Reduce Adminis BY THE COMPTROLL GENEIUL OF THE UNITEL’ STATES COMPTROLLER GENERAL OF TIiE UNITED STATES WASHlNGTOM. D.C. 20548 B- 114859 To the President of the Senate and the Speaker of the House of Representatives This is our report entitled “Further Action by the Veterans Administration Could Reduce Administrative Costs and Improve Service to Veterans Receiving Educational Benefits.” Our review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.C. 67). Copies of this report are being sent to the Director, Office of Management and Budget, and to the Administrator of Veterans Affairs. Comptroller General of the United States 50TH ANNIVERSARY 1921- 1971 COMPTRQLLER GENEi'tYiL'S FURTHER ACTION BY VETERANS ADMINISTRATION REPORT.TO THE CONGRE;"S COULD REDUCE ADMINISTRATIVE COSTS AND IMPROVE SERVICE TO VETERANS RECEIVING EDUCATIONAL BENEFITS B-114859 DIGEST -----_ WHY THE REVIEW WAS MADE # ' The Weterans Administration (VA) provides financial assistance to vet- erans while they are obtaining an education: VA paid $1 billion to about 1.3 million veterans in fiscal year 1970,and payments are expected to increase to $1.4 billion to about 1.5 million veterans in fiscal year 1971. (See p. 3.) The General Accounting Office (GAO) reviewed VA's practices and proce- dures for processing veterans' status documents--the basis for payment of educational benefits--because of indications that processing delays had resulted in late payments and overpayments or underpayments. FINDINGS AND CONCLUSIONS VA regional offices manually verify data on a veteran's status docu- ments, such as his name and identification number, with like data in his case file and compute the amount of monthly payments due the vet- eran. VA"s data processing center, however, verifies most of the same data with a master record which is maintained for each veteran and in most cases computes the amount due the veteran. (See p. 5.) VA could accelerate the processing of status documents by eliminating the regional office manual verification of status documents and by placing greater reliance on the capability of its automatic data proc- essing equipment to perform this function. A test by VA's Los Angeles Regional Office during the period March to June 1970 demonstrated that it would be feasible to transmit data from status documents directly to the data processing center for computer verification without prior regional office manual verification of the data. (See p. 10.) GAO assisted WA officials in this test. GAO estimated that placing greater reliance on computer verification of data from status documents would result in savings of about $600,000 annually. To achieve such savings, however, the data processing cen- ter's computer would have to be reprogrammed. Additional computer time also would be needed to perform these functions. VA officials es- timated that such reprogramming would involve a one-time cost of about $72,000 and that increased corn uter time would cost about $100,000 annually. (See pp. 12 and 13. P Tear Sheet JULY 8,197l. I / ’ I I I RECOMMENDATIOflS OR SUGGESTIONS I , I The VA regional offices should, whenever possible, forward all data I I from status documents to the data processing center to be processed I without referral to the case files. (See pp. 14 and 15.) I I I I AGENCYACTIONSAND UNRESOLVED ISSUES I I I VA agreed, in principle, with GAO and said that procedures for auto- I mating the processing of status documents which concern reenrollment I I in the educational assistance program had been implemented in 1970 and I were being refined. VA said that-it planned to further automate the I I processing of other status documents as soon as reasonably possible. I (See p. 14.) I I I I MATTERSFOR CONSIDERATION BY THE CONGRESS I I GAO is reporting this matter to the Congress to inform it of the ac- 1 I tions being taken by VA to reduce costs and to improve service to vet- I erans. I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Contents Page DIGEST 1 CHAPTER 1 INTRODUCTION 3 2 NEED TO IMPROVEPROCEDURES FOR PROCESSING STATUS DOCUMENTS 5 Procedures for processing status docu- ments 5 Delays in processing status documents 7 Potential for processing status docu- ments Without referral to case files 9 Test of transmitting unverified data 10 Significant cost savings possible with further automation of processing pro- cedures 12 3 AGENCYCOMMENTS AND GAO RECOMMENDATION 14 Recommendation 14 4 SCOPEOF REVIEW 16 APPENDIX I Letter dated February 23, 1971, from the Associate Deputy Administrator of Veterans Affairs to the General Accounting Office 19 II Principal officials of the Veterans Adminis- tration responsible for administration of the activities discussed in this report 21 ABBREVIATIONS DPC Data Processing Center GAO General Accounting Office VA Veterans Administration FURTHER ACTION BY VETERANS ADMIMSTRATION COULD REDUCE ADMI!