H.R. 2433: Veterans Opportunity to Work Act of 2011

H.R. 2433

Veterans Opportunity to Work Act of 2011

Date
October 12, 2011 (112th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

On Tuesday, October 11, 2011, the House is scheduled to consider H.R. 2433, the Veterans Opportunity to Work Act of 2011, under a suspension of the rules requiring a two-thirds majority for passage.  H.R. 2433 was introduced by Rep. Jeff Miller (R-FL) on July 7, 2011, and was referred to the House Committee on Veterans Affairs.

Bill Summary

H.R. 2433 would create or modify programs that provide employment and training services to veterans and servicemembers separating from active duty.  The bill also would make changes to programs that offer home loan guarantees, ambulance services, and pension payments to qualifying individuals.  Below is a summary of provisions with a cost impact:

Section 101 would provide up to 12 months of Veterans Retraining Assistance to no more than 100,000 unemployed veterans that enter education or training programs at community colleges or technical schools to prepare them for employment in an occupational field that is determined by Department of Labor (DOL) to have significant employment opportunities. The monthly amount of assistance payable to participating veterans would equal the maximum monthly amount of basic assistance payable under the Montgomery G.I. Bill. For 2011, that rate is $1,426 per month. To qualify for the retraining assistance, veterans must be:

  • Unemployed;
  • At least 35, but not more than 60 years of age;
  • Discharged from active-duty service under honorable conditions; and
  • Ineligible to receive any other educational assistance from the Department of Veterans Affairs.

Of the total number of veterans that qualify for retraining assistance, only 45,000 may enter the retraining program in fiscal year 2012 and only 55,000 may enter the program between October 1, 2012, and March 31, 2014. Based on information from DOL, the Congressional Budget Office (CBO) estimates that those caps will quickly be reached and that each participating veteran would, on average, receive about $15,500 in assistance. Over the 2012-2014 period, CBO estimates that providing retraining assistance to those veterans would increase direct spending by about $1.5 billion, with most of that cost falling in fiscal year 2013.

Of the 100,000 unemployed veterans expected to participate in the retraining program,  we project that nearly half also would apply for, and be eligible to participate in, the Federal Pell Grant and Federal Student Loan Programs funded by the U.S. Department of Education. While the bulk of funding for Pell grants is discretionary (see discussion below under the spending subject to appropriation estimate for section 101), CBO estimates that, if enacted, section 101 would increase direct spending by $21 million over the 2012-2015 period for the mandatory portion of the Pell Grant program. The bill also would have a negligible impact on direct spending for student loans.

Mandatory Participation in Transition Assistance Program (TAP): Under current law, separating servicemembers are not required to participate in the employment and job training workshops provided by DOL as an element of TAP.  Section 202 would require that all servicemembers separating from active duty participate in those workshops unless they fall under one of the following categories:

  • In pay grades E-8 and above or O-6 and above,
  • Prevented from attending due to an urgent operational requirement, or
  • Accepted to an education program or already obtained post-service employment.

Under current law, DOL provides employment and job training services to an average of 130,000 separating servicemembers through about 4,100 employment workshops per year.

Based on information from DOL and Department of Defense (DoD), CBO estimates that under section 202 an additional 36,000 individuals would be required to attend those workshops each year and that DOL would have to hold about 1,100 additional workshops annually to accommodate the increased attendance.

Transition Assistance Program (TAP) Outcomes: Section 204 would require DOL and DoD to develop a joint method to assess certain outcomes of every TAP participant.  Specifically, DOL and DoD would have to be able to determine the following for each TAP participant:

  • The length of the period of unemployment following separation from active-duty service,
  • The beginning salary paid for the first job obtained following separation, and
  • The number of months of school or training attended during the first 12 months following separation.

Based on information from DOL and DoD, and assuming implementation of section 202 (see discussion below under “Mandatory Participation in TAP”), CBO estimates that DOL and DoD would need to contact about 170,000 veterans each year.

Credentialing and Licensure: Section 301 would continue a demonstration project on credentialing and licensure of veterans through September 30, 2014, and authorize the use of up to $180,000 each year for that purpose. The authority to run that project ended September 30, 2009.

Testing of National Veterans Training Institute Course Participants: NVTI was created to provide training to disabled veterans’ outreach program specialists, local veterans’ employment representatives, and other personnel that provide employment services to veterans. Section 304 would require that individuals receiving training at NVTI be given a final examination at the end of each training course and that the results of those examinations be provided to the entity that sponsored the training. Under current law, no such testing is required.

Guaranteed Loan Provisions: Section 501 would modify several provisions of current law related to VA’s authority to guarantee certain mortgages provided to veterans. In total, those changes would decrease direct spending by almost $1.7 billion over the 2012-2021 period.

Fee Changes. Most significantly, section 501 would postpone scheduled decreases in the fees that VA charges for providing loan guarantees. Under its mortgage guarantee program, VA promises lenders a payment of up to 25 percent of the outstanding loan balance (subject to some limitations on the original loan amount) in the event that the borrower defaults. Such guarantees enable veterans to get better loan terms, such as lower interest rates or smaller down payments. VA charges fees to some borrowers for its guarantee to offset the costs of subsequent defaults. The amount of the fee varies depending on the size of the down payment and whether the borrower has previously used the loan-guarantee benefit.

