Thank you for being here today, mr. Secretary. Thank you for coming today. Bringing you cast of thousands. Youve got a lot of support here today. Big budget, big support. Were proud to have secretary mcdonald be here today. We were proud to have in order danny, doctor, thanks. Ronald waters. Laverne counsel. Ed murray. We appreciate all of you. With all that support, mr. Secretary, im sure youre going to do a great job. Ill make my Opening Statement and then turn to blumenthal then to your testimony. I dont want you to feel compelled by any fiveminute light. I want you to say what youve got to say. I understand the average Attention Span of the United States senator is about nine minutes. After that we all start blinking. Speaking for myself. Thats selfimposed limitation. Thank you very much, mr. Secretary, for being here today. Were looking forward to discussing the 182 billion budgetary appropriation. It would be an 8. 9 increase. Should it be adopted, medical funding would increase by 3. 8 billion or 6. 3 . I. T. Would be increased by 145 million. Im very encouraged that youve braced the program to merge the programs. We look forward to that. Your testimony also talks a little bit about accountability. In fact, i read the information. Accountability as a word is used one time but its probably most important thing this committee is really interested in doing. You and i had a great meeting at your office last week mr. Secretary and i want to acknowledge publicly with the members and thanks blumenthal and murrays staff for the work theyre doing. Ive stated publicly and im doing it again now publicly my goal is to see to it by the end march we have an accountability bill for Veterans Administration employees thats right for veterans and right for those employees and we look to the future to see to it if we have problems in the future, that we have a defensible accountability system within the department to correct a wrong and not let it happen again. Most of them, in fact, if not at all of them, pre your service, mr. Secretary. Lack of accountability implementations thats impossible to understand. We want to put that behind us. And build a platform thats good for the employees, good for the management. Most importantly, good for the veterans themselves so they know theyre getting Quality Services and quality accountability. Its very important we do that. Thats the most important thing we can do. Lastly, you talked about the appeals process. I hope youll address that in your remarks. Thats something we talked about many times. Have not done. Something we rightfully need to do. Id love to know what youre going to recommend. Were glad youre here today. Appreciate your service to the country. Its time to introduce the Ranking Member senator blumenthal. Thanks, mr. Chairman. I want to second your remarks about the need for an accountability bill which is i think making progress with very close by partisan cooperation between our staffs and ourselves. I want to thank the secretary and the president for a very robust and profoundly significant budget the vas going through major changes as it looks toward the future. And prepared for an even more challenging future so far as the needs of our veterans are concerned. In areas of not only health care but also jobs and job training and skill preparation and of course homelessness. In connecticut, i am very delighted to say is at the forefront of that effort. In fact, announced just last week that we have ended homelessness for veterans in connecticut. And of course thats a continuing effort. Its a milestone, not a finish line. We need to continue to provide permanent housing for all of our veterans, not just a temporary or transition form of housing. This budget request focuses fortunately on a number of areas i think are important. Breakthrough priorities such as Community Health care, accountability, the appeals process. I also think that in terms of our medical care, the challenges of post Traumatic Stress and the research and outreach that needs to be done need to be given priority. I hope this hearing will be an opportunity to hear from you about more of the details of this proposal, but i also think the vision for the future is tremendously important not only this year but looking beyond this year just as you would at a company like Procter Gamble, beyond this quart, beyond this year, to think about what this enterprise is going to look like in five years, in ten years. Because now is the time to build for the veterans who will be coming out of the service and theyll be more and more of them over the next few years as we downside our active force. So i thank you for being here and im looking forward to hearing from you and from the Veterans Service organizations that perform such an important and vital role in keeping us informed about veterans needs and making sure that all of us are held accountable. Thank you. Thank you, senator. Mr. Secretary, its all yours. Chairman isakson, members of the committee, thank you for the opportunity to present the president s 2017 budget and 2018 advance appropriations request for the department of Veterans Affairs. I have a written statement that i ask be submitted for the record, mr. Chairman. Mr. Chairman, the president s proposal is another strong tangible sign of his devotion to veterans and their families. It proposes 182. 