The first item appearing on that statement is for personal services.

PERSONAL SERVICES

Excluding the cost of miscellaneous fee services, which will be discussed under a subsequent heading, the total for salaries and wages in 1944 is estimated at $74,710,812 as compared with $72,554,016 in 1943, and $67,143,260 in 1942. It will be noted that the amount requested for 1944 is $2,156,796 in excess of estimated expenditures in 1943. Court No. 4 in the books before you under the title "Salaries and expenses" indicates that $343,387 is required in 1944 for new positions in the central office and in the field and for certain contemplated personnel changes. The remainder of the increase in 1944 of $1,813,409 is due to new positions which will be filled on various dates throughout the 1943 fiscal year but which will be occupied for the entire fiscal year 1944. As these amounts include the cost of salaries and wages paid employees in the departmental service and in the field, it is believed advisable to separate the two for analyzation.

The estimated cost of field personnel in 1944 and 1943 and the actual cost in 1942 are $58,892,792, $57,762,921, and $54,408,594 respectively. The number of man-years provided in the field by the above amounts are in the same order: 38,833.1, 38,206.5, and 38,050.7. The increase in man-years in 1944 and 1943 is occasioned by the fact that 487 new positions will be authorized in the present year and 328 more positions authorized in 1944, making a potential increase of 815 positions in the latter year, together with an increase in existing bed utilization. Of the 815 new positions 570 are for new beds, becoming available as follows: 1943, 948; and 1944, 453.

In accordance with instructions in the Bureau of the Budget Circular 391 no funds have been included in the 1944 estimate for within-grade administrative promotions as authorized by Public, No. 200 (77th Cong.). The cost of the custodial pay bill, Public, No. 694 (77th Cong.), is reflected in 1944 and 1943 in the following amounts: $1,963,630 and $1,910.847. It is understood that the cost of this legislation during the fiscal year 1943 will be included in a supplemental appropriation bill. Considering these facts, and having in mind the expected increase in bed utilization, it is believed that the amount included for the field service in 1944 represents minimum requirements for the furnishing of essential service and adequate medical care and treatment to the patients and beneficiaries as provided by law.

It will be noted that a decrease is reflected in the estimated deductions for quarters and subsistence from $5,578,705 in 1942 to $5,278,500 in 1944. Considerable difficulty is being experienced in obtaining and retaining personnel on an allowance basis. Since the preparation and submission of this estimate to the Bureau of the Budget, it has been necessary to release many employees from these charges at facilities where the employment problem was most acute, and I have just authorized a further liberalization of our policy relative to the acceptance of allowances, which will affect employees at most of our field stations.

The estimated cost of personnel in the departmental service in 1944 and 1943 and the actual cost in 1942 are: $15,818,020, $14,791,095, and $12,734,666, respectively. The number of man-years provided by those amounts are: 8,350, 7,932, and 6,892.1. This indicates an increase of 1,039.9 man-years in the fiscal year 1943. The per annum salaries of authorized positions in the departmental service as of June 30, 1942, totaled $16,952,540 and the per annum salaries of such employees actually on duty as of that date approximated $14,410,440. It will be noted that the estimated obligations for the departmental service permanent employees in 1943 are $14,721,095, or only $310,655 more than the June 30, 1942, on-duty personnel. In view of the potential cost of authorized positions as of June 30, 1942, the additional positions totaling 1,737 with annual salaries of $2,257,625 approved for 1943, and the uncertain ultimate cost of relieving certain employees from the present charge for allowances, it can readily be seen that additional funds will be required for the fiscal year 1943. In connection with the 1,737 new positions approved for 1943, all but 21 are directly required for national service life insurance-1,495 being for the finance and insurance services and 221 for the Chief Clerk's office. The 21 positions consist of 8 for the office of personnel, 6 for the medical and hospital service for research and supervision, and 7 in the supply service to handle the in81710-43-15

creased work due to regulations being issued by the Office of Price Administration and the War Production Board.

For the fiscal year 1944 an increase of 418 man-years is anticipated, of which number 42 represent additional positions required in 1944 for the Insurance Claims Council as the result of national service life insurance claims, and 376 are man-years which will be employed in 1943 but not presently covered by the 1943 appropriation. The total per annum salaries of all authorized positions at the end of the 1943 fiscal year will approximate $19,910,000 and additional employees are now being placed in these authorized positions as the insurance load increases. While approximately 11,010 positions will be authorized by 1914, with total annual salaries in excess of $19,800,000, the 1944 estimate provides for 8,350 man-years at an annual estimated cost of $15,818,020. This decrease in cost is due to two factors: First, a saving will be made as the result of a simplified accounting procedure being installed governing national service life insurance; and second, man-year costs are exclusive of any lapse or leave without pay.

