BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 106
                                                                  Page  1

          Date of Hearing:   June 10, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    SB 106 (Monning) - As Amended:  May 16, 2013 

          Policy Committee:                             Veterans  
          AffairsVote: 10-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          As proposed to be amended, this bill:

          1)Makes minor clarifications to current law authorizing the  
            California Department of Veterans Affairs (CalVet) to enter  
            into financial agreements to receive cash advances to the  
            California Central Coast State Veterans Cemetery at Fort Ord  
            Endowment Fund (fund) for the purpose of funding initial  
            planning and design and submitting a grant proposal to the  
            U.S. Department of Veterans Affairs (USDVA). 

          2)Makes minor clarifications to the fund regarding the  
            maintenance and operation of the cemetery, specifically, that  
            the Endowment Fund is adequate to cover each year's costs for  
            the next 10 years, rather than for the 10-year period in  
            total.  

          3)Specifies that funds contributed to the Endowment Fund shall  
            be returned to the donor if the cemetery is not funded by the  
            USDVA. 

           FISCAL EFFECT  

          No direct state cost. The endowment fund is currently authorized  
          to accept a funding advance or loan to help the state complete  
          its initial planning and application required by the federal  
          government (at a cost of about $2 million) for a grant that  
          would cover plans and full construction (an estimated $26  
          million). There are virtually no funds in the endowment fund,  
          however, though potential donations of about $200,000 are in the  
          offing, pending the state's application to the USDVA.    








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          Current law explicitly states there is no liability on the part  
          of the state for an advance or a loan, should the federal grant  
          fail to materialize. This bill makes that intention extra  
          explicit.

          (The state's future fiscal exposure for a veterans' cemetery is  
          limited to maintenance and operational costs, which would likely  
          be in the range of $500,000 annually, more than half of which  
          would likely be covered by burial fees, with the balance covered  
          by the GF and endowment fund contributions.) 

          While this bill seeks to safeguard the GF, at the time this  
          analysis was prepared, the Senate version of the 2013-14 budget  
          bill contained $2.5 million (GF) for preliminary planning for  
          the cemetery. The budget proposal requires this amount to be  
          repaid within two years, presumably if and when USDVA funds are  
          approved. It is not clear, however, whether the state would be  
          repaid in full, as federal reimbursement procedures cover up to  
          100% of the loan, and may not cover all expenditures.  

          The budget augmentation and the existing authorization to accept  
          an advance or loan to complete the federal application and begin  
          preliminary plans are parallel components of a two-prong plan to  
          commence cemetery construction. The advance/loan plan is fading,  
          as no funding is forthcoming in the shape of a loan or advance.   
          GF budget augmentation is now the goal. In either case, the  
          state's application to the USDVA must be submitted by July 1. 

           COMMENTS
           
           1)Rationale  . AB 1842 (Monning), Statutes of 2012, authorized  
            CDVA to enter into financial agreements to receive cash  
            advances to the California Central Coast State Veterans  
            Cemetery at Fort Ord Endowment Fund to fund initial planning  
            and design and to submit a grant proposal to the USDVA. Any  
            such agreement requires Department of Finance review, with no  
            state repayment exposure. 

            According to the author, this bill responds to a request from  
            the Governor's Office for minor clarifying amendments to make  
            it abundantly clear the state is not required to make any  
            payment on the authorized cash advances or loans. This bill  
            also clarifies the requirement that the Endowment Fund have  
            sufficient income for each of the next 10 years, and adds "net  








                                                                  SB 106
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            of all other revenue sources" to the requirement.

           2)Background  . In 1991, Fort Ord was announced for closure by the  
            United States Base Realignment and Closure Commission. Prior  
            to closure, FORA set aside 204 acres for a veterans' cemetery.  
            Legislation enacted in 2006 created an endowment fund to  
            support cemetery planning and design. When the endowment is  
            sufficiently funded to design and plan the cemetery, CDVA can  
            apply to the USDVA for a cemetery grant, which will cover the  
            costs of construction and any planning and design work.

           3)Author's amendments  specify that funds contributed to the  
            Endowment Fund shall be returned to the donor if the cemetery  
            is not funded by the USDVA. 

           4)Prior Legislation  . 

             a)   AB 629 (Monning), Statutes of 2011, authorizes CalVet   
               to contract with the Fort Ord Reuse Authority (FORA),  
               rather than the Department of General Services (DGS), for  
               design and construction of a state-owned and operated  
               veterans' cemetery at Fort Ord.

             b)   AB 1757 (Monning), Statutes of 2010, requires CalVet to  
               design and construct a state-owned and operated veterans  
               cemetery at Ford Ord. The design and construction of the  
               cemetery may not move forward until a determination was  
               made that 100% of the funds necessary for planning and  
               design were raised.

             c)    AB 3035 (Laird), Statutes of  2006, established the  
               California Central Coast State Veterans Cemetery at Fort  
               Ord Endowment Fund for the receipt of donations of personal  
               property, including cash or other gifts, to be used for  
               maintenance of the cemetery.  

                Analysis Prepared by  :    Geoff Long / APPR. / (916)  
               319-2081