oversight

National Cemetery System: Opportunities to Expand Cemeteries' Capacities

Published by the Government Accountability Office on 1997-09-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to the Chairman, Subcommittee
                  on Benefits, Committee on Veterans’
                  Affairs, House of Representatives


September 1997
                  NATIONAL
                  CEMETERY SYSTEM
                  Opportunities to
                  Expand Cemeteries’
                  Capacities




GAO/HEHS-97-192
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-277569

      September 10, 1997

      The Honorable Jack Quinn
      Chairman, Subcommittee on Benefits
      Committee on Veterans’ Affairs
      House of Representatives

      Dear Mr. Chairman:

      The National Cemetery System (NCS) of the Department of Veterans Affairs
      (VA) provides interment of eligible veterans and their families upon
      demand in national cemeteries. In fiscal year 1996, VA provided burial
      benefits to about 72,000 veterans and their family members and had an
      appropriation of about $73 million for interments and related program
      services.1 With the aging of World War II veterans, the numbers of veteran
      deaths and interments performed by NCS continue to grow each year and
      are projected to peak between 2005 and 2010. In addition, due to the
      depletion of available grave sites, over half of the national cemeteries will
      be unable to accommodate casket burials of “first family members” before
      then.2 Therefore, it is important that NCS develop long-range plans for
      addressing veterans’ future burial needs.

      This letter responds to your concerns about NCS’ ability to accommodate
      the increasing demand for burial benefits. Specifically, you requested that
      we (1) assess NCS’ plans for addressing veterans’ future burial demands;
      (2) determine the relative 30-year costs of three types of cemeteries: one
      providing only casket interment, another providing only interment of
      cremated remains in columbarium niches, and a third providing only
      in-ground interment of cremated remains;3 and (3) identify what NCS can
      do to extend the service period of existing national cemeteries.

      To address your request, we met with NCS officials responsible for
      planning, expanding, and constructing national and state veterans’

      1
       In addition to burying eligible veterans, NCS manages three related programs: Headstones and
      Markers; Presidential Memorial Certificates; and State Cemetery Grants, which provides financial aid
      to states establishing, expanding, or improving state veterans’ cemeteries. (See the background section
      for a discussion of each of these programs.)
      2
       Currently, veterans who choose casket burial are allotted one plot that can hold two caskets, one
      above the other. The first eligible family member who dies and is buried in such a plot, which may or
      may not be the veteran, is called the first family member; the second family member who dies and is
      buried in such a plot is called the subsequent family member.
      3
       Columbarium niches are recessed compartments within a structure—called a columbarium—that
      hold cremation urns. In-ground cremated remains (cremains) sites are small burial sites, generally 3
      feet by 3 feet.



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                   cemeteries. We reviewed legislation, regulations, operating procedures,
                   strategic plans, and program management reports. We also prepared an
                   analysis of the costs for three types of national cemeteries and provided a
                   comparison of the present value of the estimated costs for each type of
                   cemetery.4 (See app. I for a detailed discussion of the methodology and
                   data used in the cost analysis.)

                   In addition, we visited the NCS area office in Atlanta, Georgia, and national
                   cemeteries in four localities—San Diego, Riverside, and Los Angeles,
                   California, and Seattle, Washington—to obtain information on planned
                   burial site development projects; the use of cremation within the cemetery
                   service area; and the construction and maintenance costs of casket graves,
                   columbaria, and in-ground cremains sites. We selected the national
                   cemeteries in the first three localities because they offered interment of
                   cremains in both columbaria and in-ground sites during fiscal year 1996.
                   Moreover, the Los Angeles National Cemetery operates and maintains the
                   oldest columbarium in the system. Tahoma National Cemetery, in the
                   fourth locality, is the most recently constructed national cemetery, and its
                   cost figures are the basis for our 30-year cost estimates. We did our work
                   between November 1996 and July 1997 in accordance with generally
                   accepted government auditing standards.


                   As veteran deaths increase, NCS projects that demand for veterans’ burial
Results in Brief   benefits will also increase. For example, NCS projects the number of annual
                   interments will increase over 40 percent between 1995 and 2010. NCS has
                   adopted a 5-year strategic plan for fiscal years 1996 through 2000 with the
                   goal of ensuring that burial in a national or state veterans’ cemetery is an
                   available option for all veterans and their eligible family members.
                   Strategies outlined in NCS’ plan include (1) establishing five new national
                   cemeteries, (2) developing available space for cremated remains,
                   (3) acquiring contiguous land at existing cemeteries, and (4) encouraging
                   states to provide additional burial sites through participation in the State
                   Cemetery Grants Program. However, the strategic plan does not tie its goal
                   to external factors, such as the mortality rate for veterans and veterans’
                   relative preferences for various burial options, that will affect the need for
                   additional VA and state cemetery capacity. In addition, it is unclear how
                   NCS will address the veterans’ burial demand during the peak years (2005
                   through 2010), when pressure on it will be greatest, since NCS has not

                   4
                    “Present value” is defined as the current worth of money expected to be spent at a future date. A
                   dollar available at some date in the future is valued at less than a dollar available today because the
                   latter could be invested at interest in the interim. Unless otherwise noted, when we refer to “30-year
                   costs” in this report, we mean present value.



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developed a strategic plan for the period beyond the year 2000.5 According
to NCS’ Chief of Planning, beyond 2000, NCS will continue using the basic
strategies outlined in its current 5-year plan. For example, NCS plans to
encourage states to establish veterans’ cemeteries in areas where it does
not plan to operate national cemeteries. However, since the grant
program’s inception in 1978, fewer than half of the states have established
veterans’ cemeteries. States also have shown limited interest in a
legislative proposal designed to increase state participation by increasing
the share of federal funding.

In connection with NCS’ plans to develop land to achieve its goal, we
estimated the present value of the costs of three types of cemeteries, each
with 50,000 burial sites, over a 30-year period. Our analysis showed that
planning, designing, constructing, and operating a cemetery of casket
grave sites and no other burial options would be the most expensive
interment option available.6 Moreover, the costs for a cemetery that
offered only a columbarium and one that offered only in-ground cremains
sites would be about the same. Thus, while the cost of a casket-only
cemetery would be over $50 million, the cost of a cremains-only cemetery
would be about $21 million. This cost difference is primarily attributable
to the lower operating and land development costs of cremains
cemeteries.7

Finally, while the majority of veterans and eligible family members prefer
a casket burial, cremation is an acceptable interment option for many, and
the demand for cremation, which varies by region, continues to increase.
Moreover, as annual interments increase, cemeteries will reach their burial
capacity, thus increasing the importance of making the most efficient use
of available cemetery space. To identify feasible approaches to extending
the service period of existing cemeteries, we analyzed the impact of
adding burial sites to an acre of land in an existing cemetery.8 Our analysis
of three interment options showed that columbaria offer the most efficient
interment option because they would involve the lowest average burial

5
 NCS recently drafted a strategic plan to cover fiscal years 1998 through 2003; however, like the
current plan, it does not address how NCS plans to deal with the veterans’ burial demand during the
peak years.
6
 We also evaluated the three types of cemeteries over a 50-year period (see app. I). We found that
differences in the relative costs of using caskets and cremation are roughly the same over a 50-year
period as over a 30-year period.
7
 Land development costs include site preparation (for example, grading, landscaping, providing
irrigation, building roads, and providing for storm drainage) and site furnishing (for example,
providing benches and flagpoles).
8
 We assumed an acre of land composed of parcels of land not contiguous to each other.



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             cost and would significantly extend a cemetery’s service period. For
             example, the average cost for a burial in a columbarium would be less
             than half the cost of a casket burial and slightly less than an in-ground
             cremains burial. Our analysis also showed that the total service period of a
             cemetery offering only columbaria could be about 50 years longer than the
             service period of a cemetery offering only casket or in-ground cremains
             burials.


             The National Cemeteries Act of 1973 (P.L. 93-43) authorized NCS to bury
Background   eligible veterans and their family members in national cemeteries. NCS
             operates and maintains 114 national cemeteries located in 38 states and
             Puerto Rico. In fiscal year 1996, NCS performed about 72,000 interments
             and maintained more than two million burial sites and over 5,600 acres of
             land developed for interment purposes.

