The Veteran Affairs (VA) was expecting to spend around $193 billion this fiscal year in benefits to veterans. But due to an increase in the number of claim requests, the VA is currently estimating that they will have a budget shortfall this FY of approximately $2.9 billion. If the funding issue is not corrected by Congress, compensation and pension payments and survivors and readjustment benefits scheduled for payment on October 1 could be at risk.
Rise in Benefits Use
So why has the use of benefits risen so dramatically and unexpectedly? Basically, two main reasons.
1. An Increase in GI Bill Use
In April 2024, the Supreme Court ruled on a case that had been in courts for 10 years – Rudisill v McDonough. The ruling allows veterans to use education benefits from both their Montgomery GI Bill and Post 9/11 GI Bill if they are eligible to receive benefits from both GI Bills. The ruling in favor of the plaintiff resulted in more veterans using their GI Bill benefits thus resulting in an unexpected uptick in the amount of payout in education benefits.
2. The PACT Act Implementation
With the PACT Act approved, the VA is delivering more health care benefits to more veterans. While this care is well deserved for veterans suffering health issues caused by breathing toxic air contaminated from the use of burn pits while on deployment, it caused a budgetary shortfall with the increase in payouts.
FY 2025 VA Budget
In March the VA requested a budget for FY2025 of $370 billion. This is significantly higher than the FY 2024 budget due to not only the increase in GI Bill use and PACT Act, but $4 billion higher projected costs for pharmacy and prosthetics next year.
Another reason for the higher FY2025 budget is more veterans are using the community care program. Under this program, veterans can see doctors outside of the VA system and the VA will pay for it. This has led to an increase projection of spending of about 4.5% more than what is currently in the FY2025 budget request to Congress – 16.5% vs 12% respectively.
Staffing is another reason for the higher budget. While the VA originally had expected to cut about 10,000 employees, they are now requesting a net gain of about 5,000 more employees necessary to handle the increased volume of work due to the expansion of benefits. So far, the VA has processed 2 million claims this year – a 27% increase over last year which at that time was a record year in itself.
Congress has not yet approved the VA’s FY2025 budget so they could add additional funding if they agree with the VA projections. But time is running out to cover the projected shortfall for this FY ending on September 30. And with Congress getting ready to leave for their month-long summer break, they will need to expedite a funding increase before September 9 if they are to fund the projected shortfall this FY and prevent a delay in the October 1 payments to veterans and survivors.
