July 31, 2006

OF BULLETIN 06GC1.06

REVISED INTEREST RATE FOR CALENDAR YEAR 2006

1. PURPOSE: This bulletin provides a revised interest rate to be assessed on delinquent debts from July 1 through December 31, 2006.

2. BACKGROUND: Each year, the Office of Financial Policy is responsible for notifying the various VA elements involved in debt management of the appropriate late charges to be assessed on delinquent debt. For calendar year 2006, the Office of Financial Policy issued OF Bulletin 06GC1.02, “Late Payment Charges For Calendar Year 2006” (December 13, 2005). OF Bulletin 06GC1.02 established the annual interest rate to be assessed on delinquent debts in calendar year 2006 at 2.00 percent. This interest rate is set by the Treasury Financial Management Service (FMS) and is based on the current value of funds rate (CVFR). On July 28, 2006, Treasury FMS issued Treasury Financial Management (TFM) Bulletin No. 2006-10, “Current Value of Funds Rate (CVFR) Percentage,” which notified Federal agencies that they will apply a CVFR percentage of 4.00 percent from July 1 through December 31, 2006. Annually, Treasury FMS computes the CVFR percentage by averaging investment rates for the 12-month period ending September 30, rounded to the nearest whole percentage. Quarterly, if the annual average (on a 12-month moving average basis) changes by 2 percent, Treasury FMS revises the rate. With the quarter ending June 30, 2006, the 12-month moving average investment rate increased by 2 percent.

3. INTEREST TO BE ASSESSED ON DELINQUENT DEBT FOR JULY 1 THROUGH DECEMBER 31, 2006: The interest rate to be assessed on debts established from July 1 through December 31, 2006 is 4.00 percent. This interest rate will be assessed on all debts resulting from participation in a VA benefits program or from the provision of medical care. Such debts include VA benefit overpayment debts, loan default debts, humanitarian medical care debts, ineligible medical care debts, Category C non-service connected copayment (means test) debts, pharmacy copayment debts, and per diem charges for hospital/nursing home care. This interest rate will also be assessed on nonbenefit debts, such as salary, travel, vendor, etc. The monthly administrative cost of collection charge, the litigation referral fee, and the penalty charge established by OF Bulletin 06GC1.02 are not revised.

4. QUESTIONS. Facilities should direct questions to Tim Nixon, Cash and Debt and Management Division (047GC1), at (202) 273-7554.

//s// July 31, 2006

Romano Mascetti, III

Associate Deputy Assistant Secretary for Financial Policy (047G)