             NCS offers veterans and their eligible family members the options of casket
             interment and interment of cremated remains in the ground (at most
             cemeteries) or in columbarium niches (at nine cemeteries). NCS
             determines the number and type of burial options available at each of its
             national cemeteries. The standard size of casket grave sites, the most
             common burial choice, is 5 feet by 10 feet, and the grave sites are prepared
             to accommodate two caskets stacked one on top of the other. A standard
             in-ground cremains site is 3 feet by 3 feet and can generally accommodate
             one or two urns. The standard columbarium niche used in national
             cemeteries is 10 inches wide, 15 inches high, and 20 inches deep. Niches
             are generally arrayed side by side, four units high, and can hold two or
             three urns, depending on urn size. Figure 1 shows a columbarium and
             in-ground cremains sites at national cemeteries.




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Figure 1: Columbarium and In-Ground
Cremains Sites at National Cemeteries




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Armed forces members who die while on active duty and certain veterans
are eligible for burial in a national cemetery. Eligible veterans must have
been discharged or separated from active duty under other than
dishonorable conditions and have completed the required period of
service.9 People entitled to retired pay as a result of 20 years’ creditable
service with a reserve component of the armed services are also eligible.
U.S. citizens who have served in the armed forces of a government allied
with the United States in a war may also be eligible. The benefit of burial
in a national cemetery is further extended to spouses and minor children
of eligible veterans and of active duty members of the armed forces. A
surviving spouse of an eligible veteran who later marries a nonveteran,
and whose remarriage is terminated by death or divorce, is also eligible for
burial in a national cemetery.

Burial in a VA cemetery includes, at no cost to the veteran, one grave site
for the burial of all eligible family members. Also included are the opening
and closing of the grave, perpetual care of the site, and a government
headstone or marker and grave liner. Veterans’ families are required to pay
for services provided by funeral directors and additional inscriptions on
the headstone or marker. Generally grave sites may not be reserved; space
is assigned at the time of need on the basis of availability.

In addition to burying eligible veterans and their families, NCS manages
three related programs: (1) the Headstones and Markers Program, which
provides headstones and markers for the graves of eligible people in
national, state, and private cemeteries; (2) the Presidential Memorial
Certificates Program, which provides certificates to the families of
deceased veterans recognizing their contributions and service to the
nation; and (3) the State Cemetery Grants Program, which provides aid to
states in establishing, expanding, or improving state veterans’ cemeteries.

In 1978, Public Law 95-476 authorized NCS to administer the State
Cemetery Grants Program, under which states receive financial assistance
to provide burial space for veterans and eligible dependents. State
veterans’ cemeteries supplement the burial service provided by NCS. The
cemeteries are operated and permanently maintained by the states. A
grant may not exceed 50 percent of the total value of the land and the cost
of improvements. The remaining amount must be contributed by the state.
The State Cemetery Grants Program has funded the establishment of 28

9
 Veterans who entered active duty as enlisted persons before Sept. 7, 1980, or as officers before
Oct. 17, 1981, are eligible for burial in a national cemetery. Veterans who entered active duty after
these times, with certain exceptions, must have served for a minimum of 24 months or the full period
for which they were called to active duty.



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                            veterans’ cemeteries, including three cemeteries currently under
                            development, located in 21 states, Saipan, and Guam. The program has
                            also provided grants to state veterans’ cemeteries for expansion and
                            improvement efforts.

                            While VA strongly encourages states to adopt the eligibility criteria applied
                            to national cemeteries, states have been allowed to establish eligibility
                            criteria for interments that differ from VA-established criteria, but only if
                            their criteria are more restrictive than those established for national
                            cemeteries. In other words, state veterans’ cemeteries cannot be used for
                            the interment of people who are not eligible for burial in a national
                            cemetery. Most states have a residency requirement, and some states
                            restrict eligibility to veterans who were honorably discharged, had
                            wartime service, or both.


                            As the veteran population ages, NCS projects the demand for burial benefits
NCS Strategic Plan          to increase. NCS has a strategic plan for addressing the demand for
Does Not Address            veterans’ burials up to fiscal year 2000, but the plan does not tie its
Long-Term Burial            strategic and performance goals to external factors such as veterans’
                            mortality rates and preferences for burial options—that is, caskets,
Demand                      in-ground cremains, or columbaria niches. In addition, NCS’ strategic plan
                            does not address long-term burial needs—that is, the demand for benefits
                            during the expected peak years of veteran deaths, when pressure on the
                            system will be greatest. Beyond the year 2000, NCS officials said they will
                            continue using the basic strategies contained in the current 5-year plan.


Demand for Veterans’        With the aging of the veteran population, veteran deaths continue to
Burial Benefits Projected   increase each year. For example, NCS projects annual veteran deaths will
to Increase                 increase about 20 percent between 1995 and 2010, from 513,000 to 615,000,
                            as shown in figure 2. Moreover, NCS projects that veteran deaths will peak
                            at about 620,000 in 2008. The demand for veterans’ burial benefits is also
                            expected to increase. For example, NCS projects annual interments will
                            increase about 42 percent between 1995 and 2010, from 73,000 to 104,000.
                            NCS projects that annual interments will peak at about 107,000 in 2008.




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Figure 2: Estimated Number of Veteran Deaths, 1995-2040

 Number of Veteran Deaths (in Thousands)

 650


 600



 550


 500


 450



 400


 350


 300
   1995        2000        2005       2010        2015         2020         2025          2030         2035          2040
                                                       Years
                                             Source: NCS national data.




Five-Year Plan Has                           According to its 5-year strategic plan (1996-2000), one of NCS’ primary
Multiple Strategies                          goals is to ensure that burial in a national or state veterans’ cemetery is an
                                             option for all eligible veterans and their family members. The plan sets
                                             forth four specific strategies for achieving this goal. First, NCS plans to
                                             establish, when feasible, new national cemeteries. NCS is currently
                                             establishing five new national cemeteries, which are in various stages of
                                             development, and projects that all will be operational by 2000.10

                                             A second strategy for addressing veterans’ burial demand is to develop
                                             available space for cremated remains. NCS plans to survey national
                                             cemeteries to determine what space is available for use as in-ground
                                             cremains sites, construct additional columbaria at eight existing
                                             cemeteries, and include columbaria at the five new cemeteries.


                                             10
                                              New national cemeteries will be located in or near Albany, New York; Chicago, Illinois; Cleveland,
                                             Ohio; Dallas/Fort Worth, Texas; and Seattle, Washington.



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Third, NCS plans to acquire land through purchase or donation. NCS plans to
use this land to extend the burial capacity and service period of national
cemeteries currently projected to run out of available grave sites.

Fourth, NCS plans to encourage states to provide additional burial sites for
veterans through participation in the State Cemetery Grants Program.
According to the plan, NCS plans to identify and prioritize those states most
in need of a veterans’ cemetery; design a marketing strategy for those
states; visit a minimum of four of those states annually until all prioritized
states have been visited; and participate in the state conferences of at least
three veterans’ service organizations (for example, the American Legion
and the Veterans of Foreign Wars) each year.

In addition to the strategic and performance goals, the plan also discusses
assumptions, such as veterans’ demographics (the projected increases in
veteran deaths and interments), and external factors, such as resource
constraints, that could delay achievement of the plan’s performance goals.
However, the plan does not tie the strategic and performance goals to its
assumptions. For example, while the plan includes some data on
demographic trends in the veteran population, it does not explain how
these data were used in setting strategic goals, or how they will be used to
measure progress in achieving these goals. Neither does the plan tie its
strategic and performance goals to external factors—such as preferences
for VA, state, or private cemeteries and preferences for casket, in-ground
cremains, or columbaria niche burial—that will affect the need for
additional VA and state cemetery capacity. NCS tracks actual burial
practices in national cemeteries, monitors trends in the private cemetery
sector, and in 1992 surveyed veterans to determine their preferences for
type of cemetery (national, state, or private) and burial option (casket or
cremation burial).11

Despite NCS plans to ensure that burial in a national or state veterans’
cemetery is an available option, officials acknowledge that large numbers
of veterans currently do not have access to a veterans’ cemetery within a
reasonable distance of their place of residence.12 For example, NCS
estimates that of the approximately 26 million veterans in 1996, about
9 million (35 percent) did not have reasonable access to a national or state
veterans’ cemetery. According to NCS officials, most underserved areas are

11
 VA, National Center for Veteran Analysis and Statistics, VA National Survey of Veterans
(NSV9503) (Washington, D.C.: Apr. 1995).
12
  According to NCS, a national or state veterans’ cemetery within 75 miles of a veteran’s place of
residence would provide reasonable access.



