Thursday, November 27th, 2014

Walk-O-Meter

Develop plan to keep Veterans Trust Fund solvent

Will develop plan to keep Veterans Trust Fund solvent. "One of my first jobs as governor will be to develop a long-term plan to ensure the Veterans Trust Fund remains solvent."


Subjects: Veterans

Updates

Cash infusions have kept it afloat, but deficit projections remain

As a candidate for governor in 2010, Scott Walker pledged to quickly find ways to keep the state Veterans Trust Fund, which finances transitional housing, county veterans service offices, veterans cemeteries and other services, financially viable.

With the 2011-13 state budget, Walker's first as governor, $5 million in general fund tax dollars was allocated to the trust fund and another $416,800 was added with a one-time transfer.

The state Department of Veterans Affairs criticized the governor's plan, saying it did not address the Veterans Trust Funds structural deficit and "does not provide additional support to ensure the solvency" of the fund.

Indeed, the nonpartisan Legislative Fiscal Bureau projected the fund would be more than $20 million in the hole by mid-2015.

With his second budget, for 2013-'15, Walker provided the trust fund another $5.3 million in general fund revenue. That budget also allows any surplus revenues from the state's veterans homes to help pay for programs funded by the Veterans Trust Fund.

Laurel Patrick, the governor's secretary, argued that Walker's actions show he has kept his pledge. She cited a Legislative Fiscal Bureau memo that says various steps taken by Walker are aimed at reducing shortfalls in the trust fund. But that memo also says expenditures would exceed revenues such that there would be a shortfall entering the 2015-'17 biennium.

Moreover, Democratic lawmakers have raised concerns about a June 2014 report from the state Department of Veterans Affairs that projects deficits in the trust fund within the next several years.

The report said the fund had a positive balance of $15.9 million in 2013, but that would decline to  $2.55 million in fiscal 2015. From there, growing deficits are projected -- from $8.57 million in fiscal 2016 to $13 million by 2019.

In summary, Walker has given the trust fund some cash infusions and allowed for surplus revenues from the state's veterans homes to help shore up the trust fund. But within a few years, more deficits are projected.

We rate this promise a Compromise.

Sources:

Email interview, Gov. Scott Walker press secretary Laurel Patrick, Sept. 3, 2014

Wisconsin Department of Veterans Affairs, letter to Gov. Scott Walker, March 2011

Wisconsin Department of Veterans Affairs, memo to Joint Finance Committee, June 27, 2014

Wisconsin Legislative Fiscal Bureau, Joint Finance Committee memo, April 30, 2013

Some ideas on the table, but long-term money issues remain

As a candidate for governor in 2010, Scott Walker pledged to quickly find ways to keep the state Veterans Trust Fund, which finances a variety of veterans services, financially viable.

There was reason to take notice.

Wisconsin has some 400,000 veterans. And it wasn't the first time there were worries about the trust fund's future.

While the fund has needed state revenue allocations and state loans at various times over the years, things turned dire in 2004. An official with the Department of Veterans Affairs, which provides the services financed by the fund, declared that "if there are no changes made in how the department does business" the trust fund would disappear within three years.

A 10-year plan to get the agency's finances back on track was put forth that same year, but the fund continued to spend more than it took in. By 2009, the Department of Veterans Affairs projected the trust fund would have enough money to operate only through 2012.

Walker"s promise was: "One of my first jobs as governor will be to develop a long-term plan to ensure the Veterans Trust Fund remains solvent."

That suggests he would quickly identify action steps that, over time, would improve the trust fund"s financial outlook.

Let's turn to the Walk-O-Meter, which tracks 65 Walker campaign promises, to see what the status is on this promise.

History of the fund

According to the Department of Veterans Affairs, the forerunner of what is now the Veterans Trust Fund was created in 1919. It offered World War I veterans a choice of one-time payouts based on their years of service: a cash bonus, or a larger grant to use for education.

In 1942, veterans assistance was expanded to provide medical and economic assistance to World War II veterans. Over the next several years, a rehabilitation trust fund was created and a third trust was established to help veterans buy homes. In 1961, the Veterans Trust Fund was formally created when the three trusts were consolidated.

Currently, the trust fund finances, among other things, grants for education, job training and health care; and operations of the Wisconsin Veterans Museum, a program to aid homeless veterans and a personal loan program. At various times over the years, the fund received money from the state"s general fund, as well as from a surtax on income and a tax on alcoholic beverages.

