[Appendix, Budget of the United States Government, Fiscal Year 1998]
[Page 889-899]

 
                     VETERANS HEALTH ADMINISTRATION

                              Federal Funds

General and special funds:

                              Medical Care

    For necessary expenses for the maintenance and operation of 
hospitals, nursing homes, and domiciliary facilities; for furnishing, as 
authorized by law, inpatient and outpatient care and treatment to 
beneficiaries of the Department of Veterans Affairs, including care and 
treatment in facilities not under the jurisdiction of the Department; 
and furnishing recreational facilities, supplies, and equipment; 
funeral, burial, and other expenses incidental thereto for beneficiaries 
receiving care in the Department; administrative expenses in support of 
planning, design, project management, real property acquisition and 
disposition, construction and renovation of any facility under the 
jurisdiction or for the use of the Department; oversight, engineering 
and architectural activities not charged to project cost; repairing, 
altering, improving or providing facilities in the several hospitals and 
homes under the jurisdiction of the Department, not otherwise provided 
for, either by contract or by the hire of temporary employees and 
purchase of materials; uniforms or allowances therefor, as authorized by 
5 U.S.C. 5901-5902; aid to State homes as authorized by 38 U.S.C. 1741; 
and not to exceed $8,000,000 to fund cost comparison studies as referred 
to in 38 U.S.C. 8110(a)(5); [$17,008,447,000,] $16,958,846,000, plus 
reimbursements: Provided, That [of the funds made available under this 
heading, $700,000,000 is for the equipment and land and structures 
object classifications only, which amount shall not become available for 
obligation until August 1, 1997, and shall remain available until 
September 30, 1998.] not to exceed 8.3 percent of amounts made available 
herein shall remain available until September 30, 1999: Provided 
further, That funds under this heading shall be available for medical 
examinations required for benefits claims under title 38, United States 
Code. (Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 1997.)

    Note: In addition to resources requested here, $468 million in net 
resources would be provided by an accompanying legislative proposal.

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0160-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct program:

        Operating expenses:
          Provision of veterans health 
              care:
00.01       Acute hospital care.........       5,225       5,038       4,663
00.02       Rehabilitative care.........         377         375         343
00.03       Psychiatric care............       1,535       1,558       1,428
00.04       Nursing home care...........       1,594       1,767       1,831

[[Page 890]]

00.05       Subacute care...............         544         495         453
00.06       Residential care............         245         269         271
00.07       Outpatient care.............       5,184       5,939       6,426
00.08       Miscellaneous benefits and 
              services..................         692         699         727
00.09     CHAMPVA.......................          91          92          92
                                           ---------   ---------  ----------
00.91       Total operating expenses....      15,487      16,232      16,234
        Capital investment:
          Provision of veterans health 
              care:
01.01       Acute hospital care.........         335         354         329
01.02       Rehabilitative care.........          21          22          21
01.03       Psychiatric care............          59          62          58
01.04       Nursing home care...........          45          47          44
01.05       Subacute care...............          21          22          21
01.06       Residential care............          14          15          14
01.07       Outpatient care.............         298         314         293
01.08       Miscellaneous benefits and 
              services..................          26          27          26
01.09     CHAMPVA.......................           1
                                           ---------   ---------  ----------
01.91       Total capital investment....         820         863         806
                                           ---------   ---------  ----------
01.92     Total direct program..........      16,307      17,095      17,040
02.01 Reimbursable program..............          66          75         146
                                           ---------   ---------  ----------
10.00   Total obligations...............      16,373      17,170      17,186
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................         501         731         650
22.00 New budget authority (gross)......      16,617      17,088      17,105
22.30 Unobligated balance expiring......         -14
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......      17,104      17,819      17,755
23.95 New obligations...................     -16,373     -17,170     -17,186
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....         731         650         569
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................      16,564      17,013      16,959
40.75   Reduction pursuant to P.L. 104-
          134...........................         -21
                                           ---------   ---------  ----------
43.00     Appropriation (total).........      16,543      17,013      16,959
      Permanent:

        Spending authority from 
            offsetting collections:
68.00     Offsetting collections (cash).          66          75         146
68.26     Offsetting collections 
            (unavailable balances)......           8
                                           ---------   ---------  ----------
68.90       Spending authority from 
              offsetting collections 
              (total)...................          74          75         146
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................      16,617      17,088      17,105
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation       2,179       2,394       2,460
73.10 New obligations...................      16,373      17,170      17,186
73.20 Total outlays (gross).............     -16,114     -17,103     -16,848
73.40 Adjustments in expired accounts...         -44
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation       2,394       2,460       2,798
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority      14,131      14,526      14,192
86.93 Outlays from current balances.....       1,917       2,502       2,510
86.97 Outlays from new permanent 
        authority.......................          66          75         146
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........      16,114      17,103      16,848
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources...............         -47         -53        -123
88.40     Non-Federal sources...........         -19         -22         -23
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........         -66         -75        -146
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................      16,551      17,013      16,959
90.00 Outlays...........................      16,048      17,028      16,702
---------------------------------------------------------------------------

                 Summary of Budget Authority and Outlays

                        (in millions of dollars)

                                     1996 actual  1997 est.   1998 est.
Enacted/requested:
  Budget Authority..................      16,551      17,013      16,959
  Outlays...........................      16,048      17,028      16,702
Legislative proposal, not subject to 
    PAYGO:
  Budget Authority..................                                 591
  Outlays...........................                                 591
                                    ------------------------------------
Total:
  Budget Authority..................      16,551      17,013      17,550
  Outlays...........................      16,048      17,028      17,293
                                    ====================================
                                            PERFORMANCE MEASURES
                                                 1994 actual 1995 actual 1996 actual    1997        1998 
                                                                                      projected   projected
Medical Care Summary:
  Unique users (in millions)....................       2.811       2.890       2.937       2.937       3.072
  Chronic disease index.........................         N/A         N/A        0.46        0.92        0.95
  Prevention index..............................         N/A         N/A        0.34        0.68        0.95
  Percentage of inpatients receiving care in 
    accordance with externally set and accepted 
    standards...................................          98          96          96          97          98
  Percentage of patients reporting their care as 
    very good or excellent:
    Inpatient...................................         N/A          60          65          70          75
    Outpatient..................................         N/A          60          61          70          75
  Percentage of networks improving performance 
    on two-thirds of customer service standards.         N/A         N/A          86          91          95
  Bed-days of care per 1,000 unique users.......       3,523       3,183       2,525       2,275       2,025
  Percentage of appropriate surgical and 
    invasive diagnostic procedures performed on 
    ambulatory basis............................          35          39          52          58          65
  Percentage of patients enrolled in primary 
    care........................................          20          66          72          75          80
  Percentage of medical care residents trained 
    in primary care.............................        34.0        37.5        38.5        41.0        43.5

    The performance measures and workloads reported in this schedule 
represent the total estimated workloads for fiscal years 1996-1998. 
Fiscal year 1998 estimated performance measures and workload levels can 
only be fully accomplished with: (1) approval of resources in this 
schedule; (2) passage of proposed legislation referenced in the 
following schedule; and (3) achieving receipts estimated. The short 
narrative descriptions of net change by program sub-activity that 
introduces these workload levels also include obligations and the 
average employment estimates in total, the aggregate of both regular and 
proposed legislation schedules.

