VA's Budget Request for Fiscal Year 2013
February 16, 2012
STATEMENT OF
RAYMOND KELLEY, DIRECTOR
NATIONAL LEGISLATIVE SERVICE
VETERANS OF FOREIGN WARS OF THE
UNITED STATES
BEFORE THE
COMMITTEE ON VETERANS’ AFFAIRS
UNITED STATES HOUSE OF
REPRESENTATIVES
WITH RESPECT TO
VA’S BUDGET REQUEST
FOR FISCAL YEAR 2013
WASHINGTON,
D.C.
MR.
CHAIRMAN AND MEMBERS OF THE COMMITTEE:
On behalf of the more
than 2 million men and women of the Veterans of Foreign Wars of the U.S. (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
the budget.
With an infrastructure
that is more than 60 years old, the Department of Veterans Affairs (VA) has a
monumental task of maintaining and improving its vast network of facilities to
ensure the Veterans Health Administration (VHA) can provide accessible,
high-quality health care to our nation’s veterans. Currently, VA owns 5,300
buildings and manages more than 800 leases. In 2005, VA began using the Federal
Real Property Council (FRPC) Tier 1 performance measures to assess its capital
portfolio goals.
The two measures that directly affect patient services are utilization and
condition. In 2004, VA’s utilization was at 80 percent, well below capacity.
That utilization grew to 121 percent in 2010, and is projected to grow even
more in the coming years. During the same time period, the condition of VA’s
infrastructure decreased from 81 percent to 71 percent.
These trends show that funding for the next few years will be critical for VA
to fulfill its mission.
VA has developed the
Strategic Capital Investment Plan (SCIP) to address the critical deficiencies
in its infrastructure. SCIP uses six criteria to assess deficiencies, or gaps,
in its ability to deliver efficient, high-quality, accessible services and care
for veterans. The six gap criteria are access, utilization, space, condition,
energy, and other (which includes safety, security, privacy, and seismic
corrections). It
was also determined that to close all these gaps it would cost between $53
billion and $65 billion.
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 consisting of roads, parking,
sidewalks, water mains, water protection. The FCA review team can grant ratings
of A, B, C, D, and F. Assessment ratings A through C conclude the assessed 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 $10 billion.
To close the gaps in
access, VA will need to invest between $30 billion and $35 billion dollars in
major and minor construction and leasing. The remaining $20 billion is needed
to close the remaining nonrecurring maintenance deficiencies.
Major
Construction Accounts:
By estimation of the
Department of Veterans Affairs, the cost to implement all currently identified
gaps in major construction, Congress will have to authorize and appropriate
between $20 billion and $24.5 billion over the next 10 years. Currently, there
are 35 major construction projects that are authorized, dating back as far as
2004. Only three of these projects are funded through completion. The total
unobligated amount for all currently congressionally budgeted major
construction projects is $2.8 billion.
Yet the total funding requested for FY 2012 major construction accounts was
only $725 million.
At this level of
funding, it will take VA more than 25 years to complete its current 10-year
capital investment plan. The Independent
Budget veterans service organizations (IBVSOs) understand that fiscally
difficult times call for spending restraints, but without quality, accessible
medical centers, VA will not be able to deliver quality, accessible care. The
IBVSOs recommend $2.8 billion to complete all partially funded and future major
construction needs to close all identified gaps by 2021.
Minor
Construction Accounts:
To close the minor
construction gaps within its 10-year timeline, VA will need to invest nearly $8
billion in Veterans Health Administration minor construction alone.
Minor construction projects allow VA to address issues of functional space
within existing buildings and improve facility conditions at cost less than $10
million. In past years VA and Congress requested and appropriated nearly 10
percent of the total need to close the minor construction gaps. However, the
Administration and Congress decreased funding for minor construction by about
$250 million over the past two years. If this rate of investment is continued,
it will take more than 16 years to complete all current minor construction
gaps. Congress and VA must put minor construction back on track by investing 10
percent of the total cost to complete the 10-year minor construction plan. With
this in mind, The Independent Budget
recommends $969 million in FY 2013 to achieve this goal.
Nonrecurring
Maintenance Account:
Even though
nonrecurring maintenance (NRM), which is funded through VA’s Medical Facilities
account and not through the construction account, it is critical to VA’s
capital 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. Accordingly, to fully maintain its facilities, VA needs an
NRM annual budget of at least $2.1 billion.
Given the low level of
funding NRM accounts have historically received, The Independent Budget veterans service organizations (IBVSOs) are
not surprised that basic facility maintenance remains a challenge for VA. In
addition, the IBVSOs have long-standing concerns about how this funding is
apportioned once received by VA. Because 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. The IBVSOs 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.
Capital
Leasing:
The Department of
Veterans Affairs 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 operating accounts.
