Male and female military cadets take test or take notes during a class at a military academy. (Photo courtesy of CalMatters)

The U.S. Department of Veteran Affairs has canceled its contract with a California state agency that approves colleges to receive GI Bill funds, after a lengthy dispute over how to regulate for-profit and out-of-state schools.

The VA said Sept. 6 it will take over responsibility for deciding which California schools qualify to receive military education benefits, a role it has traditionally delegated to states.

But state officials insist that state law authorizes them to carry out those responsibilities and say they will continue to do so — setting the stage for another potential showdown between California and the Trump administration.

The dispute comes after the VA pushed the California State Approving Agency for Veterans Education to approve the payment of GI Bill benefits to Ashford University, an online for-profit college. California Attorney General Xavier Becerra is suing Ashford, alleging the school lied to prospective students about financial aid and job outcomes, and engaged in illegal debt collection practices. State regulators said they would not act on the university’s application while the lawsuit is pending.

In a letter to the state agency, the VA said its performance had “significantly declined to an unacceptable level” over the past three years. It said the agency had failed to complete required surveys of schools and approve educational programs on military bases.

The letter also cited the agency’s decision not to approve Ashford.

The state agency’s “continued refusal to adhere to the requirements of the cooperative agreement has negatively impacted the ability of veterans and qualifying dependents to maximize their utilization of VA educational assistance benefits,” wrote Charmain Bogue, executive director of the VA’s education service.

Within California, the agency oversees the quality of 1,600 colleges and training facilities that serve military veterans — inspecting the schools and verifying information about their financial stability, job placements and accreditation. It is under the California Department of Veterans Affairs, known as CalVet.

“CalVet takes very seriously our responsibility to protect taxpayers and veterans from waste, fraud and abuse while ensuring veterans in California receive the education and training they are paying for with their earned GI Bill benefits,” said department spokeswoman Lindsey Sin. She added that the federal VA “has taken exception with many of our actions over the years and continues to disagree with our efforts to protect veterans’ educational benefits in California.”

Sin called the letter “riddled with inaccuracies.”

The VA’s letter left open the possibility that it would sign a new contract with the California agency if the agency worked to “resolve all outstanding issues.”

In the meantime, VA spokeswoman Christina Mandreucci said the department will work closely with the state agency to ensure California veterans can use their education benefits at approved schools. The decision will take effect Oct. 1, she said.

* This story and other higher education coverage are supported by the College Futures Foundation. is a nonprofit, nonpartisan media venture explaining California policies and politics.