BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 106
                                                                  Page  1

          Date of Hearing:   June 4, 2013

                       ASSEMBLY COMMITTEE ON VETERANS AFFAIRS
                                Al Muratsuchi, Chair
                     SB 106 (Monning) - As Amended:  May 16, 2013

           SENATE VOTE  :   37-0
           
          SUBJECT  :   California Central Coast State Veterans Cemetery at  
          Fort Ord Endowment Fund.

           SUMMARY  :   This bill clarifies that any so-called cash advances  
          to the Fort Ord Endowment Fund (Endowment Fund) are not  
          obligations of the General Fund and requires the Department of  
          Veterans Affairs (Department) to develop and submit a State  
          Veterans Cemetery Grant Program application under certain  
          conditions as specified. Specifically,  this bill  :  

          1)States that the Department may enter into any financial  
            agreement to receive cash advances in the Endowment Fund,  
            provided that the agreement does not require the state to  
            repay or make payments on cash advances and the agreement is  
            reviewed and approved by the Department of Finance.

          2)Mandates that upon the determination of the Controller, after  
            consultation with the Secretary of Veterans Affairs, that the  
            Endowment Fund has adequate principal to yield sufficient  
            investment earnings in each year for the next 10 years,  from  
            the date of the determination, to fully fund the respective  
            year's administrative and oversight costs, net of all other  
            estimated revenue sources, and to fund the estimated costs of  
            developing and submitting the State Veterans Cemetery Grant  
            Program application, the Department shall develop and submit a  
            State Veterans Cemetery Grant Program application to the  
            United States Department of Veterans Affairs for the  
            establishment of a veterans cemetery. 

          3)Directs the Department to consider cash flow needs when  
            providing estimates to the Controller in making this  
            determination. 

          4)Contains an urgency clause, directing that this bill go into  
            effect immediately.  

          5)Declares that the reason for the urgency clause is to meet the  








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            deadline of July 1, 2013, established by the United States  
            Department of Veterans Affairs as a result of federal  
            sequestration, which requires the California Department of  
            Veterans Affairs to submit its application for millions of  
            dollars in federal funds to cover the cost of building the  
            California Central Coast State Veterans Cemetery at Fort Ord.

           EXISTING LAW  :  Creates the Endowment Fund in the State Treasury.  
           Moneys in the Endowment Fund shall be allocated, upon  
          appropriation by the Legislature, to the Department for the  
          annual administrative and oversight costs of the veterans  
          cemetery and to generate funding through interest for the  
          veterans cemetery.  
           
          Directs that Moneys in the Endowment Fund shall first be  
          invested with the goal of achieving capital appreciation to  
          create a balance sufficient to generate ongoing earnings to  
          cover the estimated annual oversight and maintenance costs  
          associated with the veterans cemetery.

          Directs that upon the determination of the Controller that the  
          Endowment Fund balance has attained the goal of generating  
          ongoing earnings to cover the estimated annual oversight and  
          maintenance costs associated with the veterans cemetery, moneys  
          in the Endowment Fund shall be invested to generate earnings to  
          fund annual oversight and maintenance costs associated with the  
          veterans cemetery.

          Specifies that the Endowment Fund may consist of donations from  
          public and private entities, partnerships between public and  
          private entities, fees, cash advances, and transfers from the  
          state General Fund as may be specified by law.

          Authorizes the Department to enter into any financial agreement  
          to receive cash advances in the Endowment Fund, provided that no  
          obligations of repayment are made to the state and the agreement  
          is reviewed and performed in consultation with the Department of  
          Finance.

          Directs that to the extent possible, donations made in-kind to  
          the Endowment Fund shall be monetized so as to offset the  
          ongoing administrative and oversight costs.
           
          Specifies that earnings generated by the Endowment Fund shall be  
          retained by it.








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          Clarifies that moneys deposited in the Endowment Fund are exempt  
          from the requirements of Sections 11270 through 11277 of the  
          Government Code.

          Directs the Treasurer to invest money in the Endowment Fund  
          after consultation with the Department in a manner that best  
          meets the goals of the Endowment Fund.

          Specifies that if, through changes in state or federal law,  
          additional revenues are identified for the administration and  
          oversight of the cemetery, including increases in federal burial  
          allowances, so that the amount of annual revenue exceeds the  
          annual administrative and oversight costs, the excess revenues  
          shall be deposited in the Endowment Fund

           FISCAL EFFECT :  Senate Appropriations Committee determined that  
          there was either no cost to the state or minimal costs, pursuant  
          to Rule 28.8.

           COMMENTS  :   

          In 1991 the federal Base Realignment and Closure Commission  
          (BRAC) recommended that the United States Army post at Ford Ord  
          be inactivated. The fort was closed in 1994. Part of the Base  
          Reuse Plan includes building a veterans' cemetery.

          Traditionally, veterans' cemeteries have been federal  
          responsibilities, but as the last century came to a close the  
          federal government enacted a cost saving measure by offering to  
          build cemeteries but let states pay the maintenance costs in  
          perpetuity as was done with the now completed Redding cemetery,  
          California's first.

          The federal government has proposed the same agreement for the  
          California Central Coast State Veterans Cemetery at Fort Ord,  
          saying the federal veterans' cemetery at Gustine in the Central  
          Valley is close enough and has enough room to relieve Washington  
          of any obligation to build a federal cemetery on the central  
          coast.

