BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 543| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 543 Author: Wolk (D) Amended: 5/5/15 Vote: 21 SENATE VETERANS AFFAIRS COMMITTEE: 5-0, 4/28/15 AYES: Nielsen, Hueso, Allen, Nguyen, Roth SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/28/15 AYES: Lara, Beall, Hill, Leyva, Mendoza, Nielsen NO VOTE RECORDED: Bates SUBJECT: Veterans: Veterans' Home of California SOURCE: Author DIGEST: With regard to the Veterans Home of California system, this bill creates a single system-wide Morale, Welfare, and Recreation Fund (MWR Fund) that consolidates existing and future MWR moneys generated by individual veterans home campuses, and establishes procedures for and restrictions on the budgeting and spending of moneys in the Fund. ANALYSIS: Existing law: 1) Establishes the Veterans Home of California within the SB 543 Page 2 Department of Veterans Affairs (CalVet), and provides for its operation at various campuses in order to provide housing for aged and disabled veterans and their nonveteran spouses, who meet eligibility requirements. 2) Requires that the administrator of each home campus maintain an MWR Fund that shall be used - at the discretion of the administrator and subject to the approval of the secretary - to provide for the general welfare of the resident veterans. 3) Provides that CalVet may recover, from the estates of deceased veteran residents, certain portions of obligations owed to CalVet, including costs of the veteran's care in excess of federal reimbursement. Provides that those recovered funds be deposited into the MWR Fund of the deceased veteran's last home of residence. 4) Specifies authorizations and restrictions on how MWR Fund moneys may be expended. This bill: 1) Requires the administrator of each veterans' home to deposit the balance of funds (as of January 1, 2015) in each homes' existing local MWR Fund into the newly created statewide consolidated MWR Fund. 2) Provides that all future moneys collected as a result of unreimbursed costs of care determinations are state funds and shall be deposited into the consolidated MWR Fund. 3) Requires CalVet to adopt regulations, in consultation with the resident council at each home, which will govern the process by which a home may make an annual request for a disbursement as well as the process for CalVet to review the request. 4) Requires CalVet to annually determine the total amount for disbursement from the consolidated MWR Fund to the home proportionally by each home's relative share of the total population of the entire veterans home system; but states that any moneys derived from golf course green fees, range ball fees, and operations of activities specifically at the Veterans' Home at Yountville will be credited to the MWR Fund SB 543 Page 3 allocation for that home. 5) Authorizes CalVet to allocate an additional one-time allocation of up to five percent of the home's annual disbursement for a special project if the home's administrator shows good cause for the allocation. 6) Authorizes CalVet to increase the allocation from the consolidated MWR to the Veterans' Home at Yountville, as specified. 7) Allows the California Veterans' Board to review any special allocation as specified. 8) Authorizes monies in the consolidated MWR Fund to be used to operate a canteen, hobby shop, theater, library, bank, newspapers, chapel expenses, entertainment expenses, sports activities, celebrations, or any other function or activity that is related to the morale, welfare and recreation of the residents that would not otherwise be paid for from the General Fund. 9) Prohibits the use of MWR funds for medical treatments, maintenance of the home, or any function, operation, or activity that is not directly related to the morale, welfare, or recreation of the residents of the home. 10)Provides that appropriations from the General Fund may not be decreased due to CalVet's special disbursement of MWR funds to the Yountville Home. 11)Requires CalVet to report annually on deposits to, and expenditures from, the consolidated MWR Fund. 12)Requires CalVet to maintain a reserve in the consolidated MWR Fund of $2 million. 13)Authorizes CalVet to transfer funds to the Surplus Money Investment Fund as specified. 14)Authorizes a home administrator to enter into an agreement with the Veterans' Home Allied Council that authorizes the council to operate facilities and engage in activities for the general welfare of the residents of the home. SB 543 Page 4 Background CalVet's Veterans Homes Division provides rehabilitative, residential medical care and services in a homelike environment for all veterans (and eligible veteran spouses) residing in the State's eight veterans homes, which are located in Barstow, Chula Vista, Fresno, Lancaster. Redding, Ventura, West Los Angeles, Redding, and Yountville. As of early 2015, nearly 2,000 members resided in these veterans homes. Morale, Welfare and Recreation Funds Existing law: 1)Authorizes MWR funds to be used for, but not be limited to, the following: a) Operating the Veterans' Home Exchange store, hobby shop, motion picture theater, library, and band, and any other function that is operated for the morale, welfare, and recreation of the veterans; b) Paying for newspapers, chapel expenses, welfare and entertainment expenses, sport activities, celebrations, and any other activity that is for the morale, welfare, and recreation of the veterans. 2)Prohibits MWR funds from being used for: (1) medical or any related treatment; (2) maintenance of the home's physical plant; or (3) any function, operation, or activity not directly related to the morale, welfare, or recreation of the veterans. 3)Provides that certain portions of the estates of deceased veteran residents may be recovered by CalVet for obligations owed to CalVet, including costs of a veterans care in excess of the reimbursement for that care made by the United States Department of Veterans Affairs (USDVA). 4)Requires that residents, upon admission to the home and monthly thereafter, be informed about these provisions to SB 543 Page 5 recover unreimbursed costs of care. 5)Provides that the recovered funds are not returned to the State General Fund, but, instead, are deposited into the MWR fund account for the campus at which the veteran resided at the time of death. The existing local MWR funds obtain funding from several sources, including: " The estates of deceased residents, who die without heirs or owing money to the home for the cost of their care; " Donations from taxpayers when filing their state tax returns; " Revenues from the issuance of prisoner-of-war license plates; " Other donations; " Interest earned from investments made with MWR Fund moneys; and " Revenues from businesses operated using the MWR Fund. Although Military and Veterans Code Section 1047 allows a home administrator to spend MWR moneys for the benefit of the residents of the home, other state laws impose requirements on the manner in which this is done, particularly when it entails leasing state-owned land. In October 2013 the California State Auditor released an investigative report (i2011-0837) entitled, Wastefulness, Failure to Comply With State Contracting Requirements, and Inexcusable Neglect of Duty. The report revealed that over a two-year period from January 2010 to December 2011, the Yountville Veterans Home administrator executed two contracts using MWR funds without consulting CalVet executive office officials, appropriate legal counsel, or residents of the Home. Related/Prior Legislation AB 1580 (Yamada, 2014) would have created a consolidated statewide MWR Fund and instituted review measures and controls on the expenditure of MWR funds. (Inactive File, Senate Third Reading.) SB 543 Page 6 AB 1739 (Allen, Chapter 95, Statutes of 2012) allows the administrator of a state veterans' home to enter into an agreement with the home's allied council to authorize the council to operate MWR Fund activities such as a hobby shop, movie theater, library, band, and to pay for such things as newspapers, entertainment, sports activities, celebrations and other activities for the benefit of the veterans. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, the fiscal impact is: " Redirection of approximately $11.5 million from individual accounts to the newly created state fund (Special Fund) " First year costs of approximately $418,000, and ongoing of $396,000 annually to the Department of Veterans Affairs (General Fund) The Department of Veterans' Affairs estimates the need for four positions: 3 AGPA's and 1 Business Services Assistant, to promulgate rules and regulations, administer the new fund, and comply with the reporting requirements. SUPPORT: (Verified5/27/15) None received OPPOSITION: (Verified5/27/15) None received Prepared by:Wade Cooper Teasdale / V.A. / (916) 651-1503 5/31/15 12:16:29 **** END **** SB 543 Page 7