3 billion for the department and fiscal year 2017 which include 78. 7 billion in discretionary funding, a 4. 9 increase above the 2016 enacted level largely for health care. It includes 12. 2 billion for care in the community and a new medical Community Care budget account consistent with the va budget and choice improvement act. It includes 103. 6 billion in mandatory funding for veterans benefit programs and 103. 9 billion in advanced appropriations for our three major mandatory Veterans Benefits accounts. It supports vas four Agency Priority goals and our five my va transformational objectives to modernize va and improve the veteran experience, improve the employee experience, improve internal support services, establish a culture of Continuous Improvement and expand strategic partnerships. Those five transformational objectives are about growing va into the High Performance organization veterans deserve and taxpayers expect. I learned over three decades in the private sector Procter Gamble what makes a High Performance organization. It takes a clear purpose, strong values, enduring principles and technical competence. High performance organizations depend on sound strategies. They thrive with passionate leaders who are willing to take tough decisions and make bold changes to improve. And High Performance organizations require responsive systems and processes designed and managed in a high performing culture. Well, va has a clear purpose in our most Noble Mission to care for those who have born the battle. We have strong core values, integrity, commitment, advocacy, respect and excellent. Our Strategic Plan makes clear were a Customer Service organization. We serve veterans. Our five my va transformational objectives and our 12 breakthrough priorities for 2016 are about accomplishing that strategy. Ten of our top 16 executives are new since i became secretary. Theyre part of a growing team of talented enthusiastic former Business Leaders and experienced government and Health Care Professionals. And theyre making innovative changes and creating opportunities for even greater progress. Were making the sweeping changes necessary for va to be a High Performing Organization and well know were getting there when by design veterans needs shape our systems, our processes and our culture. For example, a Responsive Health care system for veterans means veterans have 24 7 access to va systems and know where to get accurate answers. Whether thats their veteran Contact Center or the Veterans Crisis line. Veterans calling or visiting primary care facilities and Medical Centers have their clinical needs addressed the very same day. Veterans calling for new Mental Health appointments receive suicide risk assessments and Immediate Care if needed. And veterans already engaged in Mental Health care who need urgent attention speak to a provider the very same day. For employees serving veterans, it means a high her forming culture where Continuous Improvement drives responsive forward thinking and innovative change. It means training our workforce on advance business techniques. It means responsive Performance Management systems that resonate with employees and encourage rather than discourage Continuous Improvement in excellen excellence. It means proper employee placement. Clear performance expectations. Continuous feedback and employees equipped with the tools to achieve excellent. It means executive performance ratings and bonuses that reflect actual performance and take into account relative inputs like veteran outcomes, results of employee surveys. It means modern systems in place of antiquated costly paper processes. These are a few characteristics of high her forming systems, processes and culture and were advancing along these lines in many others. We launched our cascading leaders developing leaders training last year with 450 senior field leaders. Its not a single event. Its a continuous enterprisewide process of leaders teaching leaders teaching leaders in order to inculcate lasting change. Well have trained over 12,000 Senior Leaders empowering teams to dramatically improve care and Service Delivery to veterans and creating better work environments for employees. Private sector leadership experts are developing va teams in new ways with cutting edge business skills like human centered design. Were using human centered design and lean right now to redesign the compensation and pension progress because veterans find it confusing and burdensome. Were looking at industry best practices in planning for an automated Performance Management solution for general scheduled employees. We can streamline that process, improve accuracy and interface with opm. All of this is focused on moving va into the ranks of High Performing Organizations. That goal is in reach. Well need your continued support to achieve it. I appreciate our extensive discussion at the end of january on our my va 12 breakthrough priorities for 2016. The proposed budget continues support of this priorities into 2017. It provides 65 billion for veterans medical care, 6. 3 increase over 2016. It provides 66. 4 billion in advanced appropriations for the va medical care programs in 2018. It provides 7. 