VA Testimony of Peter H. Dougherty before Congress on October 1, 2009

United States Department of Veterans Affairs

STATEMENT OF
PETER H. DOUGHERTY,
DIRECTOR, HOMELESS VETERANS PROGRAMS
OFFICE OF PUBLIC AND INTERGOVERNMENTAL AFFAIRS
U.S. DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE
SUBCOMMITTEE ON HEALTH
COMMITTEE ON VETERANS’ AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
OCTOBER 1, 2009

October 1, 2009

Good Morning Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me here today to present views on several bills that would affect Department of Veterans Affairs (VA) programs of benefits and services. Joining me today are Jane Clare Joyner, Deputy Assistant General Counsel, and Paul E. Smits, Associate Chief Consultant, Homeless and Residential Rehabilitation and Treatment Programs, Veterans Health Administration. We appreciate the opportunity to address four bills that would affect the Department’s programs for homeless Veterans. Unfortunately, we did not receive H.R. 1017, H.R. 1036, H.R. 3441, or two draft bills in time to provide our views and costs. We will forward these as soon as they are available.

H.R. 2504: “To Increase the Amount Authorized to Be Appropriated for Comprehensive Service Programs for Homeless Veterans”

H.R. 2504 would amend 38 U.S.C. 2013 to raise the authorized amount to be appropriated from $150,000,000 to $200,000,000 beginning in FY 2010 and each fiscal year thereafter.

VA supports H.R. 2504 in principle but has concerns about the proposed annual authorization level. 38 U.S.C. 2013 currently authorizes an appropriation up to $150,000,000 for the Grant-and-Per-Diem (GPD) program. The Administration and the Department have a goal of ending homelessness among our nation’s Veterans within 5 years. To achieve this goal, VA will assist every eligible homeless Veteran willing to accept services. We will help them acquire safe housing and obtain needed treatment, services, and benefits assistance, while also providing opportunities to return to employment. VA’s plan includes education, job training, substance abuse and mental health care, and an assortment of other benefits. It will require close partnership with Federal and State agencies, local, non-profit and private groups; outreach and education to Veterans, people and organizations providing services to Veterans, and the general public; universal and targeted prevention; treatment focused on recovery and tailored to individual Veterans’ needs; housing and supportive services; and income, employment and benefits assistance. For example, we will continue our collaborative efforts with the Department of Labor to provide employment services. We will leave no opportunity unexplored, and we will continue this pursuit until every Veteran has safe housing available and access to needed treatment services. We are eager to work with Congress to provide these services to Veterans.

VA estimates that the proposed maximum annual authorization level of $200 million would be inadequate for the amounts of VA projects delivering comprehensive services through this important program. We recommend that a specific authorization funding level be dropped from the statute. This is a well established program in VA and need not be constrained.

If the specific authorization ceiling in H.R. 2504 is enacted, VA’s resources to execute this program would be limited to $146.3 million in FY 2010, $189.2 million in FY 2011, $935.5 million over 5 years, and $1.9 billion over 10 years.

H.R. 2559: “Help Our Homeless Veterans Act”

H.R. 2559 would require VA to carry out a national media campaign targeting Veterans who are homeless or who are at risk of becoming homeless, with special emphasis on women Veterans. The Secretary would be required to inform Veterans of their rights and benefits under the laws administered by the Secretary and would advise them where to turn for help if they are already homeless or at risk of becoming so.

VA supports outreach to homeless veterans but H.R. 2559 duplicates existing statutory authority. We would welcome the opportunity to work with Committee staff in order to address this concern.

Congress already provided this authority last year in Public Law 110-389, which created section 532 of title 38. That authorized the Secretary to purchase advertising in national media outlets to promote awareness of benefits administered by the Secretary, including programs to assist homeless Veterans. This extant authority is preferable to HR 2559 as it does not require VA to target only Veterans. Targeting Veterans alone will not be sufficient to achieve the goal of ending Veteran homelessness, while a coordinated national campaign reaching Veterans, those who provide benefits and services, as well as the general public can help achieve this goal. If new legislation nevertheless goes forward, it should support advertising and media outreach directly to public and private, state, tribal and community agencies that serve the homeless population to enhance referrals to VA.