    Provision of Veterans Health Care--
        Acute hospital care.--Costs for 1998 are estimated to decrease 
    by $194 million for operating medical, neurology, surgical, contract 
    and State home hospital beds, reflecting the shift to increased use 
    of ambulatory care.
        Estimated operating levels are:

                                     1996 actual  1997 est.   1998 est.
  Patients treated..................     621,495     575,334     560,377
  Average daily census..............      13,948      12,266      11,364
  Average employment................      67,902      61,175      57,364

        Rehabilitative care.--A decrease of $18 million in 1998 is 
    estimated for providing rehabilitative care, including spinal cord 
    injury care.
        Estimated operating levels are:

                                     1996 actual  1997 est.   1998 est.
  Patients treated..................      18,625      18,021      17,537
  Average daily census..............       1,642       1,516       1,399
  Average employment................       5,724       5,344       4,998

        Psychiatric care.--A decrease of $71 million is estimated in 
    1998 for the inpatient care of veterans with problems related to 
    mental illness, including alcohol and drug problems.

                                     1996 actual  I997 est.   1998 est.
  Patients treated..................     177,287     172,624     167,985

[[Page 891]]

  Average daily census..............      11,037      10,357       9,558
  Average employment................      25,162      23,944      22,474

        Nursing home care.--In 1998, an increase of $116 million is 
    estimated for the care of residents in VA nursing homes, contract 
    nursing homes and State nursing homes.
        Estimated operating levels are:

                                     1996 actual  1997 est.   1998 est.
  Patients treated..................      82,390      86,091      87,446
  Average daily census..............      33,733      35,182      35,876
  Average employment................      19,567      20,494      20,806

        Subacute care.--A decrease of $22 million is estimated in 1998 
    for the treatment of veterans who require a level of care between 
    acute and long-term care, as provided in VA hospital intermediate 
    bed sections.

                                     1996 actual  1997 est.   1998 est.
Patients treated....................      32,691      28,605      27,836
Average daily census................       5,085       4,369       4,032
Average employment..................       9,634       8,399       7,832

        Residential care.--An increase of $12 million is estimated in 
    1998 for the care of veterans in locations other than their own 
    homes, such as residential rehabilitation and domiciliary care 
    programs.

                                     1996 actual  1997 est.   1998 est.
Patients treated....................      28,036      29,142      29,674
Average daily census................       9,319       9,612       9,905
Average employment..................       3,700       3,864       3,932

        Outpatient care.--An increase of $758 million is estimated in 
    1998 for the cost of outpatient medical and dental care provided by 
    staff, physicians, and dentists participating under a fee basis 
    arrangement for certain eligible veterans.

              NUMBER OF MEDICAL VISITS AND DENTAL WORKLOADS

                                     1996 actual  1997 est.   1998 est.
  Medical visits (in thousands):
  Outpatient clinic visits..........      28,360      29,209      31,504
  Community based visits............         935         935         935
  Readjustment counseling...........         760         767         774
                                    ------------------------------------
        Total.......................      30,055      30,911      33,213
                                    ====================================
  Dental:
    Staff:
      Examinations..................     234,968     235,000     235,000
      Treatments....................     152,373     150,000     150,000
                                    ------------------------------------
        Total.......................     387,341     385,000     385,000
                                    ====================================
    Fee: Cases completed............      16,647      16,500      16,500
                                    ====================================
  Average employment................      56,906      59,653      63,911
                                    ====================================

        Miscellaneous benefits and services.--This covers such items of 
    nondirect medical care and treatment as beneficiary travel, care of 
    the dead, operation of personnel quarters at medical facilities, and 
    the cost of furnishing supply, engineering, housekeeping, and other 
    administrative support services to other departments on a 
    nonreimbursable basis. An increase of $27 million is estimated for 
    1998.

                                     1996 actual  1997 est.   1998 est.
  Average employment................       6,416       5,985       5,858

        Civilian health and medical program of the Department of 
    Veterans Affairs (CHAMPVA).--No change is estimated in 1998 for 
    private hospital and outpatient care for dependents and survivors of 
    certain veterans.

                                     1996 actual  1997 est.   1998 est.
  Average daily hospital census.....         150         150         150
  Outpatient (in thousands).........     822,637     822,637     822,637
  Average employment................         142         142         142

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0160-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Direct obligations:

        Personnel compensation:
11.1      Full-time permanent...........       6,506       6,689       6,548
11.3      Other than full-time permanent         863         717         704
11.5      Other personnel compensation..         783         801         763
                                           ---------   ---------  ----------
11.9        Total personnel compensation       8,152       8,207       8,015
12.1    Civilian personnel benefits.....       1,900       1,935       1,914
13.0    Benefits for former personnel...          11         148          15
        Travel and transportation of 
            persons:
21.0      Employee travel...............          31          51          52
21.0      Beneficiary travel............         108         118         123
21.0      Interagency motor pool 
            payments....................          12          12          12
21.0      All other.....................          31          34          32
22.0    Transportation of things........          25          30          30
23.1    Rental payments to GSA..........          23          25          26
23.2    Rental payments to others.......          55          63          66
23.3    Communications, utilities, and 
          miscellaneous charges.........         430         464         465
24.0    Printing and reproduction.......          13          15          14
25.2    Other contractual services......       1,221       1,363       1,528
        Medical care:
25.6      Outpatient dental fees........          12          13          14
25.6      Medical and nursing fees......         275         289         303
25.6      Community nursing homes.......         338         325         364
25.6      Contract hospitalization......         143         150         158
25.6      Civilian Health and Medical 
            Program of the Department of 
            Veterans Affairs............          85          85          85
        Supplies and materials:
26.0      Supplies and materials........       2,317       2,608       2,673
26.0      Provisions....................          92          95          94
31.0    Equipment.......................         632         567         545
32.0    Land and structures.............         187         256         258
        Grants, subsidies, and 
            contributions:
41.0      Grants, subsidies, and 
            contributions...............         207         232         245
41.0      Grants to private 
            organizations...............           6           8           7
43.0    Interest and dividends..........           1           2           2
                                           ---------   ---------  ----------
99.0      Subtotal, direct obligations..      16,307      17,095      17,040
99.0  Reimbursable obligations..........          66          75         146
                                           ---------   ---------  ----------
99.9    Total obligations...............      16,373      17,170      17,186
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-0160-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Direct:
      Total compensable workyears:

