Chairman Buyer announces initial GAO findings:
A flawed VA budget process  

Washington, D.C.—The Government Accountability Office (GAO), reporting initial findings from an investigation requested by House Committee on Veterans’ Affairs Chairman Steve Buyer (R-Ind.), and members of the Senate, has found that unrealistic assumptions, errors in estimates, insufficient data, and an unresponsive budget model contributed to health care funding shortfalls at the Department of Veterans Affairs in fiscal years 2005 and 2006. 

“As I promised last June, we are closely examining what went wrong with the VA budget process and how we can ensure that we get it right,” said Chairman Buyer. “To provide for America’s veterans, the VA must be able to accurately forecast its requirements.”   

The GAO confirmed that VA’s budget model and the federal budgeting process itself, which uses information up to three or more years old, had contributed to shortfalls.  Projections were understated for a number of reasons, including returning Operation Enduring Freedom and Operation Iraqi Freedom soldiers and requirements for long-term care. 

Other findings included: 

·                    VA’s internal process for formulating the medical programs funding requests was informed by, but not driven by, projected demand.

·                    Certain categories of care required additional funding.  These included care for returning veterans of the war on terror, funding for long-term care, and care for higher priority patients – essentially those who have service-connected disabilities, have special disabilities, such as spinal cord injuries, and the indigent.

·                    In forecasting savings for 2005, VA unrealistically assumed it could immediately reduce the number of nursing home beds it operates.  In addition, the department annually assumes significant cost savings through the identification of management inefficiencies and through legislative proposals, both of which failed to materialize in FY 2005. 

GAO officials in their briefing said that VA is working hard to avoid repeating these errors.  They stated that they had been told by VA officials that the department now receives monthly casualty reports from the Department of Defense, but had not yet confirmed that was the case. Such reports could enable VA to plan for war-related care requirements. 

The funding shortages, which were discovered by VA officials in the spring of 2005, were ultimately addressed with supplemental funding.  VA officials had initially sought to redress the shortages by using funds intended for carryover from 2005 into 2006, and by deferring certain expenses. Learning of these shortfalls in a June committee hearing, Chairman Buyer began the effort that provided VA $1.5 billion in supplemental funding for 2005, with unused funds available for this year.  VA, unable to use the amount it requested, rolled over more than a billion dollars into 2006.  

The GAO will continue its review of the process used by the Administration to formulate the VA budget.