Contents

• Most Recent Developments
• Status of Legislation
• Summary and Key Issues
• 'Economic Stimulus' Funding
• Economic Stimulus Funding for Department of Defense
• Economic Stimulus Funding for Department of Veterans Affairs
• Regular Fiscal Year 2009 Appropriations
• Appropriations Subcommittee Jurisdiction Realignment, 110^th Congress, 1^st Session
• Appropriations for Fiscal Year 2008
• Regular Appropriations
• FY2008 Emergency Supplemental Request for the Global War on Terror
• Second FY2008 Supplemental Appropriations for Military Operations, International Affairs, and Other Purposes
• Executive Order 13457
• Title I: Department of Defense
• Military Construction
• Key Budget Issues
• Construction Cost Inflation
• Base Realignment and Closure (BRAC)/Integrated Global Presence and Basing Strategy (IGPBS)/Global Defense Posture Realignment (GDPR)
• Repealing the BRAC Commission Mechanism
• "Growing the Force"
• Overseas Initiatives
• Other Issues
• Title II: Department of Veterans Affairs
• Agency Overview
• Key Budget Issues
• Medical Care
• Title III: Related Agencies
• American Battle Monuments Commission
• U.S. Court of Appeals for Veterans Claims
• Department of Defense: Civil (Army Cemeterial Expenses)
• Armed Forces Retirement Home (AFRH)
• Budget
• Selected Websites

Summary

Soon after it convened, the 111^th Congress initiated H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA), otherwise known as the "economic stimulus." Passed by both chambers and enacted by President Barak Obama on February 17, 2009, the Act adds approximately $4.3 billion to the $119.6 billion regular FY2009 appropriations for military construction and veterans affairs accounts contained in Division E of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009. The President's request for those funds and Congress' disposition of the request are discussed in this report on pp. 2 through 9, below. The balance of the report discusses those parts of the President's regular FY2009 budget request covered by the Military Construction, Veterans Affairs and Related Agencies appropriations bill.

President George W. Bush submitted his regular FY2009 appropriations request to Congress on February 4, 2008, including $115.3 billion for programs covered in the regular Military Construction, Veterans Affairs and Related Agencies appropriations bill: $24.4 billion for Title I (military construction and family housing); $90.8 billion for Title II (veterans affairs); and $183 million for Title III (related agencies). Compared with funding appropriated for FY2008 (emergency supplemental appropriations are pending), this represented increases for Title I of $3.8 billion (18.3%), for Title II of $3.2 billion (3.6%), and for Title III of $16.7 million (10.1%). The overall increase in appropriations between that requested for FY2009 and enacted for FY2008 is $7.0 billion (6.4%).

The House and Senate Committees on Appropriations reported their versions of the FY2009 Military Construction, Veterans Affairs and Related Agencies appropriations bill on June 24 (H.R. 6559) and July 22 (S. 3301), 2008, respectively. The bill's legislative path is laid out in detail in the Regular Fiscal Year 2009 Appropriations section of this report. The House committee recommended appropriating $118.7 billion in new budget authority, $3.4 billion above the President's request. This included $24.8 billion for Title I, $400 million above the request and $4.2 billion above the FY2008 enactment. The Senate committee recommended $119.8 billion, including $24.7 billion for Title I. The Continuing Appropriations Act appropriated $119.6 billion, including $25.0 billion for Title I. In the area of veterans' non-medical benefits, mandatory spending is increasing as claims for disability compensation, pension, and readjustment benefits increase due to a combination of several factors including the aging of the veterans population and the current conflicts in Iraq and Afghanistan. As a result of the increase in the number of claims, the average processing time for a disability claim in FY2007 was 183 days. To reduce the pending claims workload and improve processing time, funds were provided in the FY2008 appropriation for hiring and training additional claims processing staff. In FY2008 mandatory spending was $44.5 billion, increasing to $46.0 billion in FY2009.

In terms of medical care afforded to veterans, similar to the past six years, the Administration has included several cost sharing proposals including increase in pharmacy copayments and enrollment fees for lower priority veterans. An additional proposal would bill veterans directly for treatment of nonservice-connected conditions. The House Appropriations Committee draft bill provides $40.8 billion for Veterans Health Administration for FY2009, a 9.6% increase over the FY2008 enacted amount of $37.2 billion, and 4.1% above the President's request of $39.2 billion. The bill did not include any provisions that would give the Department of Veterans Affairs the authority to implement fee increases.

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Military Construction, Veterans Affairs, and Related Agencies: FY2009 Appropriations

Most Recent Developments

The President enacted H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, which included the Military Construction and Veterans Affairs Appropriations Act, 2009, as its Division E on September 30 as P.L. 110-329.¹

On January 26, 2009, Representative David R. Obey, chair of the House Committee on Appropriations introduced H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA), which supplemented some military construction and veterans affairs appropriations accounts. The bill was signed by the President on February 17 to become P.L. 111-5.

The first portion of the "Summary and Key Issues" section of this report, "'Economic Stimulus' Funding," beginning on p. 2, discusses the $4.3 billion ARRA addition to military construction and veterans affairs appropriations. This second portion, "Regular Fiscal Year 2009 Appropriations", explains the regular FY2009 appropriations bill, includes a detailed description of its legislative path, and begins on p. 9.

Status of Legislation

No official committee conferences were held for either the appropriations or authorization bills before they were enacted. Rather, the appropriations bill was inserted as part of an amendment to H.R. 2638, a Department of Homeland Security appropriations bill for FY2008 that had been passed by both chambers but never enacted. The amended bill, renamed the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act for FY2009, was subsequently passed by both houses without referral to committee and enacted.²

The authorization bill was passed and enacted via a different procedural route, but also without recourse to conference. The authorization bill was subject to an exchange of amendments between the houses, a method known as the "ping pong" procedure, before being cleared for the White House.³

Summary and Key Issues

The first portion of this section examines those parts of the American Recovery and Reinvestment Act of 2009 (H.R. 1, the ARRA, enacted on February 17, 2009, as P.L. 111-5) that touch on military construction and veterans affairs appropriations accounts. The section's second portion, beginning on p. 9, discusses the regular FY2009 appropriations to these same accounts enacted on September 30, 2008.

'Economic Stimulus' Funding

On January 26, 2009, three weeks after the 111^th Congress convened, Representative David R. Obey, chair of the House Committee on Appropriations, introduced H.R. 1, the American Recovery and Reinvestment Act of 2009, or ARRA, also known as the "economic stimulus." Title X of the bill added funding to several military construction and veterans affairs appropriations accounts. The original bill was referred to the House Committees on Appropriations and Budget. It was brought up for consideration on the floor on January 27 (Congressional Record, pp. H557-H583, H620-H749). After debate and amendment, H.R. 1 was passed by the Yeas and Nays, 244-188 (Roll no. 46).

The Senate received the bill on January 29. It was laid before the Senate by Unanimous Consent on February 2, when Sen. Harry Reid, the Majority Leader, proposed on behalf of Sen. Daniel K. Inouye, chair of the Senate Committee on Appropriations, to amend H.R. 1 by substituting the text of S. 336, the chamber's own version of the bill (Congressional Record S1237-S1243, S1266-S1273). The Senate adopted several floor amendments before passing the bill February 10 by a vote of 61-37 (Record Vote No. 61).

The House disagreed with the amendment on the same day and agreed to a conference with the Senate by the Yeas and Nays (Roll no. 54, Congressional Record H1090-H1102). The Conference Committee filed its report (H.Rept. 111-16, Congressional Record H1307-H1516) on February 12. The House agreed to the conference report on February 13 by the Yeas and Nays, 246-183-1 (Roll no. 70, Congressional Record H1587). In the Senate, a point of order was raised against the emergency designation of the Act that was specified in the conference report.⁴ A motion to waive was carried 60-38 (Record Vote No. 63), and the Senate agreed to the conference report by a Yea-Nay vote of 60-38 (Record Vote No. 64) on February 13 (Congressional Record S2288-S2313). The passed bill was presented to the President on February 16, 2009 and signed the next day to become P.L. 111-5.

