BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 543|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 543
Author: Wolk (D)
Amended: 8/1/16
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
SENATE FLOOR: 34-4, 6/1/15
AYES: Allen, Beall, Berryhill, Block, Cannella, De León,
Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg,
Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire,
Mendoza, Mitchell, Monning, Moorlach, Nguyen, Nielsen, Pan,
Pavley, Roth, Stone, Wieckowski, Wolk
NOES: Anderson, Fuller, Morrell, Vidak
NO VOTE RECORDED: Bates, Runner
ASSEMBLY FLOOR: 54-23, 8/18/16 - See last page for vote
SUBJECT: Veterans: Veterans Home of California
SOURCE: Author
DIGEST: This bill creates a centralized, state-level Morale,
Welfare, and Recreation Fund (MWR Fund) for the Veterans Home of
California (VHC) system of state veterans homes. This bill
consolidates within this MWR Fund all existing and future MWR
moneys generated by individual homes, and establishes procedures
for and places restrictions on the budgeting and expenditure of
moneys in the MWR Fund.
SB 543
Page 2
Assembly Amendments modify the guidance to the Department of
Veterans Affairs (CalVet) in how it distributes moneys from the
MWR Fund to the eight home campuses; require each home campus
administrator to maintain a local Morale, Welfare, and
Recreation Operating Fund (MWRO) to receive distributions from
the state MWR Fund; require each home campus to establish an MWR
Advisory Committee to provide ongoing guidance for MWR Fund
processes; and further clarify what constitutes appropriate use
of MWR moneys.
ANALYSIS:
Existing law:
1) Provides for establishment of the VHC system, administered
by CalVet, at various sites for aged and/or disabled veterans
and their nonveteran spouses, who meet certain eligibility
requirements.
2) Provides for eight home campuses within the system: Barstow,
Chula Vista, Fresno, Lancaster, Redding, Ventura, West Los
Angeles, and Yountville.
3) Requires that the administrator of each local home 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 residents.
This bill:
1) Creates a centralized MWR Fund as a continuously
appropriated fund within the State Treasury.
2) Requires the administrator of each local home to deposit all
moneys maintained in an existing local MWR account into the
centralized MWR Fund.
3) Requires the administrator of each local home to establish
an MWRO Fund to administer quality of life activities for the
SB 543
Page 3
general welfare of the residents and receive funds from the
centralized MWR Fund, as specified, and to establish an MWR
Advisory Committee, as specified.
4) Requires CalVet, in consultation with the MWR Advisory
Committee, the Veterans' Home Allied Council or resident
council of each local home campus, to adopt regulations
related to, among other things, administering the centralized
MWR Fund and local MWRO Funds, and the process by which the
campuses submit budget requests and receive allocations.
5) Authorizes the use of MWR funds to provide for the general
welfare of the residents, as specified, and specifies
restrictions on the use of those funds.
6) Requires CalVet to annually determine the total amount for
disbursement from the MWR Fund, and for that disbursement to
be allocated proportionally to each campus' relative share of
the total population of the entire VHC system.
7) Authorizes additional allocations to any campus if it is
appropriate on the basis of factors including, but not
limited to, the campus' unique age, size, population, and
historical significance.
8) Authorizes the administrator of a home to enter into an
agreement with a local allied council to operate facilities
and activities that are related to authorized expenditures
from the MWR Fund, as specified.
9) Requires CalVet to prepare annual reports regarding moneys
deposited into the MWR Fund and expenditure of those funds,
as specified, and to submit the report on or before December
31 of each year to specified entities.
10)Requires CalVet to maintain a $3 million reserve in the MWR
Fund.
11)Authorizes CalVet to invest MWR Fund moneys in the Surplus
Money Investment Fund - or to contract with a third-party
investment broker consistent with laws and regulations
regarding selecting prudent, approved investment types.
SB 543
Page 4
Background
Morale, Welfare and Recreation Funds. Under existing law, MWR
funds may be used for, but not be limited to, the following
purposes:
1)Operating the local 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.