The personnel requirements in the central office are governed to a large extent by the rapidity in which the armed forces are enlarged as there is a corresponding increase in the number of insurance applications and subsequent claims for insurance and pension benefits. For this reason it is difficult to foretell with any degree of certainty whether the amount estimated for 1944 is entirely adequate. The same holds true with the funds now available for the current fiscal year although it is considered highly probable that additional funds will be required before the end of the 1943 fiscal year.

TRANSFER TO OTHER GOVERNMENT DEPARTMENTS

The next item appearing on chart No. 1 covers transfers from the appropriation of the Veterans' Administration to other Government departments, which are effected by appropriation transfer warrants. Only one transfer of this nature is involved in the fiscal year 1944, and that is to the War Department for the care of Veterans' Administration beneficiaries hospitalized in Army hospitals.

It is estimated that $1,018,852 will be transferred to the War Department in the fiscal year 1944 and $919,344 in the fiscal year 1943. This provides for an average of 655 Veterans' Administration patients in Army hospitals during those years. In 1942 an average of 699 patients were so hospitalized at n total cost of $982,057. The average cost per day of $3.85 obtaining in the fiscal year 1942 has been continued for 1943 and the recently approved increased reciprocal per diem rate of $4.25 has been used for 1944.

A transfer to the Department of Agriculture in the amount of $45,000 is shown for the fiscal year 1942, which expense is for the inspection of foodstuffs. For the fiscal years 1943 and 1944 this item will not be handled by transfer warrant and, therefore, is shown below under "Other contractual services" for those years.

The Veterans' Administration receives transfers of funds from the War Department for hospitalization of Civilian Conservation Corps enrollees: from the United States Employees' Compensation Commission for examinations and hospitalization of beneficiaries of that Department; and from the United States Civil Service Commission for physical examinations. These items are shown on chart No. 1 under the heading "Reimbursements."

The transfer from the War Department for the fiscal year 1942 was $62,298 and covered the furnishing of 16,613 in-patient days hospitalization for members of the Civilian Conservation Corps at $3.75 per day. For the fiscal year 1943 it is estimated that 500 in-patient days of hospitalization will be furnished at the same per diem rate. No transfer is anticipated for this purpose in the fiscal year 1944.

The Employees' Compensation Commission anticipates that they will require physical examinations and hospitalization to the extent of $85,000 for regular Government employees during each of the fiscal years 1943 and 1944. Actual reimbursements for this purpose in 1942 totaled $77,051. The Commission also estimates that physical examinations and hospitalization for emergency relief and other beneficiaries will total $51,000 in 1944 and $51 600 in 1943. The actual cost for service rendered this type of beneficiary in 1942 was $74,519.

The United States Civil Service Commission estimates that physical examinations made for that Commission during the 1943 and 1944 fiscal years will cost

$100,000 each year, and actual reimbursements for such service in 1942 totaled $62,109. These physical examinations are made on applications for and employees in, the Federal classified service when requested by the Commission.

The rates charged for services rendered other Government departments by this Administration are as follows: For hospitalization in 1942 and 1943 the established reciprocal rate of $3.75 per day, and for 1944 the revised reciprocal rate of $4.25 per day: for examinations, one-half the rate as shown in the Veterans' Administration Schedule of Medical Fee Services.

FEE SERVICES

"Symbol 0150-Fee services and reimbursements" consists of expenditures for contract hospitalization, medical and dental examinations, and treatments on a fee basis, special nursing service, contract X-ray and laboratory work, attendants' fees and services rendered by other Government agencies including hospitalization where payment therefor is not made by appropriation transfer warrants. Estimate requirements under this heading for the fiscal year 1944 are $4,781,556 as compared with contemplated expenditures of $4,688,818 in 1943 and actual obligations of $3,921,046 in 1942.

Most of this expense is for the hospitalization of Veterans' Administration beneficiaries in other Government hospitåls and in contract hospitals.

The first major item of expense under this heading is for the hospitalization of Veterans' Administration beneficiaries in civil and State hospitals. During 1942 an average of 858 beneficiaries were so hospitalized at an average daily cost of $3.35, or a total expenditure of $1,049,626. The majority of the beneficiaries so hospitalized reside in insular and Territorial possessions where Veterans' Administration facilities are not available and very little change is anticipated in the number to be hospitalized in the two ensuing years. In 1943 and 1944 an average of 840 and 850 patients, respectively, are provided for at the 1942 experienced cost of $3 25 per day.