1001    Full-time equivalent employment.     194,364     188,143     177,987
1005    Full-time equivalent of overtime 
          and holiday hours.............       3,470       3,395       3,141
    Reimbursable:
      Total compensable workyears:

2001    Full-time equivalent employment.         789         857       1,666
2005    Full-time equivalent of overtime 
          and holiday hours.............          14          15          29
---------------------------------------------------------------------------
    Note: An additional 7,664 FTE are funded through the legislative 
proposal authorizing Medical Care to retain medical collections and user 
fees.

                              Medical Care

              (Legislative proposal, not subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0160-2-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Reimbursements:

        Operating expenses:
          Provision of veterans health 
              care:
00.01       Acute hospital care.........                                 172
00.02       Rehabilitative care.........                                  13
00.03       Psychiatric care............                                  55
00.04       Nursing home care...........                                  46
00.05       Subacute care...............                                  17
00.06       Residential care............                                   9
00.07       Outpatient care.............                                 246
                                           ---------   ---------  ----------
00.91       Total operating expenses....                                 558
        Capital investment:
          Provision of veterans health 
              care:
01.01       Acute hospital care.........                                  14
01.02       Rehabilitative care.........                                   1
01.03       Psychiatric care............                                   2
01.04       Nursing home care...........                                   2
01.05       Subacute care...............                                   1
01.06       Residential care............                                   1
01.07       Outpatient care.............                                  12
                                           ---------   ---------  ----------
01.91       Total capital investment....                                  33
                                           ---------   ---------  ----------

[[Page 892]]


01.92     Total reimbursement program...                                 591
                                           ---------   ---------  ----------
10.00   Total obligations...............                                 591
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                 591
23.95 New obligations...................                                -591
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................                                 591
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................                                 591
73.20 Total outlays (gross).............                                -591
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority                                 591
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................                                 591
90.00 Outlays...........................                                 591
---------------------------------------------------------------------------

    The request in 1998 establishes a new course for veterans' health 
care that emphasizes and supports an emerging dynamic, business-like 
healthcare system that is innovative and cost effective, and will 
improve the health and well being of veterans throughout the Nation. The 
VA healthcare system will expand and improve with future budget 
increases provided by the proposed retention of all medical collections 
and user fees. The net total of these is an estimated $468 million in FY 
1998 ($591 million less $123 million in administrative expenses).

    The budget schedule includes a legislative proposal to retain 
earnings from Medical Care Cost Recovery (MCCR) program third party and 
user fee collections as reimbursements to Medical Care starting on 
October 1, 1997. VA also plans to begin a demonstration program in 1998 
to test the feasibility of ``Medicare subvention'', i.e.--billing 
Medicare for healthcare provided to Medicare eligible Category C 
veterans. By FY 2002, assuming that the Congress authorizes a Medicare 
subvention demonstration and it is successful, and that Congress decides 
to allow VA to expand it nationwide, the combination of the Medicare 
reimbursements and allowing VA to retain medical collections and user 
fees would support a 30 percent lower unit cost and 20 percent more 
veterans served with 10 percent of the VA healthcare budget from non-
appropriated revenues. It would also give veterans more healthcare 
provider choices.

    The MCCR legislation proposed for FY 1998 repeals Section 1729(g) of 
title 38, United States Code, and inserts language requiring all amounts 
recovered or collected (third party, medical fees and other receipts) 
for medical care and other services furnished to be deposited in the 
Department of Veterans Affairs' Medical Care account and be available 
until expended. At the same time, the existing Medical Care Cost 
Recovery (MCCR) Fund is proposed for termination. These additional 
expenditures within this discretionary account are being funded through 
offsetting receipts as the result of the merger of the MCCR activities 
with the Medical Care account.

    This is one of several proposals in the budget to charge fees to 
users directly availing themselves of, or subject to, a government 
service, program, or activity, in order to cover the government's costs. 
Legislation will be proposed to authorize the fees and, upon enactment 
of the authorization, a budget amendment to the current appropriations 
language will be proposed to make the fees available for expenditure. 
Because the current requirements of the Budget Enforcement Act of 1990 
make it difficult to fund discretionary programs with receipts that are 
not authorized in appropriations acts, the Administration is proposing a 
change in the requirements to facilitate the enactment of proposals such 
as this one.

    The additional expenditures described below include the 
administrative costs of collecting receipts and user fees for the 
medical services provided.

    Provision of Veterans Health Care--
        Acute hospital care--Medical collections and user fees provide 
    an estimated $186 million in 1998 for operating medical, neurology, 
    and surgical hospital beds.
                                                       1998 est.
Patients treated..................................              15,835
Average daily census..............................                 315
Average employment................................               2,390

        Rehabilitative care.--Medical collections and user fees provide 
    an estimated $14 million in 1998 for rehabilitative care, including 
    spinal cord injury care.
                                                       1998 est.
Patients treated..................................                 513
Average daily census..............................                  41
Average employment................................                 208

        Psychiatric care.--Medical collections and user fees provide an 
    estimated $57 million in 1998 for inpatient care of veterans with 
    problems related to mental illness, including alcohol and drug 
    problems.
                                                       1998 est.
Patients treated..................................               4,911
Average daily census..............................                 279
Average employment................................                 938

        Nursing home care.--Medical collections and user fees provide an 
    estimated $48 million in 1998 for the care of residents in VA 
    nursing homes.
                                                       1998 est.
Patients treated..................................               1,128
Average daily census..............................                 409
Average employment................................                 839

        Subacute care.--Medical collections and user fees provide an 
    estimated $18 million in 1998 for the treatment of veterans who 
    require a level of care between acute and long-term care, as 
    provided in VA hospital immediate bed sections.
                                                       1998 est.
Patients treated..................................                 814
Average daily census..............................                 118
Average employment................................                 327

        Residential care.--Medical collections and user fees provide an 
    estimated $10 million in 1998 for the care of veterans in locations 
    other than their own homes, such as residential rehabilitation and 
    domiciliary care programs.
                                                       1998 est.
Patients treated..................................                 657
Average daily census..............................                 174
Average employment................................                 163

        Outpatient care.--Medical collections and user fees provide an 
    estimated $258 million in 1998 for the cost of outpatient medical 
    care provided by VA staff and other health professionals 
    participating under a fee basis arrangement for certain eligible 
    veterans.