Title X of Division A of the versions of the ARRA passed by the House and Senate each included budget authority destined for military construction and veterans affairs appropriations accounts. The amounts recommended and enacted for these accounts are presented in Table 3.

The House and Senate versions of H.R. 1 differed not only in the allocation of funds across broad appropriations accounts, but also in their specificity on the use of funds within individual appropriations accounts. In addition, the Senate amendment to H.R. 1 and the enacted bill addressed a number of non-appropriations issues. These will be discussed in detail in the sections that follow.

Economic Stimulus Funding for Department of Defense

Military Construction, Army

The House version of the bill would have appropriated $920 million, made available without time limitation for construction projects not otherwise authorized.⁵ Of this sum, $600 million would have been designated for training and recruitment troop housing (barracks), $220 million for permanent party troop housing (barracks), and $100 million for on-post child development centers.

The Senate amendment would have appropriated $637.9 million to this account, available for obligation through Fiscal Year (FY) 2013, for which $84.1 million would be dedicated to child development centers, $481 million to the construction of warrior transition complexes, and $42.4 million for building and equipping medical and dental clinics.

The Act appropriated $180 million, available through FY2013 for projects in the United States not otherwise authorized, with $80 million devoted to child development centers and $100 million dedicated to warrior transition complexes.⁶ In this and other military construction provisions, Congress instructed the Secretary of Defense to submit an expenditure plan for the funds provided to the Committees on Appropriations within 30 days of the bill's enactment.

Military Construction, Navy and Marine Corps

The House bill would have appropriated $350 million, again without time limitation on its obligation, of which $170 million would have built sailor and Marine housing and $180 million would have constructed child development centers.

The Senate version would have appropriated $990.1 million, available through FY2013. $172.8 million of this amount would have been dedicated to child development centers, $174.3 million would have constructed barracks, $125 million would have replaced health clinics, and $494.4 million would have been used for energy conservation and alternative energy projects.

The enacted version appropriated $280 million, available through FY2013 for projects in the United States not otherwise authorized. $100 million was dedicated to troop housing, $80 million was targeted at child development centers, and $100 million was to be used for energy conservation and alternative energy projects.

Military Construction, Air Force

The House would have provided $280 million without time limit for projects not otherwise authorized. $200 million of this would have been dedicated to airmen housing, and $80 million would have built child development centers.

The Senate amendment would have appropriated $871.3 million to the Air Force for construction obligations through FY2013. $18.1 million would have been be dedicated to child development centers, $612.2 million would have constructed Air Force dormitories (barracks), and $138.1 million would have constructed health clinics.

The enacted version appropriated $180 million available through FY2013 for projects within the United States not otherwise authorized. $100 million was designated for troop housing, and the remainder was devoted to child development centers.

Military Construction, Defense-Wide

The House bill would have appropriated $3,750 million ($3.8 billion) for the construction of hospitals and ambulatory surgery centers, without time limitation and in addition to those otherwise authorized by law.⁷

The Senate version would have provided $118.6 million to the account for use in the Energy Conservation Investment Program through FY2013.

The enacted version appropriated $1,450 million ($1.4 billion), available through FY2013 for projects in the United States not otherwise authorized. Of this, $1,330 million was dedicated to the construction of hospitals, and $120 million went to the Energy Conservation Investment Program.

Military Construction, Army National Guard

The House bill would have added $140 million, without time limitation, for projects not otherwise authorized.

The Senate bill would have appropriated $150 million, available through FY2013, for the construction of readiness centers not otherwise authorized.

The enacted version appropriated $50 million, available through FY2013, for projects not otherwise authorized. The Act directed the Secretary of Defense to consult with the Director of the Army National Guard before submitting the required expenditure plan.

Military Construction, Air National Guard

The House bill would have appropriated $70 million without time limit for construction not otherwise authorized.

The Senate bill would have provided $110 million, available through FY2013 for projects not otherwise authorized.

The enacted version appropriated $50 million, available through FY2013, for construction projects not otherwise authorized. The Act directed the Secretary of Defense to consult with the Director of the Air National Guard before submitting the required expenditure plan.

Military Construction, Army Reserve, Military Construction, Navy Reserve, and Military Construction, Air Force Reserve

The House version of H.R. 1 would have appropriated $100 million, $30 million, and $60 million, respectively, to these accounts, all without time limitation, for the construction of projects not otherwise authorized.

The Senate bill had no such provision.

The enacted version had no such provision.

Family Housing Construction and Family Housing Operation and Maintenance Accounts

The House bill contained no such appropriations.

The Senate amendment would have provided $34.6 million to the Army and $80.1 million to the Air Force for the construction military family housing is not otherwise authorized. These funds would have been available through FY2013. It would have also added $3.9 million to Army accounts and $16.5 million to Air Force accounts for the operation and maintenance of military family housing and minor construction in the United States through FY2013.

The enacted version provided $34.5 million to the Army Family Housing Construction account, but otherwise appropriated sums identical to those the Senate amendment.

Homeowners Assistance Fund

The House bill did not address the Homeowners Assistance Fund (HAF).

The Senate bill would have appropriated $411 million to the Fund to remain available until expended.

The enacted version appropriated $555 million to the Fund, available until expended, and required the Secretary of Defense to report quarterly on the expenditure of HAF funds made available under any provision of law.

The Homeowners Assistance Program [HAP] Fund provides funds to assist eligible military personnel and civilian federal employee homeowners who sustain a loss on the sale of their primary residence due to a declining residential real estate market attributable to the closure or realignment of a military installation. There have been five so-called Base Realignment and Closure (BRAC) rounds, in 1988, 1991, 1993,1995, and 2005.

Program expenses include payments to homeowners for losses on private sales; cost of judicial foreclosure; property acquisition by liquidating and/or assuming outstanding mortgages; partial payment of homeowners' lost equity on government acquisitions; retirement of debt after sale of properties when the government assumes mortgages; and administrative expenses. It was created by Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966 and is codified as 42 U.S.C. §3374.

This assistance has been offered during every BRAC round. Nevertheless, the eligibility criteria are restrictive and include a requirement that the Secretary of Defense determine that a sale was forced where "there is no present market for the sale of such property upon reasonable terms and conditions."⁸ Section 1001 of the Senate amendment would have temporarily expanded eligibility by removing the need for the Secretary to make such a finding for properties were purchased before July 1, 2006 and were being sold pursuant to a base closing or realignment in the 2005 BRAC round. This expansion would have applied to properties sold before September 12, 2012 or some earlier date designated by the Secretary.

Another clause in the bill would have permanently expanded eligibility for DOD acquisition or loss reimbursement upon the sale of or foreclosure on the primary residences of certain wounded, injured, or ill members of the Armed Forces undergoing a medically mandated transition to civilian life or similarly afflicted civilian employees of the Department of Defense or the United States Coast Guard, or their surviving spouses.

The Senate amendment would also have extended a temporary eligibility for such assistance to certain members of the Armed Forces permanently reassigned to distant duty stations during the specified mortgage crisis, defined in the bill as extending from February 1, 2006 through September 30, 2012, or earlier if so determined by the Secretary of Defense.

All of these expansions and extensions were included within the enacted Act.

Economic Stimulus Recovery Zones

Within Subtitle E of Title I of Division B of H.R. 1, Section 1401(a) of the ARRA allowed the issuer of certain financial instruments to designate areas "economically distressed by reason of the closure or realignment of a military installations pursuant to the Defense Base Closure and Realignment Act of 1990" as "recovery zones." Such zones were made eligible for the issuance of Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds that qualify for certain special tax considerations.

Economic Stimulus Funding for Department of Veterans Affairs

H.R. 1 as passed by the House provides a total of $1 billion for the VA, while the Senate amendment (S.Amdt. 98) provides a total of $3.9 billion for the Department (see Table 3). The $1 billion provided under H.R. 1 would fund non-recurring maintenance and energy conservation projects in VA medical facilities and monument and memorial repairs in VA national cemeteries. Of the $1 billion provided in the Housed-passed measure, $950 million is allocated to the medical facilities account and $50 million to the National Cemetery Administration (NCA). H.R. 1 as passed by the House does not specify which VA medical centers or national cemeteries would receive funding; however, the bill language calls for an expenditure plan from the VA within 30 days of enactment.

