VA prepares for still more furloughs as money runs out

Thursday - 10/10/2013, 6:15am EDT

Jared Serbu reports.

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In the coming days or weeks, the Department of Veterans Affairs says it will need to furlough thousands of additional employees, part of a cascading series of effects the agency and veterans will endure as the government shutdown drags on.

Beyond further workforce reductions, the shutdown already has turned around the progress VA has made toward reducing its disability claims backlog and reduced the department's ability to oversee construction and acquisition projects; soon it will scale back the number of burials at cemeteries.

And by the end of this month, disability payments to veterans and their survivors will grind to a halt, VA Secretary Eric Shinseki told the House Veterans Affairs Committee Wednesday.

Because of some unique funding arrangements, nearly 80 percent of VA, the government's second largest department, continues to operate during the shutdown. The system of healthcare facilities run by the Veterans Health Administration mainly is unaffected because it receives its appropriations from Congress a year in advance. But the Veterans Benefits Administration and the array of support services that sustain operations in both divisions are not immune.

VA continued many of its functions in the benefits and support arenas in the opening days of the shutdown because Congress lets it carry forward a small percentage of its unspent funding in various accounts from one fiscal year to the next. But those funds already have begun to run dry. On Monday, VA furloughed nearly 2,800 people in its Office of Information Technology, and the next day, it sent home another 7,800 from the benefits administration.

Around half those employees are veterans themselves, Shinseki said.

"There are about 100,000 of them in the VA. If they're furloughed and they also lose their disability checks, their resources go to zero," he said. "Then I have the responsibility to try and figure out how to keep them from becoming homeless. This is going to be a major challenge for us."

Backlog increasing

The scaling back of manpower in the benefits administration and the IT office already has begun to reverse the progress VA's made recently on reducing its backlog of disability benefits. Since the shutdown began, the backlog has increased by 2,000 claims. That's after the prior six months in which VBA reduced the backlog by 193,000 claims through a combination of process improvements, mandatory overtime and the introduction of the electronic Veterans Benefits Management System (VBMS).

"Lots of folks wondered whether they were gonna be able to do it. VBMS will be important to that effort, but VBMS is just coming online," he said. "So all of this work was done by the good folks in the benefits administration. I would speak for them. They're disappointed that the ground they gained is being lost day by day."

Shinseki said VBA's capability to carry out its mission will continue to deteriorate the longer the shutdown continues. For now, it's continuing to pay benefit claims from mandatory spending accounts that still have funds available. But even those will run dry soon — VA currently estimates that will happen sometime between now and Nov. 1, depending on the volume and speed of the benefits it's able to issue with a shorthanded staff.

When the accounts are empty, VBA would be legally required to furlough more than 10,000 additional employees.

"We have these folks processing claims, and where it's appropriate to make a decision today and pay today, retroactive claims, for example, we are doing that," Shinseki said. "But every payment we make reduces the amount of mandatory funds. And before the end of the month, this account will be exhausted. At that point, these 13,000 or so people who are doing this will have no reason to continue to function because the necessary implication clause that allows them to work will be exceeded when the mandatory account is exhausted. And at that point, they will be furloughed, and our Veterans Benefits Administration will be reduced to maybe less than 1,500 folks."

Modified burial schedule

At that point, VA says about 5 million people, including veterans and their surviving spouses and children will stop receiving their benefit checks. Those 1,500 employees will be excepted from furlough for the sole purpose of meeting the legal requirement that VA record the time and date when new benefit claims are received, but won't be able to act on them. Tuition and stipends for half a million military and veteran students who receive funds under the GI Bill would stop as well.