BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 543|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   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  








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             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  







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             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.







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          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  







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            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.)








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          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


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