Veterans' Disability Benefits
Improved Transparency Needed to Facilitate Oversight of VBA's Compensation and Pension Staffing Levels Gao ID: GAO-06-225T November 3, 2005The Chairman, Subcommittee on Disability Assistance and Memorial Affairs, House Committee on Veterans' Affairs, asked GAO to submit a statement for the record highlighting findings from an examination of the Veterans Benefit Administration's (VBA) fiscal year 2005 budget justification. In that review, we assessed (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.
We reported in November 2004 that VBA's fiscal year 2005 budget justification for disability compensation and pension staffing could have been more transparent. VBA inadequately explained how it planned to deal with a growing workload and meet its performance goals despite a lower staffing level. We recommended that to make its budget justification more transparent and useful for congressional oversight, VBA provide the Congress with information on explanation of the expected impact of specific initiatives and changes in incoming claims and workload. While the fiscal year 2005 justification identified a number of factors that could affect VBA's staffing requirements, VBA did not clearly explain how each of these initiatives and projections affected its funding request for fewer employees. We also recommended that VBA provide the Congress with information on claims processing productivity, including VBA plans to improve productivity. The fiscal year 2005 budget justification inadequately explained how VBA would achieve productivity improvements needed to improve claims processing performance with larger workloads and fewer staff. We further recommended that VBA provide the Congress with information on explanation of how claims complexity is expected to change and the impact of these changes on productivity and requested staffing levels. VBA stated that claims complexity is increasing, but did not project increases in disabilities per claim or explain how complexity changes would affect productivity. In responding to our report, VBA agreed to work to include this information in its future budget justifications for compensation and pension staffing and identified more specific steps that it plans to take in its fiscal year 2007 and 2008 budget cycles. We have observed that, in contrast to last year, the fiscal year 2006 justification contains performance goals that VBA believes are more achievable and it addresses how it will achieve these goals within higher resource levels, due to additional funding from the Congress.
GAO-06-225T, Veterans' Disability Benefits: Improved Transparency Needed to Facilitate Oversight of VBA's Compensation and Pension Staffing Levels
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Testimony:
Before the Subcommittee on Disability Assistance and Memorial Affairs,
Committee on Veterans' Affairs, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EST:
Thursday, November 3, 2005:
Veterans' Disability Benefits:
Improved Transparency Needed to Facilitate Oversight of VBA's
Compensation and Pension Staffing Levels:
Statement for the Record by Cynthia A. Bascetta, Director, Education,
Workforce and Income Security:
GAO-06-225T:
GAO Highlights:
Highlights of GAO-06-225T, a statement for the record to Subcommittee
on Disability Assistance and Memorial Affairs, Committee on Veterans'
Affairs, House of Representatives:
Why GAO Did This Study:
The Chairman, Subcommittee on Disability Assistance and Memorial
Affairs, House Committee on Veterans‘ Affairs, asked GAO to submit a
statement for the record highlighting findings from an examination of
the Veterans Benefit Administration‘s (VBA) fiscal year 2005 budget
justification. In that review, we assessed (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:
We reported in November 2004 that VBA‘s fiscal year 2005 budget
justification for disability compensation and pension staffing could
have been more transparent. VBA inadequately explained how it planned
to deal with a growing workload and meet its performance goals despite
a lower staffing level. We recommended that to make its budget
justification more transparent and useful for congressional oversight,
VBA provide the Congress with the following types of information:
* Explanation of the expected impact of specific initiatives and
changes in incoming claims and workload. While the fiscal year 2005
justification identified a number of factors that could affect VBA‘s
staffing requirements, VBA did not clearly explain how each of these
initiatives and projections affected its funding request for fewer
employees.
* Claims processing productivity, including VBA plans to improve
productivity. The fiscal year 2005 budget justification inadequately
explained how VBA would achieve productivity improvements needed to
improve claims processing performance with larger workloads and fewer
staff.
* Explanation of how claims complexity is expected to change and the
impact of these changes on productivity and requested staffing levels.
VBA stated that claims complexity is increasing, but did not project
increases in disabilities per claim or explain how complexity changes
would affect productivity.
In responding to our report, VBA agreed to work to include this
information in its future budget justifications for compensation and
pension staffing and identified more specific steps that it plans to
take in its fiscal year 2007 and 2008 budget cycles. We have observed
that, in contrast to last year, the fiscal year 2006 justification
contains performance goals that VBA believes are more achievable and it
addresses how it will achieve these goals within higher resource
levels, due to additional funding from the Congress.
