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House of Representatives,

Subcommittee on Benefits,

Committee on Veterans' Affairs,

Washington, DC.

    The subcommittee met, pursuant to call, at 8:30 a.m., in room 340, Cannon House Office Building, Hon. Jack Quinn, (chairman of the subcommittee) presiding.
    Present: Representatives Quinn, Filner, and Evans.


    Mr. QUINN. Good morning. The subcommittee will come to order, please. As we continue to work toward a balanced budget, both the Congress and the executive branch need a way to determine whether programs are accomplishing what they were designed to do.
    As resources become constrained, it's vital that we are able to judge the relative performance and cost of a wide range of programs. Done properly, it will allow us to put our resources where they do the most good, and that is the best thing for veterans.
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    Today we begin a series of oversight hearings on the management of veterans' benefits program using the Government Performance and Results Act as a framework. The Results Act was passed during the 103rd Congress to provide the executive and legislative branches sort of a common reference around which to judge the performance of Government programs.
    Probably the single most important feature of the Act is linking performance to the budget process by focusing on outcomes rather than through-put in a series of agreed measures to judge that performance.
    For instance, in the case of the Veterans' Employment Training Service, a through-put is something like saying ''VETS assisted 500,000 veterans.''
    Whereas, an outcome would be 500,000 veterans placed in jobs with supporting measures like the average salary of those placements and how long the veterans stayed in the job.
    Yesterday Congressman Bob Filner and I received a briefing from GAO which helped us with these terms, so I don't want to appear overly intelligent. They helped us with them yesterday, and so—I have less of a problem back home in my district with that where they know me a little better.
    And we appreciated that information and we're going to hear testimony today to that effect and all of those things. We're very, very pleased to have Preston Taylor with us not only today, but for a little while longer before he leaves us. But that's the basis for the hearing.
    We'll have some members who will be in and out this morning, I'm sure of that. And since this is the first meeting of the subcommittee, I'd like to welcome not only the staff and the people here in the audience, but especially the ranking member of the committee, Bob Filner from California.
    And Bob, why don't I turn to you for the opening remarks.
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    Mr. FILNER. Thank you, Mr. Chairman. I'm looking forward to working with you on this committee and to getting positive results for all of our veterans and our whole country.
    This hearing today on the Government Performance and Results Act is, I think, important to see how the Veterans' Employment and Training Service is complying with the requirements of that Act.
    I think this Act will help us all in the legislative branch and executive branch to make sure that we are actually carrying out the mission that is assigned, that that mission is appropriate and remains appropriate, and the goals are being achieved.
    There is, from my own experience, a bit of a cautionary view that I have of this whole process. About 20 years ago, I served as president of the San Diego Board of Education. We took a similar approach toward the bureaucracy, if you will, in that regard.
    And we ''reinvented,'' as the word is used now, a poorly functioning school system and instituted a results-based system of evaluation of the quality of education. And that, in fact, continues to work well even two decades later.
    The entrenched institutional resistance to change was enormous, and it took an extraordinary effort and near-constant supervision of the school system to accomplish the goals that we wanted.
    I want you to know that we are committed to ensuring that the goals of VETS that you describe for us today do not simply disappear a year from now or 5 years from now. If GPRA is to have any actual positive effect, we must commit, as Congresspeople, to a sustained focus on the agencies under our jurisdiction and regularly examine the progress being made.
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    I know, however, that if change is going to come, I have full confidence in the leadership and staff of VETS because I know, under your leadership, Mr. Secretary, you have already made great strides forward in the re-invention process.
    In fact, General, your willingness to change, and your sincere enthusiasm for this change, have revitalized VETS. The veterans of this country have benefited from your determination to provide them with world class employment assistance.
    You will be missed, Mr. Secretary. All of us are grateful for the blood and the sweat and the tears that I know you have sacrificed on behalf of all of our Nation's veterans. But when you leave, I think you can be assured that you have established a firm foundation on which your successors can build.
    I promise you that we will all work with those who follow you to ensure that your work in fact is successful. So we thank you, Mr. Secretary, for your service. We wish you the best in your future and looking forward to your dialogue today.

    [The prepared statement of Congressman Filner appears on p. 40.]

    Mr. QUINN. Thank you, Bob. We appreciate it very much. As we introduce our first panel, the Honorable Preston Taylor, Assistance Secretary for Veterans Employment and Training from the Department of Labor, Mr. Secretary, we all understand that you're about to leave VETS at the end of the month and return to your home of New Jersey. This is probably your last appearance here before the Veterans' Committee.
    On behalf of this committee; our chairman, Bob Stump; ranking member Lane Evans, who has just joined us this morning; members of the committee before we came on board here, we want to thank you for not only your service here, but your service to the country over pretty much your career and a lifetime in and out of uniform.
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    It's no secret that you are the one who has enjoyed carrying the message about the value of veterans. You go out to the work place and you're never at a loss for words on this subject. And if we have one parting observation, I hope that maybe you can find somewhere where they pay you by the word instead of the job, Mr. Secretary.
    We wish you the very best. And before I announce under the 5-minute rule here this morning, I'd like to turn to the Committee's ranking member, Lane Evans, for any opening remarks. Lane.


    Mr. EVANS. Thank you, Mr. Chairman.
    Today the subcommittee will receive testimony on Government Performance and Results Act strategies for the Veterans' Employment and Training Service. I commend you for scheduling this hearing and for your active interest in the Government Performance and Results Act process.
    The Government Performance and Results Act requires consultation with the Congress. In order for this consultation to be meaningful, it is essential that our committee be provided substantive information in a timely fashion for this to happen. Meaningful consultation on veteran employment and training issues is critically important.
    The programs authorized by our committee must be implemented in the manner which will achieve the best results for our Nation's veterans. This is our goal, and I look forward to the testimony to be presented today.
    And I want to take this opportunity to thank Assistant Secretary Preston Taylor for years of devoted service to the Department of Labor and to the Training Service. He has brought a new level of leadership to VETS which will be the standard which his successors will be measured for many years to come.
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    On behalf of the hundreds of thousands of veterans who have benefited from your commitment to them, General, we want to thank you very much for a job well done. And hope you won't be a complete stranger. Stop in and see us when you're in town.
    Thank you, Mr. Chairman. Appreciate the opportunity.
    Mr. QUINN. Thank you, Mr. Evans. I know that your written testimony will be received for the record.
    Mr. Secretary, why don't you please proceed.

    [The prepared statement of Congressman Evans appears on p. 44.]


    Mr. TAYLOR. Yes, sir.
    Good morning, Mr. Chairman, and members of the committee. I appreciate the opportunity to testify this morning and discuss with you the implementation of the Government Performance and Results Act by my agency, the Veterans' Employment and Training Service.
    As I am sure you know by now, I will be leaving the position of Assistant Secretary for Veterans' Employment and Training at the end of this month, so this hearing is likely to be the last time I will appear before you in this capacity.
    I am glad to be able to talk with you about the Results Act, as you refer to it on the Hill, because throughout my tenure as Assistant Secretary, my bottom line question about every program, about every activity, and about every proposal presented to me has been what will be the result for veterans?
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    I left the New Jersey Department of Military and Veterans' Affairs in 1993 to take the job of Assistant Secretary of Labor for Veterans' Employment and Training. In New Jersey, I instituted a total quality management program, so the basic principles of GPRA are very familiar to me.
    GPRA, like TQM, requires consultation with your stakeholders, learning from your customers what they need and want and value most, aligning your business processes to meet those customer demands, and measuring your results so that you continually know how well you are doing and where you need to improve.
    GPRA, like TQM, is about ensuring that all programs and policies are focused on results for your customers. I found that VETS as an agency was in pretty good shape in that respect when I arrived. But I also found that most people in the Labor Department on the Hill in Washington and around the country did not know what this agency was achieving for its customers.
    One of my first priorities was to compile a list of its accomplishments in quantified terms and to regularly publish those results for internal and external scrutiny.
    For the last 3 years, VETS has been focusing on results expressed in terms of output and outcome measures such as 536,000 veterans placed in jobs last year, 85 percent of reemployment rights claims satisfactorily resolved within 120 days of the date of the initial complaint.
    We use such data in formulating our annual budget request so that when you analyze our request for funding, you also can see how many veterans we can find jobs for with the amount requested for the DVOP and LVER program; or how many transitioning servicemembers can we help; or how many service providers personnel will become more competent to help veterans as a result of training that they receive at the National Veterans' Training Institute.
    But we are not complacent about those accomplishments or about the measures we have in place. I believe in the process of continuous improvement, and we practice that in VETS. I have institutionalized a senior management position devoted to strategic planning.
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    We have been vigorous in consulting with our stakeholders and service provider partners. We learn from customer satisfaction surveys and focus groups what our customers, both veterans and employers, want most and where we need to do better.
    We have forged healthy relationships with the Veterans' Service Organizations, the Employment and Training Administration, the Department of Veterans Affairs, and the State and local entities engaged in the development of the one-stop service center system.
    Our major challenge now is to forge ahead in this GPRA process and gain consensus on the results we will measure year in and year out. It is a difficult challenge because the Nation's employment service system is changing rapidly as new information technology makes its impacts.
    It is a difficult challenge that must be faced jointly, candidly, and honestly by congressional and executive branch leadership. I feel very strongly that we must have a nonpartisan collaborative approach to establishing new ways to measure what we will use to judge the value of the programs and services provided for our veterans, our reservists, and our National Guard members.
    We have only a little more than 4 months left to establish the first 5 years strategic plan for VETS that will have a significant impact on the lives of tens of millions of veterans, reservists, and Guard members and their dependents.
    Because I will not be here through all of those 4 months, I am glad that our draft strategic plan now is in the OMB review process. And that as of today, our dialogue with you regarding that plan has officially begun. I look forward to your comments and questions and to helping to move this cooperative effort forward.
    Thank you. I will now answer any questions that you might have.