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                           major metropolitan regions with a high concentration of veterans. With the
                           completion of the five new cemeteries, NCS officials estimate that the
                           percentage of veterans who will have reasonable access to a veterans’
                           cemetery will increase from about 65 percent in fiscal year 1996 to about
                           77 percent in fiscal year 2000.


How NCS Plans to Address   Although NCS has a 5-year strategic plan for addressing veterans’ burial
Burial Demand Beyond the   demand during fiscal years 1996 through 2000, it is unclear how NCS plans
Year 2000 Is Unclear       to address the demand beyond 2000. For example, NCS has not developed a
                           strategic plan to address veterans’ burial demand during the peak years of
                           veteran deaths, when pressure on the system will be greatest. According to
                           NCS’ Chief of Planning, although its strategic plan does not address
                           long-term burial needs, NCS is always looking for opportunities to acquire
                           land to extend the service period of national cemeteries. For example, NCS
                           is working to acquire land for one of its west coast cemeteries that is not
                           scheduled to run out of casket sites until the year 2011. Also, to help
                           address long-range issues, NCS compiles key information, such as mortality
                           rates, number of projected interments and cemetery closures, locations
                           most in need of veterans’ cemeteries, and cemetery-specific burial layout
                           plans. In addition, the planning chief pointed out that the Government
                           Performance and Results Act requires a strategic plan to cover only a
                           5-year period. However, the Results Act allows an agency to extend its
                           strategic plan beyond a 5-year period to address future goals. Although
                           NCS’ strategic plan notes that annual veteran deaths are expected to
                           increase about 20 percent between 1995 and 2010, the plan does not
                           indicate how the agency will begin to position itself to handle this increase
                           in demand for burial benefits. A longer planning period would provide the
                           opportunity to develop strategies for obtaining funds, acquiring land,
                           assessing veterans’ preferences, or all three.

                           While NCS does not have a formal strategic plan to address veterans’ burial
                           demand beyond the year 2000, NCS officials said they will continue using
                           the basic strategies contained in the current 5-year plan. For example, NCS
                           plans to enhance its relationship with states to establish state veterans’
                           cemeteries through the State Cemetery Grants Program. According to NCS’
                           Chief of Planning, NCS will encourage states to locate cemeteries in areas
                           where it does not plan to operate and maintain national cemeteries. Since
                           the State Cemetery Grants Program’s inception in 1978, fewer than half of
                           the states have established veterans’ cemeteries primarily because,
                           according to NCS officials, states must provide up to half of the funds
                           needed to establish, expand, or improve a cemetery, as well as pay for all



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                        equipment and annual operating costs. Furthermore, the Director of the
                        State Cemetery Grants Program told us that few states, especially those
                        with large veteran populations, have shown interest in legislation that VA
                        proposed in its 1998 budget submission in order to increase state
                        participation. This legislation would increase the federal share of
                        construction costs from 50 to 100 percent and permit federal funding for
                        up to 100 percent of initial equipment costs. In fact, according to the
                        Director, state veterans’ affairs officials said that they would rather have
                        funding for operating costs than for construction.

                        In addition, VA does not plan to request construction funds for more than
                        the five new cemeteries, which will be completed by the year 2000,
                        because of its commitment to deficit reduction. Officials said that even
                        with the new cemeteries, interment in a national or state veterans’
                        cemetery will not be “readily accessible” to all eligible veterans and their
                        family members. According to NCS officials, most underserved areas will
                        be major metropolitan areas with high concentrations of veterans, such as
                        Atlanta, Georgia; Detroit, Michigan; and Miami, Florida.


                        As demand for burial benefits increases, cemeteries become filled, thus
Traditional Casket      reducing the burial options available to veterans and their families. We
Cemetery Would Be       developed a model to analyze the relative costs of three types of
Twice as Expensive as   cemeteries. The analysis showed that over 30 years, the traditional casket
                        cemetery would be the most expensive interment option. Our analysis also
Cremains Cemeteries     showed that there would be no significant difference in the costs of
                        columbarium and in-ground cremains cemeteries. Although the
                        development and construction costs are higher for a columbarium
                        cemetery, operating costs are higher for an in-ground cremains cemetery.
                        Table 1 compares the 30-year costs of these three types of cemeteries.
                        (See app. II for a detailed cost comparison of the three types of
                        cemeteries.)




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Table 1: Comparison of 30-Year
Present Value Costs of Three Types of                                                                                                 In-ground
Cemeteries With 50,000 Burial Spaces,                                                                   Columbarium                    cremains
in 1997 Dollars                         Cost factorsa                   Casket cemetery                     cemetery                   cemetery
                                        Total development and
                                        construction                          $12,100,000                 $12,800,000                $4,400,000
                                        Total operations and
                                        maintenance                            38,400,000                   10,200,000               16,500,000
                                             Nonlabor and
                                             equipment                         20,000,000                    1,800,000                5,100,000
                                             Labor                             18,400,000                    8,400,000               11,400,000
                                        Total                                 $50,500,000                 $23,000,000              $20,900,000
                                        a
                                         App. I defines all cost factors.

                                        Source: GAO analysis of NCS cost data.




Traditional Casket Burial               A cemetery providing only casket burials would be the most expensive
Most Expensive Interment                interment option, costing, on average, over twice as much as columbarium
Option                                  or in-ground cremains cemeteries. We estimated that over a 30-year
                                        period, the casket cemetery would cost over $50 million, compared with
                                        about $21 to $23 million for either of the two cremation cemeteries. The
                                        difference in costs is due primarily to the higher land development and
                                        operations/maintenance costs of a casket cemetery. Specifically, providing
                                        50,000 grave sites for 30 years would require developing about 115 acres at
                                        a cost of $8.4 million, compared with 34 acres for an in-ground cremains
                                        cemetery and 14 acres for a columbarium cemetery, costing about
                                        $2.5 million and $1 million, respectively.

                                        Over 30 years, the total operations and maintenance cost for a casket
                                        cemetery is three times as much as that for a columbarium cemetery and
                                        over twice as much as that for an in-ground cremains cemetery. As table 1
                                        shows, providing burial services and maintenance activities for a 115-acre
                                        casket cemetery would result in higher nonlabor and labor costs.13 For
                                        example, it requires about 39 full-time staff to operate and maintain a
                                        casket cemetery, compared with about 21 full-time staff for an in-ground
                                        cremains cemetery and 14 full-time staff for a columbarium cemetery.




                                        13
                                          Burial services include scheduling services; attending committal services; opening and closing grave
                                        sites or niches; interring remains; setting headstones, markers, or niches; and restoring burial sections.
                                        Maintenance activities include groundskeeping, facilities maintenance, and equipment maintenance.



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Costs Vary Slightly for     Over 30 years, it would cost about the same to plan, design, construct,
Columbarium and             operate, and maintain a columbarium and an in-ground cremains cemetery
In-Ground Cremains          with 50,000 burial spaces: $23 and $21 million, respectively. The
                            development and construction cost is higher for a columbarium cemetery,
Interments                  but its operations and maintenance cost is lower than that of an in-ground
                            cremains cemetery. As table 1 shows, over 30 years the development and
                            construction cost for a columbarium cemetery would be, on average,
                            about three times as much as that for an in-ground cremains cemetery.
                            This difference in costs is primarily due to the cost of building the
                            columbarium structure. The operations and maintenance cost of an
                            in-ground cremains cemetery is almost twice as much as that of a
                            columbarium cemetery. This cost difference can be attributed to the fact
                            that columbarium cemeteries have fewer acres to maintain, resulting in
                            lower nonlabor and labor costs.