Of the total $3.9 billion provided under the Senate amendment $5 million would be for the medical support and compliance account and would be used for energy conservation initiatives in throughout the VA health care system. Moreover the Senate amendment provides approximately $1.4 billion for the non-recurring maintenance projects in VA medical centers, and $64.7 million for NCA for monument and memorial repairs. Unlike H.R. 1, the Senate amendment provides funding for the following accounts: general operating expenses, information technology, Office of the Inspector General (OIG), construction major and construction minor accounts as well as for grants for construction of state extended care facilities (see Table 3 for specific amounts for each of these accounts). In total the Senate amendment provides $2.9 billion above the House-passed version of H.R. 1.

Filipino Veterans

The Senate amendment (S.Amdt. 98) includes an administrative provision to provide a one-time payment to Filipino veterans who served in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The payment would be $15,000 for U.S. citizens and $9,000 for non-U.S citizens. Payments would be made from the Filipino Veterans Equity Compensation Fund and are subject to funds being made available (appropriated). P.L. 110-329 appropriated $198 million for the Filipino Veterans Equity Compensation Fund. The provision in S.Amdt. 98 is similar to H.R. 6897 that was passed by the House on September 23, 2008.⁹

Economic Recovery Payments

The ARRA contained a provision to make one-time payments, called economic recovery payments, of $250 to certain beneficiaries of Social Security, Supplemental Security Income, Railroad Retirement, and certain VA programs (disability compensation, pension, dependency and indemnity compensation, and special payments to disabled children of certain veterans). Individuals who are beneficiaries or more than one of these programs will only receive one payment. For appropriation purposes, each agency (Social Security Administration, Railroad Retirement Board, and the VA) has funds appropriated necessary to make the payments associated with their beneficiaries. For the VA, these funds are to be appropriated to the compensation and pension account. In addition, the VA is appropriated $100,000 for the information technology account, and $7.1 million for the general operating expense account for administrative costs to provide the one-time economic recovery payments. Table 3 does not reflect the additional appropriations associated with the economic recovery payments.

The remainder of this section discusses the regular FY2009 appropriations enacted on September 30, 2008, as Division E of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (H.R. 2638, P.L. 110-329).

Regular Fiscal Year 2009 Appropriations

The President submitted his FY2009 appropriations request to Congress on February 4, 2008. The House Committee on Appropriations Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, chaired by Representative Chet Edwards (17^th Congressional District of Texas), began its series of hearings on February 14 by addressing requested appropriations for the Department of Veterans Affairs (DVA). Subsequent hearings focused on the small agencies funded by the appropriation, the DVA's Office of Inspector General, veterans' medical care, military construction for the Departments of the Army, Navy, Air Force, and Defense, the Central, European, and Pacific combatant commands, and DVA's use of information technology. House subcommittee hearings ended on April 10 with the European Command presentation.¹⁰

The Senate subcommittee, chaired by Senator Tim Johnson (South Dakota), held two hearings. The first, concerned with the DVA request, convened on April 10. The second, on military construction, took place on April 24, 2008.

The House subcommittee marked its bill on June 12, adopting the mark by voice vote. The full committee mark took place on June 24, 2008, and was also adopted by voice vote. Representative Chet Edwards, subcommittee chair, introduced the bill (H.R. 6599, H.Rept. 110-775) on July 24, 2008 (Congressional Record, p. H7163), when it was placed on the Union Calendar (Calendar No. 494).

The House Rules Committee reported H.Res. 1384, its rule on consideration of H.R. 6599, on the evening of Tuesday, July 29, which allowed both one hour of general debate and amendment of the bill.¹¹ The House passed H.Res. 1384 on July 31.

The House resolved itself into the Committee of the Whole, with Representative Earl Pomeroy (ND/AL) acting as Chair, to debate H.R. 6599. Representative Rob Bishop (UT/01) offered an amendment to insert into the bill a new Division B, the "American Energy Act."¹² Mr. Edwards (TX) raised a point of order under House Rule XXI, asserting that the amendment would constitute legislation in an appropriations bill. The Chair sustained the point of order. Debate continued until 1:06 am on the morning of August 1 with the Committee of the Whole debating amendments and adopting a number of them.¹³

Debate continued later in the morning of August 1 when the Committee of the Whole again took up H.R. 6599 as unfinished business. Several additional amendments were considered, with one being adopted, before the House rose from the Committee of the Whole at 10:13 am to report the bill.¹⁴

After the House adopted the amended bill, Representative Jerry Lewis (CA/41) moved to recommit the bill to the committee with instructions to insert a section enacting H.R. 6566, the American Energy Act. Mr. Edwards (TX) raised a point of order against the motion, stating that the motion to recommit constituted legislation in an appropriations bill. The point of order was sustained by the Chair. Representative John E. Peterson (PA/05) appealed the ruling, and Mr. Edwards moved to table the motion to appeal. The House agreed to table the motion to appeal by recorded vote, 230-184 (Roll no. 562). The House passed H.R. 6599 on August 1, 2008, by the yeas and nays, 409-4 (Roll no. 563).¹⁵

The Senate subcommittee polled out its version of the appropriations bill. The full committee ordered the bill to be reported out favorably without amendment on July 17 by a vote of 29-0. Senator Tim Johnson, subcommittee chair, introduced the measure (S. 3301, S.Rept. 110-428) on July 22 (Congressional Record, p. S7030), when it was placed on the Senate Legislative Calendar under General Orders (Calendar No. 892).

Early press accounts suggested that a number of appropriations bills, this included, could be held until the 111^th Congress convenes in January 2009.¹⁶ Nevertheless, a version of the bill was incorporated on September 24, 2008, into Division E of an amendment to the Senate amendment of H.R. 2638, the Department of Homeland Security Appropriations Act, 2008, that was subsequently retitled the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. The House agreed to the amendment by the yeas and nays, 370-58-1 (Roll no. 632) on September 24, 2008 (Congressional Record, pp. H9231-H9305). The Senate considered the House-amended bill on Friday, September 26, and passed the measure on Saturday, September 27 by yea-nay vote, 78-12 (Record Vote Number 208, Congressional Record, p. S9965), clearing it for the White House. The President signed the bill into law (P.L. 110-329) on September 30, 2008.

Appropriations Subcommittee Jurisdiction Realignment,
110^th Congress, 1^st Session

With the opening of the 110^th Congress, the House and Senate brought the responsibilities of their appropriations subcommittees more closely into alignment. On the House side, this resulted in a new alignment of jurisdictions and the renaming of several subcommittees.

As a result, non-construction quality-of-life defense appropriations that had been considered in the House version of this appropriations bill during the 109^th Congress, including Facilities Sustainment, Restoration, and Modernization, Basic Allowance for Housing, Environmental Restoration, and the Defense Health Program, were transferred to the jurisdiction of the House Committee on Appropriations Subcommittee on Defense. The former Subcommittee on Military Quality of Life, Veterans Affairs, and Related Agencies became the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, mirroring its counterpart in the Senate.

Appropriations for Fiscal Year 2008

Regular Appropriations

The Military Construction, Veterans Affairs and Related Agencies Appropriations Act (H.R. 2642) was introduced in the House on May 22, 2007. Passed by the House on June 15,it was extensively amended by the Senate and adopted on September 6. A conference convened in early November, when the bill was inserted into the Labor-HHS-Education appropriations bill (H.R. 3043) as its Division B. Division B was struck from H.R. 3043 on November 7, 2007, when a point of order was raised on the Senate floor.¹⁷

The appropriations bill was eventually bundled with others and added to the existing State Foreign Operations and Related Activities appropriations bill (H.R. 2764) as Division I of what then became the Consolidated Appropriations Act for Fiscal Year 2008. H.R. 2764 was enacted by the President on December 26, 2007, as P.L. 110-161. H.R. 2642 was later amended to become the Second FY2008 Supplemental Appropriations for Military Operations, International Affairs, and Other Purposes (see below).