VBA Compensation and Pension FTEs, Fiscal Years 1998-2006:
[See PDF for image]
[End of figure]
What GAO Recommends:
In our November 2004 report, GAO recommended that VBA take steps to
ensure the Congress has a realistic and transparent foundation on which
to base funding decisions for disability compensation and pension
programs. Specifically, GAO recommended that VBA provide additional
information on (1) the impact of claims processing improvement
initiatives; (2) claims processing productivity, and plans to improve
productivity; and (3) the impact of changes in claims complexity. VA
concurred with this recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-06-225T.
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]
Dear Mr. Chairman and Members of the Subcommittee:
I am pleased to have the opportunity to comment on Veterans Benefits
Administration (VBA) requests for funding to administer its disability
compensation and pension programs, in particular funding for claims
processing staffing levels. The Congress relies on VBA's annual budget
justification as the agency's statement of how it plans to spend the
funds it requested and for conducting its oversight of VBA. Therefore,
it is important that VBA provide the Congress with a reliable and
transparent analysis to support its funding requests.
As the Chairman requested, my statement is based on our November 2004
report on VBA's fiscal year 2005 staffing request and presents key
findings and recommendations from that report.[Footnote 1] To update
information in the report, we reviewed VBA's fiscal year 2006 budget
submission and obtained final fiscal year 2005 data on VBA's
compensation and pension claims workload. We did not perform
independent verification of VA's data for this statement, but are
currently assessing the reliability of VBA's workload data. We
conducted our review in October 2005, in accordance with generally
accepted government auditing standards.
In summary, we reported in November 2004 that VBA's fiscal year 2005
budget justification for disability compensation and pension staffing
could have been more transparent. VBA inadequately explained how it
planned to deal with a growing workload and meet its performance goals
despite a lower full-time equivalent (FTE) staff level. We recommended
that to make its budget justification more transparent and useful for
congressional oversight, VBA provide the Congress with the following
types of information:
* Explanation of the expected impact of specific initiatives and
changes in incoming claims workload. While the fiscal year 2005
justification identified a number of factors that could affect VBA's
staffing requirements, VBA did not clearly explain how each of these
initiatives and projections affected its funding request for fewer
employees.
* Claims processing productivity, including VBA plans to improve
productivity. The fiscal year 2005 budget justification inadequately
explained how VBA would achieve productivity improvements needed to
improve claims processing performance with larger workloads and fewer
staff.
* Explanation of how claims complexity is expected to change and the
impact of these changes on productivity and requested staffing levels.
VBA stated that claims complexity is increasing, but did not project
increases in disabilities per claim or explain how complexity changes
would affect productivity.
In responding to our report, the Department of Veterans Affairs (VA)
agreed to work with the Office of Management and Budget and
congressional appropriating and authorizing committees to ensure that
appropriate supporting information is included in its future budget
justifications for compensation and pension staffing. VBA also
identified more specific steps that it plans to take in response to our
recommendation, in the fiscal year 2007 and 2008 budget cycles.
Meanwhile, we have observed that VBA's fiscal year 2006 budget
justification addressed how VBA would use higher resource levels, due
to additional funding from the Congress, to meet what it believes are
more achievable performance goals. For example, VBA eased its fiscal
year 2005 goal for average days to complete rating-related claims from
100 to 145 days.[Footnote 2]
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 FTE employment level.[Footnote 3] In
fiscal year 2004, VBA spent about $926 million to administer its
compensation and pension programs, including support for about 9,100
FTEs.
From fiscal year 1998 through 2003, VBA's compensation and pension
staffing levels increased by about 38 percent, from 6,770 to 9,352
FTEs, as shown in figure 1. 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, with these decisions increasing from
481,000 to 827,000 in fiscal year 2003. After relatively small declines
in the FTE level in fiscal years 2004 and 2005, VBA estimated that its
fiscal year 2006 budget request would support 9,087 FTEs.
Figure 1: VBA Compensation and Pension FTEs, Fiscal Years 1998-2006:
[See PDF for image]
[End of figure]
In fiscal year 2005, VBA's 57 regional offices received about 788,000
rating-related claims from veterans and their families for disability
benefits. This included about 211,000 original claims for compensation
of service-connected disabilities (injuries or diseases incurred or
aggravated while on active military duty) and about 439,000 reopened
compensation claims.[Footnote 4] In addition, about 85,000 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 5] 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 rating-
related claims received increased by about 17,000 from fiscal year 2004
to fiscal year 2005, continuing a trend that has seen an increase of
more than 200,000 claims (about one-third) since fiscal year 2000.
