VA’S BUDGET REQUEST FOR FISCAL YEAR 2014
April 11, 2013
RAYMOND KELLEY, DIRECTOR
NATIONAL LEGISLATIVE SERVICE
VETERANS OF FOREIGN WARS OF THE UNITED
COMMITTEE ON VETERANS’ AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES
VA’S BUDGET REQUEST FOR FISCAL YEAR 2014
WASHINGTON, D.C. April 11,
MR. CHAIRMAN AND MEMBERS OF THE
On behalf of the nearly 2 million
men and women of the Veterans of Foreign Wars of the United States (VFW) and
our Auxiliaries, I would like to thank you for the opportunity to testify
today. The VFW works alongside the other
members of the Independent Budget (IB) – AMVETS, Disabled American Veterans and
Paralyzed Veterans of America – to produce a set of policy and budget
recommendations that reflect what we believe would meet the needs of America’s
veterans. The VFW is responsible for the
construction portion of the IB, so I will limit my remarks to that portion of
VA strives to improve the quality and delivery of care for our wounded, ill and
injured veterans, the facilities that provide that care continue to erode. With
buildings that have an average age of 60 years, VA has a monumental task of
improving and maintaining these facilities. Since 2004, utilization at VA facilities
has grown from 80 percent to 120 percent, while the condition of these
facilities has eroded from 81 percent to 71 percent over the same period of
time. It is important to remember that VA facilities are where our veterans
receive care, and they are just as important as the doctors who deliver it.
Every effort must be made to ensure these facilities remain safe and sufficient
environments to deliver that care. A VA budget that does not adequately fund
facility maintenance and construction will reduce the timeliness and quality of
care for our veterans.
vastness of VA’s capital infrastructure is rarely fully visualized or
understood. VA currently manages and maintains more than 5,600 buildings and
almost 34,000 acres of land with a plant replacement value (PRV) of
approximately $45 billion. Although VA has decreased the number of critical
infrastructure gaps, there remain more than 4,000 gaps that will cost between
$51 and $62 billion to close with an additional $11 billion in activation costs.
two categories that concern The
Independent Budget veterans service organizations (IBVSOs) the most are
condition and access. To determine and monitor the condition of its facilities,
VA conducted a Facility Condition Assessment (FCA). These assessments include
inspections of building systems, such as electrical, mechanical, plumbing,
elevators and structural and architectural safety; and site conditions consist
of roads, parking, sidewalks, water mains, water protection. The FCA review
team can grant ratings of A, B, C, D, and F. A through C assessments conclude
the rating is in new to average condition. D ratings mean the condition is
below average and F means the condition is critical and requires immediate
attention. To correct these deficiencies, VA will need to invest nearly $9.8
close the gaps in access, VA will need to invest between $30 and $35 billion
dollars in major and minor construction and leasing. The remaining $20 billion
is needed to close the remaining non-recurring maintenance (NRM) deficiencies.
accessible health care continues to be the focus for the IBVSOs, and to achieve
and sustain that goal, large capital investments must be made. Presenting a
well-articulated, completely transparent capital asset plan is important, which
VA has done, but funding that plan at nearly half of the prior year’s
appropriated level and at a level that is only 25 percent of what is needed to
close the access, utilization and safety gaps will not fulfill VA’s mission:
“to care for him who shall have borne the battle…”
of underfunding has led to a major construction backlog that has reached
between $21 billion and $ 25 billion. There are currently 21 VHA major
construction projects that have been partially funded dating back to 2007. None
of these projects are funded through completion and only four received funding
in FY 2013. The total unobligated amount for all currently budgeted major
construction projects exceeds $2.9 billion. Yet the total budget proposal for
FY 2013 major construction accounts was less than $533 million.
finish existing projects and to close current and future gaps, VA will need to
invest at least $21.7 billion over the next 10 years. At current requested
funding levels, it will take between 40 years to complete VA’s 10-year plan.
the short-term, VA must start requesting and Congress must start funding major
construction at a level that begins to reduce the backlog. The IBVSOs recommend
doubling the requested level, providing VA with $1.1 billion in major
construction funding in FY 2014. VA must also begin presenting long-term
proposals that will outline how the Department will address closing all major
close all the minor construction gaps within their 10-year timeline, VA will
need to invest between $8.5 billion and $10.5 billion, up $1 billion from last
year. For several years VA minor construction was funded at a level to meet its
10-year goal. However, the Administration and Congress have lost their commitment
and proposed a drastic funding decrease for minor construction over the past
two years. The budget proposal for FY 2013 was $607.5 million, an increase from
the prior year, but still underfunded to close existing minor construction
gaps. At this funding rate, current minor construction gaps will take more than
16 years to close.