FY2008 Emergency Supplemental Request for the Global War on Terror

In February 2007, coincident with its annual request for FY2008 appropriations, DOD submitted a supplemental request for $141.7 billion dedicated primarily, but not exclusively, to funding continued military operations in Iraq and Afghanistan. Additional requests transmitted to Congress in July and October 2007 brought total supplemental funding to $189.3 billion.¹⁸

Some construction was covered by these funds. These included new or upgraded facilities in direct support of military units deployed in Kygyzstan, Afghanistan, Iraq, Kuwait, and Qatar. Additional construction funds were dedicated to building a new headquarters in Djibouti, Africa, and facilities at a number of installations across the United States. Funding for the realignment of Walter Reed Army Medical Center in the District of Columbia, part of the implementation of the 2005 Base Realignment and Closure (BRAC) round, and an addition to the Burn Rehabilitation Unit at the Brooke Army Medical Center, Ft. Sam Houston, Texas, was also part of the supplemental request.

Second FY2008 Supplemental Appropriations for Military Operations, International Affairs, and Other Purposes

H.R. 2642, the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, was reintroduced to the House in mid-May 2008 and reconstituted as a second supplemental appropriation for FY2008. After debate and amendment by both chambers, the supplemental appropriation was presented to the President on June 27, 2008, and signed into law on June 30 as P.L. 110-252.¹⁹

The act provides additional funds for a number of accounts related to military construction and veterans' affairs, as delineated in Table 4.²⁰

Executive Order 13457

Congress typically funds this act by appropriating directly to broadly defined appropriations accounts, such as Military Construction—Army or Family Housing—Air Force. These appropriations have typically been stated within the statutory language of the act itself. Nevertheless, within the budget documentation that the President submits to Congress each year are hundreds of detailed justifications for individual construction projects at specified locations for stated purposes in established funding amounts. The appropriations and authorization committees consider each of these as individual requests and indicate their approval, disapproval, or additions to the project lists in the explanatory statements reported to their respective chambers. While it is generally recognized by legal experts that statutory language (provisions stated in the body of legislation passed by Congress and enacted by the President) carries the full weight of law, the legal standing of statements contained within what is generally considered supporting language, such as explanatory statements written into reports to the chambers by members of committees, is less clear.

On January 29, 2008, President George W. Bush issued Executive Order (E.O.) 13457, titled "Protecting American Taxpayers From Government Spending on Wasteful Earmarks." In that E.O., the President stated, in part, that:

For appropriations laws and other legislation enacted after the date of this order, executive agencies should not commit, obligate, or expend funds on the basis of earmarks included in any non-statutory source, including requests in reports of committees of the Congress or other congressional documents, or communications from or on behalf of Members of Congress, or any other non-statutory source, except when required by law or when an agency has itself determined a project, program, activity, grant, or other transaction to have merit under statutory criteria or other merit-based decisionmaking.²¹

The impact of E.O. 13457 on appropriation or implementation practices of either the executive or the legislative branches is unclear. For example, the order states that "executive agencies should [emphasis added] not commit, obligate, or expend funds ..." under certain circumstances. In law, "should" is interpreted as non-binding guidance to those to whom it is addressed. However, in a subsequent section of the E.O., the President directs that "the head of each agency shall [emphasis added] take all necessary steps ..." to implement the policy according to certain criteria that he then lays out. It should be noted that "shall" is a much stronger, directive term. The E.O. applies only to appropriations enacted after January 29, 2008, and will therefore not affect any existing or prior-year appropriation.

The E.O. does not appear to bar the implementation of congressionally directed funding in cases where spending is "required by law or when an agency has itself determined a project, program, activity, grant, or other transaction to have merit under statutory criteria or other merit-based decisionmaking." Examples of such a situation have existed where particular construction projects have been directed in the text of previously enacted authorization acts. The President's order also allows agency heads to "consider the views of a House, committee, Member, officer, or staff of the Congress with respect to commitments, obligations, or expenditures to carry out any earmark" when "such views are in writing...."

In addition, the definition of an "earmark" written into the E.O. may reduce somewhat the clarity of exactly what spending is to be avoided. That definition states that earmarks are "purported congressional direction (whether in statutory text, report language, or other communication) [that] circumvents otherwise applicable merit-based or competitive allocation processes, or specifies the location or recipient" (emphasis added).²² While much of the E.O. stresses the necessity of adhering to the letter of the law, this definition could be interpreted as preventing an agency from observing some statutory text.

More generally, the E.O. may raise a number of other questions regarding future expenditure of appropriated funds. Two examples are suggested below.

• 1. There are instances where a construction project is not stated within the statutory text of the law in question, but rather is referenced in the text of another. An example might be a statutory requirement for the Department of Veterans Affairs to construct a number of cemeteries for the use of veterans at specified locations for which appropriations are not provided until a number of years later.²³ Would the E.O. bar the initiation of construction until such a statutory link is found and proven to unambiguously cover each project?
• 2. The E.O. grants agency heads the authority to accept congressionally directed funding when a project has "merit under statutory criteria or other merit-based decisionmaking," or when considering "the views of a House, committee, Member, officer, or staff of the Congress ... when such views are in writing...." Do these provisions constitute a broad discretion on the part of agency heads to accept congressional guidance on spending?

In drafting its version of the FY2009 appropriations bill, the House committee clarified the status of congressionally directed spending within the context of the Executive Order by referencing the list of construction projects within the statute. For each appropriation account for which specific construction projects are identified in the committee report, the proposed legislation states, "That the amount appropriated in this paragraph shall be for the projects and activities, and in the amounts, specified under the headings ... in the table entitled ... in the report of the Committee on Appropriations of the House of Representatives to accompany this bill."²⁴

Title I: Department of Defense

Military Construction

Military construction accounts provide funds for new construction, construction improvements, planning and design, and host nation support of active and reserve military forces and Department of Defense agencies. The North Atlantic Treaty Organization Security Investment Program (NSIP) is the U.S. contribution to defray the costs of construction (airfields, fuel pipelines, military headquarters, etc.) needed to support major NATO commands. Family housing accounts fund new construction, construction improvements, federal government costs for family housing privatization, maintenance and repair, furnishings, management, services, utilities, and other expenses incurred in providing suitable accommodation for military personnel and their families where needed.

The DOD Housing Improvement Fund is the vehicle by which funds, both directly appropriated and transferred from other accounts, support military housing privatization. The Homeowners Assistance Fund provides relief to federal personnel stationed at or near an installation scheduled for closure or realignment who are unable to sell their homes. The Chemical Demilitarization Construction, Defense-Wide, account provides for the design and construction of disposal facilities required for the destruction of chemical weapons stockpiles. The Base Realignment and Closure Account 1990 funds the remaining environmental remediation requirements (including the disposal of unexploded ordnance) arising from the first four base realignment and closure (BRAC) rounds (1988, 1991, 1993, and 1995). The Base Realignment and Closure Account 2005 provides funding for the military construction, relocation, and environmental requirements of the implementation of both the 2005 BRAC round and the DOD Integrated Global Presence and Basing Strategy/Global Defense Posture Realignment (military construction only).

Key Budget Issues

Several issues regarding military construction funding may be of interest to some Members in their consideration of the FY2009 appropriation request. Funding of the various accounts included under Title I (Department of Defense) is listed in Appendix A to this report.

Construction Cost Inflation

Military construction appropriations legislation often permits budget authority obligations (the ability of agencies to obligate funding) to continue for as many as five years after the appropriation is enacted. The House committee noted that inflation and the cost of construction over such a lengthy period could significantly affect the accuracy of cost estimates submitted by DOD. The committee directed DOD to increase the accuracy of its inflation estimates and report on the baseline inflation rate used in the creation of its 2010 budget request, comparing it with similar calculations used by other agencies.

Neither the Senate committee nor the Continuing Appropriations versions of the report contain such language.

