The Department of Veterans Affairs had set aside more than $43 million for veterans benefits but it sat in an account unused for three years until now when an agency financial manager happened to notice it.
Wait, it gets worse, it may be too late for the cash-strapped agency to spend the money on the veterans.
The inspector general’s office, in a report issued this month, cited a “breakdown of fiscal controls” and “lack of oversight” in concluding that VA officials had “no need” for the $43.1 million — at least not for the purpose they claimed, which was to print personalized handbooks that explain in detail what benefits for which a veteran is eligible.
Acting Inspector General Richard Griffin’s audit came as top VA officials prepared to tell House lawmakers last week that they’re facing a $2.6 billion budget shortfall that’s partly responsible for a new explosion in wait times for medical care. Senior leaders say they may have to freeze hiring or furlough employees unless funding is reallocated for the federal government’s second-largest agency.
Now comes $43.1 million that officials in the Veterans Health Administration “parked” at the Government Printing Office for three years. Investigators discovered that VHA, which runs the sprawling health-care system for veterans, had the money deposited by contracting officials to be “held” for some future use. VHA said the money was earmarked for handbooks, but auditors found no documents to that effect.
The money sat from fiscal 2011 through fiscal 2014 “with no designated purpose,” auditors found, and $2.3 million that eventually was spent did not produce handbooks but business cards, pamphlets and mailings about the Affordable Care Act.
“A breakdown of VA fiscal controls and a lack of oversight led to the parking of funds for an excessively long period and the failure to detect and properly use and manage these funds,” auditors wrote in their June 17 report. They cited a “lack of supervisory review” to ensure that the money was spent properly.
The VHA, it turned out, had “no current need” for the money and wanted to save it for another year, a strategy that’s considered poor financial policy.
Money budgeted for one account is not supposed to be spent for other needs without congressional approval. In this case, the $43.1 million came from a fund designated for administrative support for veterans’ hospitals, including supplies, training and janitorial expenses.
Adding to the mismanagement, the contracting fund took $5.6 million in service fees from VHA, but no services were rendered, the inspector general found.
VA officials concurred with the watchdog’s account and said they are tightening their internal financial controls in response.
The biannual handbooks, an initiative of then-VA Secretary Eric Shinseki, provide veterans with information about their health benefits and other services. They list contacts for a veteran’s preferred clinic, instructions on how to schedule appointments, information on the federal health-care law, any co-pays and other information. VA began sending the handbooks to millions of veterans last year.
The agency had plenty of money to produce the handbooks, with a $20.1 million balance in the handbook account when the $43.1 million showed up in 2011. During the three years it went unspent, the fund grew by $6.7 million, investigators said.
The situation gets worse because VA officials are looking at whether they have unpaid bills for fiscal 2011 to apply the money to, and if not, it must be returned to the Treasury, auditors said.
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