IBVSOs believe that minor construction accounts can be brought back on track by
investing approximately $880 million per year over the next decade to close
existing gaps and to prevent unmanageable future gaps in minor construction.
for capital infrastructure, renovations, and maintenance, we recommend $50
million or more for up to five major construction projects in VA research
facilities; and $175 million in non-recurring maintenance and Minor
Construction funding to address Priority 1 and 2 deficiencies identified in the
capitol infrastructure report (in accounts that are segregated from VA’s other
major, minor, and maintenance and repair appropriations).
though non-recurring maintenance (NRM) is funded through VA’s Medical
Facilities account and not through construction account, it is critical to VA’s
capitol infrastructure. NRM embodies the many small projects that together
provide for the long-term sustainability and usability of VA facilities. NRM
projects are one-time repairs, such as modernizing mechanical or electrical
systems, replacing windows and equipment, and preserving roofs and floors,
among other routine maintenance needs. Nonrecurring maintenance is a necessary
component of the care and stewardship of a facility. When managed responsibly,
these relatively small, periodic investments ensure that the more substantial
investments of major and minor construction provide real value to taxpayers and
to veterans as well.
is moving further from closing current NRM safety, utilization and access gaps,
and continues to fall behind on preventing future gaps from occurring. Just to
maintain what they have, in the condition that it is in, VA’s Non-Recurring
Maintenance (NRM) account must be funded at $1.35 billion per year, based on The Independent Budget veterans service
organizations (IBVSO) estimated Plant Replacement Value. It is currently being
funded at $712 million per year. More will need to be invested to prevent the
$22.4 billion NRM backlog from growing larger.
NRM accounts are organized under the Medical Facilities appropriation, it has
traditionally been apportioned using the Veterans Equitable Resource Allocation
(VERA) formula. This formula was intended to allocate health-care dollars to
those areas with the greatest demand for health care, and is not an ideal
method to allocate NRM funds. When dealing with maintenance needs, this formula
may prove counterproductive by moving funds away from older medical centers and
reallocating the funds to newer facilities where patient demand is greater,
even if the maintenance needs are not as intense. We are encouraged by actions
the House and Senate Veterans’ Affairs Committees have taken in recent years
requiring NRM funding to be allocated outside the VERA formula, and we hope
this practice will continue.
fourth cornerstone to VA’s capital planning is leasing. The current lease plan
calls for little more than $2 billion over the next 10 years. The VA enters
into two types of leases. First, VA leases properties to use for each Agency
within VA, ranging from community-based outpatient clinics (CBOC) and medical
centers, to research and warehouse space. These leases do not fall under the
larger construction accounts, but under each Administration’s and Staff Office
VA faces a new problem regarding
leasing protocols for major medical facilities; facilities that average an
annual rental payment of more than $1 million. Prior to 2012 the Congressional
Budget Office (CBO) used the assumption that these leases were short-term
agreements used for existing and renewed leases only. While CBO prepared its
cost estimate for H.R. 6375, the VA Major Construction Authorization and
Expiring Authorities Extension Act of 2012, budget analysts realized most of
the leases were for newly-built facilities over extended periods of time.
CBO views these types of leases
in the same vein as purchasing a facility, and therefore concluded that VA must
fully account for funding of such leases in first year of the lease.
Under these rules, VA would have
to base its major facility leases by using a revolving fund similar to the
General Services Administration’s (GSA). This is problematic for VA because the
agency would now have to offset approximately $1.2 billion this fiscal year to
comply with current budget rules and proceed with the current requested leases.
In the absence of VA rewording
these leases in a way that would prompt CBO to calculate major facility leases
in their pre-2012 method, the IBVSOs request that Congress forego current
budget rules, enabling these leases to move forward while a long-term solution
is determined. Providing quality, timely and accessible health care should be
the highest priority, even above current budget rules.
The second type of lease, called
enhanced-use lease (EUL), allows VA to lease property they own to an outside-VA
entity. These leases allow VA to lease properties that are unutilized or
underutilized for projects such as veterans’ homelessness and long-term care.
