The OIG conducted a legislatively mandated review of the circumstances and the underlying conditions that led to VBA announcing a potential shortfall and the need for FY 2024 supplemental funding.
In July 2024, the VA Secretary announced to Congress that VBA needed about $2.9 billion, in addition to the approximately $193.4 billion previously appropriated, to cover disability compensation, pension, and readjustment benefits for over seven million veterans through September 2024. VBA officials attributed this projected shortfall to processing more claims than ever before, expanded eligibility for PACT Act compensation benefits, unprecedented outreach to potential beneficiaries, increased payments and obligations, and more eligible participants for education and job training programs. If funding was even one dollar short at year-end, veterans’ benefits payments would be delayed.
The President signed a supplemental appropriations bill on September 20 to provide VBA with the funding. On October 28, VA officials reported to Congress that no supplemental funding was actually needed for the two accounts. The OIG’s analysis showed VBA’s actual spending did not consistently exceed planned amounts for either account. VBA had not included realized prior-year recoveries in its monthly status report calculations throughout the year, which would have shown a reduced risk of a shortfall by year-end. VBA officials reported that a projected lack of carryover funding for use at the end of the fiscal year raised concerns about depleting FY 2024 resources. Furthermore, VBA expected claims processing would surge to meet year-end regional office metrics, but a VA analysis did not show a spike in compensation and pension obligations. Although VBA acted to prioritize veterans’ benefits, the OIG found that improved financial oversight, reporting accuracy, and communications may have obviated the need for a supplemental funding request. The OIG made four recommendations to VBA to improve financial management practices and communications.
