In late August, VA Secretary Denis McDonough was in New Orleans and met some VA nurses who were recently included in the list of Great 100 Nurses of Louisiana. He said at a recent press conference that one factor in the budget shortfall is an aggressive outreach program related to the PACT Act, which expanded benefits to hundreds of thousands of new veterans. Photo from VA Secretary’s X post.
WASHINGTON, DC — Congress recessed for August without passing legislation to close the nearly $15 billion budget shortfall VA is facing for this year and next. The shortfall, which came to light in July, includes $2.88 billion for the remainder of FY2024 and $12 billion for FY2025.
According to VA officials, Congress has until the middle of this month to solve this year’s shortfall, which rests solely on VBA’s side and will impact veterans benefits if not addressed in time. Legislators have until the end of September to address the remaining $12 billion.
While many legislators have said they are committed to bridging the funding gap and had hoped to vote on legislation prior to the monthlong recess, some are also demanding answers from VA. In a letter to Sen. Jon Tester (D-MT), chairman of the Senate VA Committee, Republican members of the committee urged Tester to schedule a public hearing to hear from VA Secretary Denis McDonough on how this shortfall came about.
“The VA secretary needs to immediately testify in-person before the committee to answer the nearly $15 billion question before a supplemental is considered,” the letter states. “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. … Once we get these critical answers, then we can quickly take appropriate action to ensure payments continue to our veterans and ensure this unacceptable financial mismanagement does not jeopardize veterans again.”
While McDonough did not appear before the committee prior to the recess, he did take questions on the budget issue at his monthly press conference and characterized the shortfall as the result not of mismanagement but of VA doing its job exceptionally well.
“Right before the end of last fiscal year, we asked Congress to lift the authorized level of mandatory funding available to pay [compensation and pension] and readjustment benefits at VBA. They did that as they often do,” McDonough explained. “We [made that request] because we anticipated a very aggressive outreach plan. We’ve been tracking this closely, … and it’s become clear that because we are producing at levels [where] we would need Congress to lift that authorized mandatory level one more time before the end of the fiscal year to the tune of about $3 billion.”
That aggressive outreach to veterans is a result of the PACT Act, which expanded benefits to hundreds of thousands of new veterans, as well as increasing benefits for many already-enrolled veterans. According to VA, over 700,000 veterans have been enrolled in VA since the PACT Act was passed in August 2022.
As for the $12 billion shortfall for FY2025, that falls on the VHA side of the ledger and is due, McDonough said, to VA providing more care to more veterans.
“We’re on track this year to provide 127 million healthcare appointments for veterans,” he said. “That also is an increase from last year, which was an all-time high of 120 million appointments. In light of this fact, we have determined that next year [we need] about $12 billion to ensure that we can continue to provide record levels of care to record levels of veterans.”
A large portion of that $12 billion will be for staffing. VA presented an FY2025 budget that anticipated needing 10,000 fewer staff in FY2025, with cuts coming from underutilized facilities. Now it seems the department will need approximately 22,000 more staff than expected, with 5,000 still needing to be hired.
As late as June, VA officials were still holding to that 10,000 fewer staff estimates. However, at an unrelated House Veterans Affairs Committee hearing in July, VA’s Chief Financial Officer Laura Duke told legislators that VA suspected as early as January that the staffing estimates were off.
“I would say when we were monitoring [full-time employee] counts beginning [in January] when we started to watch where staffing levels were and when staffing levels were coming in higher than what we were targeting,” she said.
Asked why VA did not adjust its budget request sooner if they knew the staffing estimates might be off, McDonough reminded reporters that his previous testimony on the budget had always come with a caveat.
“I’ve kept telling you, as I kept telling Congress during the course of the year, including in each of the public hearings, that we believed we had the funding we needed, but if we needed more, we’d come back and ask,” he said. “The thing I said I won’t do is I will not stop outreach and I will continue to allow our local leaders to make strategic hiring decisions. And as they’ve done that, we’ve relooked at that [staffing] goal and we’ve adjusted that.”