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NEW GAO REPORT DETAILS VA'S BUDGET FAILURES --
VA budget
planning was based on "unrealistic assumptions,
errors in estimation,
and insufficient data" causing massive
shortfalls. -- And all the while,
VA Secretary Nicholson misleads Congress by
testifying that the
VA budget was adequate.
This story starts with a GAO report from
earlier this year. That here...
http://www.vawatchdog.org/
old%20newsflashes%20FEB%2006/newsflash02-02-2006-9.htm
That prompted my article, "Cooking the
VA's Books"...here...
http://www.vawatchdog.org/
milcom/cookingthevasbooks.htm
The above report and article detail how
the political appointees who run the VA lowered their budget
expectations, bowing to pressure from the White House and the Office of
Management and Budget (OMB), and, in plain English, faking budget
figures.
Now, as Paul Harvey says, we have the
rest of the story.
Sen. Patty Murray (D-WA) and others asked
for this new GAO report.
And, it's not pretty. Basically the
VA had its own "don't ask, don't tell" policy...since (they claim)
nobody asked, they weren't going to tell about budget problems.
But, that's not entirely true...as you will see below. VA
Secretary deliberately mislead Congress with his testimony about the VA
budget.
And, VA officials would not comment to
the Associated Press, saying they had not seen the report. This is
a downright LIE. Not only have they seen it...the GAO report
states that the VA has seen the report and agrees they have to do better
at the budgeting process. They must think we are fools!
We have...
1. GAO report highlights.
2. Press release from Sen. Patty
Murray.
3. Timeline of misleading
statements made by Secretary Nicholson.
4. News story from the AP.
Full GAO report here...
http://www.gao.gov/new.items/d06958.pdf
GAO highlights here...
http://www.gao.gov/highlights/d06958high.pdf
Highlights below:
---------------
Why GAO did this study
The Department of Veterans Affairs (VA)
estimates it will serve 5.4 million patients in fiscal year 2006.
Medical services for these patients are funded with appropriations,
after consideration by Congress of the President’s budget request. VA
formulates the medical programs portion of that request. VA is also
responsible for budget execution—using appropriations and monitoring
their use for providing care. For fiscal years 2005 and 2006, the
President requested additional funding for VA medical programs, beyond
what had been originally requested.
GAO was asked to examine for fiscal years 2005
and 2006 (1) how the President’s budget requests for VA medical programs
were formulated, (2) how VA monitored and reported to Congress on its
budget execution, and (3) which key factors in the budget formulation
process contributed to requests for additional funding. To do this, GAO
analyzed budget documents and interviewed VA and Office of Management
and Budget (OMB) officials.
What GAO foundThe formulation of the
President’s budget requests for VA medical programs for fiscal years
2005 and 2006 was informed by VA’s comparison of its cost estimate of
projected demand for medical services to its anticipated resources. VA
projected about 86 percent of its costs using an actuarial model that
estimated veterans’ demand for health care. To project the costs of
long-term care (about 10 percent of the funds for VA medical programs in
each of these years) and the remaining medical care costs (about 4
percent), separate estimation approaches were used that did not rely
upon an actuarial model but used other methods instead. The agency
anticipated resources based on prior year appropriations, guidance from
OMB, and other factors. For both fiscal years, VA officials told GAO
that projected costs—calculated from the actuarial model and other
approaches—exceeded anticipated resources and that they addressed the
difference in budget requests for those years with cost-saving policy
proposals and management efficiencies.
Although VA staff closely monitored budget
execution and identified problems for fiscal years 2005 and 2006, VA did
not report this information to Congress in a sufficiently informative
manner. VA closely monitored the fiscal year 2005 budget as early as
October 2004, anticipating challenges managing within its resources.
However, Congress did not learn of these challenges until April 2005. VA
initially planned to manage within its budget for fiscal year 2005 by
delaying some spending on equipment and nonrecurring maintenance and
drawing on funds it had planned to carry over into 2006. Instead, the
President requested additional funds from Congress for both fiscal years
2005 (a $975 million supplemental appropriation in June 2005) and 2006
(a budget amendment of $1.977 billion in July 2005). Congress included
in the 2006 appropriations act a requirement for VA to submit quarterly
reports regarding the medical programs budget status during this fiscal
year. These reports have not included some of the measures that would be
useful for congressional oversight, such as patient workload measures to
capture costs and the time required for new patients to be scheduled for
their first primary care appointment.