VBA's Budget Justifications Could More Clearly Explain the Basis for
Its 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 fiscal year 2005
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 6]
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--which allows military retirees with service-
connected disabilities rated at 50 percent or higher to receive both VA
disability compensation and military retirement pay. VBA estimated that
it would receive about 65,000 claims due to this legislation. 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
did not specify how such initiatives and projections would affect the
number of employees it needed 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. We recommended that VBA provide the Congress with an
explanation of the expected impact of specific initiatives and changes
in incoming claims workload on requested staffing levels. VBA
concurred, stating that, beginning with the fiscal year 2007 budget
cycle, VBA will provide detailed analyses of instituted or planned
initiatives and process changes, and their anticipated impact on
productivity.
Also, VBA's fiscal year 2005 budget justification provided no specific
information on its compensation and pension claims processing
productivity or on its planned improvements in productivity. VBA
expressed confidence that it could 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.
However, the budget justification included no measurement of
productivity nor did it identify how it planned to achieve the needed
productivity improvements. We recommended that VBA provide the Congress
with additional information on claims processing productivity,
including how it plans to improve productivity. VBA concurred, stating
that it would investigate ways to incorporate more information on
productivity in the formulation of its fiscal year 2007 budget
justification.
Further, 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.
Further, VBA's discussion of complexity in its fiscal year 2006 budget
justification was limited to a statement that complexity is increasing.
We recommended that VBA prepare an explanation of how claims complexity
is expected to change and the impact of these changes on productivity
and requested staffing levels. VBA concurred, stating that
modifications were being made to its information systems that would
enable VBA to use data from its Rating Board Automation 2000 system to
measure complexity in terms of numbers of issues adjudicated. VBA
anticipates having sufficient baseline data by the end of calendar 2005
to support its fiscal year 2008 budget projections.
VBA's fiscal year 2006 budget justification proposed to fund more FTEs
than it originally proposed for fiscal year 2005 and set more
achievable performance goals. Specifically, VBA estimated that it would
have 7,703 direct compensation and pension FTEs in fiscal year 2005,
primarily for the processing of compensation and pension
claims.[Footnote 7] This was 290 FTEs more than VBA originally
requested. VBA requested the same direct FTE level for fiscal year
2006. This increased staffing level was funded through a transfer of
$119 million from VA's Medical Services account, as authorized by the
Congress. At the same time, VBA adjusted key fiscal year 2005
performance goals to make them less ambitious. For example, the new
goal for average days to complete a rating-related decision was 145
days, up from 100 days. Also, VBA's new timeliness goal for pending
rating-related compensation claims was an average of 119 days, up from
96 days. While VBA met neither goal, it came closer to the revised
goals.[Footnote 8] Also, VBA provided information on claims decision
productivity, in terms of rating-related claims decided per direct FTE.
Concluding Observations:
We concluded in our November 2004 report that it was difficult to
determine whether VBA's confidence that it could meet its key fiscal
year 2005 claims processing goals was well-founded because its budget
justification lacked sufficient information to make such an assessment.
VBA agreed, recognizing that it had not provided the Congress with the
information needed to determine whether it could meet its compensation
and pension claims processing performance goals despite increasing
workload and a lower staffing level. VBA has adjusted its performance
goals to make them more achievable, in particular its goals to provide
more timely claims decisions to veterans and their families. Meanwhile,
the Congress provided additional funding to support a higher staffing
level. VBA has identified steps it plans to take to provide additional
information in support of its annual budget requests. It is important
to do so to make its budget requests more transparent and more useful
for congressional budgetary decisionmaking and oversight.
GAO Contact and Acknowledgments:
For further information, please contact Cynthia A. Bascetta at (202)
512-7215. Also contributing to this statement were Cristina Chaplain,
Irene Chu, Martin Scire, and Greg Whitney.
FOOTNOTES
[1] GAO, Veterans' Benefits: More Transparency Needed to Improve
Oversight of VBA's Compensation and Pension Staffing Levels, GAO-05-47
(Washington, D.C. Nov. 15, 2004).
[2] 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.
[3] 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).
[4] 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.
[5] 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.
[6] Under OMB guidance (Circular A-11), agency FTE employment estimates
should consider productivity improvements and workload assumptions.
[7] VBA's budget justification also included requests for funding of
management direction and support and information technology FTEs.
[8] VBA completed rating-related decisions in an average of 167 days in
fiscal year 2005, and its end of fiscal year rating-related
compensation inventory's average age was 122 days.
