Congress fails to address VA budget shortfall before leaving town

Congress failed to pass legislation before leaving town to address a roughly $3 billion budget shortfall for the Department of Veterans Affairs (VA), as officials warn millions of veterans' benefits are at risk in the coming weeks.

Some senators had been hopeful of expediting legislation to patch the shortfall before leaving this week for a monthlong recess as a Sept. 20 deadline looms. But that effort fell short amid increased scrutiny over what some Republicans have alleged is mismanagement at the agency.

“We have been told for a long time that we have sufficient funds … We're only learning this now,” Sen. Jerry Moran (Kan.), a top Republican on the Senate Veterans’ Affairs Committee, said this week, adding the discovery of the shortfall came after both chambers had already begun advancing full-year funding legislation for military construction and the VA.

“I'm unconvinced that the Department of Veterans Affairs was incapable of knowing a problem at that point in time, and the [Office of Management and Budget] has never said anything,” he said. 

The agency has cited the PACT Act, a landmark law that passed with bipartisan support in 2022, as the key driver behind the budget shortfall, pointing to increases in enrollment in VA health care, appointments and applications benefits.

The White House said in the spring that veterans and survivors had submitted more than 4 million claims since August 2022, including north of 1.6 million “PACT Act-specific claims applications.”

“These important results for veterans and survivors exceeded even the most aggressive projections and expectations,” an agency spokesperson said in a statement. As a result, the VA said it’s calling on Congress to provide about $3 billion in “mandatory benefits funds” for fiscal 2024, as well as roughly $12 billion in fiscal 2025 “for medical care.”

“What happened with PACT Act [is] it’s been way more popular and people knew it was going to be,” Sen. Sherrod Brown (D-Ohio) said Wednesday. He joined Moran and other senators in introducing legislation this week to address the shortfall.

“All of us knew,” Brown said. “It's really taken off, and it's expensive because it's taking care of complicated medical situations.”

The bill seeks to address the more immediate shortfall threat. It calls for upward of $2.8 billion in additional funding for the VA, appropriating about $2.3 billion for the Veterans Benefits Administration for compensation and pensions, as well as roughly $597 million for readjustment benefits.

The bill also calls for the Government Accountability Office to review “the circumstances surrounding and causes of the shortfall” and “possible remedies the Department may take in the future to improve annual budget submissions and prevent shortfalls,” among other measures.

Veterans’ compensation and pension benefit payments, as well as their readjustment benefits, could be delayed if Congress doesn’t provide additional funding by Sept. 20.

But some senators are also demanding more information from the VA before passing legislation.

“When we spend billions of dollars, we should ask, you know, are controls in place that it’s being spent wisely. Where was it spent?” Sen. Rand Paul (R-Ky.) told The Hill earlier this week while pushing against an effort to fast-track a bipartisan bill to patch the smaller shortfall. “We gave them record amounts of dollars. Why’s it gone?”

“So, somebody made bad decisionmaking or bad management,” he said, before adding that “all that needs to be discussed and worked through, and that’s why I would never let it go through without a discussion.”

A group of Republicans penned a letter to Sen. Jon Tester (D-Mont.), chair of the Senate Veterans’ Affairs Committee, earlier this week, calling for a prompt hearing into the matter. The Republicans said VA Secretary Denis McDonough “needs to immediately testify in-person before the Committee to answer the nearly $15 billion question before a supplemental is considered.”

“The answers and accountability owed to our veterans cannot wait until the Senate returns on September 9, just days before the VA says that benefits payments will be disrupted,” the letter said. “As such, we urge you to immediately schedule a hearing so we can conduct proper oversight and get to the bottom of this concerning report.”

Rep. Mike Bost (R-Ill.), who heads the House Veterans’ Affairs Committee, also penned a letter to the secretary last month, describing the overall $15 billion shortfall as “the largest budget shortfall the Department of Veterans Affairs (VA) has experienced under any administration,” while also taking the chance to blame the Biden-Harris administration.

The letter additionally called on the secretary to answer a list of questions pressing the VA over the matter, to which the agency confirmed to The Hill on Friday that it addressed.

The Hill has reached out to the agency and Bost’s office for a copy of the response.

“We have responded directly to Chairman Bost’s letter, briefed his staff, and addressed his questions, and we look forward to continuing to work together to address this need,” a VA spokesperson said in a statement.

“VA is working closely with Congress and the Office of Management and Budget to address these needs in a way that prevents any adverse impacts on Veterans – and allows us to continue to deliver care and benefits to Veterans at record rates,” the statement added on Friday.