                       NUMBER OF MEDICAL VISITS

                                                       1998 est.
Medical visits (in thousands).....................
 Staff............................................                 921
 Fee..............................................                  27
                                                  --------------------

  Total...........................................                 948
Average employment................................               2,799

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0160-2-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
99.0  Reimbursable obligations: 
        Subtotal, reimbursable 
        obligations.....................                                 591
                                           ---------   ---------  ----------
99.9    Total obligations...............                                 591
---------------------------------------------------------------------------

[[Page 893]]



                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-0160-2-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Total compensable workyears:
2001  Full-time equivalent employment...                               7,664
2005  Full-time equivalent of overtime 
        and holiday hours...............                                  73
---------------------------------------------------------------------------

                                <F-dash>

                     Medical and Prosthetic Research

    For necessary expenses in carrying out programs of medical and 
prosthetic research and development as authorized by 38 U.S.C. chapter 
73, to remain available until September 30, [1998, $262,000,000] 1999, 
$234,374,000, plus reimbursements. (Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 1997.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0161-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Direct program:

        Operating expenses:
00.01     Medical research..............         192         210         178
00.02     Rehabilitation research.......          23          24          22
00.03     Health services research......          30          32          33
                                           ---------   ---------  ----------
00.91       Total operating expenses....         245         266         233
        Capital investment:
01.01     Medical research..............           8           7           5
01.02     Rehabilitation research.......           1           1           1
01.03     Health services research......           2           2           1
                                           ---------   ---------  ----------
01.91       Total capital investment....          11          10           7
                                           ---------   ---------  ----------
01.92     Total direct program..........         256         276         240
02.01 Reimbursable program..............          51          45          46
                                           ---------   ---------  ----------
10.00   Total obligations...............         307         321         286
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................          20          20           6
22.00 New budget authority (gross)......         308         307         280
22.30 Unobligated balance expiring......          -1
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         327         327         286
23.95 New obligations...................        -307        -321        -286
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....          20           6
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Current:

40.00   Appropriation...................         257         262         234
      Permanent:

68.00   Spending authority from 
          offsetting collections: 
          Offsetting collections (cash).          51          45          46
                                           ---------   ---------  ----------
70.00   Total new budget authority 
          (gross).......................         308         307         280
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          52          79          94
73.10 New obligations...................         307         321         286
73.20 Total outlays (gross).............        -283        -305        -288
73.40 Adjustments in expired accounts...           2
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation          79          94          93
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority         178         192         172
86.93 Outlays from current balances.....          54          68          70
86.97 Outlays from new permanent 
        authority.......................          51          45          46
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........         283         305         288
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.00   Offsetting collections (cash) 
          from: Federal sources.........         -51         -45         -46
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................         257         262         234
90.00 Outlays...........................         232         260         242
---------------------------------------------------------------------------

    The Medical and Prosthetic Research account is comprised of the 
following three programs:

    Medical research.--This program is comprised of investigator-
initiated and special research. In addition to the broad spectrum of 
biomedical research projects, priority is given to research Acquired 
Immune Deficiency Syndrome and conditions that frequently occur among 
veterans such as aging, alcoholism, schizophrenia, delayed stress 
disorders and other mental illness, and spinal cord injury and tissue 
regeneration. Cooperative studies include surgical treatment of angina 
pectoris, adjunct treatment of diabetes, and relative potency and side-
effect liability of new and marketed sedatives.

    Rehabilitation research.--This program is dedicated to the 
development and application of science and technology to improve the 
care of physically disabled veterans through prostheses for the amputee, 
improved wheelchairs for the paralyzed, and better joint functions for 
the arthritic. It also includes care for those with visual, hearing, and 
speech disorders.

    Health services research.--This program provides support for health 
services projects at Department of Veterans Affairs medical centers for 
improving the effectiveness and economy of delivery of health services 
and improving the accessibility of services to veterans.

    In support of the research activities of these three programs, VA 
applies a variety of budgetary resources including appropriations from 
the Medical Care account and reimbursements from the Department of 
Defense, grants from the National Institutes of Health, private 
proprietary sources, and voluntary agencies which provide additional 
support for VA's researchers. The first table summarizes all budgetary 
resources for the Medical and Prosthetic Research account. The second 
table shows the total number of projects.

                     SUMMARY OF BUDGETARY RESOURCES

                        [In millions of dollars]

                                     1996 actual  1997 est.   1998 est.
Medical and prosthetic research 
appropriation.......................         257         262         234
Medical care appropriation..........         335         328         325
Federal grants (NIH)................         209         217         224
Other grants (voluntary agencies, 
private proprietary)................         106         110         113
DOD reimbursements..................          16          20           *
                                    ------------------------------------
      Total budgetary resources.....         923         937         896
                                    ====================================
    *DoD reimbursements for FY 1998 are unknown.
                                            PERFORMANCE MEASURES
                                                 1994 actual 1995 actual 1996 actual    1997        1998 
                                                                                      projected   projected
Research Summary:
Total number of projects funded.................       1,870       1,771       1,666       1,644       1,469
Total number of new projects funded.............         261         334         192         200         120
Number of cooperative studies...................          28          31          35          37          37
Number of VA-funded studies involving VA 
patients or VA data bases.......................         972         854         786         786         786
Percentage of projects receiving total or 
partial funding from extra-VA sources...........          58          58          57          59          64
Percentage of funds coming from extra-mural 
sources.........................................          54          54          59          61          64

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0161-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Direct obligations:

        Personnel compensation:
11.1      Full-time permanent...........          34          41          39
11.3      Other than full-time permanent          68          76          71
11.5      Other personnel compensation..           4           4           4
                                           ---------   ---------  ----------
11.9        Total personnel compensation         106         121         114
12.1    Civilian personnel benefits.....          27          28          24
21.0    Employee travel.................           2           2           2
23.3    Communications, utilities, and 
          miscellaneous charges.........           1           1           1
24.0    Printing and reproduction.......           1           1           1
25.5    Research and development 
          contracts.....................          73          80          69
26.0    Supplies and materials..........          22          32          22

