices and consolidating pension maintenance work at three
regional offices could affect staffing levels. Also, VBA projected it
would receive more disability compensation claims than in previous
years, based on such factors as the enactment of concurrent receipt
legislation in 2003. Specifically, the fiscal year 2005 budget
justification stated that VBA expected to receive about 65,000 claims
because of the enactment of legislation that allows military retirees
with service-connected disabilities rated at 50 percent or higher to
receive both VA disability compensation and military retirement pay.
VBA officials said that this estimate was included in their
negotiations with OMB. Further, VBA noted that it expects many
experienced claims processing staff to leave VBA over the next several
years.
Despite identifying these factors in its 2005 budget justification, VBA
does not specify how such initiatives and projections will affect the
number of employees it needs to meet its claims processing performance
goals. For example, VBA projected that in fiscal year 2005, the number
of original and reopened compensation claims receipts would increase by
about 15 and 10 percent respectively from its fiscal year 2004
estimates, and that original and reopened pension receipts would
decrease by about 2 percent. However, VBA did not specifically identify
how these anticipated workload trends had affected its requested
staffing levels or its expected improvements in productivity. VBA's
reduced staffing request was consistent with OMB guidance to agencies
to assume increased productivity in their budget requests--for example,
to do the same amount of work with fewer employees. However, the budget
justification does not describe how its FTE staffing requirements are
linked to the specific initiatives and projections that could affect
these needs.
Also, VBA's fiscal 2005 budget justification provides no specific
information on its compensation and pension claims processing
productivity or on its planned improvements in productivity. VBA
expressed confidence that it can improve productivity enough to meet
its claims processing goals for fiscal year 2005 with fewer employees,
despite a projected increase in the workload of compensation claims. To
achieve expected improvements in timeliness and accuracy with fewer
employees, while receiving more claims for disability compensation,
VBA's claims processing operations will need to become more productive.
However, the budget justification included no measurement of
productivity, nor did it identify how it planned to achieve the needed
productivity improvements.
Finally, VBA's fiscal year 2005 budget justification does not
explicitly show the impact of budget decisions to shift funding away
from initiatives that could improve productivity; such decisions were
based on VBA's emphasis on meeting the Secretary's 100-day timeliness
goal for deciding rating-related claims. According to VBA officials, in
fiscal years 2002 and 2003, nonpayroll funds were shifted to help fund
increased FTE employment levels in VBA regional office Veterans Service
Centers, which are responsible for processing compensation and pension
claims. This was done to increase the number of rating-related claims
being decided and to meet the Secretary's fiscal year 2003 goals for
improving timeliness and reducing the backlog of undecided claims. For
example, VBA used nonpayroll funds to help support about 300 more FTEs
than it had originally requested for fiscal year 2002, and about 400
more FTEs than it had originally requested for fiscal year 2003.
Specifically, in fiscal year 2002, VBA requested funding for 7,351
compensation and pension FTEs but reported that it actually used 7,663,
and in fiscal year 2003, VBA originally requested funding for 7,532
FTEs but reported that it actually used 7,936. According to VBA
officials, nonpayroll funds were shifted to help pay increased payroll
costs associated with this higher FTE level. In addition, the fiscal
year 2003 budget request assumed a 2003 pay raise of 2.6 percent, but
the actual pay raise was 3.1 percent. VBA's fiscal year 2004 and 2005
budgets reflect continued efforts to support as many FTEs as possible
through reductions in nonpayroll funding to continue to support
improvements in claims processing timeliness.
VBA officials identified training and information technology
initiatives that have been delayed because of these cuts in nonpayroll
funds. These include delays in developing new Training and Performance
Support Systems (TPSS) modules and in updating existing TPSS modules to
reflect changes in laws, regulations, and procedures. According to its
fiscal year 2005 budget justification, VBA is relying on TPSS to
improve productivity by helping new claims processing employees develop
needed proficiency more quickly and by helping experienced employees
maintain their proficiency. Delays in the progress of TPSS
implementation could affect VBA's productivity, because existing
modules may not be as useful as revised modules could be, and advanced
modules may continue to be unavailable. VBA requested about $2.6
million for TPSS implementation in fiscal year 2005, including funding
to update some existing modules. However, VBA did not explain the
impact of delays in developing new training modules and updating
existing modules.
