Senators blast VA on $1b shortfall

WASHINGTON -- Members of the Senate Veterans Affairs Committee admonished Veterans Affairs Administration officials yesterday for failing to predict a $1 billion shortfall they face in this year's federal medical services budget and demanded to know why the organization did not level with them earlier about the lack of funds.

At a hearing yesterday, Senate veterans' committee members, clearly upset that they didn't know about the problem when they sought up to $1.9 billion more for the agency in April, scolded VA Secretary James Nicholson and two other VA officials for what they called a lack of full disclosure.

''From what I've learned, this shortfall is either deliberate misdirection or incompetence, and either way, it's unacceptable," said Senator Patty Murray, Democrat of Washington.

The emergency hearing, scheduled after a VA official told the House last week about the funding gap, was called to clarify the agency's true financial needs for the coming year so that the Senate can make up the difference when it votes on an appropriations bill later this month. The Senate is also expected to vote tomorrow on an emergency supplemental funding measure for the VA that would make up for this year's shortfall. Yesterday afternoon, the House voted against a Democratproposed amendment that would have added an extra $1 billion for veterans healthcare for the next fiscal year.

The shortfall results from a larger-than-anticipated number of veterans seeking medical services, said VA Secretary James Nicholson. The original budget had calculated that 23,553 military veterans from the fighting in Iraq and Afghanistan would require care, but new, midyear estimates indicate that 103,000 veterans will need treatment at VA medical centers, he said. All veterans returning from combat are eligible for services at the VA, which can range from dental care and psychological counseling for wartime stress to physical therapy and prostheses for amputated limbs.

At the hearing, Nicholson stressed to the committee that current estimates show that soldiers returning from recent combat account for just $273 million of the shortfall. The remainder, he said, results from other military vets seeking care in greater numbers. It was unclear why more veterans are seeking care from the agency, and the committee members didn't ask Nicholson for a clearer explanation.

Nicholson said the $1 billion miscalculation was not unreasonable because the administration's budgeting system relies on data and projections from previous years to come up with future budgets. The current VA budget, he explained, was sketched out using statistics from 2002. ''It's complex and it's not an exact science, and it's something we're going to have to keep working on," Nicholson said.

Committee members were not satisfied with Nicholson's explanation and said the agency should come up with a better way to anticipate its needs.

Murray, the Washington Democrat, castigated Nicholson for previously insisting that his administration was on track with its budget. A member of the Senate Appropriations Committee, Murray had led Democratic efforts to boost VA funding in April.

She read from an April 5 letter Nicholson submitted to the Military Construction and Veterans Affairs Subcommittee. '' 'I can assure you that VA does not need emergency supplemental funds in FY 2005 to continue to provide timely, quality service that is always our goal,' " Murray read.

Nicholson disputed Murray's characterization of the shortfall as a ''crisis," stressing that officials could cover the deficit by shifting several hundred million dollars from the agency's longer-term operation and maintenance funds. But several committee members, referencing promised new VA medical centers in their home states, said shifting funds leaches much-needed money from other important needs such as renovating medical centers.

Other senators, though, suggested that Nicholson, who has held his position for just a few months, may not be entirely to blame. Senator Ken Salazar, Democrat of Colorado, pointed to the White House and the Office of Management and Budget for what he called ''arbitrary restrictions on funding," while Murray accused the Bush administration of insensitivity to veterans' needs.

''It really benefits no one, I think, to fudge the numbers on this," said Senator Barack Obama, Democrat of Illinois. ''If we're starting to play budgetary games, then it's hard for us to make inevitable choices."

Whoever is responsible for past mix-ups, senators said, the important thing is to correct the problem as soon as possible, before the VA faces even worse shortfalls for the next fiscal year.

Senator Richard Burr, Republican of North Carolina, warned Nicholson to be upfront about the VA's needs for the coming year.

''This is one opportunity to redo the numbers," Burr said. ''Make sure they're right this time."