The Department of Veterans Affairs improperly spent or lost roughly $3.5 billion in fiscal 2022 across several programs it is required by law to track to improve management of department outlays.
The VA Office of Inspector General reported Monday that the department simply could not account for $1.4 billion in spending, while the remaining amount was made up of non-monetary losses that "cannot be recovered" or were the result of unknown or unexplained payments.
The amount is significantly lower than the $11.37 billion in losses reported in fiscal 2020 and also down from $5.12 billion in fiscal 2021. Nonetheless, the inspector general noted, the $1.4 billion in completely unaccounted spending remains significantly higher than the amount that fell under that category in 2020, $892 million.
Programs that saw the biggest increases in losses or misspent funds from last fiscal year included veterans pensions and long-term services and support, accounting for nearly $1.7 billion of the total, according to the report.
The OIG review comes amid increased congressional scrutiny of VA spending following record increases in the department's budget over the past decade, as well as additional boosts received during the past three years, including COVID-19 emergency pandemic funding.
As of last week with passage of the debt ceiling agreement vote, the VA budget for fiscal 2024 will likely be more than $320 billion, up from roughly $300 billion this year. In fiscal 2014, the total VA budget was $154 billion.
Between 2020 and 2021, the VA also received more than $20 billion to address COVID-19 response, as well as $17 billion as part of the American Rescue Plan.
Earlier this year, the VA OIG found that the department failed to account for at least $187 million in supplementary COVID-19 spending, which the IG attributed to contract issues, purchasing of medical supplies, and a lack of visibility over payroll, among other problems.
Lawmakers said they found the lack of transparency and accountability for the supplemental funding disturbing, with House Veterans Affairs Committee ranking member Rep. Mark Takano, D-Calif., saying during a May 23 hearing that it "damages VA's credibility and invites questions about the extent of potential waste, fraud, and abuse."
"We all know the VA's outdated fiscal system barely functions under normal circumstances, and the huge influx of COVID money only made things worse," said Rep. Mike Bost, R-Ill., the committee's chairman.
For its most recent report, the VA OIG reviewed spending across seven programs to determine whether the department has complied with the Payment Integrity Information Act, legislation passed in 2020 designed to increase oversight of programs susceptible to improper payments.
According to the legislation, that includes payments made to ineligible recipients, for ineligible goods or services, duplicate payments, and those for services that weren't received or that did not account for credit or applicable discounts.
In addition to the programs singled out as having increased significantly, the OIG reviewed beneficiary travel expenses; communication, utility and other rent bills; medical care contracts and agreements; supplies and materials; and the VA's community care program, responsible for providing medical care for veterans at non-VA facilities.
The OIG said that the VA had largely complied with the legislation but recommended that the under secretary for benefits rein in improper or unexplained payments for pensions, and that the under secretary for health reduce wrongful payments for the long-term services and support program.
In their response to the report, VA administrators said they concurred with the recommendations and noted that the department has reduced improper and unknown payments by 76% since fiscal 2018, or $11.24 billion worth.
The VA also successfully removed seven other programs from reporting requirements under the law.
"We are committed to reducing improper payments as demonstrated by [the OIG's] report confirming VA has 72 of 74 programs fully compliant with [the law's] requirements. Since fiscal 2018, VA has greatly improved its overall compliance … by reducing the number of programs at significant risk of improper and unknown payments," VA officials wrote.
– Patricia Kime can be reached at Patricia.Kime@Military.com.