Another delayed initiative that could improve productivity is Virtual
VA. This initiative involves the scanning of paper records into
electronic claims folders. VBA expects efficiency and timeliness to
improve when Virtual VA is fully implemented, in part because
electronic claims folders could be transferred among regional offices
more quickly. VBA has implemented Virtual VA at its three Pension
Maintenance Centers.[Footnote 6] However, VBA requested fiscal year
2005 funding only to maintain the existing Virtual VA program and
anticipates that funding will not be available to expand the program
beyond the Pension Maintenance Centers. VBA's justification stated that
full implementation of Virtual VA would help improve claim processing
and identified the need for additional staff to convert existing paper
claims files to electronic format, such as for document preparation and
scanning. However, VBA did not request these additional staffing
resources and did not explain why. The budget justification stated that
VBA expected no improvements in performance because of implementation
of Virtual VA at regional offices in fiscal year 2005, but it did not
identify how much productivity would be forgone because of VBA's
decision to delay Virtual VA implementation.
The Congress relies on the budget justification as VBA's statement of
how it plans to spend the funds it requested. The House and Senate
Appropriations Committees have noted that VA's budget justification
represents the agency's budget plan.[Footnote 7] VA's authorizing
committees also rely on VBA's budget justification in conducting their
oversight. In February 2004, both the Senate and House Veterans'
Affairs Committees held hearings on VA's fiscal year 2005 budget
request. Each committee then recommended funding levels to its
respective Budget Committee. The Appropriations Committees also conduct
oversight of VA through the annual budget process. Congressional
oversight could be enhanced if VBA's budget justifications were more
transparent.
VBA Projected Claims Workload Is Based on Historical Trends and Other
Factors but VBA Did Not Project Claims Complexity:
VBA estimated the number of rating-related claims it would receive in
fiscal year 2005 based on historical trends and judgments about the
likely impacts of various factors on receipts, but it did not project
claims complexity, such as average disabilities per claim. For example,
VBA expected an increase in the number of claims received based on the
enactment of legislation allowing some military retirees to receive
both military retirement pay and VA disability compensation. Also, VBA
officials stated that they factored in the return of veterans from
operations in Iraq and Afghanistan, but they were unclear as to how
many claims VBA expected to receive from these veterans.
Previous VBA projections have been mixed in their accuracy. For fiscal
years 2000 through 2004, VBA's projections of rating-related claims
receipts varied from an underprojection of about 11 percent to an
overprojection of about 19 percent, as shown in table 1.
Table 1: VBA Projected versus Actual Rating-Related Claims Receipts,
Fiscal Years 2000-04:
Fiscal year: 2000;
Projected receipts: 699,250;
Actual receipts: 585,565;
Variance: Overprojected by 19.4%.
Fiscal year: 2001;
Projected receipts: 647,960;
Actual receipts: 674,219;
Variance: Underprojected by 3.9%.
Fiscal year: 2002;
Projected receipts: 812,608;
Actual receipts: 721,727;
Variance: Overprojected by 12.6%.
Fiscal year: 2003;
Projected receipts: 723,675;
Actual receipts: 735,275;
Variance: Underprojected by 1.6%.
Fiscal year: 2004;
Projected receipts: 687,412;
Actual receipts: 771,115;
Variance: Underprojected by 10.9%.
Sources: Department of Veterans Affairs Budget Submissions for fiscal
years 2000-05, Veterans Benefits Administration fiscal year 2004 claims
receipt data.
[End of table]
In its fiscal year 2004 budget justification, VBA projected that it
would receive an average of about 57,300 rating-related claims per
month. For its fiscal year 2005 budget justification, VBA revised its
fiscal year 2004 projection to an average of about 63,900 receipts,
based on actual receipts for October and November 2003. VBA's revised
projection underprojected by only about 0.5 percent; actual fiscal year
2004 receipts averaged about 64,300 per month.
VBA is working to improve its ability to project its rating claims
workload by more accurately estimating the number of such claims it
will receive. In June 2000, VBA received the first version of a model
for forecasting original and reopened compensation claims receipts,
developed under contract by the Institute for Defense Analyses. This
model factored into its projections the changing size and demographics
of the veteran population. Specifically, the model used historical
claim submission data and projections of the veteran population to
project VBA's future workload. Although the model was updated in June
2002, its usefulness is limited by several factors. For example, it
projects only original and reopened compensation claims and relies on
outdated veteran population data. According to a VBA official, VBA's
workload projections for its budget justifications were not based on
this model, but the results of the model were used to check VBA's
projections. An expanded model with more recent information is
scheduled to be delivered in December 2004. The expanded model will
project workload for more types of claims, including all rating-related
claims, and will be updated to reflect the 2000 Census.
