The Department of Veterans Affairs Act of 1988 (Pub.L. 100–527) changed the former Veterans Administration, an independent government agency established in 1930, primarily at that time to see to needs of World War I, into a Cabinet-level Department of Veterans Affairs. It was signed into law by President Ronald Reagan on October 25, 1988, but actually came into effect under the term of his successor, George H. W. Bush, on March 15, 1989.
This bill passed into law over the objection of some of President Reagan's fellow Republicans, who were committed to preventing the U.S. federal government from expanding further. Many Republicans along with most Democrats ultimately supported it on the basis that it was really more of a reorganization than an expansion of government as the new department was in reality going to be doing very few things that the former Veterans Administration had not already been doing. There was the further consideration that military veterans constitute a large and powerful voting bloc and could easily be offended at the perceived slight that opposition to the bill might have implied.
This summary is from Wikipedia.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
10/3/1988--Conference report filed in House.
(Conference report filed in House, H. Rept. 100-1036) Department of Veterans Affairs Act - Redesignates the Veterans Administration as the Department of Veterans Affairs (the Department) within the executive branch of the Government. Places at the head of the Department a Secretary of Veterans Affairs (the Secretary), who shall be appointed by the President by and with the advice and consent of the Senate. Establishes in the Department a Deputy Secretary of Veterans Affairs, appointed in the same manner, to perform such functions as the Secretary shall prescribe. Establishes in the Department a Chief Medical Director (CMD), who shall be a doctor of medicine, and who shall also be appointed in the same manner. Requires such appointment to be made without regard to political affiliation or qualification and solely on the basis of integrity and ability. Requires the CMD to be the head of, and to be directly responsible to the Secretary for, the operation of the Veterans Health Services and Research Administration (the Administration). Provides that whenever a vacancy in the position occurs or is anticipated, the Secretary shall establish a commission, composed of specified individuals, to recommend individuals to the President for appointment to such position. Establishes in the Department a Chief Benefits Director (the CBD), appointed in the same manner, who shall be the head of the Veterans Benefits Administration and responsible for its operation. Requires the Secretary, whenever a vacancy in such position occurs or is anticipated, to establish a commission to recommend individuals to the President for appointment to the position. Establishes in the Department a Director of the National Cemetery System (the Director), who shall report to the Office of the Secretary. Continues the service of the current officials of the Veterans Administration with the Department of Veterans Affairs until specified periods. Establishes in the Department such number of Assistant Secretaries, not to exceed six, as the Secretary shall determine, who: (1) shall be appointed by the President by and with the advice and consent of the Senate; and (2) shall perform such functions as the Secretary shall prescribe. Outlines various functions to be assigned to such Assistant Secretaries by the Secretary. Requires the Secretary to designate the Assistant Secretary whose functions include budgetary and financial functions as the Chief Financial Officer of the Department. Provides a further description of the functions of the Chief Financial Officer. Requires the Secretary to designate the Assistant Secretary whose functions include information management functions as the Chief Information Resources Officer of the Department. Requires the President to state the function to be performed by each Assistant Secretary whose confirmation by the Senate is sought by the President. Provides for the continuing performance of functions to be performed by any such Assistant Secretary by an individual currently performing such functions until such functions are assigned to an individual appointed to such function under this Act. Establishes in the Department such number of Deputy Assistant Secretaries, not to exceed 18, as the Secretary may determine. Requires at least two-thirds of such positions to be filled by individuals with at least five years of continuous service in the competitive civil service. Redesignates the current VA's Department of Medicine and Surgery as the Veterans Health Services and Research Administration. Redesignates the current Department of Veterans Benefits as the Veterans Benefits Administration. Establishes in the Department the Office of the General Counsel, who shall be appointed by the President by and with the advice and consent of the Senate. Requires the General Counsel to be the chief legal officer of the Department. Continues the service of the current General Counsel of the VA. Redesignates the Office of Inspector General of the VA as the Office of the Inspector General of the Department. Provides staffing requirements for the Office and requires the President to include in his annual budget presentation to the Congress after FY 1989 an estimate of the personnel needed to supply such Office. Provides that any current references in Federal law to the VA or any of its offices shall be deemed to be references to the Department and its offices. Provides for the continuing effect of legal documents, legal proceedings, and property and resources of the current VA under the Department. Limits the number of Senior Executive Service positions in the Department authorized to be filled by noncareer appointees and the number of positions authorized to be excepted from the competitive service because of their confidential or policy-determining character. Prohibits political affiliation or qualification from being taken into account in connection with appointments to or advancement in the Department. Makes conforming amendments and directs the Secretary, within six months after the enactment of this Act and after consultation with the appropriate congressional committees, to prepare and submit to the Congress proposed legislation containing technical and conforming amendments required as the result of changes made by this Act. Includes within the definition of an administrative reorganization within the Department the reorganization of a covered central office unit which involves a reduction in any fiscal year in the number of full-time equivalent employees at such unit: (1) by 25 percent or more; or (2) by a percent which, when added to other reductions at such unit during the preceding fiscal year, is 30 percent or more. Defines "central office unit" as a unit which is the permanent duty station for 100 or more employees. Directs the Administrator of Veterans Affairs, no less than 30 days before the date on which the implementation of any reorganization is to begin, to notify the Senate and House Veterans' Affairs Committees of such reorganization. Provides that such reorganization restrictions shall not apply to any reorganizations made necessary as the result of this Act and carried out within six months after the enactment of this Act. Provides that the authority to make payments or enter into obligations under this Act shall be effective only to such extent and in such amounts as provided in appropriation Acts. Requires the President, within 30 days after the enactment of this Act, to make a determination and notify the Congress as to whether it is in the national interest to establish a national commission to review the structural organization of the executive branch of the Federal Government. Provides that if the President fails to so notify the Congress within such time period, this provision shall cease to have effect. Outlines the composition of the National Commission on Executive Organization (if established under this Act) and restricts pay and allowances of members of the Commission. Outlines functions of the Commission, including examining and making recommendations with respect to: (1) the criteria by which the President and the Congress may evaluate proposals for changes in the structure of the executive branch; (2) the organization of the executive branch; (3) the most practicable structure of the Executive Office of the President for conducting oversight of the executive branch and criteria for use by such Office in evaluating and overseeing the performance of the executive branch; and (4) the most practicable structure of the President's cabinet and means of operation of such cabinet. Directs the Commission, no later than 12 months after the appointment of its members, to report to the President and the Congress on its recommendations. Provides the Commission with certain powers necessary to carry out its purpose. Provides that the Commission shall be considered a Federal advisory committee. Terminates such Commission 30 days after submission of its required report. Directs each of the following officials, within 90 days after the enactment of this Act, to submit to the Commission materials that such official considers useful to the Commission: (1) the Comptroller General; (2) the Director of the Congressional Research Service; (3) the Director of the Congressional Budget Office; and (4) the Director of the Office of Technology Assessment. Authorizes appropriations.