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:
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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.
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Press release from Sen. Patty Murray here...
http://www.vawatchdog.org/
senatecvademsnews/senatecvademsnews09-20-06.htm
Press release below:
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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:
---------------
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News story here... http://www.chron.com/disp/story.mpl/ap/politics/4202000.html
Story below:
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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.
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Larry Scott