VBA did not project the complexity of its rating-related claims in its
fiscal year 2005 budget submission and did not explain the impact of
complexity on productivity and requested staffing levels. VBA has noted
that disability compensation claims have become more complex because
veterans are claiming more service-connected disabilities per claim,
and VBA must make a decision whether each disability is service-
connected. Meanwhile, the Congress and VA have established presumptions
of compensation and pension eligibility that can make some claims less
complex. For example, the Congress and VA have identified several types
of disabilities (such as type II diabetes) as service-connected based
on the presumption that veterans who served in Vietnam were exposed to
Agent Orange. Claims based on these disabilities can be simpler to
decide because less evidence is needed to prove service connection. VBA
did not specifically explain the impact of claims complexity on
productivity and staff requirements.
VBA provided some data on average number of disabilities for completed
compensation claims in its fiscal year 2005 budget justification.
However, these data were based on incomplete information. The average
number of disabilities per claim was based on calendar years 1998
through 2001 data on completed claims from VBA's software application
for preparing rating decisions, Rating Board Automation (RBA).
According to a VBA official, the RBA data were incomplete because data
on many rating decisions were not transmitted to VBA's central database
for analysis. For example, according to a VBA official, employees who
were working from home did not always upload rating information from
computer disks into RBA and send the data to VBA's central database.
Also, because making corrections to a rating once it had been entered
into the central database was cumbersome, corrections were not always
made to the incorrect information that had been entered in the
database. VBA began implementing a new rating decision preparation
package (RBA 2000) in October 2000. While VBA officials stated that RBA
2000 provides more complete data on rating decisions, it cannot provide
data by the end product code, which VBA uses to identify types of
claims (for example, original and reopened compensation claims). VBA
officials suggested that, in the future, it could measure issues per
claim through its new claims development software application, MAP-D.
VBA is not planning to provide information on disabilities per claim in
its fiscal year 2006 budget justification.
Conclusions:
It is difficult to determine whether VBA's confidence that it can meet
its key fiscal year 2005 claims processing goals is well founded
because its budget justification lacks sufficient information to make
such an assessment. VBA set ambitious goals for providing veterans and
their families with more timely decisions. At the same time, VBA
expects the volume of incoming rating-related claims to increase and to
lose experienced claims processing staff to attrition. Nonetheless, VBA
requested a reduction in claims processing staff in fiscal year 2005,
on top of a decrease in fiscal year 2004. VBA's budget justification
does not clearly explain how its estimated staffing requirements will
be affected by its proposed initiatives to improve efficiency and
accuracy, projected increases in compensation claims, and staff
attrition.
To achieve its goals in the face of increasing workloads and decreased
staffing, VBA will have to rely on productivity improvements. However,
its budget justification does not provide information on VBA's claims
processing productivity or how much VBA expects to improve
productivity. Consequently, it is difficult to determine if VBA can
achieve the productivity improvements it needs or determine how these
improvements will be achieved. While VBA's budget assumes improved
productivity, the agency has made budget decisions to delay initiatives
that could help improve productivity, in order to protect funding for
claims processing staff to help meet its top short-term priority--
improving timeliness. Its budget justification could have provided more
information on the impacts of decisions to delay these initiatives.
Further, VBA's budget justification did not clearly explain the effects
on productivity of claims complexity, such as changes in the average
number of disabilities per claim. Consequently, the effect of
complexity on VBA's workload and staffing requirements is unclear. A
more transparent budget justification would better inform the Congress'
oversight of VBA, by making it easier to evaluate whether the agency's
administrative budget requests adequately reflect the resources,
particularly staff, needed to achieve expected performance.
Recommendation:
To assist the Congress in its oversight of VBA's compensation and
pension claims processing operations, we recommend that the Secretary
of Veterans Affairs direct the Under Secretary for Benefits to prepare
the following information and work with the Committees on Veterans'
Affairs and the Appropriations Subcommittees on Veterans Affairs,
Housing and Urban Development, and Independent Agencies on how best to
make it available for their use:
* explanation of the expected impact of specific initiatives and
changes in incoming claims workload on requested staffing levels;
* information on claims processing productivity, including how VBA
plans to improve productivity; and:
* explanation of how claims complexity is expected to change and the
impact of these changes on productivity and requested staffing levels.