[[Page 894]]

31.0    Equipment.......................          11          11           7
41.0    Grants, subsidies, and 
          contributions.................          13
                                           ---------   ---------  ----------
99.0      Subtotal, direct obligations..         256         276         240
99.0  Reimbursable obligations..........          51          45          46
                                           ---------   ---------  ----------
99.9    Total obligations...............         307         321         286
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-0161-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Direct:
      Total compensable workyears:

1001    Full-time equivalent employment.       2,595       2,833       2,522
1005    Full-time equivalent of overtime 
          and holiday hours.............          17          17          17
    Reimbursable:
2001  Total compensable workyears: Full-
        time equivalent employment......         655         527         431
---------------------------------------------------------------------------

                                <F-dash>

       Medical Administration and Miscellaneous Operating Expenses

    For necessary expenses in the administration of the medical, 
hospital, nursing home, domiciliary, construction, supply, and research 
activities, as authorized by law; administrative expenses in support of 
planning, design, project management, architectural, engineering, real 
property acquisition and disposition, construction and renovation of any 
facility under the jurisdiction or for the use of the Department of 
Veterans Affairs, including site acquisition; engineering and 
architectural activities not charged to project cost; and research and 
development in building construction technology; [$61,207,000] 
$60,160,000, plus reimbursements. (Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 1997.)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0152-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Operating expenses: Integrated 
        health care system 
        administration..................          63          61          60
                                           ---------   ---------  ----------
10.00   Total obligations...............          63          61          60
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......          63          61          60
23.95 New obligations...................         -63         -61         -60
----------------------------------------------------------------------------

    New budget authority (gross), detail:
40.00 Appropriation.....................          63          61          60
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           6          13           6
73.10 New obligations...................          63          61          60
73.20 Total outlays (gross).............         -57         -68         -60
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation          13           6           6
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.90 Outlays from new current authority          53          56          55
86.93 Outlays from current balances.....           4          12           5
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          57          68          60
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................          63          61          60
90.00 Outlays...........................          57          68          60
---------------------------------------------------------------------------

    Supervision and administration of VA's comprehensive and integrated 
healthcare system.--Central office staff elements provide executive 
direction for all Department medical and construction programs through 
program development, implementation, and the administration of policies, 
plans, and objectives.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0152-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Personnel compensation:

11.1    Full-time permanent.............          40          40          39
11.3    Other than full-time permanent..           1           2           2
11.5    Other personnel compensation....           2           2           2
                                           ---------   ---------  ----------
11.9      Total personnel compensation..          43          44          43
12.1  Civilian personnel benefits.......           6           7           6
13.0  Benefits for former personnel.....           1
21.0  Travel and transportation of 
        persons: employee travel........                       1           1
23.1  Rental payments to GSA............           5           5           5
23.3  Communications, utilities, and 
        miscellaneous charges...........           1
25.2  Other services....................           3           3           3
26.0  Supplies and materials............           1           1           1
31.0  Equipment.........................           3                       1
                                           ---------   ---------  ----------
99.9    Total obligations...............          63          61          60
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-0152-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Total compensable workyears:
1001  Full-time equivalent employment...         635         610         565
1005  Full-time equivalent of overtime 
        and holiday hours...............           1           1           1
---------------------------------------------------------------------------

                                <F-dash>

                 Health Professional Scholarship Program

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-0163-0-1-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          10           4           4
73.20 Total outlays (gross).............          -6
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation           4           4           4
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.93 Outlays from current balances.....           6
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................           6
---------------------------------------------------------------------------

    Health professional scholarship.--To assist in the recruitment and 
retention of staff, this program provided grants for tuition, stipend, 
and other educational expenses for eligible students in programs leading 
to a degree in nursing or other allied health disciplines.

    No appropriation for this account was requested in FY 1997 and none 
is requested for FY 1998.

                                <F-dash>

                    Medical Care Cost Recovery Fund 

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-5014-0-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............       1,101       1,060       1,038
    Receipts:
02.01 Medical cost recovery.............          93          97         176
02.02 Medical cost recovery, legislative 
        proposal, not subject to PAYGO..                                 176
02.03 Medical cost recovery, legislative 
        proposal, subject to PAYGO......                                -176
                                           ---------   ---------  ----------
04.00 Total: Balances and collections...       1,194       1,157       1,214
    Appropriation:
05.01 Medical care cost recovery fund...        -126        -119        -123
05.03 Medical care cost recovery fund, 
        legislative proposal subject to 
        PAYGO...........................                                 123

[[Page 895]]

05.04 Medical care......................          -8
                                           ---------   ---------  ----------
05.99 Subtotal appropriation............        -134        -119
07.99 Total balance, end of year........       1,060       1,038       1,214
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-5014-0-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.09 Operating expenses................         103         114         118
00.10 Capital investment................          16           5           5
                                           ---------   ---------  ----------
10.00   Total obligations...............         119         119         123
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................           6          14          13
22.00 New budget authority (gross)......         126         119         123
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         132         133         136
23.95 New obligations...................        -119        -119        -123
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....          14          13          13
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.25 Appropriation (special fund, 
        indefinite).....................         126         119         123
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation          14          23          23
73.10 New obligations...................         119         119         123
73.20 Total outlays (gross).............        -109        -119        -123
73.40 Adjustments in expired accounts...          -1
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation          23          23          24
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................         109         119         123
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................         126         119         123
90.00 Outlays...........................         109         119         123
---------------------------------------------------------------------------

                 Summary of Budget Authority and Outlays

                        (in millions of dollars)

                                     1996 actual  1997 est.   1998 est.
Enacted/requested:
  Budget Authority..................         126         119         123
  Outlays...........................         109         119         123
Legislative proposal, subject to 
    PAYGO:
  Budget Authority..................                                -123
  Outlays...........................                                -123
                                    ------------------------------------
Total:
  Budget Authority..................         126         119
  Outlays...........................         109         119
                                    ====================================

    The Medical Care Cost Recovery (MCCR) Fund was established by the 
Omnibus Budget Reconciliation Act of 1990, P.L. 100-508. This Fund 
serves as a depository for all third-party insurance collections. A 
portion of these monies will be utilized to provide for FTE and other 
administrative costs associated with medical care cost recovery efforts. 
After providing for the estimated cost of operations for the ensuing 
year, remaining funds are transferred to the Department of Treasury 
before January of the next year.