~ISTRATIVE COSTS AND IMPROVE SERVICE TO VETERANS RECEIVING EDUCATIONAL BENEFITS B-114859 DIGEST ------ WHY THE REVIEW WAS MADE The Veterans Administration (VA) provides financial assistance to vet- erans while they are obtaining an education. VA paid $1 billion to about 1.3 million veterans in fiscal year 1970, and payments are expected to increase to $1.4 billion to about 1.5 million veterans in fiscal year 1971. (See p. 3.) The General Accounting Office (GAO) reviewed VA's practices and proce- dures for processing veterans' status documents--the basis for payment of educational benefits--because of indications that processing delays had resulted in late payments and overpayments or underpayments. FINDINGS AND CONCLUSIONS VA regional offices manually verify data on a veteran's status docu- ments, such as his name and identification number, with like data in his case file and compute the amount of monthly payments due the vet- eran. VA's data processing center, however, verifies most of the same data with a master record which is maintained for each veteran and in most cases computes the amount due the veteran. (See p. 5.) VA could accelerate the processing of status documents by eliminating the regional office manual verification of status documents and by placing greater reliance on the capability of its automatic data proc- essing equipment to perform this function. A test by VA's Los Angeles Regional Office during the period March to June 1970 demonstrated that it would be feasible to transmit data from status documents directly to the data processing center for computer verification without prior regional office manual verification of the data. (See p. 10.) GAO assisted VA officials in this test. GAO estimated that placing greater reliance on computer verification of data from status documents would result in savings of about $600,000 annually. To achieve such savings, however, the data processing cen- ter's computer would have to be reprogrammed, Additional computer time also would be needed to perform these functions. VA officials es- timated that such reprogramming would involve a one-time cost of about $72,000 and that increased computer time would cost about $100,000 annually. (See pp. 12 and 13.) RECOMMENDATIONSOR 3X;ESTIONS The VA regional offices should, whenever possible, forward all data from status documents to the data processing center to be processed without referral to the case files. (See ppB 14 and 15.) AGENCY ACTIONS AND UNRESOLVEDISSUES VA agreed, in principle, with GAO and said that procedures for auto- mating the processing of status documents which concern reenrollment in the educational assistance program had been implemented in 1970 and were being refined. VA said that it planned to further automate the processing of other status documents as soon as reasonably possible. (See p. 14.) MATTERS FOR CONSIDERATION BY THE CONGRESS GAO is reporting this matter to the Congress to inform it of the ac- tions being taken by VA to reduce costs and to improve service to vet- erans. CHAPTER1 INTRODUCTION The Educational Assistance Program authorized by shap- ters 31, 34, and 35 of title 38, United States Code, as amended,lprovides for the Veterans Administration to assist veterans to meet their tuition, living expenses, and other costs while obtaining an education. The duration of assis- tance to a veteran is determined primarily by the length of his military service and generally ranges from 9 to 36 months. In fiscal year 1970 about 1.3 million veterans partici- pated in the educational assistance program and received about $1 billion in benefits. VA estimated that in fiscal year 1971 educational assistance payments would increase to about $1.4 billion because of anticipated increases in the number of participating veterans (1.5 million) and because of authorized increases in the amounts of monthly benefit payments. In March 1970 legislation was enacted which increased, as of February 1, 1970, educational assistance payments to veterans. Under this law the minimum payment to a veteran attending a full-time educational program at a university or college is $175 a month, as compared with the $130 a month previously authorized. The amount of the monthly payment to a veteran depends on such factors as the type of educa- tional program, the number of courses, and the number of his dependents. The VA Department of Veterans Benefits has 57 regional offices throughout the Nation which administer the various veterans' programs authorized by the Congress, A veteran applies for educational benefits at a regional office. The office determines his eligibility and is his principal 1 As used in this report, the term "veteran'" includes veterans and servicemen and their wives, widows, and children who are eligible for educational benefits. 