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                                                      Calendar No. 202
114th Congress       }                                 {        Report
                                     SENATE
 1st Session         }                                 {       114-122
                                
                                                              
======================================================================



 
      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2015

                                _______
                                

                August 28, 2015.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1493]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs (hereinafter, 
``Committee''), to which was referred the bill (S. 1493) to 
provide for an increase, effective December 1, 2015, in the 
rates of compensation for veterans with service-connected 
disabilities and the rates of dependency and indemnity 
compensation (hereinafter, ``DIC'') for the survivors of 
certain disabled veterans, and for other purposes, having 
considered the same, reports favorably thereon, without 
amendment, and recommends that the bill do pass.

                              Introduction

    On June 3, 2015, Committee Chairman Johnny Isakson 
introduced S. 1493, a bill to provide for an increase, 
effective December 1, 2015, in the the rates of compensation 
for veterans with service-connected disabilities and the rates 
of dependency and indemnity compensation for the survivors of 
certain disabled veterans, and for other purposes. Ranking 
Member Richard Blumenthal and Committee Members Jerry Moran, 
John Boozman, Dean Heller, Bill Cassidy, Mike Rounds, Thom 
Tillis, Dan Sullivan, Patty Murray, Bernard Sanders, Sherrod 
Brown, Jon Tester, Mazie K. Hirono, and Joe Manchin are 
original cosponsors of the bill, which was referred to the 
Committee upon introduction.

                           Committee Hearing

    On May 13, 2015, the Committee held a hearing on 
legislation pending before the Committee. Testimony on S. 1493 
was received from: David R. McLenachen, Acting Deputy Under 
Secretary for Disability Assistance, Department of Veterans 
Affairs; Jeffrey E. Phillips, Executive Director, Reserve 
Officers Association; and Aleks Morosky, Deputy Director, 
National Legislative Service, Veterans of Foreign Wars of the 
United States.

                           Committee Meeting

    On July 22, 2015, the Committee met in open session to 
consider legislation pending before the Committee. Among the 
measures so considered was S. 1493. The Committee voted by 
voice vote, without objection, to report favorably S. 1493 to 
the Senate.

               Summary of the Committee Bill as Reported

    The Committee bill contains freestanding provisions that 
would require the Secretary of Veterans Affairs to increase, 
effective December 1, 2015, the rates of certain benefits paid 
by the Department of Veterans Affairs (hereinafter, ``VA'') by 
the same percentage as the cost-of-living adjustment 
(hereinafter, ``COLA'') provided to Social Security recipients 
and VA pension beneficiaries that become effective on the same 
date. The COLA would apply to:

    1. Basic compensation rates for veterans with service-
connected disabilities and the rates payable for certain severe 
disabilities;
    2. The allowance for spouses, children, and dependent 
parents paid to service-connected disabled veterans rated 30 
percent or more disabled;
    3. The annual clothing allowance paid to veterans whose 
compensable disability requires the use of a prosthetic or 
orthopedic appliance (including a wheelchair) that tends to 
tear or wear out clothing or requires the use of a medication 
prescribed by a physician for a service-connected skin 
condition if the medication causes irreparable damage to the 
veteran's outer garments; and
    4. The DIC rates paid to:

          (a) surviving spouses of veterans whose deaths were 
        service-connected;
          (b) surviving spouses for dependent children below 
        the age of 18;
          (c) surviving spouses who are so disabled that they 
        need aid and attendance or are permanently housebound;
          (d) surviving spouses covered under section 1318 of 
        title 38, United States Code (hereinafter, ``U.S.C.''); 
        and
          (e) the children of veterans whose deaths were 
        service-connected if no surviving spouse is entitled to 
        DIC, the child is age 18 through 22 and attending an 
        approved educational institution, or the child is age 
        18 or over and became permanently incapable of self-
        support prior to reaching age 18.

    The Congressional Budget Office (hereinafter, ``CBO'') 
estimated in its March 2015 baseline that the COLA to be 
provided to Social Security recipients in 2015 will be .9 
percent.