Proper use of leases provides VA with flexibility in providing care as
veterans’ needs and demographics changes.
gives VA the authority to lease land or buildings to public, non-profit or
private organizations or companies as long as the lease is consistent with VA’s
mission and that the lease “provides appropriate space for an activity
contributing to the mission of the Department.” Although, EUL can be used for a
wide range of activities, the majority of the leases result in housing for
homeless veterans and assisted living facilities. Unfortunately, EUL authority
has expired, leaving the VA struggling to enter into agreements for under and
unused property. Congress must reauthorize this authority.
or Underutilized Space at Medical Centers:
Department of Veterans Affairs maintains approximately 1,100 buildings that are
either vacant or underutilized. An underutilized building is defined as one
where less than 25 percent of space is used. It costs VA from $1 to $3 per
square foot per year to maintain a vacant building.
have shown that the VA medical system has extensive amounts of empty space that
can be reused for medical services or reapportioned for another use. It has
also been shown that unused space at one medical center may help address a
deficiency that exists at another location. Although the space inventories are
accurate, the assumption regarding the feasibility of using this space is not.
Medical facility planning is complex. It requires intricate design
relationships for function, as well as the demanding requirements of certain
types of medical equipment. Because of this, medical facility space is rarely
interchangeable, and if it is, it is usually at a prohibitive cost. Unoccupied
rooms on the eighth floor used as a medical surgical unit, for example, cannot
be used to offset a deficiency of space in the second floor surgery ward.
Medical space has a very critical need for inter- and intradepartmental
adjacencies that must be maintained for efficient and hygienic patient care.
department expands or moves, these demands create a domino effect on everything
around it. These secondary impacts greatly increase construction expense and
can disrupt patient care.
features of a medical facility are permanent. Floor-to-floor heights, column
spacing, light, and structural floor loading cannot necessarily be altered.
Different aspects of medical care have various requirements based upon these
permanent characteristics. Laboratory or clinical spacing cannot be
interchanged with ward space because of the different column spacing and
perimeter configuration. Patient wards require access to natural light and
column grids that are compatible with room-style layouts. Laboratories should
have long structural bays and function best without windows. When renovating
empty space, if an area is not suited to its planned purpose, it will create
unnecessary expenses and be much less efficient if simply renovated.
old space, rather than constructing new space, often provides only marginal
cost savings. Renovations of a specific space typically cost 85 percent of what
a similar, new space would cost. Factoring in domino or secondary costs, the
renovation can end up costing more while producing a less satisfactory result.
Renovations are sometimes appropriate to achieve those critical functional
adjacencies, but are rarely economical.
stated earlier in this analysis, the average age of VA facilities is 60 years.
Many older VA medical centers that were rapidly built in the 1940s and 1950s to
treat a growing war veteran population are simply unable to be renovated for
modern needs. Another important problem with this existing unused space is
often location. Much of it is not in a prime location; otherwise, it would have
been previously renovated or demolished for new construction.
Law 108-422 incentivized VA’s efforts to properly dispose of excess space by
allowing VA to retain the proceeds from the sale, transfer, or exchange of
certain properties in a Capital Asset Fund. Further, that law required VA to
develop short- and long-term plans for the disposal of these facilities in an
annual report to Congress. VA has identified 494 buildings that have been
identified for repurposing. Building Utilization Review and Repurposing or BURR
will focused on identifying sites in three major categories; housing for
veterans who are homeless or at risk for being homeless; senior veterans
capable of independent living and veterans who require assisted-living and
supportive services. The three phases planned include identifying campuses with
buildings and land that are either vacant or underutilized; sites visit to
match the supply of building and land with the demand for services and
availability of financing and lastly identifying campuses using VA’s
enhanced-use leasing authority. Under the BURR initiative, if no repurposing
for a building is identified, VA will begin to assess its vacant capital
inventory by demolishing or disposing of buildings that are unsuitable for
reuse or beyond their usefulness.
IBVSO’s have stated that VA must continue to develop these plans, working in
concert with architectural master plans, community stakeholders and clearly identifying
the long-range vision for all such sites.
Chairman, this concludes my testimony and I will be happy to answer any
questions you or the Committee may have.
by Rule XI2(g)(4) of the House of Representatives
Pursuant to Rule
XI2(g)(4) of the House of Representatives, VFW has not received any federal
grants in Fiscal Year 2013, nor has it received any federal grants in the two
previous Fiscal Years.
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