Department of Veterans Affairs centralizes payroll operations to cut costs and streamline administration

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VA centralizes payroll operations

Highlights

The Department of Veterans Affairs completed payroll centralization 15 months ahead of schedule, consolidating operations for all 114 VA medical centers by June 1, 2026.
The transition eliminates duplicate payroll systems, is run by about 600 Financial Services Center employees, and achieved reassignment without layoffs, saving taxpayers millions of dollars annually.
Since Jan. 20, 2025, the VA opened 38 new healthcare facilities, held 82,083,918 direct care appointments, reduced the benefits backlog by 74%, and housed 51,936 homeless veterans in fiscal 2025.

Payroll consolidation completed ahead of schedule

As reported by VA News, the agency has finished the shift to a centralized payroll system 15 months earlier than its original late-2027 target. The new structure moves payroll processing for all VA medical centers into the Financial Services Center, which was already handling payroll for the Veterans Benefits Administration and National Cemetery Administration.

VA Secretary Doug Collins says the consolidation removes needless duplication and allows the department to focus more resources on serving veterans, families, caregivers and survivors. Before the change, 114 VA medical centers were still using their own payroll systems even though the Financial Services Center had already been set up to manage that work centrally, a duplication the department says cost taxpayers millions of dollars each year.

Effective June 1, 2026, all Veterans Health Administration facilities are processing payroll through the Financial Services Center. The department says the new system can be run by about 600 employees, and no workers were laid off or removed as part of the transition because employees no longer needed in payroll processing have been reassigned to other duties.

Efficiency push and broader operational impact

The payroll change forms part of a wider effort by the Trump Administration to reduce bureaucracy and improve operations at the department. VA says it has also removed layers of headquarters management, reorganized its police force and introduced manning documents to track job titles across the agency and help identify staffing needs.

The department also points to wider service metrics it says show operational gains since Jan. 20, 2025. These include opening 38 new VA healthcare facilities, completing 82,083,918 direct care appointments in fiscal 2025, reducing the backlog of veterans waiting for benefits by 74%, offering more than 2.8 million appointments outside normal operating hours and permanently housing 51,936 homeless veterans in fiscal 2025.

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