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Gov. Scott Walker and the Department of Veterans Affairs are at odds over how to correct the predicted bankruptcy of the state’s Veterans Trust Fund. The fund, the primary source of state funding for veterans programs in Wisconsin, is expected to go broke in 2013. Walker wants to grab savings from lower benefit costs for workers at the state’s two veterans nursing homes to prop up the Trust Fund and has proposed privatizing one home. Veterans Affairs officials object to both plans.

The budget repair bill, signed by Walker last week, paves the way for the state to realize large savings in state employee benefits by increasing employee contributions to pension and health insurance coverage. Walker spokesman Cullen Werwie said on Tuesday this will save the veterans homes about $13 million in the 2011-13 biennium, a portion of which could be used to keep the Trust Fund afloat. Walker’s 2011-13 budget calls for a change in state law that would allow the department to make such a transfer of funds.

The Trust Fund – founded in 1961 and periodically replenished with injections of state funding – hasn’t received such an infusion since 1988, according to a department report. The department requested about $2.9 million in additional funding to sustain the fund through the 2011-13 biennium, saying that was the “bare minimum,” but Walker denied the request.

The fund pays for an array of programs providing loans, health care grants and job training to veterans. It also provides funding for the state’s Military Honors Funeral Program, the Wisconsin Veterans Museum and the state’s three veterans cemeteries.

In a letter veterans Secretary Ken Black wrote to Walker earlier this week, he says that at a time “of unprecedented need in the veterans community, the budget proposal does not fix the structural deficit in the Veterans Trust Fund.”

The fund balance has wavered between about $20 million and $30 million going back to fiscal year 2004, but the fund is projected to contain just $13 million by the end of fiscal year 2011 (June 30).

Overall, the veterans department’s spending would take an 11 percent cut under Walker’s budget, down from $307 million in 2009-2011 to about $273 million in 2011-13. Spending on veterans homes and cemeteries would both increase, by five percent and 16 percent, respectively, and the budget would provide new funding for the Wisconsin Veterans Museum. Loans to veterans and other aid programs, however, would be cut 17 percent, according to the budget’s executive summary.

“This budget endangers the existence of essential veterans programs in this biennium and in future years,” says Black, who was appointed by the state Board of Veterans Affairs in 2009 after it fired John Scocos.

Homes funding

In the letter to Walker, the secretary says diverting savings on employee benefits at the veterans homes could “lead to a structural deficit” in the fund supporting the veterans homes.

ken black

Black notes the state’s system of veterans homes will take on new costs in the upcoming biennium: It’s preparing to convert the home in Union Grove to a skilled nursing facility and planning to build a new home in Chippewa Falls. Werwie says most of the funding for the new home will come from federal funds – the rest, 35 percent of construction costs, will come from state bonds, he says.

Walker’s budget calls for contracting with a private health care provider to staff the new home. Black says the department “is actively investigating whether outside contracting will have a negative effect on the costs of care, the liability exposure of the state and, most importantly, the high quality of care.”

Werwie cited six other states – Maryland, South Carolina, North Carolina, Utah, Texas and Georgia – where states have contracted out for veterans home staff. Such contracting, he said, “with proper oversight, can be more efficient than a state-operated enterprise.”

Meanwhile, the budget would also expand the Wisconsin GI bill, which provides tuition waivers for veterans, from two years of college to four. “There is no greater benefit to our veterans struggling to find employment than the restoration of the Wisconsin GI Bill,” Werwie said.

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