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OMB COST ESTIMATE FOR PAY-AS-YOU-GO CALCULATIONS
Report No: 533
Date: 12/07/2000
OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS
LAW NUMBER: P.L.106-419 (S. 1402)
BILL TITLE: Veterans Benefits and Health Care
Improvement Act of 2000
BILL PURPOSE: (1) Increases the rates of
educational assistance under the Montgomery
GI Bill and the survivors' and dependents' program; (2) modifies procedures for the
adjustment of rates of pay for nurses, employed by the Department of Veterans Affairs
(VA); and (3) makes other changes in veterans educational assistance, health care, and
benefits programs, and for other purposes.
OMB ESTIMATE: P.L. 106-419 expands educational assistance and various other
veterans' benefits. The law increases the basic monthly Montgomery GI Bill educational
benefits by 21 percent in FY 2001 (over FY 2000 rates) and allows participants to make
additional contributions to earn higher monthly benefits. The law also increases
educational benefits for survivors and dependents by 21 percent in FY 2001 (over FY
2000 rates) and provides annual cost-of-living adjustments. OMB estimates that these
educational provisions will cost $1.3 billion over the 2001-2005 period. Various other
increases, including an increase to the limitation on benefit payments to incompetent
institutionalized veterans, are estimated to cost $0.1 billion over the five years. In order
to partially offset the cost of these increases, the law extends for FYs 2003-2008 certain
expiring savings provisions relating to VA housing, income verification with the Internal
Revenue Service, and the authority to limit VA pension benefits to certain Medicaid-eligible
recipients. These extensions save $1.1 billion in total over the 2003-2005 period.
(Fiscal years; in millions of dollars)
2000
2001
2002
2003
2004
2005
Net costs...............
0
219
260
-77
-45
-22
CBO ESTIMATE:
(Fiscal years; in millions of dollars)
2000
2001
2002
2003
2004
2005
Net costs...............
0
154
277
-103
-86
-91
EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:
OMB estimates higher education benefit outlays than CBO in FY 2001 due to different
assumptions about the number of trainees and benefit usage. However, CBO estimates
higher education benefit costs over FYs 2002-2005 as a result of assuming that larger
amounts of the benefits will be used at a faster pace due to the rate increases that take
effect in FY 2001. The differences in FYs 2003-2005 result largely from CBO's higher
estimate of net savings from extending the authority to limit VA pension benefits to
certain Medicaid-eligible recipients, which more than offsets CBO's higher estimate of
education benefit costs. In particular, CBO estimates that lower costs will be shifted to
Medicaid as a result of extending this provision.
CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION
ENACTED TO DATE:
(Fiscal years; in millions of dollars)
2000
2001
2002
2003
2004
2005
Outlay effect..............
34
1,372
2,444
7,074
7,807
8,002
Receipt effect............
-8
-689
-808
-870
-922
-924
Net costs....................
42
2,061
3,252
7,944
8,729
8,926
NOTE: The cumulative effect of direct
spending and revenue legislation enacted to date is
currently estimated to result in an end-of-session sequester. The Administration looks forward to
working with the Congress to ensure that an unintended sequester does not occur.