Unrealistic assumptions, errors in estimation,
and insufficient data were key factors in VA’s budget formulation
process that contributed to the requests for additional funding for
fiscal years 2005 and 2006. Unrealistic assumptions about how quickly
cost savings could be realized from proposed nursing home policy changes
contributed to the additional requests, as did computation errors
measuring the estimated effect of one of these changes. Insufficient
data in VA’s initial budget projections also contributed to the
additional funding requests. For example, VA underestimated the cost of
serving veterans returning from Iraq and Afghanistan, in part because
estimates for fiscal year 2005 were based on data that largely predated
the Iraq conflict and because according to VA, the agency had challenges
for fiscal year 2006 in obtaining data from the Department of Defense.
What GAO recommends
GAO recommends that VA better explain cost
savings from proposed policy changes in budget formulation and provide
more comprehensive reporting on budget execution to Congress. VA stated
that it substantially agreed with GAO’s findings and concurred with the
recommendations.
---------------
Press release from Sen. Patty Murray
here...
http://www.vawatchdog.org/
senatecvademsnews/senatecvademsnews09-20-06.htm
Press release below:
---------------
News Release
Murray calls for a Real Budget based on Real Demands after GAO Report
Reveals VA Failures
GAO Report finds that past VA budget planning
was based on "unrealistic assumptions, errors in estimation, and
insufficient data."
For Immediate Release:
Wednesday, September 20, 2006
GAO Report
(Washington D.C.) – U.S. Senator Patty Murray (D-WA) today called on
Department of Veterans Affairs (VA) Secretary Jim Nicholson to provide
Congress with an accurate plan for the health care of America's
veterans, a plan based on real numbers and real demands for service. The
call comes after the Government Accountability Office (GAO) released a
stunning report detailing the VA's failure to provide accurate
information for budget needs in fiscal years 2005 and 2006. The report
found that the VA used faulty information when planning for overall
health care demands and that it estimated health care costs for service
members returning from Iraq and Afghanistan based on prewar data.
"Protecting and taking care of our soldiers is the most basic
responsibility for those planning and executing a war," said Murray.
"Unfortunately, this report offers a stunning indictment of this
Administration's commitment to our troops when they return home from
Iraq and Afghanistan."
The GAO report was commissioned to investigate two emergency budget
requests made by the President in 2005 for a total of nearly $3 billion.
Those Presidential requests came after Senator Murray made a similar
request for additional funds based on reports of under-funded services
for veterans. The GAO looked into why realistic funding levels were not
initially requested by the VA and why additional funds were needed. The
GAO report found that the additional funding was necessary because the
VA prepared their '05 and '06 budgets using "unrealistic assumptions,
errors in estimation, and insufficient data." Specifically, the report
found that:
* The VA failed to report the problems they were experiencing to
Congress in a timely manner.
* The VA underestimated the cost of serving veterans returning from Iraq
and Afghanistan because they used budget information that predates the
war.
* The VA used faulty information on when they would see real dollars
from proposed cost saving measures.
* The VA in many cases did not have any actual means of implementing
proposed cost saving measures.
"This is really about the VA being frank with Congress and the American
people about its needs," said Murray. "When the VA plays politics with
their budget, America's veterans get shortchanged."
"It's time for Secretary Nicholson to explain how the VA is going to put
in place a system that will be able to handle the cost of providing
mental health care, reducing patient wait times, and providing for an
influx of Iraq and Afghanistan veterans," said Murray. "I have not seen
that plan, and today's report certainly does not lead me to believe such
a plan exists."
"This independent report once again illustrates a VA that is incapable
of preparing a real plan for the care of our nation's veterans," said
Senator Murray. "There was no plan when service members were sent off to
Iraq and Afghanistan, there is no plan now, and most tragically, there
is no plan in place for when they return home."
Senator Murray has consistently called upon Secretary Nicholson to
provide Congress with the full scope of the VA's fiscal needs.
In March 2005, after hearing reports from various veterans groups citing
long lines for care Senator Murray requested $2.85 billion in
supplemental spending to meet the increased demand. In the months after
Murray's request, the VA continually misled Congress about the existence
of a budget shortfall.
