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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-320
_______________________________________________________________________


 
      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 1997

_______________________________________________________________________


October 9, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Stump, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2367]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 2367) to increase, effective as of December 1, 
1997, the rates of compensation for veterans with service-
connected disabilities and the rates of dependency and 
indemnity compensation for the survivors of certain disabled 
veterans, having considered the same, reports favorably thereon 
without amendment and recommends that the bill do pass.

                              Introduction

    On July 31, 1997, the Chairman and Ranking Member of the 
Veterans' Affairs Committee, the Honorable Bob Stump and the 
Honorable Lane Evans, along with the Chairman and Ranking 
Member of the Subcommittee on Benefits, the Honorable Jack 
Quinn and the Honorable Bob Filner, introduced H.R. 2367, which 
would provide a cost-of-living adjustment (COLA) in the rates 
of service-connected disability compensation and dependency and 
indemnity compensation (DIC), effective December 1, 1997.
    On September 4, 1997, the Subcommittee on Benefits met and 
ordered H.R. 2367 reported favorably to the full Committee by 
unanimous voice vote.
    On September 11, 1997, the full Committee met and ordered 
H.R. 2367 reported favorably to the House by unanimous voice 
vote.

                      Summary of the Reported Bill

    H.R. 2367 would:

    Increase, effective December 1, 1997, the rates of 
compensation for service-connected disabilities and the rates 
of dependency and indemnity compensation for surviving spouses 
and children of veterans who die of service-connected causes, 
the additional amounts for dependents and survivors, and the 
clothing allowance payable to certain veterans. The rate of 
increase would be the same as the percentage increase 
automatically provided to Social Security beneficiaries.

      Background of the Compensation and Dependency and Indemnity 
                         Compensation Programs

    There were 2.6 million veterans receiving disability 
compensation as of July, 1997. The Department of Veterans 
Affairs expects expenditures for disability compensation to be 
$19.9 billion for fiscal year 1998. The basic purpose of the 
disability compensation program is to provide a measure of 
relief from the impaired earning capacity of veterans disabled 
as the result of their military service. The amount of 
compensation payable varies according to the degree of 
disability, which, in turn, is required by law to represent, to 
the extent practicable, the average impairment in earning 
capacity resulting from such disability or combination of 
disabilities in civil occupations.
    To be eligible to receive disability compensation, a 
veteran must have contracted a disease, suffered an injury 
which is not the result of willful misconduct, or aggravated an 
existing disease or injury in the line of duty during active 
duty service, and have been discharged under other than 
dishonorable conditions.
    The responsibility for determining a veteran's entitlement 
to service connection for a disability rests solely with the 
Department of Veterans Affairs.

  Dependency and Indemnity Compensation for Survivors of Veterans Who 
                 Have Died of Service-Connected Causes

    As of July, 1997, there were 280,608 surviving spouses and 
34,021 children receiving dependency and indemnity compensation 
(DIC). The VA expects DIC expenditures of $3.3 billion in 
fiscal year 1998. Widows and children of veterans who died of 
causes determined to be service-connected are entitled to 
receive monthly DIC.
    The purpose of this benefit authorized under chapter 13 of 
title 38 is to provide partial compensation to the appropriate 
survivors for the loss in financial support due to the service-
connected death. Income and need are not factors in determining 
a surviving spouse's or child's entitlement since the Nation 
assumes, in part, the legal and moral obligation of the veteran 
to support the spouse and children.
    In 1992, Congress reformed the manner in which payments of 
DIC are made. Under current law, for death occurring on and 
after January 1, 1993, a base rate of $833 per month is payable 
to a surviving spouse. Such amount is increased by $182 if the 
veteran suffered from a service-connected disability which was 
rated 100 percent for a period of eight years immediately 
preceding death and if the veteran and surviving spouse were 
continuously married during that period. For service-connected 
deaths occurring prior to January 1, 1993, payment of DIC is 
made on the basis of the veteran's military pay grade if the 
result would be a higher benefit level than under the new 
payment structure. Rates for these ``grandfathered'' surviving 
spouses range from $833 for the spouse of an E-6 to $1,774 for 
the surviving spouse of an O-10. Surviving spouses are 
currently entitled to an additional $211 per month for each 
child.
    There is an additional allowance of $211 monthly which is 
payable to eligible surviving spouses who are patients in a 
nursing home or who are in need of the regular aid and 
attendance of another person.
    If there is no surviving spouse receiving dependency and 
indemnity compensation benefits, but there is a surviving 
child, the child is entitled to $354 monthly with additional 
benefits for other children with certain limits due to age, 
disability, and status as a student.

                  History of Cost-of-Living Increases

    The Committee annually reviews the service-connected 
disability compensation and DIC programs to ensure that the 
benefits provide reasonable and adequate compensation for 
disabled veterans and their families. Based on this review, the 
Congress acts annually to provide a cost-of-living adjustment 
(COLA) in compensation and DIC benefits. The Congress has 
provided annual increases in these rates for every fiscal year 
since 1976.

