VA Watchdog Blames Accounting Errors for Budget Scare That Alarmed Veterans

The Department of Veterans Affairs (VA) Office of Inspector General (OIG) has published a report attributing last year’s $2.9 billion budget scare to inadequate accounting practices and inaccurate financial projections. This caused concern among veterans regarding possible delays or cancellations of disability benefits.

The report indicates that the Veterans Benefits Administration (VBA), led by former Under Secretary of Benefits Joshua Jacobs, did not correctly account for unused funds from prior years and overestimated the number of claims requiring funding by the conclusion of fiscal year 2024. The VA subsequently sought billions in extra funding from Congress—funds that, in the end, remained unutilized.

In July 2024, the VA alerted Congress to a $12 billion shortfall in its health care budget and a $3 billion deficit in its benefits budget, attributed in part to a rise in claims resulting from the PACT Act, which broadened benefits for veterans exposed to toxic substances. VA Secretary Denis McDonough assured lawmakers that the agency would seek funds only when essential.

By November, the VA communicated to Congress that the shortfall was not as significant as anticipated, indicating that the additional funds could be allocated for expenses in early 2025 instead. This revelation provoked strong reactions from lawmakers, such as House Veterans Affairs Committee Chairman Mike Bost (R-Ill.) and Rep. John Carter (R-Texas), who charged VA officials with misleading Congress and causing undue concern among veterans.

“Senior Biden VA officials instilled fear in veterans and their families regarding the security of their benefits,” Bost remarked, describing the situation as "incredibly concerning."

The VA Inspector General has suggested that the VA enhance its financial oversight, consider all available budgetary resources in its projections, and perform more thorough fiscal reviews.

Performing Under Secretary for Benefits Michael Frueh recognized the recommendations. Still, it justified the agency’s careful approach, noting that although the risk of a funding shortfall had diminished, it was never entirely eradicated.

The VA has committed to enhancing its financial controls and improving transparency in budget forecasting to avert future issues.