Claims staff will be cut from 20,000 to 1,500.
This story has been updated with details and background.
If the government shutdown persists until late October, the Veterans Affairs Department will cut off disability, pension, compensation and education claims to 5.18 million veterans, surviving spouses and children on Nov. 1, VA Secretary Eric Shinseki told a hearing of the House VA Committee Wednesday.
VA needs to pay out $6.25 billion in claims on Nov. 1 but Shinseki said he has only $2 billion in accounts to cover those payments.
The Veterans Benefits Administration on Tuesday furloughed 7,000 personnel who process claims. VBA was able to keep 13,000 employees on the job because their salaries were covered by $40 million in carryover funds from 2013. Shinseki said those funds will run out before the end of the month, at which point all but 1,500 VBA employees will be furloughed.
Shinseki said he could not provide a date at which VBA employees would be furloughed or when he would have to cut off Nov. 1 payments, as it all depends on a hard-to-quantify “burn rate” to cover ongoing operations.
The VA will use its remaining $2 billion claims fund to pay retroactive claims and GI bill tuition, Shinseki told the hearing.
The 9/11 GI Bill also pays students a housing allowance, which in Washington runs $1,770 a month. Shinseki said a continued shutdown means "I will not be able to pay living stipends” to a half million veterans.
VBA will keep on a skeleton staff of about 1,500 when funds run out to receive and date stamp claims at all 56 of its regional centers and will also staff the national call centers, Shinseki said.
The VA Office of Information and Technology furloughed 2,754 employees Monday, a move that threatens ongoing improvements to the paperless Veterans Benefits Management System, or VBMS , Shinseki said. VA fielded the “basic model” of VBMS to all VBA regional offices this June, Shinseki said, but much more needs to be done to add capabilities and improve robustness of the system.
All software development on VBMS has been halted, Shinseki told the hearing, and the longer VA operates without a budget, it will become “difficult to maintain what we have,” he said. “We can’t increase capabilities.”
Asked by House VA Committee Chairman Jeff Miller, R-Fla., if VA could have better prepared for a shutdown, Shinseki said, “I did not think this could happen….I did not think you would allow this to happen.”
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