Under current law, in 2011, veterans who get a mortgage with a VA guarantee and who make no down payment are required to pay an up-front fee equal to 2.15 percent of the principal amount. The fees for veterans who do make down payments range from 1.25 percent to 1.50 percent of the principal amount, depending on the size of the down payment. Under current law, in 2012 and thereafter the fees for such loans are scheduled to decline by roughly half. Veterans who have previously used the loan-guarantee benefit currently pay an up-front fee equal to 3.30 percent of a subsequent guaranteed loan taken in 2011. The rate for that fee will decline to 2.80 percent in 2012, to 2.15 percent in 2013, and to 1.25 percent in 2014 and any subsequent year. (Veterans of the reserve components pay an additional fee of 0.25 percent for loan guarantees.)

Section 501 would increase the current-law fee rates for the 2012-2017 period to the rates in effect for 2011. Reserve veterans would continue to pay the additional 0.25 percent premium. In 2018 and thereafter, the fees would decline to the rates specified for those years in current law. Eliminating the scheduled fee decline for the 2012-2017 period would increase collections by VA, lowering the subsidy cost of the loan guarantees provided in those years; direct spending would decrease by $229 million in 2012, and by $1,684 million over the 2012-2021 period, CBO estimates.

Adjustable-Rate, Hybrid-Adjustable-Rate, and Jumbo Mortgages. Section 501 also would extend several expiring authorities to guarantee certain types of mortgages. VA is authorized to provide guarantees for adjustable-rate mortgages and hybrid-adjustable-rate mortgages (that is, mortgages with a rate that is fixed for an initial period and adjustable thereafter) until the end of fiscal year 2012. The bill would extend those authorities through fiscal year 2014.  It also would increase the maximum loan level for which VA can provide a full guarantee.

The guaranteed payment from VA is generally capped at 25 percent of the initial loan balance, up to the limit on loan size established by the Federal Home Loan Mortgage Corporation Act, currently a maximum loan amount of $417,000. (Loans at or below that level are known as conforming loans; loans in excess are called jumbo loans. Exceptions are made to the conforming limit for certain high-cost areas like Hawaii and Alaska.) The Veterans Benefits Improvements Act of 2008 (Public Law 110-389) temporarily increased by 75 percent—to $729,750—the maximum loan amount eligible for the full guarantee.  The limit reverts to the lower level after December 31, 2011.  Section 501 would extend for three years the authority to guarantee loans up to that higher limit.

Loan Guarantees for Surviving Spouses: Section 502 would make the surviving spouses of certain totally disabled veterans eligible for the mortgage guarantee benefit. Under current law, surviving spouses of veterans who die from a service-connected disability may get a loan with a VA guarantee; spouses of veterans whose disability was not related to their service are ineligible. The bill would authorize VA to guarantee loans to surviving spouses of veterans with disabilities that were not service-connected if the veteran had been continuously and completely disabled for 10 years preceding death, completely disabled for five years from the date of discharge, or completely disabled for one year if they had also been held as a prisoner of war and died after September 30, 1999.

Homeless Veterans Reintegration Program (HVRP): Section 503 would extend the HVRP through fiscal year 2012, authorizing $50 million for DOL to provide grants to agencies and organizations that provide job placement, training, and vocational counseling to homeless veterans. Under current law, the authorization for this program will expire at the end of fiscal year 2011.

Reimbursement for Ambulance Services: Section 504 would allow VA to pay the provider of ambulance services the lesser of the actual charge or the amount determined by the Medicare fee schedule for such services. Under current law, VA does not have a standard fee for ambulance services; rather the department reimburses the transportation costs for certain veterans based upon the “actual necessary expense” as submitted by the provider. CBO expects that paying Medicare rates for ambulance services would lower such costs by roughly 20 percent (comparable to the difference between Medicare Part B physician payment rates and those of the private sector).

Pensions for Veterans in Medicaid Nursing Homes: Section 507 would extend from May 31, 2015, to May 31, 2016, the expiration date of a provision of current law that sets a $90 per month limit on pensions paid to any veteran without a spouse or child, or to any survivor of a veteran, who is receiving Medicaid coverage in a Medicaid-approved nursing home. The law also allows the beneficiary to retain the pension instead of having to use it to defray nursing home costs. Using data provided by VA, CBO estimates that in 2012 about 15,000 veterans and 19,000 survivors will be affected by this provision and that the average savings to VA will total about $18,600 per veteran and $11,600 per survivor.

Background

On September 8, 2011, the Committee on Veterans Affairs held a markup of seven bills directed at improving employment prospects for American veterans.  The latest job figures from the Bureau of Labor Statistics show that nearly 1 million veterans are currently unemployed, including more than 600,000 veterans of past eras and conflicts.  In September, the overall veteran unemployment rate rose from 7.7% to 8.1%, and continues to rise faster than the national average.

Cost

According to Congressional Budget Office (CBO) estimates, the bill would decrease direct spending by $8 million over the 2012-2016 period and by $291 million over the 2012-2021 period.  Because the bill would affect direct spending, pay-as-you-go procedures apply.  Enacting H.R. 2433 would not affect revenues.

In addition, CBO estimates that implementing H.R. 2433 would have a discretionary cost of $8 million over the 2012-2016 period, assuming appropriation of the specified and estimated amounts.