VA Backtracks on Budget Shortfall Warning, Angering Lawmakers Who Vow an Investigation

A shortfall in the Department of Veterans Affairs' health-care budget isn't as big as previously predicted, but the department will still need some extra money next year, department officials told Congress this week.

In a memo to lawmakers, VA officials said costs have been lower than expected, but that some of the things the department has been doing to live within its budget "are not sustainable in the long run."

"That's why, as requested by the administration last fiscal year, we still need a funding anomaly by the end of this calendar year to ensure that we are able to continue to provide veterans with the world-class care and benefits they deserve through FY 2025," the memo to the House Veterans Affairs Committee said.

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The memo did not provide an exact amount of extra funding needed for next year, saying officials are still doing final calculations on the VA's fiscal 2024 spending and that they "will come back to [lawmakers] with more information as soon as possible."

Over the summer, the VA informed Congress that it was facing a $12 billion shortfall in fiscal 2025 for veterans health care.

The new projection for the medical budget, as well as additional information about a previously stated benefits funding shortfall, infuriated a pair of top House Republicans, who sent a fiery letter to VA Secretary Denis McDonough on Friday, accusing officials of "repeatedly misinform[ing] Congress and our nation's veterans, even risking inciting a panic among veterans about their benefits being delayed or cut."

"The response shows that, in fact, no benefits shortfall ever existed and much of the information your leadership team has provided about a purported health care shortfall was erroneous," House Veteran Affairs Committee Chairman Mike Bost, R-Ill., and Rep. John Carter, R-Texas, who chairs the House Appropriations Committee's VA subcommittee, wrote in the letter. "This revelation severely undermines our confidence in the Biden-Harris administration's stewardship of the federal budget and your management of VA."

The shortfall, VA said over the summer, included about $3 billion in disability and education benefits funding in fiscal 2024 and $12 billion in medical funding in fiscal 2025. Officials largely attributed the shortfalls to higher-than-expected benefits and enrollment from the PACT Act, the sweeping toxic exposure bill that expanded benefits and health care to millions of veterans exposed to environmental hazards during their military service.

Amid VA warnings that veterans benefits checks could be delayed if Congress did not provide more funding, lawmakers approved nearly $3 billion in September to cover the stated benefits funding shortfall.

Republicans, though, were more hesitant to approve the $12 billion for medical care, arguing they had outstanding questions about that shortfall. VA officials had asked for the medical funding to be included in a stopgap spending bill that Congress approved at the end of September, warning that the department would struggle to keep up with demand from veterans without the extra money.

Lawmakers ultimately did not include the $12 billion in the stopgap bill and have not committed to including it in another government spending bill they will need to pass in December.

Now, the VA memo to lawmakers this week suggested both the benefits funding and medical funding shortfalls were not as bad as previously stated.

None of the nearly $3 billion Congress approved in September was used to cover benefits payments for fiscal 2024, and even without that funding, the VA would have had about $2.2 billion left in its benefits accounts at the end of the fiscal year, the memo said.

Still, the VA defended asking Congress for the extra money and said it would go toward benefits in the beginning of fiscal 2025.

"While the supplemental funding was not immediately utilized, it was critical that we had this funding on hand -- because if we had even been $1 short on Sept. 20, we could not certify our payment files and more than 7 million veterans and survivors would have had delays in their disability compensation, pension and education benefits on Oct. 1," the memo said.

For the medical budget, the VA has been able to stretch funding because staffing costs were lower than expected, the department did not purchase as much equipment as planned, and the community care budget didn't grow as much as feared, the memo said.

But those practices aren't feasible for long, because "VA cannot continue to delay medical equipment purchases year over year -- and as we briefed Congress last year, we need to strategically hire approximately 5,000 additional employees in high-growth areas such as mental health," the memo added.

Asked about Bost and Carter's letter and the new calculations for the health-care shortfall, the VA sent Military.com a statement about the benefits funding shortfall without addressing the health-care shortfall. A department spokesperson did not immediately respond to a follow-up request for information about the health-care shortfall.

In its statement, the VA reiterated points made in the memo to Congress that it asked for the extra benefits funding "out of an abundance of caution" and that the money left over in the benefits account at the end of the fiscal year was far less than previous years.

"The amount of the emergency funding and more was used in October -- and it went directly to providing disability compensation and education benefits for veterans and their families," VA spokesperson Terrence Hayes said in a statement, meaning the money was used in the first month of fiscal 2025.

In their letter to McDonough, Bost and Carter said he needed to "come clean" about the VA's budget situation and answer outstanding questions lawmakers still have.

In a separate statement, Bost also said administration officials "should be ashamed of themselves for how they have mismanaged the VA budget and scared veterans to death about the security of their health care and benefits."

"We will be launching a full investigation to get to the bottom of this," Bost added, "but until then I have one question for Secretary McDonough: Who is counting the money and when will they be held accountable?"

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