    [The prepared statement of Secretary Taylor appears on p. 47.]
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    Mr. QUINN. Thank you, Mr. Secretary. Thanks very much. I have a couple of opening questions, Bob, and then we'll get to them.
    Just a procedural one. We know that the Secretary is appointed over at the Labor Department now and confirmed. Do you have any sense for a time line on replacements in the Department?
    Mr. TAYLOR. No, we'll have our first meeting with the Secretary tomorrow morning. And I think—I suspect that she will give us some information in regard to how that process will work and where the process is. I believe there have been some initial efforts at beginning to identify people who will fill some of the Assistant Secretary positions.
    Mr. QUINN. Sure.
    Mr. TAYLOR. There are quite a few that are vacant at this time.
    Mr. QUINN. Yes. We obviously won't be at that meeting. It will be her meeting to chair for her staff. But from our point of view, would you please voice our interest in moving that process along. As you correctly point out, we're looking at a September deadline for some of these things to be in place.
    I think that we find ourselves in a good position now——
    Mr. TAYLOR. Yes.
    Mr. QUINN (continuing). Because the strategic plan is there. But I'd hate to see that delayed because of appointments.
    Mr. TAYLOR. Yes, sir. Yesterday afternoon, there was a reception for the outgoing acting secretary which was hosted by the new secretary. And I had the opportunity to chat with her for a moment, and she asked me to go to lunch with her to talk about these issues.
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    So I'm looking forward to having a private meeting with her, and I will urge that she move quickly.
    Mr. QUINN. Sure. And if there's anything that you sense that Bob Filner and I can do from this subcommittee to assist in that effort, please feel free to give us a call back next week after your meetings with the secretary——
    Mr. TAYLOR. Yes, sir; I will do that.
    Mr. QUINN (continuing). Informally or formally.
    Mr. TAYLOR. I will do that.
    Mr. QUINN. Thank you.
    Mr. TAYLOR. You're welcome.
    Mr. QUINN. In your written testimony this morning, about halfway through, you talk about the customer survey portion of all of this strategic plan. And in the customer survey, one of the major dissatisfactions with the public employment service system expressed by veterans is the quality of the jobs that are listed there.
    And I think all of us Members of Congress have a different customer survey. We hear it every weekend when we go back home.
    Mr. TAYLOR. Yes.
    Mr. QUINN. And we hear it at hearings, which is the way it's supposed to be. So we have proposed to implement measures of quality within there. Can you talk a minute or two about some of those measures of quality?
    Mr. TAYLOR. Yes.
    Mr. QUINN. Because we hear the same thing.
    Mr. TAYLOR. Yes, yes. As I said earlier in my opening statement, I've had some experience with quality before I arrived here. But there were some things that we had to do when I first arrived, and so we had to begin to prioritize our actions 3 1/2 years ago.
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    We had to look at exactly what was going on out there with our DVOP's and LVER's, how many veterans were coming into the employment offices, what our Status Enforcement Program was like, how well were we doing with our Transition Assistance Program given at 160 military bases.
    And then we had to look internally at the organization; was it configured correctly in order to provide those services that I felt that we had to provide. So we placed a lot of emphasis on reorganization, reengineering internally to get the internal customers squared away.
    And then we began to really focus hard on the external customers. And then when we got that done, we began to ask questions like okay, you did real good out there. You found 565,000 jobs in the employment system—DVOP, LVER and Wagner-Peyser.
    And I said okay, fine; now how much do these jobs pay? And without any urging from the Congress, we decided that we wanted to find out. And so we did this survey. And what we found was a little disturbing to me. If you break the veterans down into age components 20 to 24, 24 to 30, 30 to 35, you see something that's very disturbing.
    And I pointed this out to the staff. Young veterans are getting jobs through these State employment systems that paid around $10,000. As they got older, they got more money, better jobs. It wasn't until they reached age 35 that we saw that they dropped it down to the national level.
    And so we thought we needed to know a little bit more about that. What was going on out there? And so I decided that we would do focus groups and that we would ask the veterans to come in and sit down and tell us where we were weak and tell us where we were strong.
    And then we would begin to do analysis and then begin to put processes in place aimed at improving all of this.
    My experience in quality is that it takes a while to change the culture of an organization. And when you add the Federal employees and the State employees, the DVOP's and LVER's, you're talking about 3,500 people and to change mind sets and change the way people think.
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    And of course, working with ETA who owns the data bases and the processes to get those data bases changed, to get their culture changed and working in concert with them. So we are—we have recognized that the employment system has to improve.
    We know that it is improving. I think some members of your staff may have gone to a one-stop shop. If they have not gone to a one-stop shop, I urge them to go. I've taken my staff members to one in Columbia, MD.
    We sat down at the computers and we looked at the jobs. And for the first time now, we can see $40,000 jobs there. So we know that things are improving in the employment system, we're breaking paradigms. You're talking about, you know, changing the culture. It is not easy and it takes time to do it.
    But I'm encouraged. I know Congressman Filner has mentioned that they had to reinvent the school system in San Diego. That's not an easy thing to do. And you have a lot of opposition. You have people who are very afraid of change, people who work for you.
    And we have a tendency, I have a tendency to like planning. I like long range planning. I like plans to be done in 5-year or 10-year or 15-year segments. Well, when you write these plans, even though they're draft plans, and we were doing that before GPRA was required, you telegraph your intentions.
    And by telegraphing your intentions, you give your adversaries a chance to develop their own plan to oppose what you're doing. And so it's not easy to do. But we were determined to do it, and I think we're on the right track. We're seeing—IBM has just given us 24,000 jobs.
    Now, what is the point——
    Mr. QUINN. Excuse me. I'm sorry?
    Mr. TAYLOR. IBM has just given the Department of Labor 24,000 jobs and these are mid level and above jobs. Okay, and you know, if you were an employer and you go to the employment system and you say give me good employees and you don't have good employees, you're not going to go to the employment system.
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    Mr. QUINN. Right.
    Mr. TAYLOR. And if you're a veteran or a non-veteran going to the employment system looking for a good job and the employers are not giving the employment system good jobs, they're not going to go there.
    So you have to have a marriage of the two. The employers have to be considered customers just like the people who are looking for jobs are considered customers. And you've got to convince the employers that you're going to provide good employees. And you've got to convince those who are looking for jobs that they're going to get good jobs.
    The culture of the employment system has been historically a place where you go to get an unemployment check, not a place where you go to get a good job.
    Mr. QUINN. Sure.
    Mr. TAYLOR. We're changing this, and it's hard to do. But it is a great challenge. I love the challenge. And we are beginning to see results. And so we are beginning to see better jobs.
    And as we concentrate, we put these measurements in place, we go out and evaluate the people working in the field and we get the word out there that you're going to be evaluated not just on the number of jobs that you get for these veterans, but on the quality of jobs.
    Mr. QUINN. And on the quality question—excuse me—you've answered already by saying that it's more than just the pay.
    Mr. TAYLOR. Yes.
    Mr. QUINN. When you mention something like IBM, to measure the quality——
    Mr. TAYLOR. Yes, sir.
    Mr. QUINN (continuing). Is more than just what you're paid an hour.
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    Mr. TAYLOR. Yes, sir.
    Mr. QUINN. And I think that's important.
    Mr. TAYLOR. But I need to advise you that there's an investment cost in doing these things. I had to use some money that was available to me to do these surveys, the survey on how the ETS system was doing. That cost money. That cost time.
    It costs money to do focus groups. I traveled to California and I sat in on at least four of them. We did focus groups in seven different States. I was recently in Georgia, and I sat down with executives from Delta Airlines, CSX Railroad, and Hartsfield Airport.
    The unemployment in that area down there is around three percent. So when you look at employment requirements, you've got to look through environmental scan. In California a couple of years ago, the unemployment rate was 13 percent.
    So California is not Georgia, and Georgia is not New York. And so you have to focus and you have to develop strategies to deal with where the problems are. And so Delta tells me we'll hire every veteran you can bring to us.
    So how do we convince those veterans that are going to our TAP classes in the eight military bases in Georgia to stay in Georgia?
    Mr. QUINN. That's right.
    Mr. TAYLOR. And how do you convince veterans who have been unemployed for 2 years in California to move to Georgia where the jobs are? So it's not a simplistic problem.
    Mr. QUINN. Thank you.
    Mr. TAYLOR. But we're dealing with it.
    Mr. QUINN. Appreciate it very much.
    And a follow up question on job development, but I think that you've sort of touched on that a little bit when you talked about the outreach there.
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    Mr. Filner.
    Mr. FILNER. Well, if Georgia only had the weather that San Diego has——
    I want to take advantage of the fact that this is your last appearance and be a little—maybe philosophical in terms of looking at this process of setting up, or of complying with, the Results Act.
    For example, as soon as you get into accountability, you get into measures and numbers and figures, and we all know there's some resistance to doing this. Some of that's well-founded resistance.
    For example, some of these numbers can be very simplistic. If I asked you, for example, to give me the unit cost of placing an individual, what did it cost per placement? There's a resistance to doing that because it's not so simple as that.
    I could divide the number, the 585,000, into your budget and say, ''Oh, it costs this. And the private sector can do it this—why are you wasting all this money?'' That's how these sometimes are used. So there's a resistance to even trying to calculate them because of the complexities.
    And yet, the numbers are important because we have no other way of being accountable. So, understanding that, we understand that the numbers sometimes can be misused and are maybe simplistic, we still like to see the numbers.
    If you add to that situation the sense that whatever number you want depends on your priority of what you're asking for—if I said give me a cost figure—and some folks around this table might say well, you're not doing a good job because of this.
    And I say, well, I would like to know exactly the time frames involved in getting people jobs and the quickness of that. And that's my prime measure. And to do that, as you said, may cost money.
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    In fact, the technological investment in computers or whatever would give you more satisfaction and yet, it may cost more.
    I assume you have grappled with those problems. As a Congressional subcommittee that has responsibility and demands accountability what is your sort of advice on how we use these numbers? What should our demands be? What priority should we put on these different numbers? I'd like to hear your reflections on that as you come to the end of your tenure.
    Mr. TAYLOR. Well, Mr. Congressman, I'm very glad you asked that question. I think when we look at this agency, we need to put things in perspective. Why is the agency there? What is the mission?
    Congress put the agency here. And obviously, Congress thought that there was a need for an agency such as this. And I agree; there is. When we go here in 1993, unemployment of veterans was about 7.2 percent. Today, when I go out and I talk to groups, I can tell them, and I do tell them, that unemployment of veterans in the United States is now 3.8 percent.
    We have trained over 600,000 young men and women and their spouses in transition assistance programs at the bases. And we did survey data on TAP several years ago as to whether or not it was working. Our survey data indicates that those who take the TAP classes—and they are voluntary, not mandatory.
    And we're seeing more and more young people going to the TAP classes every year. That's 250,000 that are getting out now with the down sizing that's complete. And yet, we see more and more people in our TAP classes. The word is getting around that you ought to go and learn how to write a resume and do an interview, etc.
    Because the survey data indicates that those who take those courses get jobs about an average of 3 to 4 weeks sooner than those that don't. Unemployment compensation is about $200 a week. So we know that the Department of Defense is saving a lot of money because of the TAP program, but it is anecdotal.
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    It was $583 million dollars 4 years ago. It's down to $300 and some million dollars now. We have to find a way to measure whether the success of TAP is a result of unemployment compensation going down for veterans in the United States. So there is a need to do some empirical things, not just anecdotal.
    I am delighted that this committee is looking at the agency closer to determine whether there's quality there. I think that hard questions should be asked. The devil is in the details. How do we really know if these things—these programs are effective unless you do demand accountability?
    And so I welcome this oversight. I think the way that this committee can work with the agency is to have continual dialogue with the staff members and have your staff members maybe visit some of these sites, sit down with us and analyze this data along with the representatives from the veterans' service organizations.
    I don't mind being criticized as long as the criticism results in some positive action occurring. And so I think that this is a wonderful opportunity for a partnership to be performed, to be established between this committee, this agency, and the veterans' service organizations.