                            As existing national cemeteries reach their capacity, columbarium burial
Columbarium Option          offers the most efficient option for extending cemetery service periods.
Offers Opportunity for      We developed a model to analyze the cost of three interment options on
Extending Service           the basis of the cost of developing a total of 1 acre of land, composed of
                            parcels of land not contiguous to each other, in a cemetery nearing
Period of Existing          exhaustion of available casket grave sites. The analysis showed that the
Cemeteries                  average burial cost would be lowest and the service delivery period the
                            longest using columbarium interment. The analysis also showed that the
                            average cost per burial would be about the same for columbarium niches
                            as for in-ground cremains sites. However, columbarium interment would
                            extend the service period by about 50 years, while in-ground cremains
                            interment would extend the service period about 3 years and casket
                            burials, about half a year. Casket burials would be the most expensive per
                            burial and would have the shortest service period.


Many National Cemeteries    At the end of fiscal year 1996, 57 of VA’s 114 national cemeteries had
Have Reached Capacity for   exhausted their supply of casket grave sites available to first family
Casket Burials              members, as shown in figure 3. Of these 57 cemeteries, 38 could
                            accommodate casket burial of subsequent family members and interment
                            of cremated remains of both first and subsequent family members.
                            Nineteen could accommodate only subsequent family members—for
                            either casket or cremated remains interment. According to NCS’ Chief of
                            Planning, unless NCS acquires additional land, it projects that 15 cemeteries
                            will totally deplete their inventory of casket grave sites for first family
                            members by 2010, and another 16 cemeteries will do so by 2020. In total,



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by 2020, NCS projects that 88 of the 119 national cemeteries (74 percent)
will no longer be able to accommodate casket burials of first family
members.14




14
 With the projected completion of five new national cemeteries by 2000, the total number of national
cemeteries will increase from 114 to 119.



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Figure 3: Casket Grave Site Availability at National Cemeteries, 1996, 2010, and 2020




                                           Page 16                                      GAO/HEHS-97-192 National Cemetery System
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Source: NCS national data.




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Columbarium Burial Offers            As less burial space is available, columbarium burial offers the most
Most Efficient Option for            efficient interment option for extending the service period of existing
Extending the Service                cemeteries. Our analysis of the costs of three interment options, based on
                                     the development of 1 remaining acre of land, pieces of which were not
Period of Existing                   contiguous to each other, showed that the average burial cost would be
Cemeteries                           lowest using columbarium interment. For example, the average
                                     columbarium interment cost would be about $280, compared with about
                                     $345 for in-ground cremains burial and about $655 for casket burial, as
                                     shown in figure 4.


Figure 4: Estimated Average Burial
Costs of Three Interment Options




                                     Source: GAO analysis.




                                     Our analysis also showed that the service delivery period would be
                                     extended the most using the columbarium. For example, a total of 1 acre
                                     of land could accommodate about 87,000 columbarium niches and could
                                     extend the service delivery period for over 52 years, compared with about




                                     Page 18                               GAO/HEHS-97-192 National Cemetery System
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                                          3 years for about 4,800 in-ground cremains sites and about 1/2 year for
                                          about 870 casket sites, as shown in figure 5.



Figure 5: Estimated Additional Sites and Service Delivery Period Extension for Three Interment Options




                                          Source: GAO analysis.




                                          Although NCS officials acknowledge that the columbarium option could
                                          extend the service delivery period of existing cemeteries, they said that it
                                          has been used to do so at only one national cemetery, which is located on
                                          the west coast. Furthermore, at the end of fiscal year 1996, only 9 of the
                                          114 national cemeteries offered interment in a columbarium, while the
                                          majority of cemeteries provided casket and in-ground cremains sites.
                                          According to NCS officials, NCS has not made greater use of columbaria
                                          primarily because of their substantial up-front construction costs. Officials
                                          said they generally develop casket and in-ground cremains sites first
                                          because they believe the initial costs are less. However, our analysis




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showed that the total cost per burial would be lower for a columbarium
because of its low operations and maintenance costs.

Columbaria would be particularly useful in metropolitan areas where
interment rates are high; past or projected cremation demand is
significant; land is scarce, expensive, or both; and no state veterans’
cemetery exists to compensate for the lack of available national cemetery
grave sites. For example, at one midwestern cemetery, NCS plans to add
about 8,000 casket sites, but no cremation sites, to its last acres. With the
additional casket sites, the cemetery is projected to deplete all burial
spaces about the time veteran deaths peak, and no state veterans’
cemetery exists to compensate for the lack of burial spaces. However, by
incorporating columbaria into 1/2 acre of land, this cemetery could
continue to provide a burial option to thousands of additional veterans,
who otherwise would have no burial option available to them within a
reasonable distance of their homes, and keep the cemetery open well
beyond the peak years.

While historical data imply that the majority of veterans and eligible
dependents prefer a casket burial, NCS national data show that the demand
for cremation at national cemeteries is increasing. For example, while
about 70 percent of veterans prefer a casket burial, veterans choosing
cremation increased from about 20 percent of the veteran population in
1990 to nearly 30 percent in 1996, and NCS officials expect demand for
cremation to continue to increase in the future. At cemeteries offering
both types of interments, the ratio of casket to cremation interments
varies significantly. For example, cremation accounts for over 40 percent
of interments at some cemeteries and less than 5 percent at others. In
addition, according to cemetery directors, veterans choosing cremation do
not strongly prefer either in-ground burial or interment in a columbarium
niche.

The incidence of cremation also continues to increase in the general
population. For example, cremation was chosen for about 14 percent of
nationwide burials in 1985 and about 21 percent in 1995. The Cremation
Association of North America (CANA) projects that cremations will account
for about 40 percent of all burials by 2010.15 Like other interment options,
cremation is an individual’s decision and is subject to influences such as
culture, religion, geographic area of the country, and age and generational
preferences. According to CANA, people choose cremation primarily

15
 Projected cremation demand is based on actual statewide cremation data compiled by CANA, the
only organization that compiles such data. The 2010 projected cremation rate is based upon the
average actual increase in cremation between 1985 and 1995.



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                         because it is perceived as less expensive and simpler than traditional
                         casket burial, it uses less land, and it offers more options for
                         memorialization.


                         Long-range planning is crucial to addressing veterans’ burial needs during
Conclusion               the peak years and beyond. Although NCS has a 5-year strategic plan, it
                         does not address veterans’ burial needs beyond the year 2000, when the
                         demand for burial benefits will be greatest. Specifically, while the World
                         War II veteran population is entering its peak years of need, many national
                         cemeteries are depleting their inventory of available casket grave sites. As
                         a result, additional burial sites are needed to help meet future burial
                         demand. In some cases, state veterans’ cemeteries could reduce the
                         negative impact of the loss of available casket spaces from a national
                         cemetery. However, it does not appear that state veterans’ cemeteries will
                         be able to accommodate all veterans seeking interment. Therefore, NCS
                         needs to rely more on extending the service periods of its existing national
                         cemeteries. Columbaria can more efficiently utilize available cemetery
                         land at a lower average burial cost than the other interment options and
                         can also extend the service period of existing national cemeteries. Using
                         columbaria also adds to veterans’ choice of services and recognizes
                         current burial trends. Although cremation will not be the preferred burial
                         option for all veterans, identifying veterans’ burial preferences would
                         enable NCS to better manage limited cemetery resources and more
                         efficiently meet veterans’ burial needs.


                         To better serve the American veteran, we recommend that the Secretary of
Recommendation           Veterans’ Affairs instruct the director of the National Cemetery System to

                     •   extend its strategic plan to address veterans’ long-term burial demand
                         during the peak years of 2005 to 2010;
                     •   collect and use information on veterans’ burial preferences to better plan
                         for future burial needs; and
                     •   identify opportunities to construct columbaria in existing cemeteries, for
                         the purpose of increasing burial capacity and extending the cemeteries’
                         service periods.


                         In commenting on a draft of this report, the Director of NCS stated that our
Agency Comments          recommendations appeared valid and represented the vision and
and Our Evaluation       performance of NCS in meeting the burial needs of veterans. He also said



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that NCS is currently executing many of the practices recommended by our
report. For example, the NCS Director concurred with our recommendation
that NCS develop plans to address veterans’ long-term burial demand
during the peak years and stated that NCS is already performing long-term
planning, as evidenced by numerous strategies and activities. We
recognize that NCS has developed valuable information from such sources
as the Management and Decision Support System and cemetery master
plans to help it address long-range issues, but even with this information,
NCS is unable to specify the extent to which veterans will have access to a
national or state veterans’ cemetery during the peak years. NCS’ estimates
of the percentage of veterans who will have access to a veterans’ cemetery
stop at the year 2000.