Agency Comments and Our Response:
In its written comments on a draft of this report (see app. II), VA
concurred with our recommendation. VA noted that VBA will work closely
with VA's Office of Budget, OMB, and congressional authorizing and
appropriating committees and subcommittees to ensure that appropriate
supporting information is included in its future budget justifications.
We will send copies of this report to the Secretary of Veterans
Affairs, appropriate congressional committees, and other interested
parties. The report will also be available at GAO's Web site at http:/
/www.gao.gov.
If you or your staff have any questions regarding this report, please
call me at (202) 512-7215 or Irene Chu, Assistant Director, at (202)
512-7102. In addition to those named, Amy Buck, Denise Fantone, Martin
Scire, Greg Whitney, and Gregory Wilmoth made key contributions to this
report.
Signed by:
Cynthia A. Bascetta:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Scope and Methodology:
To assess how the Veterans Benefits Administration (VBA) determined and
justified its staffing requests, we focused on VBA's fiscal year 2005
budget justification to the Congress: specifically, its requests for
discretionary administrative funding for VBA's compensation and pension
programs.[Footnote 8] We also reviewed VBA's budget justifications for
fiscal years 2000 through 2004 to identify funding and staffing trends
and obtain background information on specific management initiatives
and workload trends. We reviewed Office of Management and Budget
guidance to agencies on how to prepare their fiscal year 2005 budget
requests.[Footnote 9] In particular, we reviewed guidance on
information to be included in budget requests, estimating staffing
levels, and the budget formulation process. In addition, we interviewed
VBA officials to identify the role of productivity and workload factors
in VBA's internal budget process and to discuss the fiscal year 2005
request. Specifically, we interviewed VBA officials responsible for
compensation and pension programs, resource management, and field
operations. In some instances, we relied on testimonial evidence from
our interviews, along with written responses to detailed questions.
To review VBA's fiscal year 2005 receipts projections, we interviewed
Compensation and Pension Service officials responsible for these
estimates. We obtained records showing the workload data used to
estimate receipts for fiscal years 2004 and 2005 as well as the
adjustments VBA made to historical trends in developing its estimates.
To assess the accuracy of receipts estimates for fiscal years 2000
through 2004, we reviewed VBA's budget justifications for those fiscal
years. For fiscal years 2000 through 2003 we compared initial estimates
of rating-related claims for each fiscal year with actual VBA-wide
receipts reported in VBA's budget justifications. We focused on rating-
related claims because they represent the types of claims VBA uses to
develop key performance measures, such as timeliness (average days to
complete rating-related claims). For fiscal year 2004, we compared
VBA's estimate in its budget justification with VBA's Distribution of
Operational Resources (DOOR) report of receipts for the fiscal year.
In addition, we reviewed documentation of the Institute for Defense
Analyses (IDA) receipt estimation model and discussed the model with
IDA and Compensation and Pension Service officials. Because VBA did not
use this model to develop the compensation claims receipt estimates in
its fiscal year 2004 and 2005 budget justifications, we did not conduct
a detailed analysis of the model. In our discussions, IDA officials
identified improvements in its model, such as projecting receipts for
additional types of claims and using updated population data.
We assessed the reliability of end product data in VBA's Benefits
Delivery Network (BDN). The end product code is a key data element
because it identifies the type of claim. VBA's DOOR reports aggregate
workload data from the BDN by end product. We reviewed 1997 and 1998
Department of Veterans Affairs (VA) Inspector General reports that
identified significant control deficiencies in BDN, leading to
questionable reliability of workload and timeliness data. We reviewed
VBA's system for identifying potentially erroneous end product
transactions that might lead to inaccurate workload data. VBA adopted
this system in response to the Inspector General's findings. We
interviewed the VBA official responsible for sampling transactions to
identify questionable end product instances--where a regional office
may have improperly taken credit for completing a claim or for
completing a claim in less time than was actually required. For
example, this sample is designed to identify when a regional office has
taken credit for more than one decision on the same claim, leading to
overcounting of decision production. We also reviewed sample data from
fiscal year 1999 through the second quarter of 2004.