    Mr. FILNER. Just on my own reflection, I would just say to any agency that if Congress is not given under this Act sort of a meaningful and credible measures of the way we should expect accountability, we will probably ask for measures which may be ''too simplistic, too un-understanding.''
    That is, unless we get in this, a dialogue that you suggested, some good—a good answer, then we end up putting what people on the other side may see as bad answers. So it's a question of how that arises through this process.
    Mr. TAYLOR. Well, I need to remind you that when we put our fiscal year budgets together, we asked for what Congress has authorized us to have. And we have not been funded at what Congress has authorized. And so Congress will ask us to do these surveys which will cost money.
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    Congress will ask us to evaluate the data, come up with the percentages, and do the measurements, and then put new processes in place that will hold people accountable.
    But unless Congress, on the appropriations side, is willing to give us what the authorizers have authorized us to have, then we're going to be caught in a catch-22 situation here where we're trying to do what you want us to do, but we have not been given the resources to do it.
    And as I mentioned earlier, this is—we're talking about an investment here that will have payoff in the out years—2000, 2001, 2002. And there's going to be some paying up front that has to be paid in order to have a good process on the other end.
    And so I think that we're going to need help from you all when we go up there to appropriations and ask for the money that you have authorized us to have. Because we're going to need this funding in order to do the things you're asking us to do.
    Mr. QUINN. Thank you. As I listen here this morning, I hear you mentioned two or three times, Mr. Secretary, the fact that it's important to go out and see some of these things happening.
    Mr. TAYLOR. Yes, sir.
    Mr. QUINN. Bob and I will, of course, talk after the hearing is over in the coming weeks.
    But I think, Bob, at some point, it might be important for the subcommittee to see some of these activities that are taking place and how they are working rather than paperwork all the time.
    And we turn to you maybe for some suggestions.
    Mr. TAYLOR. That would be absolutely excellent if you were to take time out of your schedules. You can go—there are a couple of one-stop shop systems brand new.
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    Mr. QUINN. That's a great idea.
    Mr. TAYLOR. And people, you know, are afraid of it.
    Mr. QUINN. And that's close by, one of those sites?
    Mr. TAYLOR. Yes, sir; yes, sir.
    One of the strategies that we implemented when we got here was to consult with the stakeholders. We would not put any new process in place without sitting down with the veterans' service organizations and have them look at what we were trying to do, evaluate it, tell us whether they thought it was a good idea or a bad idea.
    And we've encouraged them to go out and look at some of these sites, and they have done that. I have even forced people in the Washington office here who never see a veteran and forced them out of the office. And I said you go out and take a look at what we're doing here. And then when you come back, you'll have a better appreciation of how we're trying to help veterans.
    I mean, you know, you can read this stuff, you know, you can have somebody talk to you about it, but you've got to really get out there and you've got to see it and you've got to feel it.
    Mr. QUINN. We may, before you leave and go back to New Jersey. A couple of suggestions close by here where we can——
    Mr. TAYLOR. Yes, sir.
    Mr. QUINN (continuing). Get some of the members on a first day back and go out for a morning.
    Mr. TAYLOR. Yes, sir.
    Mr. QUINN. Could you help us with that?
    Mr. TAYLOR. Yes, sir; I certainly would.
    Mr. QUINN. Thank you.
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    Mr. TAYLOR. I think that's great.
    Mr. QUINN. One other quick question that I have before we move on. You talked about earlier job development, the DVOP involvement there. In the plan, as we've reviewed it, at least what we're seeing so far, there's not a whole lot of mention about job development in there; and yet, you talk about it.
    Wouldn't you agree that that development of the jobs is one of the outcomes that we ought to be looking for?
    Mr. TAYLOR. Yes, sir.
    Well, you said something earlier when the hearing first started that we should not give you credit for being so smart. Well, please don't give me credit for being so smart either because I had a staff—I had the staff working on this for the last couple of days.
    And I even had them come in very early this morning so we could have a final meeting on all of this. And so if I know anything about this stuff, it's only because they taught me and made me fairly smart on this.
    I think that it's very important to do job development. And as I've read this plan, there are some areas of the plan that I am not satisfied with. It is a draft, fortunately. And we can make adjustments. And as I met with the staff day before yesterday and yesterday and this morning, the staff members agreed that there have to be some changes made, and one of them is job development.
    We talked about that just this morning before we came over here. I had them come in—we got up a little extra early this morning. That's okay. You know, you don't have to do it that often.
    Mr. QUINN. You let them go home early today, right?
    Mr. TAYLOR. No, I'm quite sure. (Laughter.)
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    But I asked the question just this morning how do you measure job development? I know that the law, Title 38, requires that DVOP's and LVER's do outreach. Twenty-five percent I think it says in the law. And I asked the question well, does outreach mean you outreach to employers?
    I was told well that's not quite what it means. It means that you go to remote areas where veterans are and you help do some, you know, job placement in the remote areas. And I said well, I think we can interpret that a little bit differently.
    Why can't we do some outreach with employers? One of the things that we have discovered—I mean, we did a survey focus group with employers of veterans, not with just veterans. And we can provide you with all the data because we have all the reports on the focus groups.
    We have all the reports on the surveys. And we can give that, and I think we have given that to Mike Brinck and others, the status of the reports on the focus groups, the reports on surveys that we've done, all that stuff. It's all been memorialized in reports.
    And the employer focus group had nothing but magnificent, wonderful things to say about how well veterans work and what great employees they are. The only complaints that I heard were from the veterans about the way they were being treated in the employment offices in the quality of the jobs.
    I never heard a single complaint from an employer of a veteran. So I think that these DVOP's and LVER's, we need to put in place ways and means in which to get them out of those offices, get them to talk to the IBM's, the AT&T's and others who are thirsty now to hire good employees.
    Mr. QUINN. Thanks very much, because I think we agree on that, that as you look at that draft plan, we address the whole job development issue.
    Mr. TAYLOR. Yes, absolutely.
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    Mr. QUINN. Thank you.
    Mr. Filner, do you have anything further?
    I think we were not going to pay you by the word. Remember that.
    Mr. TAYLOR. I understand.
    Mr. QUINN. But you made out pretty well here this morning.
    Mr. TAYLOR. Well, thank you.
    Mr. QUINN. And it's a pleasure for me to meet you personally. I want to wish you the best in all that you do with your family.
    Mr. TAYLOR. Well, thank you, sir.
    Mr. QUINN. Thank you so much.
    Mr. TAYLOR. And I just would like to just close by saying that I'm really happy that you're here, Mr. Quinn. You have a wonderful reputation and I think the veterans of the United States are going to really benefit from your being here.
    And Mr. Filner, it certainly has been a pleasure working with you.
    I talked to a homeless veterans' group on Friday night here in Washington and they gave me a couple of plaques, but they also gave me a photograph. It was framed. And you and I are in that picture when I took $100,000 grant to San Diego. (Laughter.)
    Mr. QUINN. Thank you. Well, we'd like to invite you to Buffalo. Can you bring any——
    Mr. TAYLOR. Right. (Laughter.)
    Mr. QUINN. Thanks very much.
    Mr. TAYLOR. Thank you.
    Mr. QUINN. Thanks very much, Mr. Secretary.
    Our second panel from the General Accounting Office, if they'll take their seats at the moment. Carlotta Joyner, the Director; Sigurd Nilsen, the Assistant Director are both with us this morning. Why don't we let you begin.
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    Ms. JOYNER. Thank you very much. We're very pleased to be here, both Mr. Nilsen and I, to discuss the Veterans' Employment Training Service, VETS, and its initiatives in response to the Government Performance and Results Act, called either GPRA or the Results Act.
    Mr. QUINN. Let me just interrupt for a second and say thanks on the record for your assistance yesterday.
    I mentioned it in our opening remarks today, and I think both—I had to leave just a couple of minutes early when I got called away, but we—for an hour yesterday, you were very, very helpful and we want to thank you for——
    Ms. JOYNER. Thank you.
    Mr. QUINN. And thank Chris——
    Ms. JOYNER. Chris Mihm came up for that.
    Mr. QUINN. Please extend our thanks to Chris as well.
    Ms. JOYNER. Okay, thank you. I'm glad you found that helpful.
    As you are well aware, unemployment and underemployment have traditionally been serious problems, especially with certain groups of veterans. And Congress has been clear that a national response to this problem is needed. And that's why we have with us today—we have in existence today the VETS program that you've been hearing about.
    And wanted to clarify, in case there's anyone in doubt, that that is one of those programs that's operated by the Department of Labor rather than, like most of the other programs, through the Department of Veterans Affairs.
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    And that it carries out its responsibilities through a nationwide network of representatives in each of Labor's ten regions and staff in every State. You've already heard about the DVOP's and LVER's from Mr. Taylor. The State level staff monitors operations of those staff and of those programs as they're carried out in each of the local employment service offices.
    These positions are federally funded even though they're part of the State's employment service system and provide the direct employment service to veterans. My comments today will focus on four areas. One is the value of the Results Act in improving agency performance.
    The second is the employment and training performance measures currently used in VETS. The third is VETS' response under the Results Act with regard to the strategic plan and so forth that you've heard discussed before, and our assessment of VETS' response.
    The information we present is derived from some ongoing work that we have for the subcommittee on the DVOP's and LVER's program, as well as our analysis of the strategic plan, which I understand you've also seen, and our discussions with officials at VETS.
    In summary, we believe the Results Act is a powerful tool that can bring discipline to program management by requiring agencies to be clear on their mission, their long term strategic goals, their short term goals related to those, the measures they're going to use to assess performance, and then reporting on that performance and using it themselves and making it available for other people to use it.
    We think the heart of the improvement that is brought by the Results Act is actually the focus on results, as we've said before, not just on activities or interim status reports and inputs and through-puts.
    Each agency's strategic plan, as you know, is due to the Congress by September 30. And it is intended to be developed in consultation with the Congress and other stakeholders. Then in February of 1998, you can expect to get annual performance plans which relate those goals and measures to the budget categories.
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    And then subsequently, each year, you can expect to get performance reports that will tell you and others how the agency is doing in meeting those goals.
    Regarding VETS' current performance measures, our work has shown that they focus more on process than on results. They use 14 performance standards in five service categories. Two of these categories which concern job placement are results oriented, but they—the current measures—do not get into the issues we've heard of before, of the quality of those placements and whether they keep their jobs or the wages, for example.
    In each of these five service categories, the focus is on comparing the performance on these categories for veterans with non-veterans.
    What this means, however, is that if a particular State is not being as effective as another one, the standard then to which that State will be held is in fact lower than in another one—the standard to which the agency is held with respect to service for veterans.
    VETS is required to report annually to the Congress on success in meeting the performance standards, but has not yet reported for 1994, 1995, or 1996.
    VETS' draft strategic plan, with performance measures, as you've heard before, has been submitted to OMB for review. And it does identify goals and objectives for each part of its mission. But, as Mr. Taylor has said and the plan indicates, the hardest part of the challenge here is to set forth appropriate outcome measures for employment and training assistance.
    Their new measures continue to reflect the mix of activity measures as is appropriate. An example of that would be receiving counseling. But it does go beyond the current measures in proposing measures of not just entered employment, but the wages, as you've heard before, and success 2 years later.
    And also, seems to be indicating that they'll be looking at some absolute standard of success and results for veterans, not just a comparative success. We believe that this is an improvement because of this focus on results and on getting some focus on actual, absolute levels of results for veterans.
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    But our cautionary note is that it is a draft at this point. It hasn't been finalized. It hasn't been incorporated or we haven't seen how it's going to be incorporated in the Department of Labor's overall strategic plan.
    And as has been noted before, the real test is the management commitment, the senior management commitment, and the involvement of other staff to make this something that is truly reflected in day to day operations in order to achieve the results that are anticipated and hoped for.
    This concludes my prepared statement. I understand you have my full one which will be in the record. And we'd be glad to answer any questions you might have.

