Iowa senators criticize veterans benefits shortfall, disaster loan red tape

While the Senate passed a measure that would allow the U.S. Department of Veterans Affairs to pay benefits to veterans to help offset a budget shortfall, Iowa Senators Chuck Grassley and Joni Ernst said the VA needs to be held accountable to ensure similar situations don’t happen in the future.

The $2.9 billion funding bill was approved by the Senate on Thursday and signed by President Joe Biden on Friday — the deadline for approving the measure to ensure veterans’ benefits are not delayed starting in October.

VA officials told Congress the temporary measure was necessary because veterans saw record-high approvals and use of health care services last year — thanks in part to expanded coverage under the PACT Act of 2022 for veterans exposed to toxic substances like burn pits and Agent Orange while serving.

Of the approved funding, about $2.3 billion would go toward compensation and pensions through the Veterans Benefits Administration, and $597 million would go toward restructuring benefits. While the measure passed both chambers with bipartisan support, Republicans including Grassley and Ernst criticized the Veterans Affairs office for not addressing the issue sooner and adequately budgeting for the expected increased needs.

Grassley said he will work to make sure veterans receive their benefits on time, but the budget woes show the VA is “grossly mismanaging taxpayer dollars.”

“We will not leave our nation’s veterans hanging, ground to a halt,” Grassley said in a news release. “The VA, on the other hand, has some serious explaining to do: Veterans, Congress and the public deserve answers to basic questions. Namely, what led to this egregious financial deficit and how the agency will fix the mess it created. Our legislature needed accountability measures to prevent the VA from wasting taxpayer dollars intended to benefit those who honorably served our nation.”

During Wednesday’s hearing, Josh Jacobs, the VA’s undersecretary for benefits, told senators that the budget shortfall is because “our workforce has exceeded our already aggressive projections.” The department discovered during a mid-session review in late June that its projections for 2.2 million claims decisions could increase to 2.5 million, a number that Jacobs said was immediately forwarded to Congress after the review.

However, the Senate Appropriations Subcommittee had already passed its VA funding bill for fiscal year 2025 before Congress was notified of the updated estimates and expected needs. According to the online federal business newsletter Government Executive, Jacobs said that going forward, the department plans to provide monthly comparisons of benefit projections for fiscal years 2025 and 2026.

“One of my lessons here, and one of our lessons, is that we will deliver earlier communications. I will also say that we did not have a high level of certainty. We were working to get independent verification that the estimate was in fact real and that the needs were verified,” Jacobs said.

Some Republican lawmakers have called for more budget oversight measures for the VA. Grassley and Ernst joined Sen. Dan Sullivan, R-Alaska, to introduce the Protecting Regular Order (PRO) for Veterans Act on Thursday in response to the budget shortfall. The bill would require the VA to submit quarterly, in-person budget reports to Congress for the next three years and would require some senior VA and Office of Management and Budget employees to have their bonuses withheld in the event of a budget shortfall.

Ernst said the new rules will improve VA accountability and prevent future situations in which veterans’ benefits could be jeopardized.

“Our veterans have served, sacrificed, and deserve the benefits they have earned,” Ernst said in a news release. “Every Iowa family must manage their own household budget, but the VA refuses to play by the same rules as hard-working Americans. This is a failure of leadership. I am taking action to ensure that these VA bureaucrats manage taxpayer dollars and veterans’ benefits more responsibly, or their own paychecks should suffer the consequences, not our nation’s heroes.”

Ernst says Iowans frustrated with SBA’s response to disaster

Iowans living in areas hit by severe flooding and tornadoes are frustrated by problems accessing federal relief programs, Ernst told the Senate Small Business and Entrepreneurship Committee on Thursday.

The Red Oak Republican thanked the U.S. Small Business Administration and the Federal Emergency Management Agency for their work in the days and weeks following recent disasters in places like Greenfield, which was hit by a tornado in May, and in northwest Iowa communities like Rock Valley and Spencer, which suffered severe flooding and storm damage in June.

Thanks to the president’s major disaster declarations, residents and businesses in many counties affected by these extreme weather events have access to financial assistance and loans through FEMA, the SBA and the U.S. Department of Agriculture. But Ernst said that as Iowans and small businesses struggle to rebuild after these disasters, she has heard many stories of people frustrated by errors and delays in accessing these resources — particularly SBA and USDA loans.

More: Iowa leaders say USDA could increase aid for disaster-hit farmers; USDA says they’re wrong

SBA Economic Injury Disaster Loans are available to Iowa small business owners in counties designated as disaster areas. These business loans have a 4% interest rate, lower than the typical average interest rate for bank business loans. Loans are also available through the USDA Farmer Emergency Loan Program in counties listed on the U.S. Secretary of Agriculture’s declarations.

“Small business owners who lose their livelihoods in a natural disaster have no time to waste,” Ernst said at the hearing. “It’s incredibly frustrating to hear from people seeking SBA assistance that they feel it’s a waste of time. So much so that many have dropped out and not filled out their applications. For those who persevered, the processing time for SBA loans has been incredibly slow.”

Iowa Deputy Secretary of Agriculture Grant Menke and First Community Bank President and CEO Verlin Barker were among the speakers who testified at Thursday’s hearing. Barker said many Iowans rely on local community banks instead of federal programs to provide “essential resources” like disaster loans because of “bureaucratic hurdles” and other issues they have encountered when trying to obtain government aid.

“SBA direct loans and other federal disaster recovery programs have always played a critical role in the survival of businesses affected by disasters,” Barker said. “Unfortunately, these programs are bogged down in bureaucratic red tape. Disaster victims are unable to complete this excessive paperwork.”

Ernst linked problems receiving federal funds to the Biden-Harris administration.

“In short, the Biden-Harris administration — and the SBA in particular — is leaving these communities behind,” Ernst said. “SBA lending to rural areas is pathetic, at just about 15% across the agency’s two main programs. This is a slap in the face to the hard-working Americans who pay for these programs. The Biden-Harris team needs to stop picking winners and losers and make this relief available to all Americans.”

Find this story on Iowa Capital Dispatchwhich is part of States Newsroom, a network of newsrooms supported by grants and a coalition of donors as a 501c(3) charitable organization. The Iowa Capital Dispatch maintains editorial independence. For questions, contact editor Kathie Obradovich: [email protected].

This article originally appeared in the Des Moines Register: Veterans’ benefit shortfall, disaster loan woes spark Iowa senators’ ire