BILL ANALYSIS Ó SB 543 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 543 (Wolk) - As Amended August 1, 2016 ----------------------------------------------------------------- |Policy |Veterans Affairs |Vote:|8 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill consolidates the individual Veterans' Morale, Welfare and Recreation (MWR) Funds at each veterans home into one statewide fund that will be administered by the Department of Veterans' Affairs (CalVet), but allows each home to establish a separate account for purposes of receiving donations. SB 543 also requires CalVet to: SB 543 Page 2 1)Adopt regulations related to, among other things, administer the Funds and the process by which veterans homes submit and receive budget allocations. 2)Determine annually the total amount for disbursement from the Fund. 3)Report annually to specified entities regarding moneys deposited into the MWR Fund and expenditure of those funds. FISCAL EFFECT: 1)Redirection of approximately $11 million from the veterans homes to the newly created, and continuously-appropriated, MWR Fund (Special Fund). 2)First-year costs of approximately $113,000 for implementation and $107,000 on going, which include one position. COMMENTS: 1)Background: Existing law authorizes the creation of a Veterans' Morale, Welfare and Recreations Fund (MWR) at each of the eight veterans home. The MWR Fund was established in SB 543 Page 3 1999 by SB 281 (Chesbro), when there were only two homes. The Legislature intended to provide veteran home administrators with an additional funding tool to provide for the general welfare of residents beyond their medical and housing needs. Revenue to the MWR Fund is derived from many sources, including proceeds from the California Veterans Homes Fund, operations of a canteen, revenue derived from the issuance of prisoner-of-war special license plates, monies collected from golf course green fees and range ball fees, donations, interest earned on invested funds, and funds derived from the estates of deceased members. Current law also provides that certain portions of the estates of deceased veteran residents may be recovered by the department for obligations for costs of a veteran's care that are in excess of the reimbursements received by the U. S. Department of Veterans Affairs. These recovered funds are not currently returned to the state General Fund, but are instead deposited into the MWR account at the home where the veteran resided at death. Existing law also specifies how funds may be used. Home administrators, at the direction of the Secretary of the Department of Veteran Affairs (CalVet), have discretion over how monies within the fund are spent. However, home administrators have historically been granted sole authority over decision making regarding the use of the fund. 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 SB 543 Page 4 Yountville Veterans Home administrator executed two contracts using MWR funds without consulting CalVet executive office officials, appropriate legal counsel, or residents of the Home. Also, over time, there has been a great disparity in MWR Fund balances between the homes, with Redding and West Los Angeles having less than $100,000, and Yountville with over $6 million. 2)Purpose. SB 543 creates a single system-wide MWR Fund that consolidates existing and future MWR moneys generated by each of the eight veterans home campuses, and establishes procedures for and restrictions on the budgeting and spending of moneys in the Fund. Analysis Prepared by:Pedro R. Reyes / APPR. / (916) 319-2081 SB 543 Page 5