The Virginia state Capitol in Richmond. (Sarah Vogelsong/Virginia Mercury)
A review of the Virginia Military Survivors and Dependents Education Program (VMSDEP) by the Joint Legislative Audit & Review Commission found no evidence that participation in the program has peaked or will decline anytime soon.
In fact, the study, which was presented to the commission at its meeting in Richmond Monday, found that the initiative, which offers tuition waivers to the spouses and children of military members who were killed or permanently disabled due to their service, has seen significant growth over the past five years. The findings echo earlier research from JLARC that found VMSDEP has grown by nearly 350% since 2019, from about 1,400 students that year to 6,400 in 2023.
Although the veterans population in the United States has seen a decline from 22 million to 18 million in the past decade according to Veterans Affairs Annual Benefits reports, the number of veterans with a 100% disability rating — the highest rating a veteran can receive for service-connected disabilities — has grown from from 400,000 in 2014 to 1.3 million in 2023, the review found.
“On the one hand, the number of veterans has been declining and is declining. So if you look at it just in terms of that, you can make the case that maybe this program is going to start trending down and maybe we’re seeing a peak,” Justin Brown, JLARC’s senior associate director, told the panel.
The veteran population and disabled veteran population have been trending in opposite directions nationally. (Courtesy of Joint Legislative Audit & Review Commission)
But a “more powerful factor” may be the rise in veterans with a higher disability rating, Brown said.
“You don’t know which of these trends is going to prevail, but clearly there’s upward pressure on the disability side, while the big number of veterans is going down. So that complicates how you think about what might happen to the program in the future.”
Some lawmakers have expressed concern that the program is financially unsustainable, prompting them to implement eligibility changes during the 2024 General Assembly session. However, those changes were repealed in July, and in response, a Senate work group, a governor’s task force, and a study were established to review the program.
The JLARC review found that the number of relatives eligible to receive benefits has grown substantially since 2019, when the legislature approved a change that added added dependents of veterans whose death or disability due to military service in general — not just combat-related — to those who qualify.
Brown said that until these more recent changes to VMSDEP, the program enrollment was small enough “that it just didn’t represent really anything in the general fund budget, and it wasn’t really on the institutions’ radar from the financial perspective, because it was pretty small.”
As of 2022-23, undergraduate students accounted for about 89% of all VMSDEP participants. Graduate students, though, have been increasing over time as a proportion of students benefiting from the program.
In 2023-24 alone, VMSDEP enrollment in four-year colleges and universities has grown by 32%, JLARC data shows. In two-year colleges, it has increased by 47% during the same period. About half of total VMSDEP enrollment at four-year institutions is at Old Dominion University (20.6%), Virginia Commonwealth University (16.7%) and George Mason University (14.9%).
The data also found that 82% of beneficiaries are biological children of veterans, with 15% of them being spouses and 3% adopted children. Nearly all (96%) receive benefits because of a veteran’s disability — only 1% are related to a veteran who was killed or missing in action or was declared a prisoner of war.
With beneficiaries essentially receiving a free college education, some Virginia universities have raised concerns about the increasing costs of enrolling more students under the program without tuition payments.
“Let’s go back to Fiscal Year 2023, this was the year prior to when you started the process of providing general funds,” Brown told the committee. “In that year, it becomes a pretty large percentage of total revenue, and it’s just revenue that they’re not collecting due the waiver.”
The JLARC review found that several institutions are using various means to compensate for forgone revenue, mostly by raising tuition and fees for other students, reducing or controlling operational spending, tapping into their general funds or institutional revenue. But quantifying the impact of VMSDEP on tuition remains “extremely difficult.”
To offset some of the forgone revenue impact on public colleges and universities, the General Assembly earlier this year appropriated $20 million in general funds for fiscal year 2025 and 2026, with an additional $45 million each year.
The State Council of Higher Education for Virginia (SCHEV), the commonwealth’s coordinating agency for higher education, began allocating new general funds to institutions in August, Brown said.
For example, when CNU reported that the forgone revenue caused by the program was 3.5% of the university’s total revenue, SCHEV filled that shortfall by providing available general funds.
Moving forward, the JLARC study recommends that the General Assembly appropriate “sufficient general funds to cover 100% of institutions’ forgone revenue.”
Alternatively, the program could be maintained at its current general fund level and the legislature could either distribute funds to institutions proportionally according to their percentage of total VMSDEP enrollment or according to institutions’ relative ability to absorb the forgone revenue.
“There will be winners and losers in that, I guarantee it, but that’s another way to do it. And we can help you think through that if you would like,” Brown said.
Lawmakers could also follow a model from Texas and create a new fund with a combination of one-time and ongoing appropriations and apportion funds to institutions. In recent years, the fund in the Lone Star State has covered about 15% of its program cost, leaving the institutions on the hook for the remaining costs.
Brown warned lawmakers that when contemplating changes to the funding of the program, they would be advised to consider that many future participants in VMSDEP have already been certified eligible and several thousand are already certified, but not yet using the benefit.
“Depending on what you do, if you do anything, you’ll need to think about when something is effective,” Brown said. “I also think that there’s some minor changes in here that we’re going to give you as options that you could maybe do a little bit more quickly, bigger changes you might want to give some more lead time. But that’s just critically important for this particular program.”
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