VA’s FY27 budget proposal seeks funding for additional AI adoption
The Trump administration released its proposed FY27 budget on Friday, with the VA and other agencies subsequently releasing more detailed breakdowns of their suggested funding levels.
The agency’s funding proposal is unlikely to be enacted by Congress in its current form, as the legislative branch often reworks or fully overhauls White House proposals to meet lawmakers' policy goals, but the document nonetheless provides a window into VA’s priorities for FY27.
The administration is seeking $144.9 billion in discretionary funding for VA in the next fiscal year, with roughly $6.3 billion of that allocated for the agency’s IT systems.
A small — but noticeably growing — portion of these funds are earmarked for AI adoption and expansion.
The budget proposes allocating $130 million to the Veterans Benefits Administration “for automation and artificial intelligence investments modernizing veterans claims processing by reducing errors and delivering benefits to veterans faster.”
VA’s 2025 AI use case inventory listed 367 instances of the agency’s deployment of or experimentation with the emerging capabilities. Of this total, 28 of the uses were focused on improving government benefits processing for veterans and their beneficiaries.
In an FY27 budget document focused on the agency’s IT programs and electronic health record modernization project, VA also proposes earmarking $47.8 million for its “Decision Intelligence and Automation” activities. The budget breakdown says this funding would be for “shared automation and decision support capabilities, including the infrastructure and controls needed to develop, integrate, and govern artificial intelligence capabilities across the Department.”
VA says the boost in proposed funds for these activities — $4.7 million more than what was enacted in 2026, or an increase of around 10.9% — is needed to support additional uses of the emerging capabilities.
“The increase is driven primarily by the AI Infrastructure solution, enabling VA to pilot and scale AI tools that improve operational efficiency, enhance clinical decision-making, and support personalized care and benefits delivery, while sustaining governance frameworks for safe, effective, and ethical use,” the budget says. “The outcome is a secure, scalable AI ecosystem that strengthens decision-making and workflow execution across mission services.”
The agency also says further uses of AI and automated tools would reduce delays and allow VA staff and clinicians to better support veteran care.
According to the budget document, full-time equivalent employees have saved an average of 2-3 hours “through [the use of] generative AI tools at VA,” although it was not clear what timeframe was used to determine this amount. VA also says that 100% of its high-impact AI use cases are in compliance “with federal risk management practices.”
In a topline budget brief, VA says its FY27 funding levels would help support its research efforts “by providing a mechanism for directly translating new evidence into practice and pilot testing novel tools and solutions to revolutionize care.”
The agency’s overall FY27 budget proposal also allocates $4.2 billion for the continued implementation of its new Oracle Health electronic health record, which is part of a broader federal effort to deploy one common, interoperable system across VA, the Defense Department, the U.S. Coast Guard and the National Oceanic and Atmospheric Administration.
VA paused most deployments of the new EHR software in April 2023 to address a host of usability and patient safety issues at the facilities where the system had been rolled out. The agency, however, is preparing to restart go-lives on April 11, with plans to deploy the EHR system at 13 sites in 2026 and then roughly double that amount in 2027.
While the agency is primarily focused right now on resuming the EHR modernization project, the budget also says that efforts to migrate the system to Oracle Cloud Infrastructure will help it better adopt AI tools in the future.
“The ability of the Federal EHR to take advantage of artificial intelligence and other capabilities from industry hinges on successfully shifting the system to a cloud infrastructure,” the document reads.
VA’s 2025 AI inventory included five instances of the agency’s Office of Electronic Health Record Modernization — which is spearheading deployment of its new system — seeking to adopt these capabilities.
This included one use case where the office was identified as being in the pre-deployment phase of rolling out a clinical AI agent into the new system, noting that “administrative tasks, manual documentation, and complex workflows within the Electronic Health Record (EHR) cause lower clinical efficiency and operational effectiveness.”
According to VA’s AI strategy, an updated version of which was released in October, early validation of the agency’s AI use cases will eventually allow them to be “incorporated into the EHR and many other information technology platforms through coordination between innovators and the teams managing those systems today.”
]]>