McDonough warns of ‘deleterious’ impact of full-year continuing resolution on VA operations

Congress may have punted the toughest debates on funding the federal government for the rest of fiscal 2022 until mid-February, with many members already home for the holidays.

But the coming debates, still likely two months away, are weighing on Veterans Affairs Secretary Denis McDonough, who on Friday warned of the “deleterious impacts” of a full-year continuing resolution on the department and its operations.

Congress passed a multi-week temporary stop-gap earlier this month, which funds federal agencies under 2021 funding through Feb. 18. Appropriators reached that agreement after weeks of negotiations over the length of the latest CR. Democrats wanted a temporary stop-gap that was as short as possible to keep the momentum going on an eventual full-year budget deal, while Republicans pushed for the longer-term resolution.

“One issue I’m really worried about is the fact that it seems several members of Congress are comfortable with the idea that we’d operate under a continuing resolution for the entire [fiscal year] 2022,” McDonough told reporters Friday morning.

Under a full-year CR with no anomalies, VA would operate under a discretionary budget that’s $1.8 billion less than what the president had proposed earlier this year.

On the mandatory side, the department would operate under funding that’s $9 billion less than what the administration proposed. VA uses mandatory funds to pay direct compensation and pension benefits to veterans and their families.

“Without that funding there’s real risk that we would not be able to make full payments to veterans for compensation and pension requirements through September 2022,” McDonough said.

The Veterans Health Administration would experience a $941 million shortfall in community care funding, McDonough said.

He acknowledged the funding situation could impact the department’s ability to refer veterans to the community for private sector care, putting more pressure on the VA system in term.

“We’d obviously begin to make serious adjustments across the board if we had to, and we’re beginning that planning now,” McDonough said. “I don’t have specific details on how we’d bend ourselves into a pretzel to operate under these limited numbers, but we’re doing that planning now.”

VA’s construction budget would experience a $458 million shortfall compared to the president’s proposal, which McDonough said could cause potential delays and cost increases for various projects across the country.

The Veterans Benefits Administration budget would be down by roughly $259 million compared to what the administration had planned.

VBA is in the middle of a hiring surge, as it’s trying to recruit and onboard 2,000 new claims representatives to process an influx of applications from new Agent Orange presumptions, which VA announced earlier this year.

The department has hired 900 new employees so far.

“We’re getting them into training programs,” McDonough said of the new claims representatives. “A lot of that is with 2021 money, and we worked with Congress to make sure they’re comfortable that we used the ’21 money for that. In some ways on the personnel side, we can still hire many of those people, but we will be hamstrung on our training if we operate on a full-year CR.”

The backlog of pending disability claims has risen in recent months because VA has added new Agent Orange presumptions. In December it stood at about 260,000 claims, McDonough told the Senate Veterans Affairs Committee earlier this month.

The department believes it can bring the backlog down to 100,000 or less by 2024, but only if it can successfully and quickly onboard and train new claims representatives, McDonough has said.

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