In April of 2005, Secretary Nicholson wrote that he did not "foresee any
challenges" that would preclude the VA from providing "timely, quality
service." The Secretary also testified in a June 2005 Senate Veterans
Affairs Committee hearing that the VA had "an adequate level right now"
for mental health. However, those on the front lines of the VA's effort
to provide care have not echoed the Secretary's confidence in the
Department's ability to provide for Veterans. In fact, as recently as
earlier this year, Frances Murphy, M.D., Undersecretary for Health
Policy Coordination at our Department of Veterans Affairs, noted that
some VA clinics could not provide mental health or substance abuse care
to veterans, or if they do, "waiting lists render that care virtually
inaccessible."
Senator Murray's 2005 request for $2.85 billion in supplemental funding
was ultimately denied by the Republican-led Senate. Shortly after
Murray's effort was thwarted, the President's requests provided the
funding for the $3 billion budget shortfall that the VA revealed in June
2005.
The GAO report released today was requested by Senators Daniel Akaka
(D-WA), Richard Durbin (D-IL), Ken Salazar (D-CO) and Murray. Senator
Murray is a member of the Veterans Affairs Committee.
---------------
Timeline of misleading statements made by
Secretary Nicholson here...
http://murray.
senate.gov/veterans/VAmisled060920.pdf
Timeline below:
---------------
---------------
News story here...
http://www.chron.com/disp/story.mpl/ap/politics/4202000.html
Story below:
---------------
Report: VA underestimated costs
By JENNIFER TALHELM Associated Press Writer
WASHINGTON — The Department of Veterans Affairs used prewar data to
estimate the cost of caring for veterans from Iraq and Afghanistan, a
mistake that contributed to a $3 billion budget shortfall since 2005,
government investigators say.
Asked by lawmakers to examine what led to the agency's financial
troubles in the last two years, the Government Accountability Office
said in a report Wednesday that the VA used "unrealistic assumptions,
errors in estimation and insufficient data" to project its budget.
The VA failed to estimate correctly the costs for Iraq and Afghanistan
veterans party because it could not get accurate information from the
Defense Department, the GAO found.
The agency also failed to tell Congress in a timely way that it was
struggling to meet its expenses. The problems led officials to make
requests for an extra $3 billion in June and July of last year,
according to the GAO.
Democrats, who commissioned the report after the funding requests, used
it to blast the Bush administration for not adequately caring for
veterans of Iraq and Afghanistan. The VA will receive about $31.5
billion to provide health care for about 5.4 million patients this year.
The report is "a stunning indictment of this administration's commitment
to our troops," said Sen. Patty Murray, D-Wash.
Democrats called on VA Secretary Jim Nicholson to provide an accurate
plan for how it will meet veterans' needs in the future.
"We should not be running a VA system that is going to be short on the
funding for health care," said Sen. Ken Salazar, D-Colo.
VA officials said they had not seen the report and were not immediately
able to respond to questions. In comments attached to the report,
officials said they agreed with the findings and were working to
improve.
GAO investigators said the VA knew 2005 would be a tight budget year and
attempted to manage the expenses and cut costs. But officials were
overly optimistic _ and sometimes plain wrong _ about how effective the
changes could be, the GAO found.
One such plan called for the VA to reduce the average daily patient
workload in its nursing homes. But the proposal would have required the
agency to cut staff and discharge or transfer in a short time
potentially thousands of veterans with severe, chronic physical or
mental disabilities.
The plan also would have forced the veterans to dip into Medicaid,
private insurance or their own savings to pay for care, the GAO found.
Instead, in June 2005, with three months remaining in the federal budget
year, the Bush administration requested an extra $975 million from
Congress to meet its expenses. That included $273 million for Iraq and
Afghanistan veterans.
A month later, the administration asked for another $1.977 billion for
the 2006 budget year.
In response, Congress required the VA to provide quarterly status
reports. But the GAO review found the agency has left out key
information about the cost to treat patients in its reports. The first
two were almost two months late and used data that was as much as three
months old.
The agency has since worked to improve its estimates and its
coordination with Congress and the administration's budget office, said
the GAO report. But investigators recommended the agency better explain
cost savings from policy changes and that it give Congress more
information.
---------------
Larry Scott