3 point of contact with VA. The regional office establishes and maintains a case file which is the depository of all of- ficial VA records pertaining to the veteran. Documents af- fecting educational benefit payments to a veteran, such as a certification of enrollment in school, termination of en- rollment, and changes in the number of his dependents or course load--hereinafter collectively referred to as status documents-- are maintained in the veteran's case file. The VA Department of Data Management operates a data processing center (DPC) at Hines, Illinois, which uses a computer to process data related to educational benefits. For each veteran DPC maintains a master record which con- tains selected data obtained from the documents on file at the regional office. DPC also maintains master payment tapes which contain data showing the amount of educational benefits to be paid to each veteran each month. DPC revises the tapes each month to incorporate any payment changes that result from the processing of status documents and furnishes the master payment tapes to regional Treasury Disbursing Centers which prepare and issue the educational benefit payment checks. CHAPTER2 NEED TO IMPROVEPROCEDURES FOR PROCESSINGSTATUS DOCUMENTS VA is not using its automatic data processing capabil- ity to maximum advantage to process status documents perti- nent to the payment of educational benefits to veterans. Regional office employees manually verify data on a veteran's status documents, such as his name and identification number, with like data in his case file and compute the amount of monthly payments due the veteran. The regional office then transmits data from the status documents to DPC for inclu- sion in the veteran's master record. At DPC the computer also verifies most of the data from the status documents with data on the master record and, in most cases, computes the amount of the monthly payment due the veteran. We be- lieve that greater reliance on computer verification of the data could result in reducing the manual processing costs by about $600,000 annually. To achieve such savings,VA would have to reprogram DPC's computer to provide for verifying pertinent data from each status document processed and for performing all pay- ment calculations. Additional computer time also would be needed to perform these functions. VA estimated that such reprogramming would involve a one-time cost of about $72,000 and that increased computer time would cost about $100,000 annually. Elimination of the regional offices' manual verifica- tion of data on status documents would result in the accel- eration of the processing of the documents, in earlier pay- ments of benefits to veterans, and in the reduction of pos- sible overpayments and underpayments. PROCEDURES FOR PROCESSINGSTATUS DOCUMENTS Cur observations of educational benefit processing op- erations, including the flow of documents, at the VA re- gional offices in Los Angeles and Boston showed that the two regional offices followed the procedures described below. 5 When a veteran applies for financial assistance, the regional 0fficeOs Administrative Division prepares a case file to store all documents pertaining to the veteran".5 dealings with VA. The case file and the veteran's applica- tion are delivered to the Adjudication Division which de- termines the veteran!s eligibility for educational benefits and forwards the application to the Finance Division in the regional office, The data on the application is keypunched on paper tape by the Finance Divisioqand the tapes are transmitted to DPC, where an individual master record is created on mag- netic tape for use in the computer system. The case file containing the documents is then returned to the Administra- tive Division to be stored in the file room, On the basis of the data in the master record, the com- puter prepares a form for the veteran which shows his eli- gibility, The form also serves as an enrollment certifica- tion which the veteran gives to the school to complete. The school completes the enrollment certification and transmits it to the regional office where the Administrative Division obtains the veteranIs case file and forwards the certifica- tion and case file to the Adjudication Division. An adjudicator verifies certain data3 such as the vet- eran's name and identification number on the certification, by referral to documents in the case file and computes the monthly payment, The data from the enrollment certification is entered on a form which is sent to the Finance Division, and the case file, including the certification, is returned to the file room. The Finance Division keypunches the data from the form on paper tape, sends the form to the file room for inclusion in the case file, and sends the paper tape to DPC where the computer is used to transfer the in- formation to the veteran!s master record and the master pay- ment tapes. VA regional office offecials told us that the manual verification of data on status documents with data on docu- ments in the case filewas performed to ensure that the in- coming data on the status documents is correct before it is stbmitted to DPC for use in updating the master records and master payment tapes, 4 BELAYS IN PRQCESSINGSTATUS DOCkTMEEJTS Belays in processing status documents which authorize the initial benefit payments and subsequent increases or de- creases in the amounts of the payments result in delayed payments and overpayments or underpayments to some veterans. Either instance is apt to cause hardship to the veteran. Overpayments also result in collection costs to VA. VA's established time goal for processing status dots ments provides that, generally, they be processed by a re- gional office within '85 days after receipt,, VA Central (4f- fke officials in Washington, B.C., informed us that the goal was established on the basis of what VA would Like to