NCS needs to develop a strategic plan that links information such as
mortality rates and the number of projected interments and cemetery
closures, obtained from various sources, to its strategic goals,
performance measures, and mitigation plans over the next 15 years. For
example, one of NCS’ goals is to ensure that a burial option is available to
all eligible veterans. Although NCS’ current strategic plan estimates a
20-percent increase in annual veteran deaths between 1995 and 2010, it
does not indicate how NCS will begin to position itself to handle this
increase in demand for burial benefits. Because of the lead time required
to acquire land and develop some types of interment spaces, NCS needs to
develop strategies that address such issues as (1) how many burial spaces
will be needed at each cemetery to accommodate the projected demand
for burial benefits during the peak years; (2) how NCS will acquire the
additional burial spaces—for example, by purchasing adjacent land or
maximizing existing land by using columbaria; and (3) when and how NCS
will obtain funds, acquire land, and assess veteran preferences.

In addition, while one of NCS’ strategies for meeting the projected burial
demand includes encouraging states to build cemeteries, the Director of
the State Cemetery Grants Program told us that few states, especially
those with large veteran populations—such as New York, Florida, Texas,
Ohio, and Michigan—would be swayed by proposed legislation that would
increase the federal share of construction and equipment costs. NCS
officials also acknowledged that their ability to persuade states to
participate in the program is limited, because the states must take the
initiative to request grant funds. We revised our previous recommendation
to encourage NCS to extend its strategic plan to address veterans’ long-term
burial demand during the peak years of 2005 to 2010.




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The NCS Director also concurred with our recommendation to collect and
use information on veterans’ burial preferences to better plan for future
burial needs. While the Director stated that NCS carefully tracks actual
burial practices in national cemeteries and monitors trends in the private
cemetery sector, and that these indexes offer a reliable method of planning
for the future, he said that additional data on veterans’ preferences would
assist NCS in its planning efforts. Therefore, he stated that NCS will include
questions pertaining to personal burial preferences in the next VA National
Survey of Veterans.

Finally, the Director of NCS concurred with our recommendation to
identify opportunities to construct columbaria in existing cemeteries for
the purpose of increasing burial capacity and extending the service
delivery period of these cemeteries. He asserted that NCS is already
accomplishing what our recommendation was intended to achieve in that
it (1) plans to add columbaria at eight existing cemeteries and five new
cemeteries and (2) annually considers all sites that may warrant the
establishment of columbarium units. We acknowledge, as stated in our
report, that NCS plans to add columbaria at 8 of the 114 existing national
cemeteries and include columbaria in its 5 new cemeteries. However, the
intent of our recommendation was to encourage VA to identify
opportunities to construct columbaria in cemeteries that are nearing
depletion of casket grave sites for first family members or have already
run out. This will involve at least 72 cemeteries by 2010.

Although NCS acknowledges that columbaria could extend service at a
cemetery that would otherwise be closed to veteran use, they have only
been used for this purpose at one national cemetery. While the NCS
Director stated in his comments that NCS considers the anticipated ratio of
casket burial to cremains burial when planning for the future, during our
review, NCS officials stated that they primarily use historical usage data.
For example, at one cemetery, NCS planned to allocate more than
30 percent of the burial spaces for cremation sites, although the cremation
rate for the state in which the cemetery was located was more than
50 percent in 1995, and projected to increase to more than 60 percent in
2000 and to about 80 percent in 2010. As our report states, by including
other factors in the decision process, such as projected cremation
demand, availability and cost of land, and availability of grave sites at state
veterans’ cemeteries, officials may identify additional national cemeteries
that warrant the establishment of columbaria.




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NCS also provided technical comments in an attached white paper.
Comments 1 through 3 repeat points made in the letter. Comments 4 and 5
question the results of our analysis of the cost of extending the service
period of existing cemeteries, since it was based on the maximum number
of burial sites available in an acre of land. Specifically, NCS commented
that it may not be feasible to devote a single 1-acre plot entirely to
columbarium niches because using the “absolute maximum” would not
allow space between structures. However, in our analysis we did not
envision a single 1-acre plot. Rather, we assumed several parcels of land
dispersed around the cemetery that totaled 1 acre of available burial
space. Accordingly, we have revised our discussion to clarify this issue.

Comment 6 questions our assumption that first family member interments
would be evenly spaced over 30 years for all three modes of burial.
Specifically, NCS suggests an analysis in which the annual interment rates
are assumed to differ for the three alternatives (casket, in-ground
cremains, and columbarium burials), reflecting current use patterns.
However, our objective was to perform a cost comparison. For a valid cost
comparison, the alternatives being compared must be evaluated in terms
of the same outcome—in this case, to inter a given number of eligible
veterans and their dependents according to a given schedule. The specific
assumption we adopted—evenly spaced first family member interments
for all alternatives—was previously suggested to us by NCS, and our
analysis is similar to the one NCS used in its 1996 study. The type of
analysis that NCS is now suggesting is outside the scope of our work.

NCSoffered other technical comments, which we incorporated where
appropriate. NCS’ comments are included in their entirety in appendix III.


We are sending copies of this report to the Secretary of Veterans Affairs
and other interested parties. This work was performed under the direction
of Irene Chu, Assistant Director. If you or your staff have questions about




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this report, please contact Ms. Chu or me on (202) 512-7101. Other major
contributors to this report are listed in appendix IV.

Sincerely yours,




Stephen P. Backhus
Director, Veterans’ Affairs and
  Military Health Care Issues




Page 25                              GAO/HEHS-97-192 National Cemetery System
Contents



Letter                                                                                             1


Appendix I                                                                                        28
                        Introduction                                                              28
Our Analysis of the     Overview of Our Models                                                    29
Long-Term Costs of      Assumptions and Data                                                      29
Alternative Modes of
Interment:
Methodology and
Data
Appendix II                                                                                       36

Information on the
Costs of Three Types
of National
Cemeteries
Appendix III                                                                                      40

Comments From the
National Cemetery
System
Appendix IV                                                                                       45

Major Contributors to
This Report
Tables                  Table 1: Comparison of 30-Year Present Value Costs of Three               12
                          Types of Cemeteries With 50,000 Burial Spaces, in 1997 Dollars
                        Table II.1: Cost Summary for a Cemetery Offering Only Casket              36
                          Burial
                        Table II.2: Cost Summary for a Cemetery Offering Only                     37
                          Columbarium Burial
                        Table II.3: Cost Summary for a Cemetery Offering Only In-Ground           38
                          Cremains Burial




                        Page 26                              GAO/HEHS-97-192 National Cemetery System
          Contents




Figures   Figure 1: Columbarium and In-Ground Cremains Sites at National             5
            Cemeteries
          Figure 2: Estimated Number of Veteran Deaths, 1995-2040                    8
          Figure 3: Casket Grave Site Availability at National Cemeteries,          16
            1996, 2010, and 2020
          Figure 4: Estimated Average Burial Costs of Three Interment               18
            Options
          Figure 5: Estimated Additional Sites and Service Delivery Period          19
            Extension for Three Interment Options
          Figure II.1: Cash Flow for Three Modes of Burial                          39




          Abbreviations

          CANA       Cremation Association of North America
          FTE        full-time-equivalent
          GS         general schedule
          NCS        National Cemetery System
          SSA        Social Security Administration
          VA         Department of Veterans Affairs
          WG         wage grade


          Page 27                              GAO/HEHS-97-192 National Cemetery System
Appendix I

Our Analysis of the Long-Term Costs of
Alternative Modes of Interment:
Methodology and Data
                             In this appendix we discuss the methodology, data sources, and principal
Introduction                 assumptions that we used to

                         •   characterize the relative long-term cost of each of three modes of
                             interment: casket, in-ground cremains, and columbarium;
                         •   project the outlays that would be required to construct and operate a
                             cemetery that offers each of these modes of interment over a period of 30
                             years or more;16 and
                         •   estimate the cost of these three types of interment on the basis of the
                             development of a total of 1 acre of land composed of parcels of land not
                             contiguous to each other in a cemetery nearing depletion of available
                             burial sites.