Base Realignment and Closure (BRAC)/Integrated Global Presence and Basing Strategy (IGPBS)/Global Defense Posture Realignment (GDPR)

Cost of Implementation

In its appropriations request for FY2007, DOD estimated that the total one-time implementation between 2006 and 2011 of the 2005 BRAC round (the realignment and closure of a number of military installations on United States territory) and the Integrated Global Presence and Basing Strategy (IGPBS, the redeployment of 60,000 - 70,000 troops and their families from overseas garrisons to bases within the United States) would cost $17.9 billion.²⁵

Between the submission of that request in February 2006 and submission of the FY2008 BRAC funding request a year later, DOD advanced its planning for the execution of all military construction, movement of facilities, and relocation of personnel necessary to carry out the approved recommendations of the 2005 BRAC Commission. This revision caused the estimate of one-time implementation cost to rise to more than $30.7 billion, due principally to significantly higher implementation cost estimates for FY2008-FY2011. The same estimate made by DOD in February 2008 for the FY2009 appropriations request rose again, now totaling $32.0 billion. Figure 1 compares DOD BRAC 2005 new budget authority requirement estimates made for FY2007, FY2008, and FY2009.²⁶

Figure 1. New Budget Authority Estimates, BRAC 2005 Implementation

Source: DOD Budget Justification Documents for FY2007, FY2008, and FY2009

Although the BRAC 2005 account pays for buildings, moving, cleanup, and the like, the most significant factor driving implementation cost estimates for the peak years (originally FY2007 and FY2008, and later FY2008 and FY2009) is military construction. This wavelike cost profile is characteristic of BRAC rounds and is produced by the combined effects of the six-year statutory deadline for completing BRAC implementation and the need to commit funds for the execution of construction contracts at least two to three years before new building can be accepted and occupied.

BRAC 2005 appropriations requests had usually been funded fully by Congress, either through regular appropriations, omnibus appropriations, continuing resolutions, or emergency supplemental appropriations. The Senate committee's recommendation for FY2009, though, would have reduced the appropriation by $73.7 million, or 1% of the President's request, in order to increase funding for the construction of a missile defense radar site in Poland. The Continuing Appropriations bill (H.R. 2638) appropriated $8.7 billion to the BRAC 2005 account, a reduction of roughly $300 million from the President's request.

Modification of Annual BRAC Reporting Requirements

Under current statute, the Secretary of Defense is required to report annually to Congress schedules and descriptions of actions undertaken to implement the closures and realignments required by the 2005 BRAC round. Implementation of all BRAC closure and realignment actions is to be completed by September 15, 2011. Section 2711 of the House amendment to the NDAA (S. 3001) would end the reporting requirement, which is currently indefinite, with the DOD budget submission for FY2016.

Creation of an Independent Walter Reed Design Review Panel

The main campus of the Walter Reed Army Medical Center (WRAMC) in the District of Columbia is scheduled to close during the 2005 BRAC round, with the majority of its functions being transferred to other installations.²⁷ Section 2721 of the original House version of the Duncan Hunter NDAA (H.R. 5658) would have limited the construction of facilities needed to house those functions until the Secretary of Defense certified that 90% of construction design, an independent cost estimate, and a milestone schedule for the proposed realignment were complete.

Section 2721 of the amended NDAA (S. 3001) would create a panel of healthcare and facility design experts to review the plans for the new National Military Medical Center at Bethesda, Maryland, advise the Secretary of Defense on their adequacy, and recommend to the Secretary any changes needed to ensure that the resulting facilities are "world-class." Under the amended section, the Secretary would report to congressional defense committees on the recommendations, prepare a cost estimate for the closure of WRAMC, construction of replacement facilities, and relocation of functions, and create a milestone schedule for its execution. Planned construction activity would not be impeded.

Force Redeployment to United States Territory

The one-time implementation costs to carry out the President's redeployments to new garrisons on United States territory are included within the BRAC 2005 cost estimate. Table 5 displays DOD cost during the six-year BRAC implementation. This shows that $495.3 million of the $9.1 billion (5.5%) of the FY2009 BRAC 2005 appropriation request is devoted to the IGPBS/GDPR redeployment.²⁸

Repealing the BRAC Commission Mechanism

Section 2711 of the original House version of the Duncan Hunter National Defense Authorization Act for FY2009 (H.R. 5658) would have repealed the President's authority to appoint an independent commission to recommend the closure or realignment of military installations.²⁹

Under current law, the Secretary of Defense must submit to such a commission any recommendations he may have regarding the reduction of civilian employment at or the closure of military installations.³⁰ This panel, often referred to as the BRAC Commission, is empowered to accept, reject, or amend the Secretary's recommendations, or it may draft its own. Once the Commission has finalized its list of recommended actions and gained the President's approval, Congress may halt the implementation of these actions by passing a joint resolution of disapproval.³¹ Otherwise, the Secretary of Defense is required to carry out the approved recommendations not later than six years from the date of presidential approval.

Section 2711 would, if enacted, have eliminated the independent commission from the base closure process. Under the revised procedure, the Secretary of Defense would have submitted a list of recommended closures and realignments directly to President for his approval. The approved list would still have been subject to a congressional joint resolution of disapproval.

The provision was not included in the House amendment to the Senate amendment of the NDAA (S. 3001) and was therefore not enacted.

"Growing the Force"

DOD is planning to increase the end strength of the regular Army by 65,000 soldiers and Marine Corps by 27,000 Marines and the Army National Guard and Army Reserves by an additional 9,200 citizen-soldiers by 2012. This will require additional military construction to accommodate, train, and house these personnel and their families.

DOD requested more than $3.7 billion in FY2007 emergency supplemental and FY2008 military construction appropriations to support this increase. The Congressional Budget Office has estimated that the additional military construction cost between 2007 and 2013 of these soldiers and Marines will total $15.7 billion, with the bulk of the appropriations required during FY2008-FY2010.³²

Overseas Initiatives

While redeploying a number of troops to the United States, DOD is also renegotiating the location and garrisoning of a number of its remaining overseas installations. These efforts are principally focused on the Federal Republic of Germany, Italy, the Republic of Korea, and Japan. In addition, a number of new, relatively austere, installations are being created in eastern Europe and in the Pacific, Central, and Southern Command areas. In Germany, U.S. forces are continuing to consolidate at existing installations in the south of the country, while the installation near Vicenza, Italy, is being expanded in anticipation of the deployment of a modular brigade. U.S. forces in the Republic of Korea are in the process of shifting from sites immediately along the Demilitarized Zone, at the frontier between that nation and the Democratic People's Republic of Korea (DPRK), and from a large headquarters garrison in the capital of Seoul to expanded facilities further to the south. While the bulk of construction cost will be borne by the Korean government, this initiative could require as much as $750 million in U.S. construction funding to complete.

Africa Command (AFRICOM)

The creation of Africa Command (AFRICOM) under U.S. Army Gen. William E. "Kip" Ward, currently scheduled to become operational on October 1, 2008, may soon require the construction of a number of minimally manned or unmanned "cooperative security locations" at critical sites across the continent.³³ Both appropriations committees noted that the Administration's decision to stand up AFRICOM operations has not been accompanied by a clearly enunciated plan for the creation of facilities on the continent to receive U.S. military forces, nor as the location of AFRICOM'S permanent headquarters and announced.³⁴

Guam

DOD and the Government of Japan have agreed to move approximately 8,000 Marines and 9,000 of their family members from bases on Okinawa to new facilities in the U.S. territory of Guam. The construction costs associated with this move have been estimated at $10 billion, and Japan has agreed to underwrite 60% of this expense. The Departments of the Army, Navy, and Air Force have separately initiated their own increase in presence on Guam, which is expected to add personnel and family members to this total over the next several years. These moves onto the island are expected to be complete by 2014 and will increase the military-associated population from 14,000 to approximately 39,000. Based on the most recent estimates of the territorial population of approximately 175,000, the post-2014 military community could represent as much as 22% of the island's inhabitants.³⁵

DOD has estimated that approximately $3 billion will be needed for military construction on Guam. Nevertheless, as in the AFRICOM case, all appropriations committees noted that DOD has not yet finalized the construction needed to support the island's force buildup.

Section 2824 of the House-passed version of the Senate's NDAA (S. 3001) would establish a new Treasury account, the "Support for United States Relocation to Guam Account," to accept the Japanese contributions to the realignment of military installations and relocation of U.S. military personnel to Guam.³⁶ The section would also require the Secretary of Defense to report annually on each military construction project requested for the relocations to Guam from Japanese territory and as part of the general military buildup in the Territory.

