The Capital Budget

The Capital Budget


The Veterans Health Administration ( VHA ) is the largest integrated health care system in the United States and provides public-sector attention for uprightly discharged veterans of the U.S. armed forces. The VHA is largely financed from general revenue enhancement, offers a wide scope of wellness attention services to run into veterans ‘ demands, and can be characterized as a veteran-specific national wellness service. Historically, since the 1970s, the quality of the VHA ‘s service was considered hapless by about all relevant stakeholders who have significance to the organisation. Currently, VHA is a big critical system that offers a utile consensus for the oppositions of incorporate publically financed and provided wellness attention. In recent old ages, many articles has been published in academic and popular imperativeness describing a important alteration in the VHA ‘s public presentation indicating that U.S. wellness policymakers have interesting aspects to larn from the system in the context of its high cost and evident underperformance of the predominant, market-based sector ( ) . The Department of Veteran Administration ( VA ) primary duty and answerability is to supply effectual use of taxpayer dollars and continues to extinguish uneconomical disbursement.

  1. Payroll Forecast

The Veteran Administrations’ compensation reported new rates for compensation and pension benefits in 2014 are subjected to the types of compensation. VA disablement compensation provides monthly benefits to Veterans in acknowledgment of the effects of disablements, diseases, or hurts incurred or aggravated during active military service. The plan besides provides monthly payments to lasting partners, dependent kids, and dependent parents in acknowledgment of the economic loss caused by a Veteran ‘s decease during military service or after discharge from military service as a consequence of a service-connected disablement ( ) .

U.S. Department of Veteran Affairs, Office of Public and Intergovernmental Affairs reported that Veterans, their households and subsisters that get disability compensation and pension benefits received a 1.5 % for a cost-of-living addition embedded into their monthly payments which began on Jan. 1, 2014. This sentiment provided the addition expresses a significant manner that our Nation’s gratitude of the forfeits given by our handicapped and wartime serviced Veterans. As required by jurisprudence, the disablement payments did non round down to the nearest dollar figure, and that Veterans and subsisters will have an extra addition to their monthly benefit compensation payment. For Veterans without dependants, the new compensation rates ranged from $ 130.94 monthly with a disablement rate at 10 % to $ 2,858.24 monthly. The COLA addition applied to disablement and decease pension receivers, subsisters having dependence and insurance compensation, and other benefits like car and vesture allowances. Under federal jurisprudence, the cost-of-living accommodations for VA’s compensation and pension matched those for Social Security benefits. In January 2013, the last accommodation was made when the Social Security benefits rate increased to 1.7 per centum. In FY2013, VA provided over $ 59 billion in compensation benefits to about 4 million Veterans and subsisters, and more than 515,000 Veterans and subsisters spent $ 5 billion in pension benefits ( ) .

  1. Tendency Analysis

Perceptibly, the competition in health care and the development over the past decennary has been a rollercoaster quandary and the usage of market forces in health care has provided of import treatments for future health care developments. During the period when managed attention was accepted to transform the manner Medicare attention organisation provided services in which the reversal of many of the alterations took topographic point. With the incorporate bringing vision implemented is now being replaced that consumers take a more active function in their wellbeing and health care services. This development now provides a greater function for consumers to use more competitory force per unit area on suppliers to better their quality of attention and decreased costs. Therefore, future competition might go around around consumers’ to take healthcare suppliers with the quality evaluations and better efficiencies. The Center for Analyzing Health System Change ( HSC ) sporadically surveys families and doctors which effectual responses have the possible that may germinate in different waies in the hereafter. Unfortunately, the market and policymakers reacted and the responses to the recoil in resistance to managed attention that concluded some positions on the health care development for competition fosterage in the following few old ages ( ) .

The Department of Veteran Administration recommending being a responsible steward and closely supervise the resources and indispensable demands. VA continues to work to diminish improper payments, recoup misallocated financess and to efficaciously dispose of indefensible existent estate. In add-on, VA continued to better the systems used that prognosis and gaining control cost by following the procedure of direct trailing of people, equipment and consumables goods through the execution of a modernised fiscal direction system. As the Department continues to be after, plan, budgets, and execute ( PPBE ) processes that connect scheme to budget and later budget to public presentation. Besides, it will go on to reexamine internal purchasing forms including placing chances for strategic sourcing that will accomplish considerable nest eggs for repeating demands ( ) .