                             Our analysis builds on a study that the National Cemetery System (NCS)
                             performed at the request of the Chairman, Subcommittee on
                             Compensation, Pension, Insurance and Memorial Affairs, in
                             February 1996. In that study, the Department of Veterans Affairs (VA)
                             presented an analysis of the relative costs of casket and columbarium
                             burial over a 20-year period. For the purpose of this report, we have
                             updated and extended the NCS analysis, most notably by

                         •   adding in-ground cremains burial as a third alternative, as requested by the
                             Subcommittee;
                         •   analyzing costs over 30 years or more, thus recognizing that cost
                             differences among the modes of interment will persist far into the future;
                         •   analyzing the relative long-term costs of the three alternatives in the
                             context of using available space in existing cemeteries, as well as in the
                             context of developing new cemeteries; and
                         •   using the present value method to evaluate the relative long-term costs of
                             the three alternatives.


Present Value Analysis       Simple comparisons of cumulative outlays for the several modes of
                             interment (casket, in-ground cremains, and columbarium) would provide a
                             misleading picture of the relative costs of the respective options because
                             the modes differ in the relative share of total cost that is incurred in the
                             first years. Moreover, a dollar paid by the government today is more costly
                             than a dollar paid at some future date, because it increases the burden of
                             making interest payments on the national debt.

                             16
                               We recognize that it is unlikely that VA would ever devote an entire new cemetery to a single mode of
                             interment. However, we believe our analysis of the long-term costs of hypothetical single-use
                             cemeteries serves to isolate the relevant differences in the long-term costs of the three types of
                             interment.



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                                   Appendix I
                                   Our Analysis of the Long-Term Costs of
                                   Alternative Modes of Interment:
                                   Methodology and Data




                                   It is standard practice among policy analysts to compare different payment
                                   streams by calculating the present value (also known as the lump-sum
                                   equivalent) of each stream.17


                                   We developed two models. The first model was used to estimate the
Overview of Our                    long-term cost of alternative burial modes in a new cemetery. The second
Models                             model was used to estimate the long-term cost of alternative uses of
                                   available space in an existing cemetery. Each model consisted of three
                                   basic components:

                               •   simulating the sequence of events whereby a cemetery is opened and
                                   burial sites are developed, placed into service, and maintained;
                               •   attaching estimated costs to each of these events, so as to create a
                                   trajectory of costs over the whole time period; and
                               •   calculating the present values of cost streams associated with each of the
                                   options being evaluated.


                                   We developed the assumptions and specified the data to be collected in
Assumptions and Data               consultation with NCS experts. Except as noted below, NCS officials
                                   supplied the data.18 We did not verify all of the data.

                                   What follows is, first, a description of the elements of the model for the
                                   analysis of the costs of a new cemetery designed for 50,000 burial sites,
                                   with burials to take place over a 30-year period. Second, we describe how
                                   we modified the data and assumptions for the second model, which
                                   analyzes the cost of adding to an existing cemetery.


Analysis of the Costs of a
New Cemetery
Timing of Significant Events       Land acquisition. We assumed that all land acquisition and development of
                                   architectural master plans and environmental impact statements would
                                   occur in the first year.


                                   17
                                    Office of Management and Budget, Guidelines and Discount Rates for Benefit-Cost Analysis of
                                   Federal Programs, Circular A-94 (Washington, D.C.: Office of Management and Budget, revised Oct. 29,
                                   1992).
                                   18
                                     As agreed with your office, we asked NCS to supply cost data that pertain to the Tahoma National
                                   Cemetery in the Seattle area and other data describing the average salaries of NCS employees and
                                   their time charges.



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                               Appendix I
                               Our Analysis of the Long-Term Costs of
                               Alternative Modes of Interment:
                               Methodology and Data




                               Development of burial sites. NCS officials told us that burial sites would be
                               developed in three phases, each of which would result in one-third (about
                               16,700) of the total number of burial sites. The first phase would occur in
                               the second and third years. The second phase would occur in the eleventh
                               through thirteenth years. The third phase would take place in the
                               twenty-first through twenty-third years. Each of the three phases would
                               involve outlays for design, land development, and equipment acquisition
                               (see below). The construction of buildings would occur during the first
                               two phases.

                               First family member interments. Per NCS guidance, we assumed that first
                               family member interments would commence in the fourth year and that
                               they would be evenly spaced over the next 30 years (that is, there would
                               be 1,667 first family member interments per year).

                               Subsequent interments. We used the assumption, supplied by NCS officials,
                               that subsequent interments would initially make up 2 percent of first
                               family member interments and would increase linearly over time, so that
                               in the thirtieth year (that is, the thirty-third year of the period of analysis),
                               subsequent interments would make up 60 percent of first interments.

Development and Construction   These costs include the cost of site acquisition, site development
Costs                          (conducting environmental impact assessments, obtaining
                               architect/engineer design services, and developing land), and construction
                               of buildings (administration and maintenance facilities).

                               Site acquisition. According to NCS officials, land in the vicinity of the
                               Tahoma National Cemetery costs $10,000 per acre. They told us that a
                               cemetery exclusively devoted to casket burial would require 114.8 acres,
                               of which 57.4 acres would be used for grave sites and 57.4 acres for
                               infrastructure (parking lots, driveways, buildings, landscaping, and so on).
                               A cemetery devoted exclusively to in-ground cremains burial would
                               require 34.3 acres (10.3 acres for burial sites and 24.0 acres for
                               infrastructure). An all-columbarium cemetery would require 14.25 acres
                               (0.57 acre for columbaria and 13.68 acres for infrastructure).

                               Site development. The estimated cost for the environmental assessment
                               aspect of site development is $100,000 for a casket cemetery, $17,150 for
                               an in-ground cremains cemetery, and $7,250 for a columbarium cemetery.
                               These estimates reflect NCS’ experiences with similar projects in the past.




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                             Appendix I
                             Our Analysis of the Long-Term Costs of
                             Alternative Modes of Interment:
                             Methodology and Data




                             The architect/engineer design cost category covers such services as
                             carrying out a topographic survey, an archeological exploration, and
                             traffic impact studies. The cost of architect/engineer design services is
                             assumed to be proportional to construction costs (land development plus
                             buildings). The estimated cost of these services for phase 1 is $545,414 for
                             the casket alternative, $246,249 for in-ground cremains sites, and $862,233
                             for columbaria. For phases 2 and 3, costs would be lower.

                             Land development costs include site preparation (for example, grading;
                             landscaping; and providing irrigation, roads, storm drainage, and utilities)
                             and purchasing site furnishings (for example, benches and flagpoles). The
                             estimated cost of land development is $102,298 per acre for all modes of
                             interment. Thus, land development costs for the three alternatives are
                             proportional to their respective acreage requirements, discussed above.

                             Under each alternative, one-third of the total acreage would be developed
                             in each of the three phases (years 2 through 3, 12 through 13, and 22
                             through 23). For a casket cemetery, outlays would amount to $3.91 million
                             in each phase. For an in-ground cremains cemetery, the estimated cost is
                             $1.17 million per phase. For a columbarium cemetery, the estimated cost is
                             $0.49 million per phase.

                             Construction of buildings. Buildings that would be constructed in phase 1
                             include a public information building, an administration building, a
                             maintenance building, a vehicle storage building, and two committal
                             service shelters. An additional committal service shelter would be
                             constructed in phase 2. The three alternatives have different requirements
                             for the size of the maintenance and vehicle storage buildings. Columbaria
                             niches would be constructed in each phase, giving this mode the highest
                             total construction cost.

Operations and Maintenance   These costs include (1) the cost of purchasing initial and subsequent
Costs                        equipment; (2) salary and benefits for personnel to handle administration
                             and interment issues (drafting contracts and correspondence; handling
                             public inquiries, ceremonies, and outreach; scheduling burial services;
                             opening/closing grave sites or niches; interring casket or cremated
                             remains; setting headstones or placing markers; and restoring burial
                             sections); (3) the cost of purchasing nonlabor items (fertilizer, seeds,
                             headstones, markers, and grave liners); and (4) the cost of maintenance
                             activities (keeping the grounds and facilities).