                       Background and Discussion


A. Disability compensation

    The service-connected disability compensation program under 
chapter 11 of title 38, U.S.C., provides monthly cash benefits 
to veterans who have disabilities incurred or aggravated during 
active duty in the Armed Forces.
    The amount of compensation paid depends on the nature and 
severity of the veteran's disability or combination of 
disabilities. VA rates compensable disabilities according to 
its Schedule for Rating Disabilities on a graduated scale 
ranging from 10 to 100 percent, in 10 percent increments. VA 
pays higher monthly rates (known as ``special monthly 
compensation'') to disabled veterans with certain specific, 
very severe disabilities or combinations of disabilities.
    According to VA, as set forth in its fiscal year 2016 
budget, the Department estimates that it will provide 
compensation to 4,699,871 beneficiaries (4,299,512 veterans and 
400,359 survivors) in fiscal year 2016. Among the veterans 
estimated to receive such compensation are 84,175 World War II 
veterans; 126,193 Korean Conflict veterans; 1,335,527 Vietnam-
era veterans; 2,022,224 veterans of the Persian Gulf War era; 
and 731,393 veterans who served during peacetime.
    A veteran with a disability rated at 30 percent or more may 
receive additional compensation on behalf of the veteran's 
spouse, children, and dependent parents. These dependents' 
allowances are prorated according to the percentage of 
disability.

B. Dependency and indemnity compensation

    Under chapter 13 of title 38, U.S.C., VA pays DIC to the 
survivors of servicemembers or veterans who died on or after 
January 1, 1957, from a disease or injury incurred or 
aggravated during military service. Survivors eligible for DIC 
include surviving spouses, unmarried children under the age of 
18, children age 18 or older who are permanently incapable of 
self-support, children between the ages of 18 and 22 who are 
enrolled in school, and certain needy parents. Under section 
5312 of title 38, U.S.C., parents' DIC rates are adjusted 
automatically at the same time and by the same percentage as 
Social Security and VA pension benefits. Surviving spouses, 
children, and parents who are receiving death compensation 
based on deaths before January 1, 1957, may elect to receive 
DIC instead of death compensation.
    For deaths on or after January 1, 1957, but prior to 
January 1, 1993, surviving spouses received DIC at rates 
determined by the pay grade (service rank) of the deceased 
veteran. For deaths on or after January 1, 1993, DIC is paid at 
a flat rate. Surviving spouses currently receive $1,254.19 per 
month and, if the deceased veteran was totally disabled for 8 
years prior to death, an additional $266.32 per month. 
Surviving spouses who had been receiving benefits under the 
prior DIC program are paid under whichever program will pay the 
higher benefit.
    A surviving spouse who is so disabled as to be housebound 
or in need of regular aid and attendance is eligible to receive 
an additional amount. A surviving spouse may also receive 
additional allowances on behalf of the veteran's surviving 
children.
    Children are entitled to DIC if there is no surviving 
spouse, if they are 18 years of age or older and became 
permanently incapable of self-support before reaching age 18, 
or if they are 18 to 22 years old and pursuing an approved 
course of education.
    Parents of deceased veterans whose incomes are below 
statutorily prescribed income thresholds are eligible for DIC 