8 billion for Mental Health, funds veterans in the field and crisis line modernization. Enhances Health Programs for womens veterans and provides an incredibly effective hepatitis c treatment to an expected 35,000 veterans. To help integrate all the my va initiatives across the enterprises provides 2. 6 million for the my va program office. To continue Training Field employees on advance business skills and establishing high Customer Service standards, it increases funding for our veteran experience office by 47 . Well continue doing all we can to squeeze as much as possible out of every single budget dollar. Our Pharmacy Benefits Management Program afforded 4. 2 billion in unnecessary drug expenditures next year. Exceeding goals of the president s campaign to cut waste. And weve reducinged bonuses 64 between 2011 and 2015 by rigorously linking awards to performance. Weve saved 16 million using more efficient training and meeting methods. Were already saving 10 million annually. Weve saved approximately 5. 5 million from 2011 to 2015 by strengthening controls over permanent change of station moves. Now that weve implemented electronic claims processing well save millions of dollars each year in paper storage. Were committed to doing everything we can with everything were given. Many important priorities for meaningful change require substantial congressional action. There are more than 100 legislators proposals in the budget. Over 40 of them are new this year. Some are critical just to maintain our current ability to purchase nonva care. Its critical vas competitive with private sectors so we can attract top talent. Nowhere is that more important than in health care. Personal authority adjustments, were proposing flexibility on the maximum 80 hour pay period requirement for certain medical professionals. It will help improve hospital operations and attract the best hospital staff who prefer more flexible schedules. Were proposing critical compensation reforms for network and hospital directors. Likewise, the title 38 ses proposal were working on is about being competitive with the private sector in recruiting. Its not just about finding people. Its about treating va career executives more like their private sector counterparts. Va needs that flexibility too. We need your help to transform vas care in the community to best serve. We need your help modernizing vas purchase care authorities. To maintain veterans access to Care Everywhere in the country. Addressing this challenge more than nine months ago, and ive consistently identified it as a top legislative priority. This needs to get done in this congress to ensure that Strong Foundation for access to Community Care. Were proposing a general transfer authority that allows me some measured flexible spending. To respond to the veterans emerging needs. The process is or canot serving veterans well. The Budget Proposals simplified, streamlined, so that five years from now, veterans have appealed resolved within one year of filing. While requiring shortterm staffing increases to contend with the 445,000 pending appeals legislating the appeals process can save more than 139 billion, im association Million Dollars annually beginning in 2022. We need congressional authorization of 18 leases submitted in vas 2015 2016 budget request. As well as authorization of eight Major Construction projects included in the fiscal year 2016 budget. We need your support for six Additional ReplacementMajor Medical facility leases, two Major Construction projects and four cemetery projects in the 2017 budget. In passing special legislation for vas west campus will give us positive results for veterans in the community most in need it ive joust lined a few opportunities for change here. This congress, with todays va leadership, can make these changes and more for all veterans and for veterans in the future. Then we can look back on this year as the year we turn the corner. I appreciate the support youve shown veterans, the department and the my va transformation. On behalf of veterans and the va employees serving them every single it day, thank you for th opportunity. We look forward to your questions. Thank you, mr. Chairman. Thank you, mr. Secretary. Were delighted to have you here today. Ill start the questioning and well go republican democrat after we go to the Ranking Member, all the way through. Your proposal has a unique system for Senior Executive employment within the Veterans Administration which would create a unique pay schedule and discipline system around title 38. Accountability is the single most important thing we must accomplish on my judgment within this committee and the va itself. You detail for the committee the justification for the proposal. Yes, mr. Chairman. As you know, we run a health care business. We run an organization that, if it were a company, would be fortune 6 on the fortune 500. We compete with Health Care Professionals from the best Health Care Systems in the country, whether they be Medical Centers that were afillated with like Duke Medical Center or whether they be Large Health CareCompanies Like mayo or cleveland. We believe the best way to treat va employees is as a Health Care Professional also they are and the title 38 provision would give us that ability. We can pay them more competitively. Right now, our average Medical Center director is paid, at best, half what they can earn in the private sector and weve lost several recently, and were paying them the best we can with the