The Department of Veterans Affairs’ watchdog issued a report on what House Republicans have lambasted as a “fake shortfall” that caused Congress to approve billions in unnecessary emergency funds while stoking fears that veterans’ hard-earned benefits were in jeopardy.

VA officials spent last summer ringing alarm bells over an anticipated budget shortfall.

Congress passed about $3 billion in emergency supplemental funding for the Veterans Benefits Administration in September after VA officials warned they might not be able to meet all of their obligations to close out the fiscal year, which ended Sept. 30.

Then, the VA disclosed in a congressional report a little over a month later that it didn’t actually need to spend the emergency funds. Rather, the VA carried over about $5 billion in unspent funds from fiscal 2024 to fiscal 2025.

The VA Office of Inspector General issued a report Thursday with an examination of what led to the anticipation of a shortfall.

And the OIG offered several recommendations, including monthly fiscal reviews to routinely assess performance and cost drivers that may affect the status of available funds.

Republicans with the House Committee on Veterans’ Affairs accused VA leaders under the previous administration of misleading Congress about the “budget accounting mess.”

“Luckily for veterans and their families, there is a new sheriff in town at the agency and I have full confidence in Secretary [Doug] Collins to manage VA’s budget properly and get to the bottom of this to ensure that nothing like this happens again,” Rep. Mike Bost, the committee’s chairman, said in a news release.

VA leaders told lawmakers in the fall that emergency funding was prudent and critical to preventing damaging delays in benefits for veterans.

VA said falling short just $1 in its funding in the last weeks of the fiscal year would’ve prevented it from certifying its payment files, jeopardizing disability compensation, pension and education benefits for more than 7 million veterans and survivors beginning Oct. 1.

VA officials cited several reasons for a projected shortfall last year, including processing more claims than ever before, expanded eligibility under the PACT Act, and more eligible participants for education and job training programs.

However, the watchdog report found that VA’s actual spending didn’t consistently exceed planned amounts. VA failed to account for prior-year funding until it rolled over into fiscal 2024. And VA didn’t see an expected spike in compensation and pension obligations at year’s end.

OIG found that improved financial oversight, reporting accuracy, and communications may have prevented the need for the roughly $3 billion supplemental funding request from Congress.

Jim Lorraine, the president and CEO of America’s Warrior Partnership, an advocacy organization for veterans, said the inspector general’s report shows that the accounting system at VA needs to be examined.

He said veterans must have confidence that VA is accurately and responsibly managing taxpayer assets. It’s clear there’s a lot of opportunity to improve efficiency at VA without sacrificing services, Lorraine said.

“This is sort of a call to action to relook at the process of not only accountability and accounting, but don’t use veterans as a tool,” Lorraine said.

If VA needs more money, tell Congress, Lorraine said. But if VA isn’t sure that it needs more money, “Don’t throw up a false flag,” he said.

Lorraine said he expects more transparency from the new VA leadership.

In hindsight, Lorraine said, there was never any threat to veteran benefits. But the fear within the veteran community was real, he said.

Lorraine said other nonprofits were even contacting him at America’s Warrior Partnership to offer grant support for veterans they thought would be at risk of missing their benefits.

“Veterans were calling us. Nonprofits were calling us, saying, ‘We’re here to help,’” Lorraine said.

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