under section 1315 of title 38, U.S.C. As previously noted, 
parents' DIC rates are adjusted automatically at the same time 
and by the same percentage as Social Security and VA pension 
benefits.
    In its fiscal year 2016 budget, VA estimates that it will 
pay DIC benefits to 400,359 survivors, a total that includes 
surviving spouses, children, and needy surviving parents.
    Under section 1318 of title 38, U.S.C., VA pays benefits at 
DIC rates to the surviving spouses and children of veterans 
whose deaths are not service-connected if the veteran, 
immediately prior to his or her death, had been receiving (or 
had been entitled to receive) compensation at the 100 percent 
rate continuously for 10 or more years or for at least 5 years 
from the date of discharge or release from active duty. VA also 
pays DIC benefits to the surviving spouses and children of 
veterans who were former prisoners of war whose deaths were not 
service-connected if the veterans had been receiving (or had 
been entitled to receive) compensation at the 100 percent rate 
continuously for not less than 1 year preceding death.
    Committee Bill. The Committee bill would direct VA to 
compute and provide increases in the monthly rates of 
compensation and DIC, effective December 1, 2015. The rates 
would be increased by the same percentage as the Social 
Security and VA pension COLA that will take effect on that 
date.
    The increases in DIC would automatically result in 
identical percentage increases in benefits paid at DIC rates 
under section 1318 of title 38, U.S.C., to the surviving 
spouses and children of veterans who had a service-connected 
disability at the time of death for which they continuously 
were rated totally disabled for at least (1) 10 years, (2) 5 
years from the date of discharge from active duty, or (3) 1 
year if the veteran was a former prisoner of war and whose 
death was not service-connected if the veteran had been 
receiving (or had been entitled to receive) compensation at the 
100 percent rate continuously for not less than 1 year 
preceding death.
    Under section 156(e)(1)(A) of Public Law 97-377, the DIC 
increases also would automatically result in the same 
percentage increases in Social Security benefits that were 
terminated by section 2205 of the Omnibus Budget Reconciliation 
Act of 1981 (hereinafter, ``OBRA 1981'') (Public Law 97-35). 
Prior to OBRA 1981, those Social Security benefits had been 
paid to certain surviving spouses of those who died on active 
duty or from a service-connected disability on behalf of their 
children under 18 and children over age 19 who were secondary-
school students; OBRA 1981 reduced the eligibility cutoff age 
from 18 to 16 years old.
    Section 314 of Public Law 100-322 amended section 156(a)(1) 
of Public Law 97-377, the Further Continuing Appropriations Act 
of 1993, to restore the benefits eliminated by OBRA 1981. The 
DIC increase also would apply to these restored benefits, 
effective December 1, 2015.
    The CBO, in its most recent baseline, estimated that the 
Social Security COLA affecting fiscal year 2015 payments, and 
thus the COLA provided for by the Committee bill, will be .9 
percent. The actual Social Security COLA could differ from this 
estimate. Rather than selecting any particular percentage 
adjustment at the time the Committee ordered the bill reported, 
the Committee followed its prior practice of setting the COLA 
by reference to the Social Security increase. The Committee 
believes this is the most equitable means of providing 
increases in these important service-connected benefits.

