Watchdog blasts VA leaders for exaggerating budget shortfall last year

A federal watchdog on Thursday criticized Veterans Affairs leaders for accounting mistakes and procedural errors last year which led to fears of a possible department budget shortfall despite sufficient funding available to cover benefits and medical care.

The report from the VA Inspector General’s Office comes after months of criticism from Republican lawmakers about how previous department leadership — under President Joe Biden — handled budgetary issues and public messaging surrounding veterans benefits in the lead-up to the 2024 presidential election.

“The Inspector General confirmed today what we always feared, that it appears that senior Biden VA officials repeatedly misled Congress on the reality of the situation [last year],” said Rep. Mike Bost, R-Ill., chairman of the House Veterans’ Affairs Committee.

“This is incredibly concerning given that President Biden urged Congress to provide billions of additional taxpayer dollars to account for something that never even existed.”

Last September, Republican and Democratic lawmakers approved a nearly $3 billion stopgap spending bill for the VA after department officials had publicly warned 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.

VA leaders, including then-Secretary Denis McDonough and then-Under Secretary for Benefits Josh Jacobs, said through much of the summer that increased usage of department services had dipped cash balances in VA accounts below acceptable levels, and that the infusion of $3 billion more was needed to keep operations running without interruption.

But in late October, VA budget planners announced they had carried over roughly $5 billion in unspent funds related to benefits accounts from fiscal 2024 to fiscal 2025. Even without the emergency budget bill, the department would have held more than $2 billion in cash reserves, more than enough to cover demand.

Last fall, Bost and House Appropriations Committee’s veterans panel Chairman John Carter, R-Texas, accused department leaders of “misinforming Congress” and “inciting a panic among veterans about their benefits being delayed or cut.”

The inspector general’s review found that reports of benefits usage above budgetary projections were not accurate, and that department accountants failed to include some cash reserves in their predictions of a shortfall.

“From March through September 2024, the Veterans Benefits Administration continued to emphasize the risk to veterans in its communications to Congress, even though the data increasingly suggested there might actually be less need for supplemental funding as time went on,” the report stated.

“VBA officials ultimately justified the supplemental funding request as a precautionary measure to avoid potential payment delays to veterans …va the inspector general found that improvements in financial oversight, reporting accuracy, and communication processes would have provided greater clarity and may have obviated the need for the supplemental funding request.”

The report comes as the new leadership at VA under President Donald Trump have emphasized the need for efficiency and accountability in department spending, with a goal of cutting workers and contracts without compromising services.

Recommendations in the report point to stronger monthly fiscal reviews to better analyze and identify available funds, to avoid similar false predictions in the future.

In response to the watchdog findings, current VA leadership — which was not involved in the budgetary issues last year — said they are looking at reforms in the accounting process. Bost said his committee will continue to look into the reasons for the budgeting problems and “ensure that those who may have misled Congress are held accountable for their actions.”