We estimate that a national media program targeting Veterans, those who provide benefits and services to the homeless, as well as the general public would cost $600,000 in FY 2010, $618,000 in FY 2011, $3.2 million over 5 years, and $6.9 million over 10 years.

H.R. 2735: “To Make Certain Improvements to the Comprehensive Service Programs for Homeless Veterans”

Section 1 of H.R. 2735 would add a new subsection to 38 U.S.C. 3011 to specifically allow service centers receiving grants from VA to use these funds for staffing to ensure services are provided during specified hours, as well as on an as-needed, unscheduled basis. Section 2 would eliminate all references to “per diem” in 38 U.S.C. 2012 and change the basis of grants from the “daily cost of care” to the “annual cost of furnishing services.” It would also remove the prohibition on VA providing a rate in excess of the rate authorized for State domiciliaries and grant the Secretary the discretion to set a maximum amount payable to grant recipients. Section 2 would also direct the Secretary to increase the rate of payment to reflect anticipated changes in the cost of furnishing services and take into account the cost of services in different geographic areas. It would remove the requirement that the Secretary consider other available sources of funding and would leave it to his or her discretion. Finally, it would allow grant recipients to use VA grants to match other payments or grants from other providers. In sum, this bill would dramatically change VA’s grant-and-per-diem (GPD) program, which has been a key factor in reducing Veteran homelessness from 195,000 to 131,000 over the last 3 years. GPD is designed to support transitional housing for Veterans; however, in the last several years the program has expanded its range of services toward permanent housing to provide Veterans stable and continuous care. VA generally supports this bill, but is apprehensive that this legislation will result in policy problems and lead to significantly higher costs.

VA supports Section 1. GPD has 35 operational service centers (18 in rural areas, 17 in urban areas), and billing among these service centers varies significantly. Although service centers are currently not the most robust intermediaries for delivering services, these partners have played a vital role in VA’s success in combating Veteran homelessness over the last several years and will continue offering essential services as we work toward the goal of ending Veteran homelessness. We believe that this legislation may make these entities more fiscally solvent as the additional funding would off-set the needed staffing costs. VA’s Advisory Committee on Homeless Veterans has recommended for several years that this authority be given to grant recipients.

VA estimates the cost of section 1 of H.R. 2735 would be $5.2 million in FY 2010, $6.1 million in FY 2011, $35.6 million over 5 years and $101.6 million over 10 years.

Concerning Section 2, VA is currently evaluating the impact of Section 2, which shifts from the “per diem” or “daily cost of care” approach to an “annual cost of furnishing services.” Though this change may offer VA’s partners needed capital and funds at the beginning of the fiscal year to support their work, it would require significantly more detailed auditing as well as increased direct oversight by VA. We would welcome the opportunity to discuss these issues with Committee staff, and ask the Committee to defer on this provision until we have fully evaluated the impact of this proposal.

VA does not oppose removing the existing rate cap. Currently, the statute limits VA’s GPD payments to the rate for state domiciliary care, and the difference between what VA pays and the actual cost of expenditures is absorbed by the provider. Allowing the Secretary to establish the basis and the formula for payment based on cost and geographic location would increase the sustainability of community-based providers and promote increased and more comprehensive services for Veterans. However, the language of the bill is restrictive in that it only authorizes VA to increase the rate of payment from year to year; VA would be unable to respond to any situation or development that might lower the operating costs for grant recipients. As a result, VA could be forced to pay above-cost rates to providers. We consequently recommend the language be modified to say, “adjust,” instead of “increase.”

The bill would also no longer require the Secretary to consider the availability of other sources of income for grant recipients. The difference between “may,” as the bill specifies, and “shall,” as the statute currently provides, is in this instance insignificant as the Secretary would in all likelihood consider the availability of other funds in any event. H.R. 2735 would allow providers to use VA funds to secure matching amounts from other agencies or organizations. VA believes that multiple agencies should not contribute funding for the same objective or project, and that overlapping funds can introduce waste and inefficiency. VA has no objection to this provision; however, it suggests that the language be amended to prohibit duplication and allow for adjusted rather than solely increased funding.

VA estimates the cost of enacting section 2 of H.R. 2735 would be $455.9 million in FY 2010, $542.2 million in FY 2011, $3.2 billion over 5 years and $8.1 billion over 10 years.

