Good afternoon, ladies and gentlemen. It's a pleasure to be with you to talk about the budget for the Department of Veterans Affairs for fiscal year 2005.

President Bush will ask Congress to provide my department, the VA, with $67.7 billion in budget authority for fiscal year 2005, an increase in budget authority of $5.6 billion over the current fiscal year, 2004. This budget will build on and solidify the dramatic increase in access to health care veterans have enjoyed over the past three years, as well as allow us to continue improving benefits delivery. The president asked for $32.1 billion in VA discretionary funding, mostly for VA health care. Our health care resources would increase 4.1 percent over this year and build on three years of unprecedented growth totaling more than 40 percent for health care alone. As a result, today we provide quality medical care to a million more veterans than we did in 2001. I thank the president and members of Congress for making it possible for VA's health care providers to achieve this remarkable expansion in service, and I certainly thank VA health care professionals for their very hard work.

If approved by Congress we will have the resources we need to maintain our status as the gold standard of quality care, and meet our goal of scheduling non-urgent primary care for 93 percent of veterans within 30 days and 99 percent within 90 days. As you know, in the past we have had enormous waiting lists of veterans seeking primary care, as high as 300,000 when I came into office – or more than 300,000. And my goal is totally eliminating the waiting list in 90 days. The waiting list is down to about 30,000 veterans.

We will continue to focus on the medical needs of veterans identified by Congress as having the highest priority: the service-connected disabled, those injured or disabled while on active duty; the lower-income, the poorest of the poor who have few other options for health care; and those veterans who need our specialized services, like spinal cord injury, blind rehabilitation, and mental health.

This budget request more than doubles our appropriation request for construction of new and improved facilities soon to be identified through our CARES process. In addition, I will use the authority granted to me by Congress to use up to $400 million of the 2004 medical care appropriation for CARES projects. And what that means is in 2004 and 2005 we will have almost $1 billion to modernize our VA infrastructure, sorely needed and long overdue.

Perhaps most importantly, the budget will fund high-quality care for veterans returning to our shores from overseas conflicts. Of the approximately 90,000 active duty service members who were discharged after serving in Iraqi Freedom, we have seen about 12 percent of them who have sought health care, about 9,700. Of the approximately 15,000 that have separated after serving in Enduring Freedom, Afghanistan, 1,400 of them have come to the VA for care. Our extensive outreach programs to educate veterans will ensure they know where to turn when they need our assistance.

There is no question: we still face challenges, and we are responding to those challenges with policy initiatives. For example, we emphasize our commitment to the highest priority veterans by asking Congress to both raise the income threshold, exempting low-income veterans with $9,800 to $16,500 from having to make pharmacy co-payments and also to eliminate co-payments for former POWs. We also propose to eliminate co-payments for hospice care. For veterans who are in hospice programs, whether it be through the community or under contract, we will waive co-payments. And also, we will cover co-payments for veterans who are insured but must seek emergent medical care at a private sector hospital. We will cover their co-payments mandated by their insurance programs.

At the same time, we will also ask Congress to approve both an increase in pharmacy co-payments and a modest annual fee totaling less than $21 per month, a very small percent of the cost of care for higher-income, non-disabled veterans using our system. This will not be an enrollment fee but rather an annual fee that will be collected only from veterans receiving care. They could pay that approximate $21 a month either monthly or annually depending upon their own personal needs.

A separate legislative proposal that we asked Congress to consider last year -- but [which was] not acted upon -- assists us in recruiting and retaining the physicians we need to provide quality care by improving the way we compute physician pay rates and therefore attracting more physicians to the VA and retaining those skilled professionals in the VA health care system. Our requested budget would fund the necessary pay increases contained in that legislative proposal.

We can meet some of our challenges on our own without going to Congress. For example, I have approved a recommendation from my under secretary for health to address regional funding imbalances by including in our resource allocation model the dollars we send across the country to include all veterans using our system, including what we call the category 7 and 8 veterans. These are the non-service-connected, higher-income veterans. Thereby, for those regions of the country that have a disproportionate number of those veterans, the allocations would cover part of the cost of their care.

The president also requests $35.6 billion in mandatory funding to cover our disability compensation, pension, and other benefit programs. Three years ago, the then-president elect also charged me to bring our disability claims process under control. We had an enormous backlog of claims by veterans for disability compensation and pensions. By the end of last fiscal year, we reduced our inventory of ratings-related claims to 253,000, slightly higher than my goal of 250,000, down from a high of 432,000 at the beginning of the previous year. The percentage of veterans waiting more than six months for a decision was down to 18 percent from 46 percent. A court decision then prevented us from acting on many claims, and that drove our disability claims workload back up, both in size and the age of our inventory of claims. But thanks to the Congress, we are back on track to re-achieve our goals by the end of this year, and with this budget we will maintain our gains in 2005.

The number of veterans receiving service-connected disability compensation is projected to increase to 2.6 million, up from 2.3 million in 2001, reflected in part by implementation of my decisions to automatically service-connect illnesses associated with herbicide exposure, such as diabetes from Agent Orange. I'm also very proud of our people in the field and our Benefits Administration. They have increased the number of decisions on claims from an average of about 40,000 a month to over 60,000 a month, thereby accounting for the number of veterans who are receiving their disability compensation payment.

VA is not only health care and benefits. We also have the important responsibility to honor our veterans in their final rest. The VA maintains our national cemetery program. The president's budget request will continue the greatest expansion in our national cemetery system since the Civil War. Five new additional cemeteries will be open very soon. These budget funds also advanced planning for six more national cemeteries in addition to maintaining the president's commitment to performing the long-deferred maintenance needed to recognize our national cemeteries as national shrines. When this expansion is completed, we will have expanded the national cemetery system by 85 percent, almost double the number of gravesites that we currently have. So, indeed, it is a very major expansion, and really critical because of the number of veterans, primarily World War II and Korea, who are passing from us at the rate of almost 1,800 a day.

I am proud of the improvements and expansions in service to veterans achieved by VA's dedicated employees with the support of the president, members of Congress, certainly the veterans service organizations. I am confident that the president's 2005 budget request and the actions of Congress will allow us to build on the record of commitment and success. I very much appreciate this opportunity to give you a very brief overview of our budget for '05.