Overseas Installation Management

The Government Accountability Office addressed DOD planning for overseas installations in a report completed in September 2007.³⁷ The report concluded that although DOD had updated its overseas master plans, which lay out projected infrastructure requirements at overseas military installations, the Department had not sufficiently incorporated into its calculations the "residual value" of property being returned to host nations for reuse.³⁸ GAO also noted that neither DOD nor the military departments (Army, Navy, and Air Force) had yet finalized the number or makeup of forces being transferred to Guam from Japan and the United States. This meant that the housing, training and operational requirements, and community impact of significant force relocation could not be estimated.³⁹

Since FY2004, the Senate committee has required DOD to submit an annual master plan for its installations overseas. Citing the continuing military operations in Southwest Asia, troop relocations within and from Europe and Korea, and the creation of AFRICOM, the committee included an extension of the existing reporting requirement in the language of its report.

Other Issues

Brigade Transformation and Expansion of the Piñon Canyon, CO, Maneuver Training Area

During the mid-1980s, the Department of the Army acquired approximately 250,000 acres of land near Ft. Carson, CO, for use as a training site. Approximately half of the land was obtained through open purchase, with the remainder acquired through condemnation proceedings.⁴⁰

As part of the Global Rebasing effort, roughly 10,000 soldiers will redeploy to Ft. Carson from garrisons currently located overseas.⁴¹ In addition, the Army is in the process of transforming its fundamental combat organization from one based on the division (usually made up of three brigades) into one based on the "modular Brigade Combat Team" (BCT), which emphasizes tactics based on unit speed of movement and maneuverability. The Army has estimated that each BCT requires at least 95,000 acres of land for optimal training and has planned to base four such BCTs at Ft. Carson.

This increase in training need led the Army to consider a significant expansion of the Piñon Canyon Maneuver Training Area. As of mid-2006, the Department of the Army expected to acquire an additional 418,000 acres.

The proposed move generated concerns among local landowners that public condemnation might again be employed to acquire properties for incorporation into the site. The question of whether eminent domain, or condemnation, was being considered by DOD was put to Philip Grone, the Deputy Undersecretary of Defense for Installations and Environment, by Senator Wayne Allard (CO) at a hearing of the Senate Committee on Appropriations Subcommittee on Military Construction and Veterans Affairs on March 22, 2007. Mr. Grone stated that the Department would "always prefer to work with willing sellers. But I would not desire to rule out any legally available tool."

Subsequently, the National Defense Authorization Act for FY2008 contained a provision that required the Secretary of the Army to conduct an analysis of the sufficiency of existing training facilities at Ft. Carson to support the current and future training needs of units currently stationed and planned to be stationed at the post and to report the results to Congress.⁴² An amendment to the Consolidated Appropriations Act for FY2008, which funded military construction and DOD land acquisition, stipulated that, "None of the funds appropriated or otherwise made available in this Act may be used for any action that is related to or promotes the expansion of the boundaries or size of the Pinon Canyon Maneuver Site, Colorado."⁴³ Identical language appears in Section 127 of the Military Construction and Veterans Affairs Appropriations Act, 2009, as passed by the House. The same Section 127 is retained in Division E of the Consolidated Appropriations Act (H.R. 2638).

In its report to Congress on Piñon Canyon, the Department of the Army has indicated that its current assessment of need for training land at Ft. Carson may not exceed an additional 100,000 acres.⁴⁴

Extending the Use of Operation and Maintenance Funds for Overseas Construction

Section 2808 of the NDAA for 2004 (P.L. 108-136, 117 Stat. 1723) permitted the Secretary of Defense to use Operation and Maintenance funds for construction projects outside of the United States if the construction (1) was needed for urgent military operational requirements of a temporary nature; (2) was not located at a military installation where the U.S. was expected to have a long-term presence; (3) would not be used by the U.S. after operations ended; and (4) was the minimum needed to meet the temporary requirements.⁴⁵

Both the original House and Senate bills would have extended this authority for an additional year, through FY2009. Section 2806 of the House-passed version of the Senate bill (S. 3001) would extend the authority through FY2009 but would restrict its use to U.S. Central Command (USCENTCOM) and Africa Command (USAFRICOM) Areas of Responsibility in Central Asia and continental Africa. In addition, the bill would exempt construction in Afghanistan from the prohibition on the use of funds to support the long-term presence of U.S. military forces.

Military Housing Privatization

Since the mid-1990s, the Department of Defense has exercised a number of congressionally granted special authorizations to privatize military family housing at military installations. To date, approximately 87 housing projects have been initiated in which the title to family housing serving a number of installations has been transferred from DOD to private joint ventures under agreements to construct, maintain, and manage the sites for up to 50 years.⁴⁶

During 2006 and 2007, American Eagle Communities, a major developer in family housing projects at several installations, found itself unable to raise the capital needed to continue construction and operation.⁴⁷ Although other contractors eventually assumed responsibility for completing the existing contracts, the Senate version of the NDAA (Section 2803) would have increased the responsibilities of the various Secretaries for project oversight and reporting to the Under Secretary of Defense (Installations and Environment) and would have set thresholds on the qualifications of contractors allowed to participate. Another provision in the Senate bill (Section 2805) would have required the Secretary of the Air Force to provide a cost-benefit analysis to Congress regarding the proposed dissolution of one of the affected joint ventures, Patrick Family Housing LLC at Patrick AFB, Florida, before taking any action. Section 2805 of the House-amended version of S. 3001 retains these provisions.

Leasing Military Housing to the Secretary of Defense

Both House and Senate versions of the NDAA would authorize the department Secretaries to lease housing on a military installation in the National Capital Region to the Secretary of Defense. Proposed by DOD, this move is characterized as a cost-effective alternative to the periodic installation, maintenance, and protection in private homes of the DOD communications equipment and security devices and detail of personnel needed by the Secretary of Defense in pursuit of his duties. The bills differ in their method of calculating the requisite rent to be paid by the Secretary.

The House-amended version of S. 3001 retains this provision in Section 2804 and would set the rent to be paid by the Secretary at 105% of the basic housing allowance paid to the current highest-ranking member of the military services, a general or admiral in the grade of 0-10 with family, assigned to the installation where the housing is located.⁴⁸

Defense Access Road Program

23 U.S.C. 210 authorizes DOD to make appropriated funds "available, without regard to apportionment among the several States, for paying all or any part of the cost of the construction and maintenance" of certain roads, "bridges, tubes, and tunnels leading to military reservations, to defense industries and defense industry sites, and to the sources of raw materials" when designated by the Secretary of Defense as being "important to the national defense."⁴⁹ This authority, embodied in the Defense Access Road (DAR) Program, permits DOD to assess road improvement needs, request the necessary appropriation, and partner with the Office of Federal Lands Highway, Federal Highway Administration, in the Department of Transportation and the appropriate agency that would administer the construction project.

The current BRAC round and the Global Defense Posture Realignment are expected to substantially increase the military populations at a number of installations across the country. Some communities are anticipating significant strain to be imposed on the local transportation infrastructure serving these sites. The House version of the NDAA would amend the statute to require the Secretary of Defense to conduct a transportation "needs assessment" at installations where a significant transportation impact is anticipated. The Senate version contained no such legislative language, but the committee report singled out the program as an item of special interest and would have directed the Secretaries of Defense and Transportation to review the criteria by which an improvement project is deemed eligible for DAR funding and report their findings to Congress.

Section 2814 of the enacted version of S. 3001 retained the House language, amending 23 U.S.C. 210 to require transportation needs assessments and directed the Secretary of Defense to report to the relevant congressional committees any significant transportation impacts resulting from DOD activities since January 1, 2005.

Restricting the Use of NASJRB Willow Grove, Pennsylvania

Naval Air Station Joint Reserve Base (NASJRB) Willow Grove is located in Horsham, PA, a suburb of Philadelphia, and is scheduled to close as part of the 2005 BRAC round. Section 8115 of the Consolidated Appropriations Act, 2009 (H.R. 2638, P.L. 110-329) provides for all Department of the Navy property at the site to be transferred at no cost from the Secretary of the Navy to the Secretary of the Air Force as the Horsham Joint Interagency Installation and renamed "Pitcairn-Willow Grove Field." The Secretary of the Air Force will then transfer Pitcairn-Willow Grove Field and all excess Air Force property at the former NASJRB to the Commonwealth of Pennsylvania for use as the Horsham Joint Interagency Installation.