    [The prepared statement of Ms. Joyner appears on p. 54.]

    Mr. QUINN. Sure. Mr. Nilsen, do you have a prepared statement to make?
    Mr. NILSEN. No.
    Mr. QUINN. Okay, thanks.
    Let me ask you first of all a similar question that I started with in our first panel. Do you anticipate a problem with the appointment process over at the Labor Department? We've got a secretary on board now. Some of those appointments will be coming.
    You talk about an improvement from what happened, but asterisk. We need to see it after the first draft. And that's why I asked the questions here. Do you have any sense for that?
    Ms. JOYNER. I really don't. I don't have any information on that. I share your concern that, as I've said, that leadership is crucially important here. And so it would be helpful to have that leadership in place to finish up the strategic plan between now and the end of September and to make it a real, live document that drives the activity.
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    Mr. QUINN. I guess my comment is only that some good work has been done, and I would hate to see it not be implemented and go by the way side. And I don't personally feel that that's a problem, but I don't happen to know the new secretary personally to get a sense of that.
    For the record, and I know that you've submitted written testimony and that will be part of the record, but for this portion here, the dialogue, the discussion, you talk about how there's been improvement so that there's focus on process rather than results.
    Could you give us a quick example of the difference between the two?
    Ms. JOYNER. Well, an example of a process measure would be how many people, or what percent received some reportable service. And an example of proposed new measure even is how many were referred to training, how many were referred to jobs. This is—all of these things need to happen. And it's important to know that they're happening.
    But a focus on results would be the percent who actually enter jobs, the percent who entered jobs as a result of these job development activities that were discussed previously, what the wages are, if they're still in those jobs or better paying jobs 2 years later.
    That's the focus on results that we think is important.
    Mr. QUINN. Okay, thank you. Bob.
    Mr. FILNER. Can you share with us any thoughts that GAO has on this cost effectiveness issue that I raised earlier? I mean, it's a very difficult thing to measure. What are the problems in doing that? Generally an implementing branch always says, ''Well, it's a question of resources and you didn't give us the resources,'' so you have that as a kicker in there.
    You also have the issue that both General Taylor and I brought up of investment. You have to invest a certain amount of money. You have to have capital side which we generally don't have in our budgets today versus the operating side.
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    How do we determine if the agency, VETS or any other agency, is cost effective in doing its mission?
    Ms. JOYNER. Well, I think I would answer that on two levels. One is in terms of a statutory framework for improved management of which the Results Act is one piece. There is another piece, the Chief Financial Officer's Act; and then a third piece has to do with information and resource management, the Clinger-Cohen Act and the Paperwork Reduction Act.
    The idea of improving management is in putting the three of these together. Make these pieces fit together. We've had, Government-wide, a lot of money misspent; major tracking, management information systems where people have spent a lot of money trying to put them in place without proper attention to how this new system fits in with the old system and sort of the whole framework for resource investments in information technology. The expectation under the Clinger-Cohen Act is that we would move to tighten that planning and to make better expenditures and know whether we have in fact made the best ones.
    One thing that the VETS is proposing to do—this was mentioned in their written plan and I think perhaps also in General Taylor's statement—is to try to work with the Employment and Training Administration to try to make it more efficient in spending money that will be needed to develop these improved tracking systems.
    So that's one piece of it. The other piece, under the Chief Financial Officer's Act, is to say you need audited financial statements so we do know how you spent your money. And then that information will be tied in with what's available on these performance reports that will be coming out later.
    On a less global level, I think another way of approaching this is the evaluation studies that the Results Act expects to be conducted. And you heard in the previous statements several references to studies that were done to try to find out if the Transitional Assistance Program is being useful and what models work better than others.
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    In carefully designed studies and pilot tests such as what they're beginning—proposing will be starting later this summer in six States, in those studies, you can look a little more closely at what's really being done, how much is it costing, and what are we getting for it.
    What jobs did people get they would not have gotten without this activity. I think that allows them to focus in a bit more and come up with some better numbers and know how much of the success can be attributed to the money that was spent, and how much would have occurred anyway because of the improvements in the economy, for example.
    Mr. FILNER. Let me try to be more blunt.
    Ms. JOYNER. Okay.
    Mr. FILNER. General Taylor said earlier that—correct me if I'm wrong, Mr. Secretary—there was something like 565,000 placements in the year. Is that—am I getting the right——
    Mr. TAYLOR. 536,000.
    Mr. FILNER. 536,000 of what, placements?
    Mr. TAYLOR. Yes.
    Mr. FILNER. Okay, so the first question in my mind is that's a wonderful statistic, but at what cost? If you said you spent $500 million dollars to do that, it would not strike me as very cost effective; or maybe if I just gave each of these people $10,000, it would be more productive.
    As a congressman and as a guardian of the purse who wants cost-effective service, I have to ask that question. I know it's a complicated question in a lot of ways.
    But unless somebody gives me a way to answer it in a legitimate way given your mission, then I'm forced to take a very simplistic view and then do what a lot of people around here do and say it costs you $10,800 per person. We may as well just give $5,000 to people and abolish your agency.
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    That's the result if you don't give us numbers that can prove how effective your program is relative to the investment of the cost. That's all I'm trying to find out. I know it's a difficult question, and I just want some guidance on how we can credibly make a determination of the cost effectiveness of the outputs.
    Ms. JOYNER. Well, Mr. Nilsen was reminding me out here what—again, not to belabor the difficulty or the possibility of doing this in a way that drives action in the wrong direction, the problem would be to focus too much on establishing a measure that puts a lot of emphasis on driving cost down. This can drive people to providing services that are cheaper but, in the long run, not necessarily something that's going to put them in a high wage job or a job that they can stay in and move from there to an even better job.
    But I do think that the problem, to a large extent, is not knowing if this did anything at all that was good.
    I think the problem has been on the results side rather than on how much the program is costing. And that if people were truly convinced that they were getting the result that was envisioned; then you can say okay, this is worth the money that's spent.
    Mr. QUINN. Thank you. I just—Bob, I want to—your time is up, but I'm going to yield my time to you or take some of it. I mean, we will have a problem with members of the subcommittee and the full committee, for that matter, when we get talking about money.
    The General has asked us for our help when we go to appropriations to get them all the money that's been authorized. And we wouldn't be on this committee if that wasn't important for us to do. And that's why we're here. And that's what we'll talk to Lane and Bob Stump about.
    But—and I don't need an answer, but I guess what I'm trying to say is I share the same concern that Mr. Filner has that somewhere along the line, whether it's from GAO or elsewhere, because of your work in the rest of Government—not just veterans now. That's a sign of your action.
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    Hopefully we can work with. The danger of putting a flat number, X dollars and cents, of course, is that you are compared to everybody else.
    And when we want to look at the results over the longer term—are these veterans staying in jobs 2, 3, 5 years down the road and is their pay going up and are they getting benefits and all those other things is a difficult thing to do, but we want to work with you to try to get to that.
    Let me move over just for a second to ask another question that I have because we've talked about—you talked a little bit yesterday and in your testimony today—priority of service. Some of the VSO's have talked about priority of service. And my question to you is how we measure that.
    For example, at a local level, go into an employment service and there's 50 people in line and a veteran comes in. Does the veteran go to the head of the line? Does he wait to the end of the day, he or she? Is there any way that you can comment on that?
    Ms. JOYNER. Well, my understanding of the role of the LVER's is in fact to be the person on site to make sure that the activities of the office are being carried out with the view in mind that there is an obligation to say this job will be offered first to a veteran.
    Or if there is a limitation and there isn't enough money and there aren't enough resources to provide particular skills training or counseling, that it will go to veterans first. And my understanding is that that's done not so much on a quantitative basis, but by having an on site person there to pay attention to this and sort of raise a flag if it doesn't seem to be happening.
    Mr. QUINN. Who raises the flag?
    Ms. JOYNER. My understanding is that that's the role of the LVER to report that.
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    You've been in some of these as part of our ongoing work. Maybe you'd like to speak a little bit more to that, Mr. Nilsen.
    Mr. NILSEN. Yes, that's the role of the DVOP and the LVER on site in the local employment service offices. Also at the State level by the DVET, the Federal employee at the State level, to do that as well.
    But as General Taylor's testimony points out, increasingly it's going to be more difficult to identify priority of service or service to veterans in an electronic age. And I think we go back to the issue that Ms. Joyner was talking about in terms of really knowing what you're getting for what you're spending.
    What is happening to the veteran who comes in and seeks service? You can track services they got and the outcomes they achieved. And you can look at the quality and the quantity of services that a veteran got. And you may redefine, in a sense, priority of service that way.
    It's more oriented toward the quality of service the veteran is getting.
    Mr. QUINN. And then if we take the example the General gave of the one-stop shop, that could either complicate or make matters better for a veteran.
    Mr. NILSEN. I agree. What's going to happen in one-stop career centers and how the veterans people are going to fit into that is an evolving question.
    Mr. QUINN. Okay, there again, I think from my perspective we'd like to work with you. I think that GAO has a lot of experience and could maybe bring to the discussion other activities that are happening system-wide, Government-wide here.
    I think you mentioned 160——
    Ms. JOYNER. Right, 163 different job training programs the last time we counted. And we've studied several of those. We've done a lot of work on JTPA. There is a particular program for veterans and jobs where we have some work under way on that now.
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    So I think what we've learned in our studies of some other job training programs really can be relevant to the effort specifically here to assist veterans in getting jobs.
    Mr. QUINN. Okay, thank you. Well, thanks very much. We'll share—I've offered the rest of the subcommittee members some questions. They may get back to you and ask for some things in writing.
    Ms. JOYNER. We'd be glad to answer them.
    Mr. QUINN. Thanks for your time, both of you.
    Ms. JOYNER. Thank you.
    Mr. QUINN. Appreciate it.
    The third panel, representatives of the various VSO's, are here. If you'd like to take a minute to come forward.
    Good morning, gentlemen. We welcome Mr. Rhea and Mr. Drach, Mr. Daniels and Mr. Hollingsworth this morning. Appreciate your being with us. We begin by saying that we're going to try to operate under the 5-minute rule. We know that you have written testimony that you'll submit, all of which becomes part of the record today.
    In conferring with Mr. Filner, I think the way we'd like to proceed is to give each of you your 5 minutes and have the whole panel summarize your comments and then we'll direct any questions that we have when you're finished.
    Without any order, I'll start from my left to right.
    Mr. Rhea, do you want to begin and we'll go across the table?