    While the MCCR Fund reflects the program costs of both third-party 
and copayment activities, the receipts only reflect third-party 
recoveries. The table below presents the complete relationship between 
the costs of MCCR activities and the total collections, regardless of 
source, resulting from these activities.

    In 1998, the Administration will propose legislation to permanently 
extend current legal provisions due to expire in 1998. These provisions 
provide for the collection of third party health insurance payments for 
care provided by the VA for service-connected veterans with nonservice-
connected conditions, including copayments and income verification 
provisions.

                        [In millions of dollars]

                                         1996 actual   1997 est.   1998 est.
            Program activity

Third-party recoveries..................         495         471         523
Copayments and other collections........          62          62          68
                                           ---------   ---------  ----------
      Total collections.................         557         533         591
      Total program costs...............         119         120         123
Ratio of costs to collections...........       21.3%       22.4%       20.8%

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-5014-0-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Personnel compensation:

11.1    Full-time permanent.............          57          59          61
11.5    Other personnel compensation....          15          16          16
                                           ---------   ---------  ----------
11.9      Total personnel compensation..          72          75          77
12.1  Civilian personnel benefits.......          16          17          17
21.0  Travel and transportation of 
        persons.........................           3           3           3
23.3  Communications, utilities, and 
        miscellaneous charges...........           4           5           5
25.2  Other services....................           4           7           8
26.0  Supplies and materials............           4           7           8
31.0  Equipment.........................          16           5           5
                                           ---------   ---------  ----------
99.9    Total obligations...............         119         119         123
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-5014-0-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Total compensable workyears:
1005  Full-time equivalent of overtime 
        and holiday hours...............          46          46          46
1011  Exempt Full-time equivalent 
        employment......................       2,269       2,295       2,295
---------------------------------------------------------------------------

                                <F-dash>

                     Medical Care Cost Recovery Fund

                (Legislative proposal, subject to PAYGO)

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-5014-4-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.09 Operating expenses................                                -118
00.10 Capital investment................                                  -5
                                           ---------   ---------  ----------
10.00   Total obligations...............                                -123
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
22.00 New budget authority (gross)......                                -123
23.95 New obligations...................                                 123
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.25 Appropriation (special fund, 
        indefinite).....................                                -123
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................                                -123
73.20 Total outlays (gross).............                                 123
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................                                -123
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................                                -123
90.00 Outlays...........................                                -123
---------------------------------------------------------------------------

    Language is being proposed that would merge all medical related 
collections with the Medical Care account. VA is expected to receive a 
net increase of $468 million in funds to support the medical care of 
veterans through this concept.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-5014-4-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Personnel compensation:

11.1    Full-time permanent.............                                 -61
11.5    Other personnel compensation....                                 -16
                                           ---------   ---------  ----------
11.9      Total personnel compensation..                                 -77

[[Page 896]]

12.1  Civilian personnel benefits.......                                 -17
21.0  Travel and transportation of 
        persons.........................                                  -3
23.3  Communications, utilities, and 
        miscellaneous charges...........                                  -5
25.2  Other services....................                                  -8
26.0  Supplies and materials............                                  -8
31.0  Equipment.........................                                  -5
                                           ---------   ---------  ----------
99.9    Total obligations...............                                -123
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-5014-4-2-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Total compensable workyears:
1005  Full-time equivalent of overtime 
        and holiday hours...............                                 -46
1011  Exempt Full-time equivalent 
        employment......................                              -2,295
---------------------------------------------------------------------------

                                <F-dash>

Public enterprise funds:

                    Medical Facilities Revolving Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4138-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Operating expenses................                       1           1
00.02 Capital investment................           1           1           1
                                           ---------   ---------  ----------
10.00   Total obligations...............           1           2           2
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.40 Unobligated balance available, 
        start of year: Uninvested 
        balance.........................          17           6           6
22.00 New budget authority (gross)......           2           2           2
22.21 Unobligated balance transferred to 
        other accounts..................         -12
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......           7           8           8
23.95 New obligations...................          -1          -2          -2
24.40 Unobligated balance available, end 
        of year: Uninvested balance.....           6           6           5
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............           2           2           2
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           1
73.10 New obligations...................           1           2           2
73.20 Total outlays (gross).............          -1          -4          -4
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................           1           2           2
86.98 Outlays from permanent balances...                       2           2
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........           1           4           4
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.00   Offsetting collections (cash) 
          from: Federal sources.........          -2          -2          -2
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................          -1           2           2
---------------------------------------------------------------------------

    This account provides funds for the operating expenses of VA medical 
facilities furnishing nursing home care to certain veterans in receipt 
of pensions. Title 38 provides that a veteran with no spouse or child 
will only receive $90 per month in pension beginning the third full 
month following the month of admission to VA furnished nursing home 
care. The difference between the $90 the veteran receives and the amount 
otherwise authorized is transferred to this fund for spending expenses 
at the facility furnishing the nursing care.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4138-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
26.0  Supplies and materials............                       1           1
31.0  Equipment.........................           1           1           1
99.0  Subtotal, reimbursable obligations           1           2           2
                                           ---------   ---------  ----------
99.9    Total obligations...............           1           2           2
---------------------------------------------------------------------------

                                <F-dash>

                     Canteen Service Revolving Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4014-0-3-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Operating expenses:

00.01   Acquisitions....................         117         131         132
00.02   Direct operations...............          78          87          86
                                           ---------   ---------  ----------
00.91     Total operating expenses......         195         218         218
01.01 Capital investment: Sales program: 
        Purchase of equipment and 
        leasehold.......................           7           7           7
                                           ---------   ---------  ----------
10.00   Total obligations...............         202         225         225
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
      Unobligated balance available, start of year:

21.90   Fund balance....................         -12         -14         -15
21.91   U.S. Securities: Par value......          38          42          42
                                           ---------   ---------  ----------
21.99     Total unobligated balance, 
            start of year...............          26          28          27
22.00 New budget authority (gross)......         204         225         226
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......         230         253         253
23.95 New obligations...................        -202        -225        -225
      Unobligated balance available, end of year:

24.90   Fund balance....................         -14         -15         -14
24.91   U.S. Securities: Par value......          42          42          42
                                           ---------   ---------  ----------
24.99   Total unobligated balance, end 
          of year.......................          28          27          28
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............         204         225         226
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.90 Unpaid obligations, start of year: 
        Obligated balance: Fund balance.          15          14          15
73.10 New obligations...................         202         225         225
73.20 Total outlays (gross).............        -204        -225        -226
74.90 Unpaid obligations, end of year: 
        Obligated balance: Fund balance.          14          15          15
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................         202         225         226
86.98 Outlays from permanent balances...           2
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........         204         225         226
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources...............          -2          -2          -1
88.40     Non-Federal sources...........        -202        -223        -225
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........        -204        -225        -226
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................          -2
---------------------------------------------------------------------------

    The Veterans Canteen Service was established to furnish, at 
reasonable prices, merchandise and services necessary to the comfort and 
well-being of veterans in VA medical facilities.