The increase in the estimated number of Veterans' Administration beneficiaries to be hospitalized in other Government hospitals during 1943 and 1944 is in keeping with the approved policy of the Federal Board of Hospitalization that available beds in such facilities be utilized to the fullest extent for the care and treatment of Veterans' Administration beneficiaries, to the end that construction of additional facilities for exclusive use by this Administration will be restricted to needs which cannot be met in this manner. This policy together with the fact that the Veterans' Administration has no facilities in various locations such as Philadelphia, Denver, and the insular possessions accounts for the estimated increase in the number of patients to be hospitalized in other Government facilities.

During 1942 an average of 1,654 patients were hospitalized in Naval, Public Health Service and St. Elizabeths hospitals. In 1944 this number is estimated to increase to 2,027, divided as follows: Naval hospitals, 1,169; Public Health Service, 768; and St. Elizabeths, 90. It will be noted that the utilization of beds in United States Public Health Service hospitals indicates a decrease of 215 beds in 1944 from the 1943 allocation. This reduction is due to the anticipated completion of a new Veterans' Administration facility at Boston, and of a new hospital building at Baltimore by 1944, which permits the release of beds formerly utilized by the Veterans' Administration in marine hospitals in those cities.

Funds are also included in 1944 for out-patient services to be performed by the Navy and Public Health Service in the amounts of $45,000 and $3,500, respectively. Similar costs in 1942 were $42,378 and $3,155.

Medical and dental examinations and treatments on a fee basis and special nursing service, X-ray and laboratory work, attendants' fees, etc., are expected to decrease very little in 1944, due not only to the advancing age of the veterans entitled to this care and treatment but to the more vigorous activity of many of this group now engaged in defense work. Actual expenditures for this purpose in 1942 totaled $618,473 and $605,243 and $616,928 are estimated for 1943 and 1944, respectively.

The total cost of the fee services outlined above during 1942 was $3,921.046 and the estimated costs in 1943 and 1944 are $4,688,818 and $4,781,556, respectively.

TRAVEL EXPENSE

The amount estimated for "Symbol 02-Travel expense" during the fiscal year 1944 is $1,585,440. Actual expenditures in the 1942 fiscal year totaled $1,404,967 and for 1943 the estimated cost is $1,370,258. This latter amount, incidentally, was the amount included in the 1943 Budget estimate for travel expenses and the Veterans' Administration is restricted to that sum for travel in the current year by the provisions of section 5, Public, No. 630, Seventyseventh Congress.

The major portion of this expense is for the transportation of beneficiaries in connection with the furnishing of hospital and domiciliary care and treatment in facilities under the jurisdiction of the Veterans' Administration. With the lower percent of utilization of beds obtaining in 1942 there was a considerable drop in the number of travel authorizations issued for hospitalization, but with our expected increase in utilization in 1943 and 1944 an upward trend is anticipated. The average cost per travel authority advanced from $4.05 in 1941 to $4.83 in 1942, and a further increase is anticipated in 1944 based on the 10 percent advance in rates authorized for common carriers, effective February 10, 1942; the increase in per diem from $5 to $6; and the reduction in travel by private automobiles due to gasoline and tire rationing. Experience has shown that travel by automobile is in most instances more economical and results in considerable savings in per diem cost by eliminating poor transportation connections encountered especially in rural communities.

The cost of employees' travel increased from $474,659 in 1941 to $533,550 in 1942. While every effort will be made to reduce this cost in 1943 and 1944, it will be difficult to accomplish in view of the factors outlined in the preceding paragraph which tend to increase costs and a factor even more important at this time which is the necessity for transferring qualified staff and certain medical personnel to various field stations to fill vacancies caused by the entrance of employees into military service.

TRANSPORTATION OF THINGS

Estimated requirements for "Symbol 03-Transportation of things" during the fiscal year 1944 are $731,500. This represents a slight increase over estimated obligations of $708,565 in 1943, and actual expenditures of $638,501 in 1942.

This symbol includes the cost of freight, express, and drayage on supplies and equipment and the expense involved in the shipment of bodies of veterans who die while receiving hospitalization furnished by the Veterans' Administration. Expenditures of this nature are influenced by the number of available hospital and domiciliary beds, as supplies and materials are procured and transported in proportion to the number of beds in operation. A review of the expenditures for this purpose during the 1942 fiscal year indicated a reduction from similar costs in 1941 and this was due to lower utilization of available beds in 1942 plus the purchase of many commodities on an f. o. b. destination basis which is now feasible since the elimination of land grant reduction in transportation charges in accordance with the Transportation Act of 1940. The average cost per available bed for this item of expense over the past 5 years is approximately $8.80 and the amount requested for 1944 is in line with this average. Another factor considered in estimating increases under this symbol for the fiscal years 1943 and 1944 was the general increase in freight rates which was effective March 18, 1942.