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.
VA has moved to leasing
many of its CBOCs and specialty clinics to increase access of primary and
specialty care in local communities as well as a way to be more modular as veterans’
demographics change. The Independent
Budget veterans service organizations (IBVSOs) see the value in providing
quick, accessible health care, but caution a leasing concept that will rely on
contracting inpatient care. Not having accessible inpatient care can and has
left VA looking for ways to treat veterans in their greatest time of need. As
Strategic Capital Investment Planningcontinues
to move forward and more leases are entered into, some of which may have in
patient alternatives, the IBVSOs will be continue to be vigilant to ensure that
VA has viable contingency plans for inpatient care.
EUL gives VA the
authority to lease land or buildings to public, nonprofit, 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.
In 2013, VA has 19 buildings or parcels of land that are planned for EUL.
The IBVSOs encourage VA to continue to improve their transparency of potential
EUL properties. Improving dialog with veterans in the communities will reduce
the backlash that often occurs when VA property is being repurposed.
Empty or Underutilized
Space at Medical Centers:
The
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.
Public
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. With this in mind, VA has begun a review of
buildings and properties for finding possible reuse or repurpose opportunities.
Building Utilization Review and Repurposing or BURR will focus 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 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.
The
IBVSOs 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.
Program for
Architectural Master Plans:
A facility master plan
is a comprehensive tool to examine and project potential new patient care
programs and how they might affect the existing health-care facility design. It
also provides insight with respect to growth needs, current space deficiencies,
and other facility needs for existing programs and how they might be
accommodated in the future with redesign, expansion, or contraction.
In many past cases VA
has planned construction in a reactive manner. Projects are first funded and
then placed in the facility in the most expedient manner, often not considering
other future projects and facility needs. This often results in short-sighted
construction that restricts rather than expands options for the future.
The Independent Budget
veterans service organizations (IBVSOs) believe that each VA medical center
should develop a comprehensive facility master plan to serve as a blueprint for
development, construction, and future growth of the facility; $15 million
should be budgeted for this purpose. We believe that each VA medical center
should develop a comprehensive facility master plan to serve as a blueprint for
development, construction, and future growth of the facility.
VA has undertaken
master planning for several VA facilities, and we applaud this effort. But VA
must ensure that all VA facilities develop master plan strategies to validate
strategic planning decisions, prepare accurate budgets, and implement efficient
construction that minimizes wasted expenses and disruption to patient care.
Preservation of
VA’s Historic Structures:
The Department of
Veterans Affairs has an extensive inventory of historic structures that
highlight America’s long tradition of providing care to veterans. These
buildings and facilities enhance our understanding of the lives of those who
have worn the uniform, of those who cared for their wounds, and of those who
helped to build this great nation. Of the approximately 2,000 historic structures
in the VA historic building inventory, many are neglected and deteriorate year
after year because of a lack of any funding for their upkeep. These structures
should be stabilized, protected, and preserved because they are an integral
part our nation’s history.
The cost for saving
some of these buildings is not very high considering that they represent a part
of American history. Once gone, they cannot be recaptured. For example, the
Greek Revival Mansion at the VA Medical Center in Perry Point, Maryland, built
in the 1750s can be restored and used as a facility or network training space
for about $1.2 million. The Milwaukee Ward Memorial Theater, built in 1881,
could be restored as a multipurpose facility at a cost of $6 million. These
expenditures would be much less than the cost of new facilities and would
preserve history simultaneously.
The IBVSOs encourage VA
to use the tenants of Public Law 108-422, the “Veterans Health Programs
Improvement Act,” in improving the plight of VA’s historic properties. This act
authorizes historic preservation as one of the uses of the proceeds of the capital
assets fund resulting from the sale or leases of other unneeded VA properties.
Mr. Chairman, this
concludes my testimony and I look forward to any questions you and the
Committee may have.
FY 2012 Budget
Submission, Construction and 10 Year Capital Plan, February 2011, Vol. 4 of 4,
p. 9.3-11, 12
FY 2012 Budget
Submission, Construction and 10 Year Capital Plan, February 2011, Vol. 4 of 4,
p. 2-85
FY 2012 Budget
Submission, Construction and 10 Year Capital Plan, February 2011, Vol. 4 of 4,
p. 1-4
FY 2012 Budget
Submission, Construction and 10 Year Capital Plan, February 2011, Vol. 4 of 4,
p. 8.2-88.
Title 38,
U.S.C., paragraph 8162, as amended through Public Law 112-7, enacted March 31,
2011, printed May 2, 2011.
FY 2012 Budget
Submission, Construction and 10 Year Capital Plan, February 2011, Appendix 10
Year Capital Plan, p. 10-46 -10-49.
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