    Financing.--Operations will be financed from current revenues.

[[Page 897]]

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4014-0-3-705    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................         209            209           225            225
0102  Expense...........................        -206           -206          -221           -222
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............           3              3             4              3
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4014-0-3-705    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Federal assets:

1101    Fund balances with Treasury.....           3                            2              4
        Investments in US securities:
1102      Treasury securities, par......          38             40            41             42
1106      Receivables, net..............           2              1             2              2
1107      Advances and prepayments......           2              2             2              1
1206  Non-Federal assets: Receivables, 
        net.............................                                                       1
      Other Federal assets:

1802    Inventories and related 
          properties....................          27             24            25             26
1803    Property, plant and equipment, 
          net...........................          25             28            28             28
                                        ------------ --------------  ------------  -------------
1999    Total assets....................          97             95           100            104
    LIABILITIES:
      Federal liabilities:

2101    Accounts payable................           2                            1
2104    Resources payable to Treasury...           1              1             2              2
      Non-Federal liabilities:

2201    Accounts payable................          10              9             8              9
2207    Other...........................           5              8             8              8
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............          18             18            19             19
    NET POSITION:
3200  Invested capital..................          44             42            47             46
3600  Other.............................          34             35            34             39
                                        ------------ --------------  ------------  -------------
3999    Total net position..............          78             77            81             85
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position          96             95           100            104
-----------------------------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4014-0-3-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

      Personnel compensation:

11.1    Full-time permanent.............          40          41          40
11.3    Other than full-time permanent..          14          18          18
                                           ---------   ---------  ----------
11.9      Total personnel compensation..          54          59          58
12.1  Civilian personnel benefits.......          15          18          18
21.0  Travel and transportation of 
        persons.........................           1           3           3
22.0  Transportation of things..........                       1           1
23.3  Communications, utilities, and 
        miscellaneous charges...........                       1           1
24.0  Printing and reproduction.........                       1           1
25.2  Other services....................           3           6           6
26.0  Supplies and materials............         123         128         129
31.0  Equipment.........................           6           8           8
99.0  Subtotal, reimbursable obligations         202         225         225
                                           ---------   ---------  ----------
99.9    Total obligations...............         202         225         225
---------------------------------------------------------------------------

                              Personnel Summary

----------------------------------------------------------------------------
Identification code 36-4014-0-3-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
2011  Total compensable workyears: 
        Exempt Full-time equivalent 
        employment......................       3,065       3,200       3,200
---------------------------------------------------------------------------

                                <F-dash>

         Special Therapeutic and Rehabilitation Activities Fund

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4048-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
      Reimbursable Program:

00.01   Contracts.......................          18          22          23
00.02   Education and training..........           1           1           2
00.03   Operating expenses..............          10          12          12
                                           ---------   ---------  ----------
10.00   Total obligations...............          29          35          37
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.90 Unobligated balance available, 
        start of year: Fund balance.....           5           8           8
22.00 New budget authority (gross)......          32          35          37
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          37          43          45
23.95 New obligations...................         -29         -35         -37
24.90 Unobligated balance available, end 
        of year: Fund balance...........           8           8           8
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............          32          35          37
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           2           1           4
73.10 New obligations...................          29          35          37
73.20 Total outlays (gross).............         -29         -32         -33
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation           1           4           8
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          29          32          33
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.40   Offsetting collections (cash) 
          from: Non-Federal sources.....         -32         -35         -37
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................          -3          -3          -3
---------------------------------------------------------------------------

    This revolving fund, established pursuant to the Veterans Omnibus 
Health Care Act of 1976, Public Law 94-581, provides a mechanism for the 
furnishing of rehabilitative services to certain veteran beneficiaries 
who are receiving medical care and treatment from the Department of 
Veterans Affairs.

    Funds to operate the various rehabilitative activities and provide 
for the therapeutic work for remuneration for patients and members in VA 
health care facilities are derived from contractual arrangements with 
private industry or nonprofit entities. Public Law 102-54 authorizes VA 
to contract with any Federal agency, including VA, and authorizes the 
Fund to cover the training, education, and travel costs of employees 
associated with the rehabilitative programs. This is a self-sustaining 
fund, and therefore no appropriation is required to support these 
activities. 

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4048-0-3-703    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................          27             32            35             37
0102  Expense...........................         -23            -27           -35            -37
                                        ------------ --------------  ------------  -------------
0109  Net income or loss (-)............           4              5
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   36-4048-0-3-703    1995 actual    1996 actual     1997 est.      1998 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Federal assets:

1101    Fund balances with Treasury.....           7             10            13             16
        Investments in US securities:
1106      Receivables, net..............           2              1             1              1
1206  Non-Federal assets: Receivables, 
        net.............................           1              1             1              1
1803  Other Federal assets: Property, 
        plant and equipment, net........                          1             1              1
                                        ------------ --------------  ------------  -------------
1999    Total assets....................          10             13            16             19
    LIABILITIES:
2101  Federal liabilities: Accounts 
        payable.........................           1              1             4              7
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............           1              1             4              7
    NET POSITION:
3200  Invested capital..................                          1
3300  Cumulative results of operations..           8             11            11             11
                                        ------------ --------------  ------------  -------------
3999    Total net position..............           8             12            11             11
                                        ------------ --------------  ------------  -------------

[[Page 898]]


4999  Total liabilities and net position           9             13            15             18
-----------------------------------------------------------------------------------------------

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4048-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
25.2  Other services....................          26          31          33
26.0  Supplies and materials............           2           3           3
31.0  Equipment.........................           1           1           1
                                           ---------   ---------  ----------
99.9    Total obligations...............          29          35          37
---------------------------------------------------------------------------

                                <F-dash>

                  Medical Center Research Organizations

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4026-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Operating expenses................          25          26          26
00.02 Capital investment................           3           3           3
                                           ---------   ---------  ----------
10.00   Total obligations...............          28          29          29
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
21.90 Unobligated balance available, 
        start of year: Fund balance.....          18          18          18
22.00 New budget authority (gross)......          28          29          29
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          46          47          47
23.95 New obligations...................         -28         -29         -29
24.90 Unobligated balance available, end 
        of year: Fund balance...........          18          18          18
----------------------------------------------------------------------------