                             Page 31                                  GAO/HEHS-97-192 National Cemetery System
Appendix I
Our Analysis of the Long-Term Costs of
Alternative Modes of Interment:
Methodology and Data




Equipment. VA provided estimates of the equipment costs for the three
modes. The initial costs were $736,674 for caskets, $443,003 for in-ground
cremains sites, and $91,664 for columbaria—all purchased in year 3 of the
first phase. Subsequent equipment purchases were assumed to be equal
and to occur in year 3 of phases 2 and 3. We estimated their cost at
$150,000 for caskets, $90,000 for in-ground cremains sites, and $18,000 for
columbaria.

Labor associated with administration and interments. We assumed that it
would require 7.3 full-time-equivalent (FTE) general schedule (GS)
employees, at an annual rate (pay and benefits) of $45,216 each, plus 6.7
FTE wage grade (WG) employees at a rate of $35,085 each, to conduct the
1,667 interments that are projected for each year under all three burial
modes. VA said that the GS administrative and interment requirements
would be the same for all three modes but that the WG labor associated
with each mode would vary. According to NCS assumptions, the WG labor
required for casket burials was 6.7 FTEs. We had to develop our own
estimate—3 FTEs for in-ground cremains sites and .56 FTE for columbarium
niches—because VA had no specified ratio for WG labor for the noncasket
modes.

We assumed subsequent interments would require a prorated amount of
labor. That is, if subsequent interments in a given year are estimated to be
20 percent of first interments, we assumed that labor costs associated with
subsequent interments would be equal to 20 percent of the labor costs
associated with first interments. Put differently, we assumed that each
subsequent interment would require as much labor as each first interment.

Nonlabor costs. These costs include the costs of irrigating and purchasing
fertilizer, seed, and other supplies. We used VA estimates to derive
amounts for this category of costs. The amounts are small and
proportional to the acreage developed. For the casket model, the nonlabor
costs would be $389,000 in phase 1, increasing by $95,500 in phases 2 and 3
to a total of $580,000 by the 24th year. For in-ground cremains sites, we
adjusted the cost in phase 1 by the ratio of acreage to arrive at a cost of
$117,000, rising by $28,500 in phases 2 and 3 to a total of $174,000 in the
24th year (with rounding). For columbaria, the initial nonlabor cost was
$57,000, rising $14,000 in phases 1 and 2 to a total of $85,000 in years 24
through 33.

Outlays for headstones and markers are proportional to the number of
first interments in a given year. These costs vary depending on the area of



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                            Appendix I
                            Our Analysis of the Long-Term Costs of
                            Alternative Modes of Interment:
                            Methodology and Data




                            the country in which the headstones and markers are purchased. For this
                            analysis, we used the middle price in the range of prices VA said they pay.
                            For a casket burial, we assumed a headstone cost of $120; for an in-ground
                            cremains burial, we assumed a grave marker cost of $70; and for a
                            columbarium burial, we assumed a niche cover cost of $15. Casket burials
                            require grave liners, at an estimated cost of $240 apiece.

                            Labor associated with maintenance. VA uses the standard of 1 FTE per 10.7
                            developed acres for casket cemeteries. Using this ratio, under the casket
                            scenario, we estimated that maintenance of developed acreage would
                            require 3.5 WG FTEs during phase 1 (years 4 through 13), 7 FTEs during
                            phase 2 (years 14 through 23), and 10.5 FTEs during phase 3 (years 24
                            through 33), at the annual pay rates stated above. We adjusted these WG
                            labor requirements for the fewer acres in the other modes. For in-ground
                            cremains burials, we estimated that maintenance of developed grave sites
                            would require 1.1 FTEs during phase 1 and an additional 1.1 FTEs during
                            phases 2 and 3. For columbaria, we estimated that maintenance of
                            developed grave sites would require .4 FTE during phase 1, .9 FTE during
                            phase 2, and 1.3 FTEs during phase 3.

                            Further, there would also be labor costs associated with the maintenance
                            of burial sites that have already been placed in service (that is, in which
                            there has been a first family member interment). VA uses an estimate of 1
                            FTE per 7,844 developed grave sites in its planning for new cemeteries.
                            Using this ratio, it would require about .2 FTE a year for the 30-year burial
                            period in a casket cemetery. We adjusted this amount to reflect the lesser
                            acreage of the other modes. For in-ground cremains sites, .04 FTE per year
                            would be required; for columbaria, .002 FTE would be required. The cost
                            differences among the three alternatives are proportional to the
                            differences in the number of burial acres (as opposed to infrastructure
                            acres) that each alternative requires. For each alternative, grave site
                            maintenance costs would increase linearly for each succeeding year,
                            because we assumed that the same number of first family member
                            interments (1,667) would take place each year.


Analysis of the Costs of    We also analyzed the relative long-term cost of each of the three
Extending an Existing       alternatives as it applied to extending the service period of an existing
Cemetery’s Service Period   cemetery. For this model, we adopted the same assumptions, and used the
                            same data, as for the model we used to analyze the long-term cost of a new
                            cemetery, with the following modifications:




                            Page 33                                  GAO/HEHS-97-192 National Cemetery System
                             Appendix I
                             Our Analysis of the Long-Term Costs of
                             Alternative Modes of Interment:
                             Methodology and Data




                         •   We assumed the existence of an acre of land that had already been
                             acquired—an acre composed of parcels of land that were not contiguous
                             to each other—so that the cost of land acquisition was zero for all three
                             alternatives.
                         •   Similarly, we assumed that such costs as environmental assessment,
                             architect/engineer design, land development, and construction of
                             administration and maintenance buildings had already been incurred for
                             the casket and in-ground cremains site estimates.
                         •   We assumed that for columbaria, it would be necessary to incur the cost of
                             constructing a set of niches, including architect/engineer design costs.
                         •   For each of the three alternatives, we assumed that a total of 1 acre of
                             land, pieces of which were not contiguous to each other, could be devoted
                             to burial sites. That is, we assumed that the cemetery’s infrastructure (for
                             example, roads) was complete and that there were no other obstacles
                             (such as irregular topography) to the full use of the acre for burial sites.
                             Thus, we assumed the theoretical maximum number of interment sites:
                             871 for caskets; 4,840 for in-ground cremains sites; and 87,000 for
                             columbaria.
                         •   Only costs that are incurred up to the time that the acre is closed to
                             further first family member interments are accounted for. Because, as
                             noted above, each of the three alternatives permits a different number of
                             interment sites per acre, and because we are assuming that first family
                             member interments will take place at a rate of 1,667 per year, the time at
                             which the acre’s first family member interment sites are full will be
                             different under the three alternatives (0.52 years for caskets; 2.9 years for
                             in-ground cremains sites; and 52.2 years for columbaria). This simplifying
                             assumption leads to an understatement of the cost of casket burial relative
                             to that of the other alternatives, all other things equal.

Additional Assumptions       Future changes in cost factors. All costs are expressed in 1997 dollars. We
                             assumed that although the costs of labor and materials could rise in the
                             future, the relative prices would remain unchanged.

                             Discount rate. We used a (real) discount rate of 3.21 percent. This rate is
                             based on (1) a (nominal) long-term cost to the government of borrowing
                             6.71 percent, as represented by the interest rate on 30-year Treasury
                             securities as of June 1997, and (2) a long-term inflation rate projection of
                             3.5 percent that was prepared by the Social Security Administration (SSA).19

                             19
                               We also performed a sensitivity analysis in which we used a (real) discount rate of 2.7 percent based
                             on SSA’s intermediate long-term projection of the real interest rate (see SSA, 1997 Annual Report of
                             the Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund (Washington, D.C.:
                             SSA, Apr. 24, 1997, p. 7). We found that using this alternative assumption did not substantially alter the
                             relative costs of the three modes of interment.



                             Page 34                                               GAO/HEHS-97-192 National Cemetery System
Appendix I
Our Analysis of the Long-Term Costs of
Alternative Modes of Interment:
Methodology and Data




Period of analysis. As agreed with your office, we analyzed cost data over
a period that ends 30 years after the first interments (that is, 33 years), at
which time the cemeteries are assumed to be full.

Ideally, a cost analysis would consider the entire useful life of the project,
given that differences in operating costs among the three modes of
interment would persist even if there was no new development of burial
sites or new first family member interments. For a cemetery, this time
period is indefinite. Accordingly, we performed a sensitivity analysis in
which the present value of costs for the three modes of interments was
evaluated over a period of 53 years (that is, until 20 years had elapsed
since the last first family member interments).

