VA Asks for Historic $4.1 Billion for Construction as Agency Weighs Closing Some Aging Medical Facilities

The Department of Veterans Affairs' $325 billion fiscal 2024 budget proposal includes $4.1 billion for construction -- the largest request ever for the category as the department struggles to maintain aging hospitals, some more than 100 years old.

According to VA budget documents, the funding would be used to update 10 health facilities that "lack resiliency and sustainability." Yet the request comes as the department continues an ongoing assessment of all its properties, many with equally urgent repair or upgrade needs.

The VA rolled out most of the details of its fiscal 2024 budget request last week, the largest ever for the department, representing a 5% increase from this year's approved budget request.

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The $4.1 billion request for construction includes $3.01 billion for 10 medical facilities and two cemetery projects, and $1.08 billion to 76 new minor construction projects.

The 10 VA facilities that would receive major construction funds are in San Juan, Puerto Rico; Portland, Oregon; American Lake, Washington; Perry Point, Maryland; El Paso, Texas; West Haven, Connecticut; Dallas; San Francisco; San Diego; and St. Louis.

In at least one of the facilities, West Haven, hazards have been known for years: In the months leading up to a steam pipe explosion in 2020 that killed two workers, employees had complained of unsafe or unsanitary conditions such as burst pipes and insect infestations.

And work already is underway at several other facilities on the list, such as an expansion of a clinic in San Juan.

But a comprehensive review of all VA properties that is deemed vital to supporting the VA’s long-term building plan has yet to be completed, leaving the department without guidance for modernizing its health system in the coming decades.

During a roundtable with reporters in January, VA Under Secretary for Health Dr. Shereef Elhanal did not give a timeline for the review to be completed, saying that the process is taking into account not only the effects of the pandemic but the impact of the landmark toxic exposure legislation, the PACT Act, which was signed into law last year.

A year ago this week, the VA released the results of a years-long comprehensive asset and infrastructure review, recommending to a congressionally mandated Asset and Infrastructure Review (AIR) Commission that 30 new hospitals and 225 clinics and other facilities be built, while 17 medical centers and dozens of aging or underused clinics be closed.

But the recommendations met harsh pushback from lawmakers, veterans, advocacy groups and VA employees, and the AIR Commission, which was to review the VA recommendations and draft a final report on VA health facility modernization, was disbanded after the Senate refused to confirm President Joe Biden's nominees for the panel.

Given that experience, Elnahal said the VA is conducting a nationwide review of every health care market in its system and will not consider any closures until it identifies the location and need for new facilities, what he called the "build agenda."

"We can focus much more diligently and upfront on the build agenda. That was always part of the plan, even under the AIR Commission; we can focus on the infrastructure that needs to exist in the first instance, before talking about closures of old facilities," Elnahal said.

He added that closing facilities would be a "secondary matter," but said they may occur, especially in facilities that lacked demand or were unsafe.

Congress tends to look favorably on the VA budget and historically has passed it, and even added to it, given the bipartisan support for veterans care and benefits. This year, however, agency officials may see some opposition because of the vast expansion of benefits under the PACT Act, as well as issues with modernization, including health care facilities and health infrastructure technology.

In January, Sen. Jon Tester, D-Mont., chairman of the Senate Veterans Affairs Committee, introduced legislation that would require the VA to furnish a concrete plan for infrastructure modernization, as well as a budget that includes renovating or selling off old buildings.

And last week, after the release of Biden’s $6.8 trillion budget proposal, House Veterans Affairs Committee Chairman Rep. Mike Bost, R-Ill., called out the VA for what he called "complicated accounting gimmicks" in its budget proposal.

Roughly half of the VA's construction budget request falls under mandatory spending instead of discretionary funds -- a first that department officials say is allowable because the VA has a requirement to complete projects -- but is likely to be questioned by Bost's committee.

"Just like Republicans predicted last year, the Toxic Exposure Fund has less and less to do with supporting toxic-exposed veterans, and more to do with creating a bookkeeping disaster," Bost said, referring to the fund established under the PACT Act to consolidate monies allocated for exposure-related expenses and benefits and concerns expressed last year that the legislation vastly expanded mandatory spending, leaving Congress with little control over a substantial portion of the VA budget.

VA officials said Friday that the switch of construction dollars from mandatory to discretionary funds are part of an overall strategy to fund facility investment.

"The need for funding and investment in facilities is only going to increase, and this is one of the ways the administration thinks we might be able to get to that issue, starting now," said Andrew McIlroy, the VA's deputy assistant secretary for budget.

In comparison, the Defense Department's fiscal 2024 budget proposal for construction, requests four times the VA amount -- $16.7 billion, including $1.5 billion for medical buildings and quality-of-life builds like fitness centers and recreational facilities, and $1.9 billion for housing.

The DoD also requested another $19.2 billion for facilities upkeep and renovations.

-- Patricia Kime can be reached at Patricia.Kime@Military.com. Follow her on Twitter @patriciakime.

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