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    Mr. RHEA. Yes, sir. Thank you, Mr. Chairman, and good morning to you and Mr. Filner.
    NCOA is pleased to be included among the veterans' organizations that was invited to present testimony this morning. And in view of the enormous change that continues to occur in the employment arena, today's hearing is timely and NCOA thanks you for holding it.
    In short, Mr. Chairman, our association is very pleased with the overall operation of VETS and their achievements. Similarly, we are pleased with the quality of leadership within the agency, both in its political appointees and in its career staff. And I intend to comment on that briefly later when I close my oral comments.
    Our efforts with the Veterans' Employment and Training Service are primarily focused on their responsibilities in employment and training. Therefore, the comments in our testimony and my brief oral comments will be confined to employment issues.
    As has already been brought out, and in our view, there's three major influences that have driven VETS to the point where we believe they are today. And that point is a period of transition and transformation. And those three influences have already been touched upon by the assistant secretary and the GAO witnesses, but they are the technology advancements in the labor exchange environment, Government re-invention initiatives, and the advent of the one-stop centers.
    And now a fourth dynamic should be added to that, and that's the one which is the interest of this subcommittee today, the Government Performance and Results Act which, in our view, as has been expressed, a powerful tool that will have very positive effects upon the Veterans' Employment and Training Service.
    These dynamics notwithstanding, Mr. Chairman, and despite VETS being in this period of transition and transformation, as we've termed it, NCOA believes that VETS has done an admirable job. We did, in our testimony, identify some areas that we ask the subcommittee to be mindful of.
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    We are concerned with the collective ability of VETS, the people within the agency, and all of those that are concerned with it, being able to provide priority of service to veterans, particularly now that we're in this one-stop environment.
    Previously, priority of service was simple. A veteran merely proceeded to the head of the line. But in the new environment, the lines have disappeared. It's more of a challenge now, and that challenge is complicated by the multiple agencies that are involved in the one-stop effort.
    So the reality of this, and as you have sought help from GAO, we're asking the help of this subcommittee in ensuring that we're vigilant to fulfill the intent of the Congress that veterans be provided priority of service in this new area.
    We ask your aggressive efforts in that regard, Mr. Chairman and Mr. Filner.
    Along these same lines, we offered in our testimony the fact that it may be time to rethink the relative priority that we accord the veterans in the delivery of employment services. The Association tends to believe that so many distinctions among veterans may in fact prove to be a disservice in the new environment.
    For example, the majority of Vietnam era veterans are now in the workforce and have been there for quite some time. Many have retired from the workforce.
    NCOA believes that this current arrangement can and should be simplified, and we have made some suggestions in that regard in our prepared testimony. And we would ask your consideration of those thoughts expressed there.
    And lastly, by way of issues, NCOA requests that the subcommittee be aggressive on the issue of licensure of military training. Despite the stellar qualifications and the personal qualities of many individuals leaving the military today, many of these veterans remain unemployed simply because the civilian sector will not recognize their military training and experience.
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    NCOA is aware of the study that the American Legion has going in that regard right now. We would certainly urge the subcommittee to look at those results. And even in the absence of those results, NCOA would say there's ample work here to be done.
    And up to this point, in our view, our collective inability to deal with this situation is somewhat inexcusable. And this is not a hurdle that Veterans' Employment and Training Service can overcome, so therefore it needs the assistance of this—the attention of this subcommittee.
    As has been indicated, the assistant secretary is leaving. This will also be NCOA's last opportunity to express thanks to him. We would be remiss if we did not take this last moment or two that I have to publicly express to the Assistant Secretary, Preston Taylor, our heartfelt appreciation for what he has done.
    We appreciate the accessibility he has given to this organization. He clearly has fostered a teamwork within VETS that extends to and includes veterans' service organizations and veterans. And for all of that, the Non Commissioned Officers Association is thankful, and we salute you and wish you well, Mr. Secretary.
    Mr. Chairman, that concludes my oral comments. I thank you for holding the hearing and would be happy to respond to any questions.