achieve and, considering prior experience, what could rea- sonably be expected. TO determine how well the regional offices were meeting the established goal, we selected from the Boston and LOS Angeles Regional Offices a random sample consisting of 199 enroLLment certifications and analyzed the time required to process each of the certifications. As summarized in the following table, 97 of the 199 enrollment certifications, or about 49 percent, were not processed within the 15-day goal. Enrollment certifications grocessinktime Number Percent Within 15 days 102 51 Over 15 days: 16 to 20 days 27 13 2% to 25 days 23 10 26 to 30 days 15 9 31 to 40 days 14 8 41 to 50 days 8 4 51 to 60 days 3 2 Over 60 days -7 -3 97 49 Total 199 100 The delays in processing the enrollment certifications gen-' erally were attributable to the time required to locate case files which had been removed from the file room and to the backlog of cases awaiting processing, To ascertain the extent to which overpayments were caused by delays in the processing of status documents, we selected and analyzed a random sample of 200 overpayments made to veterans by the Boston and Los Angeles Regional Of- fices, These overpayments were uncollected as of Qctober 1969 6 We found that: --Delays in processing status documents had caused 29 overpayments, about 15 percent, totaling about $2,900. --The time required to process the status documents for the 29 overpayments had ranged from 18 days to over 60 days. As of October 1969 at the two regional offices there were 12,460 uncollected overpayments totaling about $1.7 million, On the basis of our sample results,we esti- mated that,of the 12,460 overpayments,about 1,870, or about 15 percent, totaling about $187,000 had been caused by de- lays in the processing of status documents. At the time of our analysis,about 47,000 overpayments totaling about $6.6 million were uncollected at all VA regional offices. 8 POTENTIAL FOR PROCESSINGSTATUS DCCUHENTS WITHOUT REFXXRALTO CASE FILES Our examination of printed copies of master record tapes maintained by DPC showed that much of the data neces- sary for verification of data on status documents was con- tained in the master records. In fact much of the data which is verified manually at the regional offices is also verified by the computer. For example, in processing an enrollment certification, the regional office adjudicator compares data in the case file with data on the certifica- tion to verify the veteran@s identification number, name, dependency information, and date the payment is to start and computes the amount of the monthly payment. At DPC the computer compares the same data from the enrollment certifi- cation with data in the veteranIs master record and verifies the benefit payment computation (except when a veteran's course load is less than half the course load of a full-time student), The Los Angeles Regional Office has about a thousand employees and has about a million case files in storage. When a veteran's case file is removed from storage, a card is left in its place which shows its general location at that time. For example9 the card may show that the case file is in the Adjudication Division, but it will not show the name of the individual who has the file. At any given time about 10,000 files are out of storage and can be in one of many locations within the regional of- fice. During peak work load periods as many as 40,000 files may be in circulation. Most of these files are in the Adju- dication Division which has about 250 employees, Since the location card designates only the general location of a case file and since the file can be moved both within the Adjudi- cation Division and to other areas of the office, locating a file may be difficult and time-consuming. On the basis of our observations and discussions with Los Angeles Regional Office officials, we believe that VA could substantially reduce the cost and time necessary to process status documents by eliminating the manual verifica- tion of the accuracy of the documents and by reprogramming its computers to perform this operation. 9 We assisted the Los Angeles Regional Office in devel- ' oping procedures that would place reliance on computer veri- fications and computations without the status documents first being verified at the regional office.These proce- dures provide for (1) data on status documents to be re- viewed by an adjudicator for legibility and reasonableness, put on paper tape, and transmitted to DPC and (2) computer verification of the data on the paper tape by comparison with data in the master record. The adoption of these procedures would result in sub- stantially reducing the work load at the regional office by eliminating the need to search for a case file every time a status document is received and by eliminating the manual verification. TEST OF TRANSMITTING UNVERIFIED -. ---DATA In March 1970 the VA Los Angeles Regional Office under- took a test of the feasibility of the above procedures. During a go--day period from March to June 1970, data con- cerning termination of veterans" benefits was transmitted from status documents (about 3,200) to DPC for computer processing without