H.R. 3073: “To Establish a Grant Program to Provide Assistance to Veterans Who Are At Risk of Becoming Homeless”

H.R. 3073 would create a new grant program that would require the Secretary to provide grants to public entities and private non-profit organizations to provide financial support for Veterans at risk of homelessness. The bill defines these Veterans as those in “imminent danger of eviction or foreclosure,” who demonstrate a “compromised ability” to make rental or mortgage payments, and who meet eligibility requirements established by grant recipients. Specifically, the bill would require grant recipients to make payments for up to 3 months on behalf of Veterans for mortgage, rental or utility payments and to ensure these Veterans receive supportive services such as job training, mental health and substance abuse treatment, and other services including support from the Department of Labor and the Department of Housing and Urban Development. Grant recipients would apply for these funds as per diem providers currently do. The bill would allow recovery of unused funds at the end of a 3-year period and would authorize up to $100,000,000 for FY 2011, 2012 and 2013.

VA supports preventive measures for at-risk Veterans in principle but does not support H.R. 3073 because certain portions of this bill duplicate existing statutory authority and others would not make the best use of Department resources. We would welcome the opportunity to discuss these issues with Committee staff in order to develop language that addresses these concerns.

Section 604 of Public Law 110-387, codified at 38 USC 2044, provides VA with authority to offer grants to organizations offering supportive services of the kind described in H.R. 3073 for low-income Veterans and their families. VA is currently developing regulations to implement this legislation. We also note the 3-month eligibility for the services offered under H.R. 3073 is too short to effectively remove the risk of homelessness for many Veterans and their families. For Veteran homeowners with non-VA mortgages, temporary relief for 3 months would likely prove insufficient to resolve the underlying conditions contributing to their potential homelessness if the terms of the mortgage have changed, as they would under an adjustable-rate mortgage, rather than as a result of changes in their personal situations. The Administration has pursued a number of initiatives to keep such homeowners, including Veterans, in their residences. H.R. 3073 may duplicate those efforts as well.

In addition, the Veterans Benefits Administration offers assistance to Veterans who encounter problems making their mortgage payments. When a VA-guaranteed home loan becomes delinquent, the loan servicer has the primary responsibility of servicing the loan to help cure the default. VA provides financial incentives for servicers who arrange reasonable repayment plans or pursue other home retention options for Veterans. In some cases loan modification may help make payments more affordable, and VA made extensive rule changes in early 2008 to make loan modifications easier for servicers to arrange. However, in cases where the servicer is unable to help the Veteran borrower retain the home or find a suitable alternative to foreclosure, VA’s Loan Guaranty Service has Loan Technicians in nine Regional Loan Centers and the Hawaii Regional Office who review all cases prior to foreclosure to evaluate the adequacy of the loan servicing.

Loan Technicians may initiate supplemental servicing by contacting the Veteran to determine whether any further assistance is possible, and Veterans may also call a nationwide toll-free contact number at any time during the process to receive loan counseling from VA. In some cases, VA will purchase a loan from the holder and modify the terms so that a Veteran can retain his or her home. The Regional Loan Centers can also provide advice and guidance to Veterans with non-VA guaranteed home loans, but VA does not have the legal authority or standing to intervene on the borrower’s behalf in these situations.

Under the Veterans’ Benefits Improvement Act of 2008 (Public Law 110-389), Veterans with non-VA guaranteed home loans have new options for refinancing to a VA guaranteed loan. Veterans who wish to refinance their subprime or conventional mortgage may do so for up to 100 percent of the value of the property, generally up to a maximum of $417,000. High-cost counties have even higher maximum guaranty amounts, which can result in higher maximum loan limits. These changes allow more qualified Veterans to refinance through VA, allowing for savings on interest costs and avoiding foreclosure. Additionally, some Veteran borrowers may be able to request relief pursuant to the Servicemembers Civil Relief Act (SCRA). In order to qualify for certain protections available under the Act, the Veteran's obligation must have originated prior to the current period of active military service. SCRA may provide a lower interest rate or forbearance, or prevent foreclosure or eviction, even after the borrower’s period of military service ends.

VA estimates there would be no costs associated with H.R. 3073 in FY 2010, with $100 million in costs for FY 2011 through FY 2014, for a 5 and 10 year total of $300 million.

This concludes my prepared statement. I would be pleased to answer any questions you or any of the members of the Subcommittee may have.