Walker's first budget

With the 2011-2013 state budget, Walker's first as governor, $5 million in general fund tax dollars was allocated to the trust fund. Walker spokesman Tom Evenson touted the appropriation to us as the largest to the fund since 1972.

The budget also allowed for shoring up the fund by transferring any surplus monies generated by operation of the state"s veterans homes. And Evenson said that Act 10, which requires public employees to pay more for benefits, would save the Department of Veterans Affairs $4 million per year.

Still, the nonpartisan Legislative Fiscal Bureau projected the fund would be more than $20 million in the hole by mid-2015.

Walker"s first budget also directed the Department of Veterans Affairs and the state Board of Veterans Affairs to issue recommendations on the solvency of the trust fund. The list of options, produced in June 2012, were for "providing a viable long-term funding source” -- in other words, a new way to provide a stream of revenue to the fund.

One suggestion was to create a veterans-themed lottery game; another was to tap revenue from the state"s general fund, or from taxes on one or more things, such as professional sports and entertainment, mining, timber, beer or liquor.

Walker"s second budget

With his second budget, Walker provided the trust fund another $5.3 million in general fund revenue to, in the words of his administration, "ensure its continued solvency” through the 2013-2015 budget period.

Walker also asked that all revenue from the state"s veterans homes be automatically deposited with the Veterans Trust Fund, so that it could be used to run not only the homes but to provide trust fund services as well.

That would have improved the revenue side of the trust fund picture, but the proposal was rejected by the Legislature"s Joint Finance Committee. The Department of Veterans Affairs still has the authority to make individual transfers from the homes to the trust fund. Such a transfer during the 2013-2015 budget cycle seems likely.

In the meantime, the fiscal bureau projects that Veterans Trust Fund expenditures will exceed revenue by nearly $6 million in 2013-2014 -- even with the $5.3 million added to the fund"s revenue -- and by more than $11 million in 2014-2015. The bureau has not made any longer-term projection.

Veterans lobbyist Jason Johns, who served as deputy secretary of the Department of Veterans Affairs under Walker, said he is optimistic the governor and other leaders will move toward a dedicated funding source to stabilize the trust fund for the long term.

"We"ve been given assurances that a long-term plan will be developed,” he said.

Our rating

As a candidate, Walker promised: "One of my first jobs as governor will be to develop a long-term plan to ensure the Veterans Trust Fund remains solvent."

But more than halfway into his term as governor -- though Walker has allocated more money to the fund and enabled the Department of Veterans Affairs to tap excess monies generated by the state"s veterans nursing homes -- no long-term stabilization plan is in place.

We rate the status of this promise as Stalled.

Sources:

Gov. Scott Walker, "Budget in Brief,” February 2013

Wisconsin Department of Veterans Affairs, "Background of the Wisconsin Veterans Trust Fund”

Wisconsin Department of Veterans Affairs, "How to donate”

Wisconsin Department of Veterans Affairs, "Veterans Trust Fund solvency options," June 30, 2012

Email interview, Gov. Scott Walker press secretary Tom Evenson, Aug. 14, 2013

Milwaukee Journal Sentinel, "Veterans services fund is in financial trouble,” July 12, 2004

Milwaukee Journal Sentinel, "Freeze on property taxes gains support,” May 12, 2011

Milwaukee Journal Sentinel, "Scott Walker seeks to slow freeway projects, cut Chicago Amtrak funds," April 29, 2013

Interview, Wisconsin American Legion chief administrative officer David Kurtz, Aug. 15, 2013

Interview, Wisconsin Veterans of Foreign Wars legislative chairman and former Department of Veterans Affairs deputy secretary Jason Johns, Aug. 16, 2013

Wisconsin Legislative Fiscal Bureau, Veterans Trust Fund memo, April 30, 2013

Wisconsin Legislative Fiscal Bureau, Veterans Trust Fund memo, May 12, 2011

Wisconsin Legislative Fiscal Bureau, 2013-2015 budget memo

WKOW-TV, "Veterans affairs: Walker budget endangers trust fund,” March 14, 2011

Badger Legionnaire, "American Legion"s top priorities,” March 30, 2011

Interview, Wisconsin Legislative Fiscal Bureau program supervisor Charles Morgan , Aug. 16, 2013