COMMUNICATION SERVICE

The amount estimated for "Symbol 04-Communication Service" during the fiscal year 1944 is $309,450 as compared with estimated obligations of $307,500 in 1943 and actual expenditures of $293,800 in 1942.

Expenditures under this symbol cover telephone and telegraph service and other communication service including stamps purchased for indigent beneficiaries and for the transfer by registered mail of veterans' case files and other important documents.

The number of beds available has a direct bearing on the volume of telegraph, telephone, and other communication services. During the past 5 fiscal years, the cost of this item per available bed has been quite uniform and has averaged about $3.80 per bed. The 1942 cost was slightly below this average,

approximating $3.62. With the added communication services now required due to the operation of the New York branch of the central office, the average for 1944 has been raised to $3.72, which should absorb this added cost. One new facility will also be in operation during the 1944 fiscal year, which will require the installation and maintenance of a complete PBX telephone system.

RENTS AND UTILITY SERVICES

Estimated expenditures under this item "Symbol 05-Rents and Utility Services" for 1944 are $2,277,540 as compared with estimated obligations of $2,339,647 in 1943 and actual expenditures of $2,300,473 in 1942. The greater portion of this amount is for the furnishing of heat, light, water, etc., in our facilities and the major determining factor as to requirements of this nature is the number of beds available in those facilities. During the past 8 years expenditures for this purpose have averaged approximately $25 per available bed and the estimate for 1944 approximates that average.

Estimated requirements for the rental of office buildings, etc., indicates a considerable reduction in the 1943 and 1944 fiscal years, as compared with actual expenditures in 1942. The 1942 expenditure of $107,787 included a rental charge of $87,350 for warehouse space at Chicago which has been eliminated for 1943 and 1944 by the recent construction of a supply depot at the Hines, Ill., Facility. The lease of a hospital building at Saratoga Springs, N. Y., has been included in the 1943 estimate at an approximate cost of $15,400 for a 10 months' period and in the 1944 estimate in the amount of $18,500 for the full year. The other items of rents included in this symbol are for sound picture apparatus and film service, and tabulating equipment, the latter for exclusive use in the central office. There is a slight increase in the expenditures for these purposes as some additional tabulating equipment has become necessary in the central office due to the increased insurance activities, and additional film service and sound picture apparatus are required at the new facilities.

REPAIRS AND ALTERATIONS TO HOSPITALS, FURNITURE, ETC.

The amount requested under "Symbol 07-Other contractual services" for the fiscal year 1944 is $3,366,900. Estimated obligations for 1943 and actual expenditures in 1942 for similar purposes were $3,331,615 and $3,003,083, respectively. This item covers the cost of repairs to buildings, furniture and equipment; the maintenance and repair of motor vehicles; miscellaneous contract services, such as for laundry and towel service, window cleaning, ambulance service, barber service, veterinary service, inspection and repair of elevators, typewriters, adding machines and other labor-saving devices; and other miscellaneous services where a division of cost cannot be made between labor, materials, and other component parts of the total charge made for the service.

The major portion of this expense is for the repairs and maintenance of buildings and equipment, formerly under Budget accounting symbol 12. The estimated obligations for this purpose in 1944 and 1943 are $2,763,600 and $2,760,940, as compared with actual obligations of $2,504,053 in 1942.

The amount requested for repairs to furniture and equipment and for the maintenance of motor vehicles is slightly in excess of actual expenditures for this purpose in 1942, due not only to the increased age of such equipment but to the necessity for expanding larger sums to keep such equipment in operation as many items cannot be readily replaced.

For the fiscal year 1944, $2,500,000 is requested for repairs, minor alterations, and improvements to hospitals and homes. In addition to the $2,500,000 appropriated for such work during the fiscal year 1942, there was made available to the Veterans' Administration approximately $1,800,000 from Work Projects Administration allotments with the result that over $4,000,000 was utilized for repairs and improvements. Funds from this latter source have been considerably reduced during the current fiscal year and no funds will be available from that source in the fiscal year 1944. It is firmly believed that the $2,500,000 requested for the fiscal year 1944 represents the minimum amount necessary to maintain the hospitals and homes of this Administration in a proper state of preservation and repair and to protect the total investment in buildings which is in excess of $200,000,000. In accordance with the approved procedure items chargeable to this account are for minor repairs, alterations, and improvements, and items constituting capital improvements not costing in excess of $5,000 for each project.