3. Outgo Prognosis

The Veteran Administration FY2014-2020 Strategic Plan builds on past achievements to drive betterments in quality, client service, readiness and direction systems. The Plan includes accent on Veteran by leting them to command how, when and where they wish to be served. The FY 2014-2015 bureau precedence ends are: 1 ) Improve veteran entree to benefits and services, 2 ) Extinguish the disablement claims backlog, and 3 ) Eliminate veteran homelessness. Since the CBO examined the demands on VA and undertakings, the resources the bureau need to supply medical attention for all enrolled veterans during the following 10 old ages ( 2011–2020 ) with no predicted appropriations for VA ( ) . In developing the strategic program and looking beyond FY2014-2020 timeframe, the strategic ends and aims is to better VA in the short term while positioning the VA Department the capableness to react to many challenges and chances they face in the following 15-20 old ages. The FY 2014-2020 Strategic Plan is based on strict analysis of long-run tendencies that affect veterans includes their benefits, service bringing and the work force by carry oning scenarios which describe a scope of future challenges and opportunities the VA Department may face 20 old ages from now in order to react and set to critical tendencies, challenges and chances ( ) .

On November 7, 2014, the Department of Veterans Affairs ( VA ) released “The 2010 National Survey of Veterans ( NSV )” public informations file in Excel format. The file contains consequences of the informations aggregation such as veterans ‘ demographic and socio-economic features and identifies VA benefits and services most utilised by Veterans. The outgos vary harmonizing to each province from highest/lowest uses in 1000s of dollars. For the State of Indiana, recorded the Veteran Population: 490,380 ; Compensation & A ; Pensions: $ 1,092,855 ; Education & A ; Vocational Rehab: $ 150,033 ; Insurance & A ; Indemnities: $ 27,941 ; Construction: $ 8,783 ; Loan Guaranty # : $ 0 ; General Operating Expenses: $ 48,931 ; Medical Care: $ 1,149,224 for a entire outgo equal $ 2,477,767 ( ) .

  1. Capital Budget

Compare two ( 2 ) options for foretelling the cost of needed fixs to the current edifice that houses the selected bureau by finishing Exercise 1 at the terminal of Chapter 1 ( page 92 ) . Supply a principle for urging one ( 1 ) of the two ( 2 ) options. Include the figures to back up the principle.The metropolis disposal is sing renovating the illuming system of its disposal edifice. After an initial probe, the metropolis procurance office has narrowed down the picks to the following two options: a- Option 1 is an Urgolight system that costs $ 500,000 to buy and put in. a- Option 2 is a conventional system that costs $ 100,000 to buy and put in. a- Both systems are expected to last for 20 old ages. a- The energy cost for option 1 is $ 20,000 and care is $ 2,000 in today’s dollars. a- The energy cost for option 2 is $ 50,000 and care is $ 10,000, besides in today’s dollars. a- Assume that the price reduction rate is 4 % and all hereafter costs are paid at terminal of twelvemonth.


Option 1: Urgolight

Option 2: Conventional

Cost Efficiency

Net Present Value (NPV)

$ 500,000

$ 100,000


Payback Period (PP)

Year End

Year End

1 & A ; 2

Energy Cost




Care Cost




Discount Rate 4 %




Expectation: 20 Old ages



1 & A ; 2

( Chen, Forsythe, Weikart & A ; Williams, 2009, p.92 ) .

Capital expenditures refer to outgos for expensive and durable goods in which organisations set a minimal life anticipation such as five old ages before it is called a capital good. Besides, a minimal value is set such as $ 50,000 before it is classified as a good or group of goods bought at one time. Therefore, recommend to elect Option2 “Conventional” due to the initial nest eggs between the two picks.


The Department of Veteran Administration ( VA ) has a cardinal duty to be an effectual steward of taxpayer dollars and go on to extinguish uneconomical disbursement, every bit good as, make certain that effectual controls, patterns and precautions methods are in place that prohibits misspending of revenue enhancement dollars ( ) .

Mentions ( 2014 ) . “Veteran Administration Compensations.” Retrieved, Nov. 2, 2014 from

hypertext transfer protocol: // ( 2014 ) . “Compensations: Benefits Rates.” Retrieved, Nov. 2, 2014 from

Chen, G. G. , Forsythe, D. W. , Weikart, L. A. , & A ; Williams, D. W. ( 2009 ) . “Budget Tools:

Fiscal Methods in the Public Sector.” Washington, D.C. : CQ Press, p.92 ( 2014 ) . “Competition in Health Care: Development Over The Past Decade.”

Retrieved, Nov. 8, 2014 from hypertext transfer protocol: //

Oliver, Adam. ( 2007 ) . “The Veterans Health Administration: An American Success Story.”

Retrieved, Nov. 8, 2014 from hypertext transfer protocol: // ( 2014 ) . “Outgos.” Retrieved, Nov. 6, 2014 from hypertext transfer protocol: //

Expenditures.asp ( 2014 ) . “Strategic Planning.” Retrieved, Nov. 8, 2014 from

hypertext transfer protocol: // ( 2014 ) . “Veterans to Receive 1.5 % Cost-of-Living Increase.” Retrieved Nov. 3, 2014,

from hypertext transfer protocol: // id=2503