regional office verification with data in case fifes. The results of the test demonstrated that it was fea- sible to transmit data from status documents directly to DPC without prior regional office manual verification of the data. About 90 percent of the status documents were processed in this manner without any subsequent referral to the case files. Because of errors in the veteranss names or identification numbers,most of the remaining 10 percent of the status documents required subsequent referral to case files at the regional office. In October 1970 we discussed the results of this test with the VA Central Office Director of Compensation, Pen- sion and Education Service and with members of his staff. The Director advised us that VA had been continually study- ing methods to automate the processing of status documents and that he was encouraged by the results of our review in this area, We stated that, as a result of our review and VA"s own studies, VA-wide procedures had been implemented which provide for transmitting data concerning veterans' reenrollment in the educational assistance program from status documents directly to DPC without prior manual veri- fication. He explained, however, that, because of other higher priorities for computer programming time--such as legisla- tive changes affecting veterans' benefit payments--further revision and implementation of procedures to reduce manual verifications at the regional offices could not be accom- plished at that time. He agreed to maintain a surveillance over the present priorities and, as manpower and computer time became available, to give priority to revising and im- plementing such procedures. SIGNIFICANT CQST SAVINGS POSSIBLE WITH FURTHER AUTOMATION OF PROCESSING PROCEDURES Considering the volume of status documents generated by VABs educational assistance program and considering the regional offices8 time-consuming procedures for verifying data on status documents prior to transmittal of the data to DPC, the elimination of the manual verifications would result in significant savings in manpower and related costs, Since the test at the Los Angeles Regional Office dem- onstrated the feasibility of computer verification of data from status documents with data in the master records, we estimated the potential savings that could be realized if VA were to revise its procedures to eliminate or minimize regional office verification of data on status documents. We discussed with VA Central Office officials the vari- ous types of status documents which would be susceptible to processing at the regional offices without referral to the case files, We were advised that referral to case files would be necessary to process status documents which relate to veteranss initial enrollment in the program. Therefore, in estimating the total number of status documents which would be susceptible to improved processing procedures, we eliminated initial enrollment documents. We also eliminated reenrollment documents, since procedures had been imple- mented to process them at the regional offices without re- ferral to the case files. On the basis of the total number of status documents processed by VA in fiscal year 1970, less enrollment and reenrollment documents, we estimated that transmitting data from status documents directly to DPC without prior regional office manual verification of the data would result in sav- ing about 60 man-years of effort representing costs of about $600,000 annually, The savings would result from (1) reduc- tions in overtime requirements and in the number of new em- ployees needed to handle the increasing work load and (2) redirection of available manpower to more pressing work load areas. To achieve these savings, DPC's computer would have to be reprogrammed to verify pertinent data from each status 12 ' document processed and to make all payment calculations, Additional computer time also would be needed to perform these functions. VA officials estimated that such repro- gramming would involve a one-time cost of about $72,000 and that increased computer time would cost about $100,000 annu- ally. We believe that further automation of the processing of status documents would result in earlier payments to vet- erans and would reduce the possibility of overpayments and underpayments. In addition, it should result in reduced costs of collecting overpayments. 13 CHAPI'ER3 AGENCYCOPQ!TEmS AND GAO RECOMMENDATION In a draft of this report submitted to VA for comment, we proposed that VA (1) reexamine existing priorities for computer programming time for the purpose of expediting the lementation of procedures that would make maximum use of computers in processing educational status documents and (2) establish the earliest possible target date for such imple- mentation. In a letter dated February 23, 1971 (see app, I>, the Associate Deputy Administrator of Veterans Affairs told us that VA agreed, in principle, with our views regarding the computer processing of status documents without referral to case files. He pointed out that procedures for automating the processing of reenrollment status documents had been im- plemented in 1970 and were being refined, He