          Under the federal Veterans Affairs State Cemetery Grants  
          Program, the federal government will fund up to 100% of the cost  
          of establishing, expanding, or improving state veterans'  
          cemeteries, including the acquisition of initial operating  








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          equipment, if the state agrees to cover the administrative and  
          oversight costs in perpetuity.

          Once completed, the cemetery will serve all veterans, but will  
          be most convenient for the approximately 100,000 veterans and  
          their families living within the 75-mile radius, an area that  
          includes the counties of Monterey, Santa Cruz, San Benito and  
          half of Santa Clara.

          The estimated interment needs of that area's veteran population  
          are 5,600 burial and crypt sites for the initial 10 years. The  
          actual interment sites to be provided in this initial phase will  
          be approximately 2,800 burial and crypt sites.

          The Phase I plan will develop 26 acres of the site. At a  
          minimum, the cemetery will provide approximately 11,500  
          gravesites in its 20-year build-out.

          A federal grant program provides funds to build both initial and  
          follow-on phases, but the State of California is responsible for  
          maintaining the cemetery, using moneys from an endowment fund.  
          AB 3035 (Laird, 2006) established an endowment to cover  
          maintenance costs, prior to applying for grant funding for  
          construction. The Endowment Fund goal is $3.4 million. 

          The strategy has been to raise funds privately and/or sell the  
          Endowment Parcel, land designated by FORA, the City of Seaside  
          and the County of Monterey, to provide the required funding to  
          meet federal obligations.  However, according to the author due  
          to the impact of sequestration, the USDVA has imposed a deadline  
          of July 1, 2013 for the Department to submit its pre-application  
          to the Veterans State Cemetery Grants Program to maintain its  
          position on the priority list for the cemetery grant.  
          Furthermore, the author states that if this deadline is not met,  
          it is likely that California will not secure a position on the  
          priority list for upcoming years.  This is the basis for the  
          urgency clause in the bill.

          The author states that the second section of the bill, "?  
          contains language requested by the [Department of Finance] DOF  
          to clarify the principle amount required to be retained in the  
          Central Coast State Veterans Cemetery Endowment Fund in order to  
          pay for the annual operations and maintenance costs of the  
          Cemetery."   









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           Related Legislation:

           AB 1842 (Monning, Ch. 745, Stats. 2012)
          (1) Authorizes the California Department of Veterans Affairs to  
          enter into a financial agreement to receive cash advances in the  
          existing Endowment Fund previously created to help the proposed  
          California Central Coast State Veterans Cemetery at Fort Ord.  
          (2) Provides such agreements are permissible so long as no  
          obligations of repayment are made to the state, and each  
          agreement is reviewed and performed in consultation with the  
          Department of Finance.  (3) Authorizes CDVA to use money  
          received from the prospective federal grant, which is  
          transferred to the Fund, to reimburse the costs of developing  
          and submitting the grant application, to reimburse any cash  
          advances made to the Fund. Senate 37-0; Assembly 74-0.

          AB 629 (Monning, Ch. 267, Stats. 2011)
          Prior law required CDVA, in voluntary cooperation with the  
          Monterey County Board of Supervisors, the City of Seaside, the  
          Fort Ord Reuse Authority (FORA), and local agencies to design,  
          develop, and construct the California Central Coast Veterans  
          Cemetery at Fort Ord, as specified. The State Contract Act  
          requires projects that are not under the jurisdiction of  
          specified departments to be under the charge and control of the  
          Department of General Services (DGS). This bill authorizes CDVA,  
          rather than DGS, to enter into an agreement with the FORA for  
          the veterans cemetery project to be under the sole charge and  
          direct control of the FORA. 

          AB 1757 (Monning, Ch. 450 Stats. 2010)
          (1) Requires the California Department of Veterans Affairs  
          (CDVA), in voluntary consultation with local governments and  
          stakeholders, to construct the California Central Coast Veterans  
          Cemetery at Ford Ord. (2) Authorizes CDVA to design, develop,  
          and construct the cemetery in phases. (3) Requires the  
          regulations established regarding burial eligibility to apply to  
          all state-operated veterans cemeteries, and limits burial to  
          dependent children of honorably discharged veterans.

          AB 3035 (Laird, Ch. 291 Stats. 2006)
          Creates the California Central Coast State Veterans Cemetery at  
          Fort Ord Endowment Fund in the State Treasury and directs that  
          moneys in the Endowment Fund shall be allocated, upon  
          appropriation, to the Department of Veterans Affairs for annual  
          administrative and oversight costs of the cemetery. 








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          SB 1815 (McPherson, Ch. 771, Stats. 2000)
          Ordered the development of the Central Coast Veterans Cemetery  
          Master Plan and appropriated $140,000 for the creation of a  
          Central Coast Veterans Cemetery Master Development Fund.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          American Legion- Department of California
          AMVETS- Department of California
          California Association of County Veterans Service Officers
          California State Commanders Veterans Council
          Fort Ord Reuse Authority
          Monterey County Board of Supervisors
          Veterans of Foreign Wars - Department of California
          Vietnam Veterans of America- California State Council

           Opposition 
           
          None on file.   

           Analysis Prepared by  :    John Spangler / V. A. / (916) 319-3550