    [The prepared statement of Mr. Rhea appears on p. 60.]

    Mr. QUINN. Thank you, Mr. Rhea.
    Mr. Drach.

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    Mr. DRACH. Good morning, Mr. Quinn, Mr. Filner.
    First of all, Mr. Chairman, I'd like to congratulate you on your ascension to the chair of the subcommittee and I look forward to working with you in the future.
    I'd like to just follow up real quick on what Mr. Rhea said about Preston. He has, I think, done some unprecedented things over at the Department of Labor to gain access to the Secretary of Labor's office and also renew a good working relationship with the Office of Federal Contract Compliance Programs, which has long neglected their responsibilities, and got things moving in the right direction.
    Mr. Chairman, I think—I know that we're in an era of real tight budget constraints and restraints and all these things, but I think we have to bear in mind too that veterans benefits and services are a continuing cost of our national defense.
    When a veteran—when a person goes into the military, there are certain benefits that are presented to that individual; and that individual goes in there in a sense under a contract that when he or she comes out of the military service, that those benefits are going to be there.
    How we get a handle on some of these cost measures is difficult. How do we measure some of these outcomes is very difficult. At one point in time, the Employment Service used to provide a—what we used to call a reportable service called counseling.
    And if you read surveys and studies done on counseling, you'll find that people who get counseled tend to be unemployed lesser periods of time, get jobs faster, and get better jobs. Counseling is now nonexistent in the employment service system.
    I think that's a service that is a measurable service, but is no longer there so you can't measure it. If you talk to the possibility of using the Department of Veterans Affairs Office to provide counseling to veterans, to which many of them are eligible to use, you come into the question of the cost effectiveness, cost efficiency.
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    And I think perhaps the best analogy I could draw is supply and demand. If you have a dwindling supply of people to provide services and you have a steady or increasing demand for those services, we all know what happens.
    In the consumer market, the price of the goods go up. In this market, I think the quality and the quantity of services goes down. And I don't know how we handle that or how we deal with that because you're going to probably have less cost effectiveness than more cost effectiveness.
    That probably needs to be brought into the mix of what we're looking at. We actually look forward to reviewing Secretary Taylor's plan once it's approved by OMB. And I'll offer him further comment on that at a later date.
    Secretary Taylor mentioned transition services. I think if we do transition services correctly, we're going to see better cost effectiveness in the outcomes. There is anecdotal information, as Secretary Taylor said, about savings. But there's also some real information.
    It's old, but it's available. And in California, when they were doing the old Career Awareness Program with the Navy out there, there was actually a study that was done and showed that, on average, people who went through the then CAP program were unemployed for about 2 weeks following their discharge compared to—I think it was 4 months for those who did not go through the CAP program.
    That's been studied and that's been validated. So if that is true today, certainly the transition services pay for itself in the savings of unemployment compensation benefits. And I think the dollar amount that Secretary Taylor referred to was around two million dollar savings.
    Certainly you can't guarantee that those savings came as a result of transition services, but you've got to give some credibility to transition services based on the history of what those services have provided.
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    As you know, there is a new commission that has been established to look at those transition services as to their effectiveness and their adequacy. That's a report that will be coming to Congress 18 months down the road or less now.
    We're looking at homeless veterans. When we first started looking at homeless veterans as an issue back in around 1988, it was estimated that 250,000 veterans were homeless on any given night. Now it's up to 280,000.
    So does that mean that the 250,000 are still homeless and we've added 30,000, or is it cyclical? Are the services being provided adequate? Are they making a difference in homeless veterans' lives? Are they getting them jobs?
    There's no real good data on that also. The National Veterans' Training Institute—how do you measure the success of that? We argued years ago and would still argue that NVTI is a needed entity. It provides training to the LVER's and DVOP's on a consistent basis.
    They're all implementing the same law in Title 38, but they're all doing it in different States. Different States have different versions and different interpretations of how they want to implement the law.
    But when these individuals go through that training and go back to their respective office, what did that training do for them that's going to make them a better service provider? How do we measure that? I don't know.
    But I have to argue that it makes them a better service provider because they've learned something. And if you talk to most of the people who go through that program, they will tell you that it's the best training they've ever had. And that's more than anecdotal.
    We know that there are—you know, the budget cuts are here to stay. It's not going to get better, I'm afraid. We look at authorization and we have an authorization of $10 million dollars for homeless veterans but no money's been appropriated.
    With that, Mr. Chairman, I will close and will be happy to answer any questions.
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    [The prepared statement of Mr. Drach appears on p. 67.]

    Mr. QUINN. Thank you very much. Mr. Daniels.


    Mr. DANIELS. Thank you, Mr. Chairman, Mr. Filner.
    As with the others who have previously testified, Mr. Chairman, we'd like to also extend our thanks and appreciation to General Taylor for his service over the past 3 1/2 years.
    We've had unprecedented access—the VSO's, that is; and we've really been made to feel like a partner for the first time in the process. We are pleased with the results of the veteran reorganization which started over 3 1/2 years ago and continues presently.
    Overall, we view the agency as being a much more efficient operation. We have some concerns, however. Our major concern involves the DVOP, LVER grants to the State. In the VFW's view, there are wide gaps in the quality of services provided to veterans from one State to the next.
    That is to say some States do a very good job and some not such a good job. We believe that the quality of services can be improved through the development of more meaningful performance standards for both DVOP and LVER's, and also for the State entities.
    Along with stronger performance standards, the VFW advocates creation of an incentives program through which consistently high performing States can be rewarded for their good work. This fund would be part of the DVOP, LVER grant program.
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    Now, Mr. Chairman, we don't pretend to be experts on the matters involving performance standards and incentive funds and the like. In fact, there's nothing new about the concept. The concept itself has been around for several years and it's often talked about.
    I have been privileged over the past 12 months to attend several meetings of the Interstate Conference of Employment Security Agencies (ICESA), Veterans' Affairs Committee. This organization represents the State employment service administrators. And basically, at each ICESA meeting, you can depend on perhaps 20 to 25 State administrators to be in attendance.
    The one thing that everyone is pretty much in agreement on is that something needs to be done. When Mr. Taylor testified and the panel immediately following Mr. Taylor, they talked about priority services. And perhaps later on this morning, if we get the opportunity, I'd like to expand my remarks in that area.
    But for the moment, thank you.

    [The prepared statement of Mr. Daniels appears on p. 70.]

    Mr. QUINN. Thank you. Mr. Hollingsworth.