advised us also that VA planned to automate further the processing of other status documents, such as unscheduled termination and depen- dency changes, as soon as reasonably possible. When fully implemented and refined, the revised proce- dures for processing reenrollment status documents, which constitute about 35 percent of all status documents, should assist in achieving more timely handling of veterans! educa- tional assistance payments. In our opinion, however, the increasing number of vet- erans participating in the educational assistance program makes it imperative that VA make maximum use of its computer capabilities for processing all status documents which may be susceptible to automation. We believe that, to achieve the potential for savings ($600,000) and to achieve improved service to veterans, VA should establish target dates for implementing the automated processing of all status docu- ments which may be susceptible to automation. RECOMMENDATION We recommend that t'he Administrator of Veterans Affairs have the Chief Benefits Director establish target dates for 14 implementing procedures requiring that, whenever possible, all data from status documents be transmitted by the re- gional offices to DPC to be processed without referral to the case files. 15 SCOPEOF REVIEW Our review was made at the VA regional offices in Los AngePes, California, and Boston, Massachusetts; at DPC in Hines, Illinois; and at the VA Central Office in Wash- ington, B.C, We reviewed the procedures and observed the operations for processing the various documents which are required to initiate, revise, and terminate educational as- sistance benefits to veterans. Discussions were held with the various VA officials involved with the activities dis- cussed in this report. APPENDIXES 17 APPEND.IXI VETERANS ADMIPIISTRATION OFFICEOF THE ADMINISTRATOR OF VETERANS AFFAIRS WASHINGTON, D.C. 20420 February23, 1971 . 1%. Max Hirschhorn Associate Director, Civil Division U. S. General Accounting Office (801) Room 137, Lafayette Building 811 Vermont Avenue, N. I~?. Washington, I). c. 20420 Dear Mr. Hirschhorn: Thank you for the opportunity to review and comment on your proposed draft report entitled "Opportunity to Reduce Administrative Costs of the Veterans Administration Education Assistance Program and to Improve Service to Veterans." We agree in principle with the draft report recommendation as it relates to processing status documents through Adjudication Divisions and Finance and Data Processing activities of the Veterans 0 Administration without claims folders. The conclusions in the GAO draft report are based, for the most part, upon unscheduled terminations. The Veterans Administration in FY 1970 implemented and is refining procedures to permit processing documents without the claims folder for re-entrance into school. The volume of re-enrollment is much greater than unscheduled terminations, re-enrollments are much more adaptable to automated procedures, and adverse publicity results if claimants are not paid promptly after re-enrolling. Other status documents, such as unscheduled terminations and dependency chaqes, are in our plans for further automation. While we have no argument with the range of dollars indicated, the savings cannot be effectively related to a specific number of people since fragmented bodies at 57 regional offices are involved. The effect, if any, will perhaps be reflected in lesser overtime require- ments. Considering the increasing workload, innovations 19 APPENDIX I Nax Hirschhorn i-h? . Associate Director, Civil Divis.ion U. S. General Accounting Office (801) such as out-lined in your report are an absolute necessity. Any lessened personnel needs generated by such improve- ments are diverted to more pressing workload needs. We appreciate your interest in our operations and welcome any recommendations which will improve our service to veterans and reduce costs. We recognize that improved service is possible subject to a calculated risk that payments will not be correctly adjusted or terminated in every instance. Essentially, we agree with the principle of processing status changes without the claims folder and intend to introduce all applications of this principle as soon as is reasonably possible,. Sincerely, RUFUSH. WILSON Associate Deputy Administrator - in the absence of FRED B. RHODES Deputy Administrator 20 . APPENDIX II PRINCIPAL OFFICIALS OF THE VETERANSADMINISTRATION RESPONSIBLEFOR ADMINISTMTION OF THE ACTIVITIES DISCUSSEDIN THIS REPORT Tenure of office From To - ADMINISTRATOROF VETERANSAFFAIRS: D, E. Johnson June 1969 Present DEPUTYADMINISTRATOROF VETERANS AFFAIRS: F. B. Rhodes bY 1969 Present CHIEF BENEFITS DIRECTOR: R. H. Wilson July 1969 Feb. 1970 0. B. Owen Feb. 1970 Present DIRECTOR, COMPENSATION,PENSION AND EDUCATIONSERVICE: J. T. Taaffe, Jr. Mar. 1968 Present CHIEF DATA MANAGEMENT DIRECTOR: P. J. Budd Feb. 1963 Present U.S. GAO, 'Jash.. D.C. 21
Further Action by Veterans Administration Could Reduce Administrative Costs and Improve Service to Veterans Receiving Educational Benefits
Published by the Government Accountability Office on 1971-07-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)