The section further provides that the property shall return to the Department of Defense should it cease being used as the Horsham Joint Interagency Installation. It may not be reconveyed by the Commonwealth.

Title II: Department of Veterans Affairs

Agency Overview

The Department of Veterans Affairs (VA) administers directly, or in conjunction with other federal agencies, programs that provide benefits and other services to veterans and their spouses, dependents and beneficiaries. The VA has three primary organizations to provide these benefits: the Veterans Benefits Administration (VBA), the Veterans Health Administration (VHA), and the National Cemetery Administration (NCA). Benefits available to veterans include service-connected disability compensation; a pension for low-income veterans who are elderly or have a nonservice-connected disability; vocational rehabilitation for disabled veterans; medical care; life insurance; home loan guarantees; burial benefits; and educational and training benefits to help in the transition of active servicemembers to civilian life. As shown in Table 6, VA appropriations for benefits and services has increased from $52.38 billion in FY2002 to $88.11 billion in FY2008.

Key Budget Issues

The FY2009 budget submitted by the Administration in February 2008 called for funding VA at a level of $90.8 billion for FY2009 (see Table 8). This would be an increase of $2.6 billion, or 3.0%, over the FY2008 appropriation (including the contingent emergency and supplemental funding).

One of the key issues for VA non-medical benefits has been the size of the disability claims workload and the average time (183 days in FY2007)⁵⁰ to process claims. The U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (P.L. 110-28) provided additional funding to the VA for resources to address the large number of pending claims and shorten processing times. P.L. 110-28 provided an additional $60.75 million for hiring and training of additional claims processing personnel, and $20.0 million for information technology to support claims processing.

The FY2008 Omnibus (P.L. 110-161) provided $124.2 million for the hiring of additional claims processors and $2.0 million for leasing office space for the new hires. Additional funds were also provided to the Board of Veterans Appeals ($3.7 million) and the Office of General Council ($3.2 million) for additional personnel to handle the increase in the number of appeals.

As shown in Table 7, H.R. 6559 provides $93.7 billion in FY2009 funding for the VA, an increase of $5.6 billion, or 6.3%, above the FY2008 appropriation (including the contingent emergency and supplemental funding). S. 3301 provides $94.8 billion in FY2009 funding for the VA, an increase of $6.7 billion, or 7.6%. H.R. 2638 (P.L. 110-329) provides $94.4 billion in FY2009 funding for the VA, an increase of $6.2 billion or 7.1% over the FY2008 enacted level. All of the FY2009 funding bills also provide a large increase in FY2009 funding relative to the FY2008 appropriation for several programs including medical support; medical facilities; and information technology.

As shown in Table 8, there is an almost equal split between mandatory and discretionary funding for the VA. In the FY2008 appropriation, mandatory funding was only slightly above discretionary funding. For H.R. 6559, S. 3301, and H.R. 2638 (P.L. 110-329) discretionary funding is slightly above mandatory funding.

Medical Care

The Veterans Health Administration (VHA) is a direct service provider of primary care, specialized care, and related medical and social support services to veterans through an integrated health care system. In FY2008, VHA operated 153 medical centers, 135 nursing homes, 795 ambulatory care and community based outpatient clinics (CBOCs),⁵¹ and 232 Readjustment Counseling Centers (Vet Centers).⁵² VHA also pays for care provided to veterans by independent providers and practitioners on a fee basis under certain circumstances. Inpatient and outpatient care is provided in the private sector to eligible dependents of veterans under the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA).⁵³ In addition, VHA provides grants for construction of state-owned nursing homes and domiciliary facilities, and collaborates with the Department of Defense (DOD) in sharing health care resources and services.

The total amount requested by the Administration for VHA for FY2009 was $39.2 billion, a $2.0 billion increase in funding compared to the FY2008 enacted amount. The total amount of funding that would have been available for VHA under the President's budget proposal for FY2009, including third-party collections, was approximately $41.1 billion. For FY2009, the Administration requested $34.1 billion for medical services, an approximately $5.0 billion, or17%, increase in funding over the FY2008 enacted amount. However, it should be noted that this amount included funding for the medical administration account which the Administration proposed to consolidate with the medical services account. The President's budget also requested $4.6 billion for medical facilities, and $442 million for medical and prosthetic research.

As in FY2003, FY2004, FY2005, FY2006, FY2007, and FY2008 the Administration included several cost sharing proposals. The first proposal was the tiered annual enrollment fee for all enrolled Priority Group 7 and Priority Group 8 veterans, which was structured to charge $250 for veterans with family incomes from $50,000 to $74,999; $500 for those with family incomes from $75,000 to $99,999; and $750 for those with family incomes equal to or greater than $100,000. According to the VA, this proposal would have increased government revenue by $129 million beginning in FY2010, and by $514 million over five years.

The Administration also proposed increasing the pharmacy copayments from $8 to $15 for all enrolled Priority Group 7 and Priority Group 8 veterans, whenever they obtain medication from VA on an outpatient basis for the treatment of a nonservice-connected condition.⁵⁴ The Administration put forward this proposal in its FY2004, FY2005, FY2006, FY2007 and FY2008 budget requests as well, but did not receive any approval from Congress. At present, veterans in Priority Groups 2-8 pay $8 for a 30-day supply of medication, including over-the-counter medications. The VA estimated that this proposal would have increased government revenue by $334 million beginning in FY2009, and by $1.6 billion over five years.

Lastly, the Administration proposed to bill veterans directly for treatment associated with nonservice-connected conditions. Presently, VA uses third-party collections to satisfy veterans' first party debt; that is, if VA treats an insured veteran for a nonservice-connected disability, and the veteran is also determined by VA to have copayment responsibilities, VA will apply each dollar collected from the insurer to satisfy the veteran's copayment debt related to that treatment. The Administration proposed to eliminate this practice. According to the VA, this proposal would have increased government revenue by $44 million beginning in FY2009 and by $215 million over five years. The President's budget request for medical services did not reflect these legislative proposals.

Compared to previous budget proposals, the FY2009 budget proposals if implemented would have deposited all collections in the U.S. Treasury and not in the Medical Care Collections Fund (MCCF) as is the current practice with regard to collections.⁵⁵

The House Appropriations Committee-passed version of the Military Construction and Veterans Affairs Appropriations bill for FY2009 provided $40.7 billion for the VHA for FY2009. This amount included $30.9 billion for medical services, $1.8 billion (6%) over the FY2008 enacted amount of $29.1 billion. The Committee-passed measure also included $4.4 billion for medical support and compliance (previously known as medical administration), $883 million (25%) above the FY2008 enacted amount of $3.5 billion; $5.0 billion for medical facilities, a 7.8% increase over the President's request of $4.7 billion; and $500 million for medical and prosthetic research, a 13.1% increase over the President's request of $442 million. The House-passed version of the Military Construction and Veterans Affairs Appropriations bill for FY2009 did not include any bill language authorizing fee increases as requested by the Administration's budget proposal for VHA for FY2009.

Of the amount recommended by the House Appropriations Committee for the medical services account, $3.8 billion was for specialty mental health care, $584 million was for the substance abuse program, $568 million was to increase the number of Priority 8 enrollment by 10 percent, and $100 million was to increase the mileage reimbursement rate from 28.5 cents a mile to 41.6 cents a mile.

The Senate Appropriations Committee-approved version of the Military Construction and Veterans Affairs Appropriations bill for FY2009 recommended $41.1 billion (excluding collections) for VHA for FY2009. This was a 4.8% increase over the FY2009 request, and $294 million above the House Appropriations Committee-recommended amount. The Senate Appropriations Committee concurred with the President's proposal to merge the medical services account with the medical administration account.

Under the proposed new account structure the Committee recommended $35.6 billion for the medical services account, a 4.4% ($1.5 billion) increase over the FY2009 request. S. 3301, as marked up by the Committee, also provided $5.0 billion for medical facilities. This was a 21% increase compared to the FY2008 enacted amount, 6.4% above the FY2009 request, and $68 million below the House Committee-recommended amount. The Senate marked up MILCON-VA appropriations bill also provided $527 million for the medical and prosthetic research account. This was a 19.2% increase over the FY2009 request, and 9.8% above the FY2008 enacted amount.

