Colby Yarnell, human resource specialist, checked-in an applicant at the Lubbock, TX, VA Clinic Hiring Fair late last summer. The Lubbock VA Clinic hosted a Hiring Fair for the community and welcomed over 170 potential candidates to the event. (Photo by Emily Smallwood, VA Lubbock Public Affairs Officer)
WASHINGTON, DC — While VA’s proposed budget represents a 10% increase from last year, it includes decreases in key areas like hiring and infrastructure. While some of those cuts are offset by other funding, others are the result of hard decisions made to accommodate federal spending caps, department leaders said.
The record-setting spending request—$396 billion for FY2025—has also reignited the debate over the amount being spent on community care and whether the increasing reliance on community care is the best way to serve veterans.
“I want to have a serious conversation about how VA is handling the taxpayer dollars that Congress provides. There’s a real problem here,” declared Chairman Rep. Mike Bost (R-IL) during his opening remarks at a recent House VA Committee hearing examining the budget request. “[Despite this increase], hiring has been cut back or frozen; the healthcare workforce is shrinking by 10,000 positions; construction to modernize VA’s facilities has been flatlined to only two major projects; IT investment has been cut by 99%; some existing projects barely have enough funding to continue, and new projects are off the table.”
VA Secretary Denis McDonough admitted that the FY2025 request is a “maintenance budget” designed to keep the department on an even keel after a year of record growth. Last year saw the biggest surge in hiring in the department’s history, accompanied by more than 400,000 new enrollees in VA healthcare and the approval of 1.9 million claims, breaking the previous year’s record by 60%.
“The MISSION Act, COVID pandemic, and PACT Act—all of these are products of just the last six years, and any one of them would have been monumentally challenging,” McDonough said “Together they’ve changed the healthcare landscape and the statutory basis for the work at VA.”
As for why VA is cutting back in some areas, particularly in healthcare, which was exempt from new federal spending caps, McDonough said the department is making up for the decrease through other spending streams, such as the ability to carry over unused balances from previous years and the Toxic Exposure Fund created through the PACT Act.
The proposed budget also supports 10,000 fewer VA employees than in 2024. According to officials, last year’s hiring surge, along with a higher-than-expected retention rate, means VA can draw down its workforce this year, leaving positions open as people retire.
IT, Infrastructure Decreases
The decrease in VA’s non-healthcare requests, such as IT and infrastructure, are by necessity rather than choice, however.
“We do have incremental funding so we can maintain momentum on modernization projects,” McDonough said. “But the budget does force some tough choices, and IT is one of those choices.”
That includes cutting the budget on the electronic health record modernization (EHRM) project in half, which left legislators wondering whether VA ever plans to move the project out of its current reset phase.
“We’re not staying in reset forever. We’re going to get into deployment,” he assured them, noting that there was enough funding already in VA’s coffers to cover the first facility deployment after the rollout starts back up.
Legislators also pressed McDonough on a 33% cut to total infrastructure spending, as well as a decrease in VA’s state veterans’ home construction grant program. Veterans service organizations have expressed concerns that, unless VA doubles or triples its existing infrastructure spending, it will never catch up to the needs of its aging facilities.
McDonough admitted that this is a problem for which VA currently does not have a solution.
“Caps did force difficult decisions on the federal government,” McDonough reiterated. “Last year, we attempted to get mandatory funding for [facility upgrades] to make sure we can invest at the levels and rates that we need to. Your average facility … is 62 years old. VA’s major construction account is not going to be made whole each year at $2 billion, so we have to figure out a different way to do that.”
Democrats on the committee pointed to the increase in community care spending as one of the prime reasons for shrinking accounts elsewhere—increases that have not come with proportional improvement in veterans’ care.
“Community care has been siphoning funds from an already underfunded [VA], and signs show that isn’t going to be stopping anytime soon,” said Rep. Chris Deluzio (D-PA). “Community care is more expensive; its quality in many measures has been worse; patient outcomes in many places have been worse; care coordination has been worse; oversight is more limited. … We don’t have wait time data [for] community care, but based on most of the studies, wait times are shorter in VA and getting better. The same is not happening in the community.”
He added, “I think we’re at a tipping point. I don’t think this privatization trend is fiscally responsible, and I don’t think it’s good for veterans.”
Republicans pushed back against characterizing community care as “privatization” and defended it as a necessary way to get veterans care in the swiftest possible manner.
“What our job here is that veterans get the care they have earned and deserved where they want it when they want it, not to protect the VA,” declared Rep. Matt Rosendale (R-MT).
Asked about the difference between direct VA care and community care, McDonough was frank.
“It’s very difficult to run a system that is both a direct care system and functionally an insurance company,” he said. “There are a lot of steps you can take under that scenario that lead you to inefficiencies that rob you of economies of scale. … The cost of community care is variable, but it’s variable only in one direction—up.”