    Mr. HOLLINGSWORTH. Mr. Chairman and Mr. Filner, thank you for the opportunity to testify. We look forward to working with you throughout the 105th Congress.
    Assistant Secretary Taylor, thank you for your leadership at VETS. I think you've set a new standard there that's going to be a tough act to follow.
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    Mr. Chairman, programs at the Veterans' Employment and Training Service were created by Congress to assist veterans in their transition from military service. Historically, educational benefits provided by the GI Bill have proven to be some of the best transition programs available, and that's why I'm going to very briefly just touch on that subject.
    The Legion is deeply disappointed that the President would propose increases for higher education in fiscal year 1998 and not include increases for veterans' educational programs. The Legion believes that if any group of young Americans should receive an increase in higher educational spending, it should be veterans.
    Veterans have earned their benefits through time, sweat equity, and sometimes blood and bodily injury. We encourage you and Mr. Filner to explore this issue in the 105th Congress. Regarding VETS, the Legion deeply believes this agency serves veterans well.
    As a result of GPRA, VETS and other Federal agencies are now required to formally measure their results. Recent data available indicates that in fiscal year 1996, the money appropriated for LVER's and DVOP's has placed well over 300,000 veterans into careers.
    The Armed Forces of the United States are currently releasing about 250,000 veterans from active duty each year. This trend will continue for the foreseeable future. Historically veterans released from active duty have become some of the more productive members of society provided they are given the right opportunities.
    They are stable with over 50 percent married. They know about leadership. They have an excellent work ethic. They show initiative and are very familiar with team work. They are certifiably drug free. In short, they are a national resource.
    These veterans have attended some of the finest technical and professional training schools in the world. And unfortunately, many agencies which issue license or certificate for the skills they hope to employ in the civilian world do not recognize their military training or experience obtained.
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    The Legion believes this lack of recognition of skills learned in the Armed Forces by civilian licensing authorities contributes to the high unemployment rate of recently separated veterans. VETS has been working with The American Legion to help remove these artificial barriers.
    But we need your help, and we strongly encourage you to monitor our study that we have going on to try to quantify what skills can be transferred to the civilian society.
    Mr. Chairman, one of the success stories of the Office of the Assistant Secretary is the Homeless Veterans' Reintegration Project. Homeless veterans make up a disproportionate number of the homeless population. HVRP offers homeless veterans a broad range of help with an emphasis on finding employment.
    This program is unique and successful because it allows communities at the local level to address this problem. Thanks to the leadership of local veterans and VETS administered programs, homeless veterans are becoming productive members of society.
    Another successful program administered by VETS is TAP. As discussed, TAP provides jobs for military personnel up to 7 weeks earlier than if no assistance were provided. Simply put, the program saves millions of dollars in unemployment claims which were closed earlier than normal because veterans found employment.
    The VFW touched on standardized training throughout the United States for DVOP's and LVER's. And that's why I'd also like to talk about NVTI. This important program provides DVOP's and LVER's standardized training so that veterans all across the country can receive the same types of assistance.
    The Legion believes the funding required to operate the NVTI and provide DVOP's and LVER's appropriate training is a sound investment, and we encourage you to continue to scrutinize this and recommend full funding.
    One-stop shops were mentioned earlier. The Legion also shares this concern. We urge the subcommittee to review this issue at a later date to ensure veterans will continue to receive priority assistance.
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    Lastly, the Legion believes it is time to replace the references in Title 38 which now refers to ''Veterans of the Vietnam Era'' to ''Veterans of a Conflict Era.'' Other agencies recognize this for benefits and services, and we believe for employment purposes that should be the case as well.
    In addition, we urge this committee to work with the Government reform and oversight to possibly review the number of veterans in the Federal Government who are preference eligible.
    If Federal agencies were required to track and report the number of preference eligible veterans as opposed to all veterans, the Legion believes the numbers would demonstrate an abysmal record with regards to veterans preference in the Federal workforce.
    Mr. Chairman, that concludes my testimony. I'll be happy to answer any questions that you may have.

    [The prepared statement of Mr. Hollingsworth, with attachments, appears on p. 73.]