We also reviewed how VBA's Systematic Technical Accuracy Review (STAR)
program identifies questionable and erroneous end product codes. If a
STAR reviewer determines that the end product code for a randomly
sampled claim file is questionable or erroneous, the claim will be
removed from the STAR sample and be replaced by another claim with the
same end product code. For example, if a claim is identified as
completed in BDN but no decision has been made on the claim, the claim
is removed from the STAR sample. We interviewed a VBA official
responsible for STAR and reviewed data on claims removed from the STAR
sample in fiscal year 2003 and the first half of fiscal year 2004.
We determined that VBA's end product data are sufficiently reliable for
the purposes of this report, which focuses on VBA-wide data. For
example, VBA's sampling shows a decline in questionable end product
codes from the second quarter of fiscal year 2003 to the second quarter
of fiscal year 2004, from about 5.2 percent to 2.8 percent. However, we
are aware that BDN is an aging information system. In its October 2001
report, VA's Claims Processing Task Force noted this and recommended
that VBA maintain BDN until the replacement VETSNET system is fully
implemented. However, VBA officials stated that VBA was not planning to
make significant investments in maintaining BDN because it will be
replaced.
We interviewed VBA officials about the reliability of its Rating Board
Automation (RBA) system as a source of data on average disabilities per
claim. These officials noted that many rating decisions were not
included in the RBA data used in VBA's fiscal year 2005 budget
justification. On the basis of this, we determined that the data on
average disabilities per compensation claim in VBA's budget
justification were not reliable, and we do not use the data in our
report. Finally, we did not assess the reliability of the full-time
equivalent data VA reported in its budget submissions.
[End of section]
Appendix II: Comments from the Secretary of Veterans Affairs:
THE SECRETARY OF VETERANS AFFAIRS:
WASHINGTON:
November 1, 2004:
Ms. Cynthia A. Bascetta:
Director:
Education, Workforce, and Income Security Issues:
U. S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Bascetta:
The Department of Veterans Affairs (VA) has reviewed your draft report,
VETERANS' BENEFITS: VBA's Fiscal Year 2005 Compensation and Pension
Staffing Request Could Have Been More Transparent (GAO-05-47) and
agrees with your conclusions. The Veterans Benefits Administration will
work closely with VA's Office of Budget, the Office of Management and
Budget, and congressional authorizing and appropriating committees and
subcommittees to ensure appropriate supporting information is included
in future budget justifications.
Thank you for the opportunity to comment on your draft report.
Sincerely yours,
Signed by:
Anthony J. Principi:
[End of section]
FOOTNOTES
[1] Rating-related decisions are primarily decisions on original claims
for compensation and pension benefits and reopened claims. For example,
veterans may file reopened claims if they believe their service-
connected conditions have worsened.
[2] Full-time equivalent employment is the basic measure of levels of
employment used in the budget. It is the total number of hours worked
divided by the total number of compensable hours in a fiscal year. For
example, in fiscal year 2003 an FTE represented 2,088 hours (8 hours
per day for 261 days).
[3] For example, a reopened compensation claim could be filed by a
veteran seeking an increase in disability rating based on the worsening
of a service-connected disability or by a veteran seeking compensation
for a previously unclaimed disability.
[4] Veterans aged 65 or older do not have to be permanently and totally
disabled to become eligible for pension benefits, as long as they meet
the other requirements for income and military service. VBA also pays
pensions to surviving spouses and unmarried children of deceased
wartime veterans.
[5] Under OMB guidance (Circular A-11), agency FTE employment estimates
should consider productivity improvements and workload assumptions.
[6] The Pension Maintenance Centers are responsible for processing
income and eligibility verifications and other related actions for
VBA's pension beneficiaries. They are located at VBA's St. Paul,
Minnesota, Philadelphia, Pennsylvania, and Milwaukee, Wisconsin,
regional offices.
[7] Conference Report, Consolidated Appropriations Act, 2004, House
Report 108-401, November 25, 2003. Specifically, Division G, p. 1033,
which includes VA's appropriations.
[8] Department of Veterans Affairs, Fiscal Year 2005 Budget Submission,
Volume 1: Benefits Programs, February 2004.
[9] Office of Management and Budget, Circular No. A-11, Preparation,
Submission, and Execution of the Budget, July 2003.
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