VA acknowledges significant errors in budget shortfall predictions

Veterans Affairs leaders on Wednesday acknowledged mistakes in their predictions this summer of looming funding shortfalls for the department, but insisted the errors were due to workload surges and not budgetary maleficence.

“Our projections could have been more accurate,” VA Under Secretary for Health Dr. Shereef Elnahal told members of the House Appropriations Committee during an oversight hearing on the issue.

“What we’re trying to do now is make sure we work very diligently and ensure that the [next] number we give this committee is much more accurate. And that is taking time.”

The response drew sympathy from some Democratic lawmakers on the panel but skepticism from Republican members, who said the discrepancies undermine congressional confidence in the department’s financial stewardship.

“VA’s inability to accurately forecast its budget needs is unacceptable,” said Rep. John Carter, R-Texas, chairman of the appropriations committee’s veterans panel. He blasted senior leaders for stoking “fear that benefits and pensions would be interrupted” and demanded better transparency in future budget requests.

In September, lawmakers approved a $3 billion stopgap spending bill for the VA after officials had warned that benefit checks could be delayed or halted on Oct. 1 — the start of the new fiscal year — if additional cash reserves were not made available to the department.

Weeks earlier, VA leaders had explained the budget shortfall came as a result of record-high benefits approvals and medical services usage by veterans in the last fiscal year. They also predicted that Congress would need to pass another $12 billion in funding to cover extra costs in fiscal 2025.

VA saw its highest level of health care appointments ever in fiscal 2024: about 127.5 million, up 6% over the previous fiscal year. More than 796,000 veterans have enrolled in VA health care over the last two years, up 37% over the previous two years.

But earlier this month, VA officials acknowledged they carried over roughly $5 billion in unspent funds related to benefits accounts from last fiscal year to this fiscal year. Even without the cash infusion approved in September, the department would have held more than $2 billion in cash reserves to cover spending needs.

The news sparked outrage on Capitol Hill, particularly in regards to the fears of benefits shortfalls.

On Wednesday, VA Under Secretary for Benefits Joshua Jacobs defended those summertime warnings, noting that “a funding shortfall of just $1 would have prevented VA from processing its September files, delaying monthly disability compensation, pension and education benefit payments to approximately 7 million veterans and survivors.”

“This was a risk we simply were not willing to take,” he added.

And Elnahal said department officials did slow hiring plans for a variety of department positions because of the short-term and long-term budget concerns. He said that has not caused any immediate access or staffing issues, but could if additional funds are not appropriated later this fiscal year.

Both Elnahal and Jacbos also acknowledged that their initial $12 billion shortfall prediction for fiscal 2025 was too high. They promised a revised budget adjustment target in coming weeks, but did not offer a firm timeline for that.

They also promised an independent assessment of mistakes made in the budgeting process, vowing to share that information with lawmakers. Carter in response promised close oversight of the issue.

“We are with you 100%,” he said. “But you have to keep us informed.”

Congress is facing a Dec. 20 deadline for a budget extension or full federal budget agreement to prevent a partial government shutdown at the end of the year.

Lawmakers typically fund VA medical care and benefits payments more than a year ahead, through an advance appropriations process. Even though the fiscal 2025 budget has yet to be finalized by Congress, VA officials already have more than $300 billion approved for operations this fiscal year.