    New budget authority (gross), detail:
68.00 Spending authority from offsetting 
        collections (gross): Offsetting 
        collections (cash)..............          28          29          29
----------------------------------------------------------------------------

    Change in unpaid obligations:
73.10 New obligations...................          28          29          29
73.20 Total outlays (gross).............         -28         -29         -29
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          28          29          29
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

        Offsetting collections (cash) 
            from:
88.00     Federal sources...............          -1          -1          -1
88.40     Non-Federal sources...........         -27         -28         -28
                                           ---------   ---------  ----------
88.90       Total, offsetting 
              collections (cash)........         -28         -29         -29
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................
---------------------------------------------------------------------------

    These nonprofit corporations provide a flexible funding mechanism 
for the conduct of approved research at Department of Veterans Affairs 
medical centers. These organizations will derive funds to operate 
various research activities from Federal and non-Federal sources. No 
appropriation is required to support these activities.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-4026-0-3-703      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
25.2  Other services....................          17          18          18
26.0  Supplies and materials............           8           8           8
31.0  Equipment.........................           3           3           3
                                           ---------   ---------  ----------
99.9    Total obligations...............          28          29          29
---------------------------------------------------------------------------

                                <F-dash>

                               Trust Funds

  [Transitional Housing Loan Program] General Post Fund, National Homes

                      (including transfer of funds)

    For the cost of direct loans, $7,000, as authorized by Public Law 
102-54, section 8, which shall be transferred from the ``General post 
fund'': Provided, That such costs, including the cost of modifying such 
loans, shall be as defined in section 502 of the Congressional Budget 
Act of 1974, as amended: Provided further, That these funds are 
available to subsidize gross obligations for the principal amount of 
direct loans not to exceed $70,000.
    In addition, for administrative expenses to carry out the direct 
loan programs, $54,000, which shall be transferred from the ``General 
post fund'', as authorized by Public Law 102-54, section 8. (Departments 
of Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1997.)

              Unavailable Collections (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8180-0-7-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
    Balance, start of year:
01.99 Balance, start of year............           2           2           5
    Receipts:
02.01 General post fund, national homes, 
        deposits........................          24          28          29
02.02 General post fund, national homes, 
        interest on investments.........           3           3           3
                                           ---------   ---------  ----------
02.99   Total receipts..................          27          31          32
                                           ---------   ---------  ----------
04.00 Total: Balances and collections...          29          33          37
    Appropriation:
05.01 General post fund, national homes.         -27         -28         -29
07.99 Total balance, end of year........           2           5           8
---------------------------------------------------------------------------

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8180-0-7-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------

    Obligations by program activity:
00.01 Religious, recreational, and 
        entertainment activities........          21          21          22
00.02 Research activities...............           3           3           4
00.03 Therapeutic residence maintenance.                       1           1
00.04 Therapeutic residence purchase and 
        renovation......................           1           1
                                           ---------   ---------  ----------
10.00   Total obligations...............          25          26          27
----------------------------------------------------------------------------

    Budgetary resources available for obligation:
      Unobligated balance available, start of year:

21.40   Uninvested balance..............          -1          -3          -1
21.41   U.S. Securities: Par value......          36          40          40
                                           ---------   ---------  ----------
21.99     Total unobligated balance, 
            start of year...............          35          37          39
22.00 New budget authority (gross)......          27          28          29
                                           ---------   ---------  ----------
23.90   Total budgetary resources 
          available for obligation......          62          65          68
23.95 New obligations...................         -25         -26         -27
      Unobligated balance available, end of year:

24.40   Uninvested balance..............          -3          -1          -1
24.41   U.S. Securities: Par value......          40          40          42
                                           ---------   ---------  ----------
24.99   Total unobligated balance, end 
          of year.......................          37          39          41
----------------------------------------------------------------------------

    New budget authority (gross), detail:
60.27 Appropriation (trust fund, 
        indefinite).....................          27          28          29
----------------------------------------------------------------------------

    Change in unpaid obligations:
72.40 Unpaid obligations, start of year: 
        Obligated balance: Appropriation           3           5           6
73.10 New obligations...................          25          26          27
73.20 Total outlays (gross).............         -24         -25         -25
74.40 Unpaid obligations, end of year: 
        Obligated balance: Appropriation           5           6           7
----------------------------------------------------------------------------

    Outlays (gross), detail:
86.97 Outlays from new permanent 
        authority.......................          22          23          23
86.98 Outlays from permanent balances...           2           2           2
                                           ---------   ---------  ----------
87.00   Total outlays (gross)...........          24          25          25
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................          27          28          29
90.00 Outlays...........................          24          25          25
---------------------------------------------------------------------------



[[Page 899]]



    This fund consists of gifts, bequests, and proceeds from the sale of 
property left in the care of the facilities by former beneficiaries, 
patients' fund balances, and proceeds from the sale of effects of 
beneficiaries who die leaving no heirs or without having otherwise 
disposed of their estate. Such funds are used to promote the comfort and 
welfare of veterans at hospitals, nursing homes, and domiciliaries where 
no general appropriation is available. Public Law 102-54 authorizes 
compensation work therapy and therapeutic transitional housing and loan 
programs to be funded from the General post fund. In addition, donations 
from pharmaceutical companies, non-profit corporations, and individuals 
to support VA medical research are deposited into this fund. (38 U.S.C. 
chs. 83 and 85.)

    Also under this heading are the activities of the Transitional 
housing loan program. This program provides loans to nonprofit 
organizations to assist them in leasing housing units exclusively for 
use as a transitional group residence for veterans who are in (or who 
have recently been in) a program for the treatment of substance abuse. 
The amount of the loan cannot exceed $4,500 for any single residential 
unit and each loan must be repaid within two years through monthly 
installments. The total amount of loans outstanding at any time may not 
exceed $100,000.

               Object Classification (in millions of dollars)

----------------------------------------------------------------------------
Identification code 36-8180-0-7-705      1996 actual   1997 est.   1998 est.
----------------------------------------------------------------------------
21.0  Travel and transportation of 
        persons.........................           1           1           1
25.2  Other services....................          11          12          12
26.0  Supplies and materials............           6           6           6
31.0  Equipment.........................           4           4           4
32.0  Land and structures...............           3           3           4
                                           ---------   ---------  ----------
99.9    Total obligations...............          25          26          27
---------------------------------------------------------------------------

                                <F-dash>