We found that when costs were evaluated over the longer period, the cost
would be $58.4 million for casket burial, $24.1 million for in-ground
cremains burial, and $24.8 million for columbarium burial. The differences
between costs for the 33-year and 53-year periods reflect differences in
operating costs across the three modes of interment, especially the fact
that columbaria would require far less costly maintenance than the other
two types of interment.




Page 35                                  GAO/HEHS-97-192 National Cemetery System
Appendix II

Information on the Costs of Three Types of
National Cemeteries

                                          We provided information on a cemetery providing only casket interment,
                                          another providing only interment of cremated remains in columbarium
                                          niches, and a third providing interment of in-ground cremated remains.
                                          For each type of cemetery, this appendix provides 30-year undiscounted
                                          and present value cost estimates in 1997 dollars for development and
                                          construction and operations and maintenance. We also projected the cash
                                          outlays that would be required to construct and operate a cemetery that
                                          offered each of these modes of interment over a 30-year period (see fig.
                                          II.1). Costs were based on actual figures obtained from the most recent
                                          NCS construction project—Tahoma National Cemetery. The following
                                          tables present detailed data for each type of cemetery we analyzed.


Table II.1: Cost Summary for a Cemetery Offering Only Casket Burial
                                                                                                                Total cost            30-year
Cost factors                     Years 1-3          Years 4-13         Years 14-23         Years 24-33       undiscounted        present value
Development and construction costs
                                                                 a                   a                   a
Site acquisition (115 acres)    $1,148,000                                                                      $1,148,000          $1,148,000
                                                                 a                   a                   a
Environmental assessment           100,000                                                                          100,000             100,000
                                                                                                         a
Architect/Engineer design          545,414             $222,446           $215,265                                  983,125             822,027
                                                                                                         a
Land development                 3,907,783             3,907,783         3,907,783                              11,723,349            8,426,331
                                                                 a                   a                   a
Construction of buildings        1,547,581                                                                        1,547,581           1,476,131
                                                                                     a                   a
Committal service shelter          130,554               65,277                                                     195,831             169,922
                                                                                                         a
Subtotal                         7,379,332             4,195,506         4,123,048                              15,697,886          12,142,411
Operations and maintenance costs
                                          a
Labor                                                  7,887,048        10,946,990         $14,006,956          32,840,994          18,385,718
           a                              a
Nonlabor                                               9,891,200        10,846,200          11,801,200          32,538,600          19,071,773
                                                                                                         a
Equipment                          736,674              150,000             150,000                               1,036,674             869,083
Subtotal                           736,674          17,928,248          21,943,190          25,808,156          66,416,268          38,326,574
Total                           $8,116,006         $22,123,754         $26,066,238         $25,808,156         $82,114,154         $50,468,985
                                             a
                                             Not applicable.
                                             b
                                               Nonlabor costs include the cost of purchasing such items as grass seed, pest control, grave
                                             liners, and headstones or markers.




                                             Page 36                                            GAO/HEHS-97-192 National Cemetery System
                                              Appendix II
                                              Information on the Costs of Three Types of
                                              National Cemeteries




Table II.2: Cost Summary for a Cemetery Offering Only Columbarium Burial
                                                                                                                Total cost            30-year
Cost factors                    Years 1-3            Years 4-13        Years 14-23         Years 24-33       undiscounted        present value
Development and construction costs
                                                                 a                   a                   a
Site acquisition (14 acres)      $142,500                                                                         $142,500            $142,500
                                                                 a                   a                   a
Environmental assessment              7,250                                                                            7,250              7,250
                                                                                                         a
Architect/Engineer design          862,233              $518,974           $511,794                               1,893,001           1,512,670
                                                                                                         a
Land development                   485,916               485,916            485,916                               1,457,748           1,047,778
                                                                 a                   a                   a
Construction of buildings          965,001                                                                          965,001             920,443
                                                                                     a                   a
Committal service shelter          130,554                65,277                                                    195,831             169,922
                                                                                                         a
Columbaria                      4,166,750               4,166,750         4,166,750                             12,500,250            8,984,740
                                                                                                         a
Subtotal                        6,760,204               5,236,917         5,164,460                             17,161,581          12,785,303
Operations and maintenance costs
                                          a
Labor                                                   4,041,213         4,902,749          $5,764,296         14,708,258            8,428,489
           b                              a
Nonlabor                                                 820,050            960,050           1,100,050           2,880,150           1,667,550
                                                                                                         a
Equipment                            91,664               18,000              18,000                                127,664             107,353
Subtotal                             91,664             4,879,263         5,880,799           6,864,346         17,716,072          10,203,392
Total                           6,851,868           $10,116,180        $11,045,259           $6,864,346        $34,877,653         $22,988,695
                                              a
                                              Not applicable.
                                              b
                                               Nonlabor costs include the cost of purchasing such items as grass seed, pest control, and niche
                                              covers.




                                              Page 37                                           GAO/HEHS-97-192 National Cemetery System
                                              Appendix II
                                              Information on the Costs of Three Types of
                                              National Cemeteries




Table II.3: Cost Summary for a Cemetery Offering Only In-Ground Cremains Burial
                                                                                                               Total cost           30-year
Cost factors                    Years 1-3            Years 4-13        Years 14-23        Years 24-33       undiscounted       present value
Development and construction costs
                                                                 a                  a                   a
Site acquisition (34 acres)      $343,000                                                                        $343,000            $343,000
                                                                 a                  a                   a
Environmental assessment             17,150                                                                         17,150              17,150
                                                                                                        a
Architect/Engineer design          246,249               $45,890            $38,710                                330,849            300,284
                                                                                                        a
Land development                1,166,197               1,166,197         1,166,197                              3,498,591          2,514,664
                                                                 a                  a                   a
Construction of buildings       1,159,204                                                                        1,159,204          1,105,685
                                                                                    a                   a
Committal service shelter          130,554                65,277                                                   195,831            169,922
                                                                                                        a
Subtotal                        3,062,354               1,277,364         1,204,907                              5,544,625          4,450,705
Operations and maintenance costs
                                          a
Labor                                                   6,071,287         7,352,561         $8,633,833         22,057,681          11,385,942
           b                              a
Nonlabor                                                2,336,900         2,621,900          2,906,900           7,865,700          4,590,211
                                                                                                        a
Equipment                          443,003                90,000             90,000                                623,003            522,387
Subtotal                           443,003              8,498,187       10,064,461          11,540,733         30,546,384          16,498,540
Total                          $3,505,357            $9,775,551        $11,269,368        $11,540,733         $36,091,009        $20,949,245
                                              a
                                              Not applicable.
                                              b
                                              Nonlabor costs include the cost of purchasing such products as grass seed, pest control, and
                                              markers.




                                              Page 38                                          GAO/HEHS-97-192 National Cemetery System
                                                   Appendix II
                                                   Information on the Costs of Three Types of
                                                   National Cemeteries




Figure II.1: Cash Flow for Three Modes of Burial

Dollars in Millions

5



4



3



2



1



0
    1    3      5     7    9        11   13   15      17     19   21   23    25    27    29     31   33
                                                      Year

          Casket
         In-Ground Cremains Sites
          Columbarium




                                                   Page 39                                       GAO/HEHS-97-192 National Cemetery System
Appendix III

Comments From the National Cemetery
System




               Page 40     GAO/HEHS-97-192 National Cemetery System
Appendix III
Comments From the National Cemetery
System




Page 41                               GAO/HEHS-97-192 National Cemetery System
Appendix III
Comments From the National Cemetery
System




Page 42                               GAO/HEHS-97-192 National Cemetery System
Appendix III
Comments From the National Cemetery
System




Page 43                               GAO/HEHS-97-192 National Cemetery System
Appendix III
Comments From the National Cemetery
System




Page 44                               GAO/HEHS-97-192 National Cemetery System
Appendix IV

Major Contributors to This Report


               Donald C. Snyder, Assistant Director (Economist), (202) 512-7204
               Jaqueline Hill Arroyo, Evaluator-in-Charge, (202) 512-6753
               Jeffrey Pounds, Evaluator
               Timothy J. Carr, Senior Economist




(105748)       Page 45                              GAO/HEHS-97-192 National Cemetery System
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