                      Committee Bill Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the CBO, estimates that enactment of 
the Committee bill would, relative to current law, not affect 
direct spending or revenues. Enactment of the Committee bill 
would not affect the budget of state, local, or tribal 
governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                               Congressional Budget Office,
                                     Washington, DC, July 30, 2015.
Hon. Johnny Isakson,
Chairman,
Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1493, the Veterans' 
Compensation Cost-of-Living Adjustment Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                                Keith Hall,
                                                          Director.

  Enclosure.

S. 1493, Veterans' Compensation Cost-of-Living Adjustment Act of 2015

    As ordered reported by the Senate Committee on Veterans' 
Affairs on July 22, 2015
    S. 1493 would increase the amounts paid to veterans for 
disability compensation and to their survivors for dependency 
and indemnity compensation by the same cost-of-living 
adjustment (COLA) that recipients of Social Security receive. 
The increase would take effect on December 1, 2015.
    The COLA that would be authorized by this bill is assumed 
in CBO's baseline, consistent with section 257 of the Balanced 
Budget and Emergency Deficit Control Act of 1985. Because the 
COLA is assumed in CBO's baseline, authorizing the COLA would 
have no budgetary effect relative to the baseline. In CBO's 
March 2015 baseline, that COLA was projected to be 0.9 percent. 
In that case, enacting this bill would increase spending for 
those programs by $662 million in fiscal year 2016. However, in 
their recent report, the ``2015 Annual Report of the Board of 
Trustees of the Federal Old-Age and Survivors Insurance and 
Federal Disability Insurance Trust Funds,'' the Social Security 
Trustees estimated that, because inflation has been so low, 
there would be no Social Security COLA this year.
    Enacting S. 1493 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 1493 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    On July 2, 2015, CBO transmitted a cost estimate for 
H.R. 675, the Veterans' Compensation Cost-of-Living Adjustment 
Act of 2015, as ordered reported by the House Committee on 
Veterans' Affairs on May 21, 2015. S. 1493 is similar to 
section 101 of H.R. 675, but does not include language that 
would require the increased payments to be rounded down to the 
next lowest dollar. Differences in the estimated costs reflect 
differences in the bills' language.
    The CBO staff contact for this estimate is Dwayne M. 
Wright. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that S. 1493 would not entail any regulation of 
individuals or businesses or result in any impact on the 
personal privacy of any individuals and that the paperwork 
resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the following is a tabulation of 
votes cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its July 22, 2015, meeting. On that date, 
the Committee voted without dissent to order favorably reported 
S. 1493, a bill to provide for an increase, effective December 
1, 2015, in the rates of compensation for veterans with 
service-connected disabilities and the rates of dependency and 
indemnity compensation for the survivors of certain disabled 
veterans, and for other purposes.

                             Agency Report

    On May 13, 2015, David R. McLenachen, Acting Deputy Under 
Secretary for Disability Assistance, Department of Veterans 
Affairs, appeared before the Committee on Veterans' Affairs and 
submitted testimony on, among other things, S. 1493. Excerpts 
from this statement are reprinted below:

    PREPARED STATEMENT OF DAVID R. MCLENACHEN, ACTING DEPUTY UNDER 
SECRETARY FOR DISABILITY ASSISTANCE, VETERANS BENEFITS ADMINISTRATION, 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS

    Good afternoon, Mr. Chairman and Members of the Committee. 
I am pleased to be here today to provide the views of the 
Department of Veterans Affairs (VA) on pending legislation 
affecting VA's programs, including the following: S. 270, 
S. 602, S. 627, the ``21st Century Veterans Benefits Delivery 
Act,'' the ``Veterans' Compensation Cost-of-Living Adjustment 
Act of 2015,'' and a draft bill concerning VA small business 
contracting, Veterans benefits, and burial matters. We will 
separately provide views on the following bills: S. 681; 
sections 202, 203 and 206 of the ``21st Century Veterans 
Benefits Delivery Act;'' the bill associated with legislative 
proposals from the Report of the Military Compensation and 
Retirement Modernization Commission; the bill associated with 
legislative proposals from the Department of Defense (DOD); and 
sections 201 and 206 of the consolidated bill related to bills 
from the 113th Congress. Accompanying me this afternoon is 
Renee Szybala, Assistant General Counsel.

           *       *       *       *       *       *       *


                DRAFT BILL COST-OF-LIVING-ADJUSTMENT ACT

    The Draft bill on the ``Veterans' Compensation Cost-of-
Living Adjustment Act of 2015,'' would require the Secretary of 
Veterans Affairs to increase, effective December 1, 2015, the 
rates of disability compensation for service-disabled Veterans 
and the rates of DIC for survivors of Veterans. This bill would 
increase these rates by the same percentage as the percentage 
by which Social Security benefits are increased effective 
December 1, 2015. The bill would also require VA to publish the 
resulting increased rates in the Federal Register.
    VA strongly supports this bill because it would express, in 
a tangible way, this Nation's gratitude for the sacrifices made 
by our service-disabled Veterans and their surviving spouses 
and children and would ensure that the value of their benefits 
will keep pace with increases in consumer prices.
    The cost of the cost-of-living adjustment (COLA) is 
included in VA's baseline budget because we assume a COLA will 
be enacted by Congress each year. Therefore, enactment of the 
draft bill which would extend the COLA adjustment through 
November 30, 2016, would not result in costs.

           *       *       *       *       *       *       *


                        CHANGES IN EXISTING LAW

    Since the Committee bill would not repeal or amend any 
provisions of current law, this report does not contain the 
material described in clauses (a) and (b) of paragraph 12 of 
rule XXVI of the Standing Rules of the Senate.