2)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.
Existing law prohibits MWR funds from being used for: medical or
any related treatment; maintenance of the home's physical plant;
or any function, operation, or activity not directly related to
the morale, welfare, or recreation of the veterans.
Existing law 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 (VA).
Existing law requires that residents, upon admission to the home
and monthly thereafter, be informed about these provisions to
recover unreimbursed costs of care.
Existing law provides that the recovered funds are not returned
to the State General Fund, but, instead, are deposited into the
MWR Fund account for the local home at which the veteran resided
at death.
The existing local MWR funds obtain funding from several
sources, including:
1)The estates of deceased residents, who die without heirs or
owing money to the home for the cost of their care.
SB 543
Page 5
2)Revenues from the issuance of prisoner-of-war license plates.
3)Other donations.
4)Interest earned from investments made with MWR Fund moneys.
5)Revenues from businesses operated using the MWR Fund.
Over time, a wide disparity in MWR fund balances has developed
among the campuses. Per the 2016-17 MWR budgets, the balances
were:
Barstow $1,951,956
Chula Vista 2,289,524
Fresno 107,294
Lancaster 161,689
Redding 90,910
West LA 69,450
Ventura 112,992
Yountville 6,290,926
Total $11,074,741
Recent Controversy and Audit. In October 2013 the California
State Auditor released an investigative report, which revealed
that over a two-year period from January 2010 to December 2011,
the Yountville Veterans Home administrator entered into and
executed two contracts using MWR funds without consulting CalVet
executive office officials, appropriate legal counsel, or
residents of the home.
The highly publicized report highlighted controversial
deficiencies in the contract process, including that the funds
were used for inappropriate purposes. Although the administrator
is authorized to use MWR funds with the approval of the CalVet
Secretary, home administrators historically have been granted
sole authority over decision making regarding the use of fund
moneys. Furthermore, each contract was executed with little or
no legal oversight, which presumably would have discovered that
both contracts violated state law and required review by the
Department of General Services. Finally, residents of the
Yountville home were unaware of the two contracts being executed
involving their local MWR funds.
Comments
SB 543
Page 6
SB 543 is not a perfect compromise that pleases all concerns of
all parties. A fair description is that the measure represents
the author's effort to harmonize competing perspectives and
strike a balance between ensuring proper oversight and
accountability of these funds, on one hand, and preserving
significant local decision making authority regarding their
expenditure, on the other.
During 2015-16, CalVet and the author sponsored several video
conference calls to discuss the evolution of this bill. The
calls included representatives from the allied/resident councils
of all eight home campuses, the Governor's office, and staff
from the Senate and Assembly veterans affairs committees. In
addition, CalVet staff visited homes on-site to discuss the bill
with local residents.
Prior/Related Legislation
AB 1580 (Yamada, 2014) would have instituted review measures and
controls on the expenditure of local MWR funds for proposed
expenditures of moneys of more than $5,000; and for proposed
contracts of more than $25,000 per year or more than $100,000
total. (Died, inactive file, Senate Third Reading.)
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee:
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.
SUPPORT: (Verified8/19/16)
Allied Council, Yountville Veterans Home
SB 543
Page 7
OPPOSITION: (Verified8/19/16)
None received
ASSEMBLY FLOOR: 54-23, 8/18/16
AYES: Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla,
Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez,
Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gipson, Gomez,
Gonzalez, Gordon, Gray, Holden, Irwin, Jones-Sawyer, Kim,
Lackey, Levine, Lopez, Low, McCarty, Medina, Mullin,
O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon
NOES: Travis Allen, Baker, Bigelow, Brough, Dahle, Beth Gaines,
Gallagher, Gatto, Grove, Hadley, Harper, Jones, Maienschein,
Mathis, Mayes, Melendez, Nazarian, Obernolte, Patterson,
Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Roger Hernández, Linder, Olsen
Prepared by:Wade Cooper Teasdale / V.A. / (916) 651-1503
8/19/16 19:54:05
**** END ****