    Mr. QUINN. Thank you, Mr. Hollingsworth.
    And thank you to all four of our panelists this morning.
    I don't know if we're breaking any rules here. You know, this is our first time at this. But since you all mentioned Secretary Taylor and he's still here, I have a question for him even though he's left the panel.
    We need to have you just take the microphone if you—and you may not be able to answer the question, Mr. Secretary, but do we have a number on how many veterans are actually looking for jobs? We've talked about placement and we've talked about——
    Mr. TAYLOR. Yes.
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    Mr. QUINN (continuing). Units measuring quality. You've talked about training. Do we know that number, sir?
    Mr. TAYLOR. I chatted with Ms. Cochran a few minutes ago about some data that we do have. We know that it costs about $40 per student in the TAP classes. We think that that's a great investment. Mr. Drach is correct. I think that the drop of about $2 million dollars in unemployment compensation paid by Department of Defense is great for America.
    It's great for veterans. And it's a great deal at $40 per student. It costs about $1,500 to place a homeless veteran into a job. And of course, we're constrained with dollars in that area. The President had asked for $2.5 million for fiscal 1998. We hope the Congress will give it to us.
    And we'll help a lot of veterans with that money. But I had to tell her that I do not know how much it costs to place a veteran in a job that comes into an employment office that works with a DVOP's and LVER, and we're going to try to find that out.
    Mr. QUINN. Can we tell how many veterans are looking for jobs?
    Mr. TAYLOR. Yes, there are two million coming into the employment offices every year.
    Mr. QUINN. And can we compare that to 1996, 1995, 1994?
    Mr. TAYLOR. Well, that's about an average. That's about average, about two million.
    Mr. QUINN. Two million.
    Mr. TAYLOR. Now you might say well, okay, you found 536,000 jobs last year or 565,000 the 2 previous years, and that's about 20 percent. But looking at the ETA9000 document and our VETS200 which is a document that DVOP's and LVER's have—it's a reporting document.
    I have copies of it. I can leave copies with you. The VETS200 is a DVOP quarterly report. And the ETA2002 is a quarterly report now. As I said earlier, the processes primarily, the data bases and so forth and so on, are owned by ETA.
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    And we're partnering with them now to ensure that veterans, when they design these data bases, they pay attention to priority of services for veterans that come into the employment office.
    But if you look at these forms, you will see that when veterans come into the employment office, they get a tic mark. And some of them come in that already have jobs that are looking for better jobs. Many of them are coming in—I just want to talk. I just want to be counseled.
    Others come in and say I'm in a private sector job but I notice that there have been announcements for Federal jobs. So not all two million that come into the employment office every year, but we have to account for each one of them because they are veterans.
    And we do have these forms—are looking for work. So you have to, you know, analyze the data. But we do know that two million, even though the employment has dropped down significantly from fiscal 1993 through fiscal 1996 from 7.3 to 3.8—and this is BLS data.
    We use BLS data to determine the cohorts that I had mentioned earlier. It's not our data. It's not VETS' data. It's BLS data. And even though the numbers have dropped down significantly, we still see two million veterans coming into the employment offices every year.
    Mr. QUINN. That's why I asked the question. Thank you very much.
    Mr. TAYLOR. You're welcome.
    Mr. QUINN. And we appreciate you staying and coming back to see us.
    Both Mr. Hollingsworth and Mr. Drach—both of you mentioned the training institute, NVTI out in Denver. And one of the outcomes that VETS proposed was for the institute to train staff. I'm not so sure that's an outcome. You know, for me, the outcome would be how many veterans are placed in jobs.
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    That's, in the end, what we're concerned about. Can you comment at all on the effectiveness of how we might—again, we're talking about measurement. And Mr. Drach, you hit the nail right on the head. I don't know sometimes how we're going to measure that. But if we were able to compare staff that's trained by NVTI and that—and those that aren't trained, now is that anecdotal?
    And Mr. Drach, maybe you can answer first. Mr. Hollingsworth, if you want to add to that.
    Mr. DRACH. Well, yes; I think it would be partially anecdotal, Mr. Chairman. But I think there's some things that can be looked at.
    See, the NVTI has several courses that they provide training under. One is case management. They recently developed a new voc rehab counselor course to work—have the DVOP's working more closely with the Chapter 31 client.
    I was able to participate in a critique of the draft of that program a year ago May. Well, actually, a year ago this month. And I saw something very unique happening with the participants in the pilot.
    And that was their comfort level and their ability to pick up the phone and call an employer and work with an employer. Somebody mentioned earlier this morning job development, and sometimes that's what it takes for some of the more hard to place veterans, particularly some disabled veterans.
    And I saw this comfort level rise from Monday through Thursday; when Thursday, they were able to pick up the phone literally and do a cold shot call out of the phone book. And NVTI assured me that this was not staged.
    And they got this employer and they talked to the employer, and they had a hypothetical veteran—but they told the employer that this was a class, but they had a real veteran. And the employer said well, he had no positions open at the present time, but he talked to the DVOP.
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    And he talked about, you know, what his needs are as an employer, what he would be willing to do to hire a veteran if a vacancy came about. So there's some of that developing now. Again, how do you measure the outcome?
    But I've got to say that when that DVOP goes back to his office, number one, he's going to have the confidence to pick up the phone and call an employer cold shot. Now the problem comes when he goes back to his office. Will the office manager allowed him to do the job development or will his work load allow him to do that job development and make those phone calls?
    Mr. QUINN. And in that case, have we not asked the DVOP to do so many other things sometimes by law or by direction, by whatever it happens to be, that they don't have the time or the manager—the boss—doesn't let them do it?
    Mr. DRACH. The quarterly report that Secretary Taylor just referenced—and I don't know what the time consumption of that is. One of the complaints that I hear from the State directors from the Federal staff is that they spend too much time filling out reports.
    And that's not unique to the Department of Labor.
    Mr. QUINN. That's not unique to anybody in this place.
    Mr. DRACH. And what happens to those reports, more often than not, they're sitting in someone's room, you know, and very seldom get really, really looked at. But then again, you have—questions get asked by you all and we need those reports to look back to to try to answer them.
    So it's a tough nut to crack. It really is.
    Mr. QUINN. Well, hopefully this whole discussion—and GAO is in here and we heard from others—is to find out what parts of that is valuable and helpful and useful. I mean, we ask some of the questions of GAO yesterday at a briefing and again today on the record.
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    You know, even some of those answers—we don't want to create another paper chase because that's not where your time is spent.
    Mr. Hollingsworth.
    Thank you, Mr. Drach. Appreciate it.
    Mr. HOLLINGSWORTH. I have to agree with Mr. Drach. I think that's a tough nut to crack. But it does open up an important discussion. And to jump onto what the VFW said, maybe we need to look at performance based incentives for some of the employees.
    And I think GAO raises another interesting point. I can place hundreds of thousands of veterans in jobs, but is that really what I want to do and are they going to be there 2 years from now?
    I think what we need to focus on is not getting veterans jobs, but getting them careers so they don't have to come back and rely on the system in the future and spend the taxpayers' money. So that essentially they have the tools they need to go forward in the future to prepare themselves for a career or various careers.
    Mr. QUINN. Thank you.
    Now I was going to yield to my colleague, but you brought up another question that I had and it talks about those incentives. And the VFW mentioned in your testimony the whole concept of some incentives or some kind of an incentive program to reward the States that are doing a pretty good job of putting a veteran in a job.
    Can you describe how you'd structure that a little bit briefly; and while you're describing that, do you have any suggestions on how we'd pay for that? Can we—yes, sir?
    Mr. DANIELS. Mr. Chairman, it's kind of like shopping for a necktie. You don't know exactly what you're looking for, but you'll know it when you see it. The features of the incentive program you hear most often is that a percentage of the totals of the LVER or DVOP grants combined would be set aside into a special fund.
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    And then based on the new standards of performance design by you, by VETS, by all of the partners, high performing States would be able to access the funds. Low performing States would be encouraged to bring their performance levels up.
    In many ways, it's similar to how recaptured funds are presently used. As a matter of policy recapture funds must be spent within the region where they're seized. The requirements are very strict. They can only be used on equipment, I believe, at the moment. What we are suggesting is to have a broader pool of funds that would allow for expanded uses.
    Mr. QUINN. New funds?
    Mr. DANIELS. I'd like to think new funds, Mr. Chairman. We'll talk about that in the morning hopefully. We're looking at $157.1 million now in both DVOP and LVER programs. So theoretically, you would be talking about maybe a minimum of seven or eight percent that would be available.
    Ideally, high performing States would be able to apply for that money based on certain preestablished standards. They would then be able to engage other types of projects that lead to additional services to VETS. But we would also like to see DVOP and LVER's in a position to receive cash bonuses for superior work.
    Those jobs tend to be very, very low paying except in some of your more progressive—or larger States, I should say. New York, Illinois, Michigan tend to pay pretty high salaries. Pennsylvania, I believe. But many of the other States are still paying very low, low $20.
    But that's my idea. Maybe there may be others.
    Mr. HOLLINGSWORTH. The American Legion has talked about things like performance based incentives. We don't know what the answers are, but we're open to discussion. I think what the subcommittee needs to know is that, The American Legion is open to wide variety of options to get veterans into careers.
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    If we need to convene this hearing at a later date and give us time to chew on some things and look at that, we're open.
    Mr. QUINN. So both of you would say that that whole suggestion of incentives might be a topic for some discussion later on and you're willing to talk to us about that?
    Mr. DRACH. Mr. Chairman, I know where we can get the money—the Federal Unemployment Tax Act which is not general revenue. It's an employer tax that employers pay to pay for the employment service system. The last I looked, and it's been a couple of years, there was a multi-million dollar surplus in that fund. It's a trust fund.
    Mr. QUINN. Don't say that quite so loud.
    Mr. DRACH. And it's not unlike the social security trust fund which is used to help balance the budget.
    Mr. QUINN. I understand.
    Mr. DRACH. But that money is there.
    Mr. QUINN. Thank you. I'm going to yield to Mr. Filner for a question to both of you.
    Mr. FILNER. Just very briefly, I've been learning from you all and trying to work with you to make sure that Congress understands these arguments.
    You're talking right now, of course, to the choir, this subcommittee and this committee. Our problem, I think, in this new world of the balanced budget and a Congress two-thirds of which don't understand the veterans' issues is that the choir is not there.
    It just struck me that you, as VSO's, the agencies, and we here on the subcommittee have to take advantage of this Results Act and start talking in a language that this says we ought to talk in as a strategy to convincing, or changing, Congress into the choir that it used to be.
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    I think if you'll review your testimony, you'll see that your testimony is for us and not for the general Congress. You will see that you're talking in a language that was not using what is mandated by the Results Act.
    We're talking very generally. You're talking about how difficult it is to measure. That's not what our colleagues need to hear. They need to hear that this is successful and why by some measure that they accept as credible.
    Mr. Rhea, you said they're doing an admirable job. I agree with you. But that's not enough for us anymore.
    Ron, you were saying how difficult it is. Well, if it's difficult, they'll say, ''Well when you find out how to measure it, come back to us.'' We have to, as a group, as an agency, as a committee, as veterans activists figure out a language—and I think we ought to take advantage of this Results Act to talk about these in ways that our colleagues can understand.
    We know we're not getting the appropriations that the authorization says. We know there should be new money. We know that the homeless program is not getting enough. But we haven't been able to convince either the administration in general or the Congress that that ought to be the case.
    So we have to agree on a language. And I think this Results Act gives us a method if we could come to an agreement on that language and terminology and priorities and which measurements. That's just some thought about listening to you all because we're all together in this and I want us all to be more effective.
    Mr. HOLLINGSWORTH. Mr. Filner, I'd like to address your comments because I agree with you. We do need to come up with results, something that other Members of Congress can buy off on. But you know, it troubles me because we do have a lot of results.
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    And if you look historically at the original GI Bill and how that literally placed veterans into employment, into careers, into schools, and you look at what that did for the country, that's results.
    We created America today from the original GI Bill. And I have to tell you. Personally, as a veteran, as a representative of the American Legion, I'm a little disturbed that the President would talk about a GI Bill of Rights for workers.
    Because we seem to be offering GI bills for everyone but GI's. And maybe we need to look back at the fundamentals of what made American great and go back to those original concepts for veterans and maybe restore some of those benefits to GI's.
    Mr. FILNER. You know, we agree. The question is how do we——
    Mr. HOLLINGSWORTH. Yes, sir.
    Mr. FILNER. I mention this statistic to every group I visit now. Two-thirds of the Congress has been elected since 1992. And on every demographic way of looking at the Congress they're the same: their average age, their employment, their religion, their income, whatever—except on one issue, and that is military service. Whereas something like 80 percent of the old group served in the military, 80 percent of the new group has not. I'm an example of that. So, they don't know anything about the GI Bill. Some of us have tried to learn about it and understand it, but 80 percent of the Congress have no understanding of it.
    It's not that they're dumb or they're evil or anything; they just don't understand it. Our job has to be to figure out ways to explain what you just said in ways that they'll understand.
    Mr. HOLLINGSWORTH. Yes, sir. And part of the veterans' community is to blame for that. Because, as advocates, we need to probably be a little bit more proactive in touting some of those results.
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    Mr. FILNER. Right, you guys have got to develop a whole new way of approaching this through a grassroots lobbying effort. It's a new world, and we all have to be active and figure out a way to explain it to people who don't have that experience and who want a results oriented language.
    Mr. RHEA. GPRA is going to force us, all of us, to do that. And I hope I'm not violating any trust here, but an initial glance that we got from the VETS of their draft GPRA strategies leads me—and I haven't seen the final one, as anybody else had, but I'm led to believe that we will be able to start talking in that language that you're referring to, Mr. Filner.
    For example, you know, the 500 plus thousand veterans that are actually placed in jobs is wonderful, but it's my impression that the new strategies will provide some finite detail within that. The entry level of the salaries, how long they stay and so forth.
    So I think your comments are well received by the Non Commissioned Officers Association, and I think we'll be talking that language that's going to be so critical to us in the future.
    Mr. FILNER. Thank you, Mr. Rhea.
    Mr. HOLLINGSWORTH. I just want to add, I honestly believe the VSO's and the veterans' community and this committee and subcommittee—I think we're taking a lead in trying to take a hard look at what we're doing and how can we do things better.
    And I commend both the Chairman and you, Mr. Filner, for your proactive approach. And I agree with you. We do need to quantify those results somehow and in some way. And I guess if I leave you with anything, the members of the subcommittee need to understand that we're open to a wide variety of options.
    We're here to work with you. Our bottom line is to get veterans into careers so that they're prepared for life.
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    Mr. QUINN. Thank you, Mr. Hollingsworth.
    Thank you, Mr. Filner.
    And I think one of the things we heard from GAO is that veterans and our discussion of veterans is a little bit ahead of the rest of this institution when it comes to this full discussion of GPRA, so that puts us in a good position.
    I understand that Mr. Drach has been appointed as a commissioner of the—on the Service Member and Veterans' Transmission Commission, and we congratulate you, sir, on that appointment.
    Mr. DRACH. Thank you, Mr. Chairman.
    Mr. QUINN. And hope that that helps you and it helps us in the end. So good luck. If we can help you and assist you in any way, let us know.
    Mr. DRACH. Thank you.
    Mr. QUINN. I'd like to thank all of the witnesses today for appearing before the subcommittee. As both Bob and I said in our opening remarks and Mr. Rhea just said it again, that this whole discussion of the Results Act offers us the framework to pursue better Government and a way to try to get a handle on whether today's programs are accomplishing what the Congress intended and what the veterans in the country need.
    We're going to try to cover most of the benefit areas using that Results Act as a framework. And we also look forward to an open dialogue on all of that discussion. So if there is no further business coming before the subcommittee, we are adjourned. Thank you.
    [Whereupon, at 10:23 a.m.., the subcommittee was adjourned.]