The Military Construction and Veterans Affairs Appropriations Act, 2009 (H.R. 2638, P.L. 110-329) provides approximately $41.0 billion (excluding collections) for VHA for FY2009. Funding levels for the medical services, medical support and compliance, medical facilities, and medial and prosthetic research accounts remained closer to the House-approved amounts. P.L. 110-329 provides $375 million to increase Priority Group 8 enrollment. It also includes an additional $133 million to increase the beneficiary travel reimbursement mileage rate to 41.5 cents per mile while freezing the deductible at current levels.

Title III: Related Agencies

American Battle Monuments Commission

The American Battle Monuments Commission (ABMC) is responsible for the maintenance and construction of U.S. monuments and memorials commemorating the achievements in battle of U.S. armed forces since the nation's entry into World War I; the erection of monuments and markers by U.S. citizens and organizations in foreign countries; and the design, construction, and maintenance of permanent cemeteries and memorials in foreign countries. The Commission maintains 24 cemeteries, 22 separate monuments and markers in foreign countries, and three memorials on U.S. soil.

The ABMC was responsible for the planning and construction of the World War II Memorial on the Mall in Washington, DC. Though the National Park Service assumed responsibility for the operation and maintenance of the Memorial at its dedication, the ABMC retains a fiduciary responsibility for the remaining public contributions given for its construction. The ABMC also undertook construction of an Interpretive Center at the Normandy American Cemetery in Normandy, France, to commemorate the World War II Allied invasion of France on June 6, 1944, and the subsequent land battles in Europe. The new facility opened on June 6, 2007.

U.S. Court of Appeals for Veterans Claims

The U.S. Court of Appeals for Veterans Claims was established by the Veterans' Administration Adjudication Procedure and Judicial Review Act of 1988 (P.L. 100-687). The Court is an independent judicial tribunal with exclusive jurisdiction to review decisions of the Board of Veterans' Appeals. It has the authority to decide all relevant questions of law; interpret constitutional, statutory, and regulatory provisions; and determine the meaning or applicability of the terms of an action by the VA. It is authorized to compel action by the VA. It is authorized to hold unconstitutional or otherwise unlawful and set aside decisions, findings, conclusions, rules and regulations issued or adopted by the VA or the Board of Veterans' Appeals.

The Court currently occupies leased facilities near Judiciary Square in the District of Columbia and is searching for a permanent location as the current lease expires in September 2010. The Court's major operational initiative is to continue and develop plans, with the General Services Administration, for a Veterans' Courthouse and Justice Center.

Department of Defense: Civil (Army Cemeterial Expenses)

The Secretary of the Army is responsible for the administration, operation and maintenance of Arlington National Cemetery and the Soldiers' and Airmen's Home National Cemetery. In addition to its principal function as a national cemetery, Arlington is the site of approximately 3,200 non-funeral ceremonies each year and has approximately 4,000,000 visitors annually.

The FY2008 Omnibus (P.L. 110-161) included additional funds in FY2008 for realignment of government-issued headstones, construction of a heavy equipment storage facility, and funds for costs not included in the budget request related to the relocation of utilities at Arlington Cemetery.

Armed Forces Retirement Home (AFRH)

The Armed Forces Retirement Home Trust Fund provides funds to operate and maintain the Armed Forces Retirement Home in Washington, DC (also known as the United States Soldiers' and Airmen's Home) and the Armed Forces Retirement Home in Gulfport, Mississippi (originally located in Philadelphia, PA, and known as the United States Naval Home). These two facilities provide long-term housing and medical care for approximately 1,600 needy veterans. The Gulfport campus, encompassing a 19-story living accommodation and medical facility tower, was severely damaged by Hurricane Katrina at the end of August, 2005, and is not currently in use. Residents of the facility were transferred to the Washington, DC, location immediately after the storm. A Memorandum of Understanding (MOU) was signed between the AFRH and the General Services Administration (GSA) for the rebuilding of the Gulfport facility, with a targeted completion date in 2010.

The appropriation for the AFRH facilities is from the Armed Forces Retirement Home Trust Fund. The trust fund is maintained through gifts, bequests, and a $0.50 per month assessment on the pay of active duty enlisted military personnel and warrant officers. The FY2008 Omnibus (P.L. 110-161) provided $800,000 in general funds for the study of the long-term viability of the trust fund.

The budget request for FY2009 includes funds for renovation of the Scott Dormitory Building for residents on the D.C. campus. The renovations are scheduled to begin in 2010, so the new Gulfport facility can be used to house the D.C. residents displaced by the renovations.

Table 9 shows the FY2008 enacted appropriations, the FY2009 request, and the appropriations provided in H.R. 6559, S. 3301, and H.R. 2638 (P.L. 110-329) for each of the related agencies.

Appendix A. DOD Military Construction Accounts

Appendix B. Additional Resources

Budget

CRS Report RL30002, A Defense Budget Primer, by [author name scrubbed] and [author name scrubbed] (pdf).

CRS Report 98-720, Manual on the Federal Budget Process, by [author name scrubbed] and Allen Schick (pdf).

Veterans Affairs

CRS Report RL33991, Disability Evaluation of Military Servicemembers, by [author name scrubbed] et al..

CRS Report RS22483, Health Care for Dependents and Survivors of Veterans, by [author name scrubbed] and Susan Janeczko.

CRS Report RS20533, VA-Home Loan Guaranty Program: An Overview, by [author name scrubbed].

CRS Report RL33704, Veterans Affairs: The Appeal Process for Veterans' Claims, by [author name scrubbed].

CRS Report RL33113, Veterans Affairs: Basic Eligibility for Disability Benefit Programs, by [author name scrubbed].

CRS Report RL33323, Veterans Affairs: Benefits for Service-Connected Disabilities, by [author name scrubbed].

CRS Report RL34370, Veterans Affairs: Health Care and Benefits for Veterans Exposed to Agent Orange, by [author name scrubbed] and [author name scrubbed].

CRS Report RS22897, Veterans Affairs: Historical Budget Authority, Fiscal Years 1940 through 2008, by [author name scrubbed].

CRS Report RS22561, Veterans Affairs: The U.S. Court of Appeals for Veterans Claims—Judicial Review of VA Decision Making, by [author name scrubbed].

CRS Report RS22666, Veterans Benefits: Federal Employment Assistance, by [author name scrubbed].

CRS Report RL33985, Veterans' Benefits: Issues in the 110th Congress, coordinated by [author name scrubbed].

CRS Report RL33992, Veterans Benefits: Merchant Seamen, by [author name scrubbed] and [author name scrubbed].

CRS Report RS22902, Veterans Benefits: An Overview, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

CRS Report RL34626, Veterans' Benefits: Benefits Available for Disabled Veterans, by [author name scrubbed] and [author name scrubbed].

CRS Report RS22804, Veterans' Benefits: Pension Benefit Programs, by [author name scrubbed] and [author name scrubbed].

CRS Report RL34627, Veterans' Benefits: The Vocational Rehabilitation and Employment Program, by [author name scrubbed] and [author name scrubbed].

CRS Report RL33993, Veterans' Health Care Issues, by [author name scrubbed].

CRS Report RL34598, Veterans Medical Care: FY2009 Appropriations, by [author name scrubbed].

Selected Websites

House Committee on Appropriations
http://appropriations.house.gov/

Senate Committee on Appropriations
http://appropriations.senate.gov/

House Committee on Armed Services
http://www.house.gov/hasc/

Senate Committee on Armed Services
http://armed-services.senate.gov/

House Committee on Veterans Affairs
http://veterans.house.gov/

Senate Committee on Veterans Affairs
http://veterans.senate.gov/

CRS Appropriations Products Guide
http://www.crs.gov/products/appropriations/apppage.shtml

Congressional Budget Office
http://www.cbo.gov/

Defense Base Closure and Realignment Commission (BRAC Commission)
http://www.brac.gov

Government Accountability Office
http://www.gao.gov/