                         Discussion of the Bill

 COST-OF-LIVING ADJUSTMENT IN RATES OF COMPENSATION AND DEPENDENCY AND 
                         INDEMNITY COMPENSATION

    H.R. 2367 would direct the VA to compute and provide 
increases in the monthly rates of compensation and DIC, 
effective December 1, 1997. The rates would be increased by the 
same percentage as the Social Security COLA that will take 
effect on that date. If the increase does not result in a whole 
dollar amount, it shall be rounded down to the next lower 
dollar amount. The bill would provide a full COLA for both old- 
and new-law DIC recipients.
    The Committee is following its recent practice of setting 
the COLA by reference to the yet-to-be determined Social 
Security increase.

                      Section-By-Section Analysis

    Section 1 would be cited as the ``Veterans' Compensation 
Cost-of-Living Adjustment Act of 1997''.

    Section 2(a) would authorize the Secretary of Veterans 
Affairs to increase, effective December 1, 1997, the dollar 
amounts in effect for the payment of disability compensation 
and dependency and indemnity compensation.

    Section 2(b) would specify the programs to receive 
increased dollar amounts: compensation, additional compensation 
for dependents, clothing allowance, new DIC rates, old DIC 
rates, additional DIC for disability, and DIC for dependent 
children.

    Section 2(c)(1) would increase the dollar amounts for those 
specified in subsection (b) based on the amount in effect on 
November 30, 1997.

    Section 2(c)(2) would specify that each amount shall be 
increased by the same percentage by which benefits are 
increased under title II of the Social Security Act (42 
U.S.C.).

    Section 2(c)(3) would round down to the next lower dollar 
amount all compensation and DIC benefits, when the adjusted 
amount is not a whole dollar amount.

    Section 2(d) would provide a special rule authorizing the 
Secretary of Veterans Affairs to adjust administratively, 
consistent with the increases made under subsection (a), the 
rates of disability compensation payable to persons within the 
purview of section 10 of Public Law 85-857, who are not in 
receipt of compensation payable pursuant to chapter 11 of title 
38, U.S.C.

    Section 2(e) would require the Secretary of Veterans 
Affairs to publish in the Federal Register the amounts 
specified in subsection (b), as increased pursuant to 
subsection (a).

                           Oversight Findings

    No oversight findings have been submitted to the Committee 
by the Committee on Government Reform and Oversight.

                  Statement of Administration's Views

    The Administration's proposed fiscal year 1998 budget 
request, submitted in February, 1997, recommended a 2.7 percent 
rate of increase be given to all compensation beneficiaries, 
including DIC spouses and children, effective December 1, 1997. 
This is the expected increase in the Consumer Price Index.

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 12, 1997.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2367, the 
Veterans' Compensation Cost-of-Living Adjustment Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mary Helen 
Petrus, who can be reached at 226-2840.

            Sincerely,
                                           June E. O'Neill,
                                                           Director

    Enclosure

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 2367--Veterans' Compensation Cost-of-Living Adjustment Act of 1997

As ordered reported by the House Committee on Veterans' Affairs 
on September 11, 1997

    For 1998, the bill would increase the amount paid to 
veterans for disability compensation and to their survivors for 
dependency and indemnity compensation by the same cost-of-
living adjustment (COLA) payable to Social Security recipients. 
The increase would take effect on December 1, 1997, and the 
results of the adjustment would be rounded to the next lower 
dollar. The COLA is assumed in the budget resolution baseline, 
pursuant to section 257 of the Balanced Budget and Emergency 
Deficit Control Act of 1985, and savings from rounding it down 
were achieved by the Balanced Budget Act of 1997 (Public Law 
105-33). As a result, the bill would have no budgetary effect 
relative to the baseline as modified by the Balanced Budget Act 
of 1997.
    The bill would affect direct spending and thus pay-as-you-
go procedures would apply. H.R. 2367 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act of 1995 and would not affect the 
budgets of State, local, or tribal governments.
    This estimate was prepared by Mary Helen Petrus, who can be 
reached at 226-2840. This estimate was approved by Robert A. 
Sunshine, Deputy Assistant Director for Budget Analysis.

                     Inflationary Impact Statement

    The enactment of the reported bill would have no 
inflationary impact.

                  Applicability to Legislative Branch

    The reported bill would not be applicable to the 
legislative branch under the Congressional Accountability Act, 
Public Law 104-1, because the bill would only affect certain 
Department of Veterans Affairs benefits recipients.

                     Statement of Federal Mandates

    The reported bill would not establish a federal mandate 
under the Unfunded Mandates Reform Act, Public Law 104-4.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the U.S. Constitution, 
the reported bill would be authorized by Congress' power to 
``provide for the common Defence and general Welfare of the 
United States.''

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