Report 2018-112 Recommendation 10 Responses

Report 2018-112: California Department of Veterans Affairs and Department of General Services: The Departments' Mismanagement of the Veterans Home Properties Has Not Served the Veterans' Best Interests and Has Been Detrimental to the State (Release Date: January 2019)

Recommendation #10 To: Veterans Affairs, Department of

To ensure that the veterans homes receive all of the funding to which they are entitled, by the May 2019 budget revision, CalVet should seek an augmentation to its appropriation for the homes equal to the lease revenues it generated from July 2015 through June 2018. If CalVet believes the state law requiring lease proceeds to augment its appropriation is outdated, it should seek a change to state law.

Annual Follow-Up Agency Response From October 2022

As stated in prior submission from October 8, 2021, no response is needed since the "Will Not Implement" was submitted during the update made on January 30, 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2021

As stated in prior submission from October 23, 2020, no response is needed since the "Will Not Implement" was submitted during the update made on January 30, 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

As mentioned at the Department's six-month update, as part of the 2019-20 budget process, the Legislature passed and Governor Newsom signed a budget trailer bill in which language in the Military and Veterans Code was updated to align with the Department's budget structure. The modifications eliminated outdated language directing certain revenues to augment the Veterans Home's budget appropriation, bringing the code in line with legislatively approved budget practices that have been observed since 2008 and meeting the State Auditor's recommendation.

As for the revenues generated between July 2015 and June 2018, CalVet has not pursued those funds, for two reasons. The first is the Department's interpretation of the language is that the Legislature never intended for CalVet to pursue that revenue as an augmentation since changing the structure of the budget, and that the language simply remained outdated until it was changed last year. The second reason is that, with the exception of fiscal year 2017-18, all other fiscal years have reverted. Pursuing the funds after the fact would not represent any additional revenue for use in the Veterans Home operations or programming for the residents.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

CalVet is correct that the Legislature revised state law to no longer require that proceeds from leases of veterans home property be directed to veterans homes. However, in its response CalVet states that it will not pursue an augmentation to its appropriation for the lease revenues generated before that law change, from July 2015 through June 2018. As we discuss in the report, regardless of whether CalVet believed that the language in state law was outdated, state law in effect during that time required that proceeds from leases of veterans home property augment the appropriation to the homes. In its response, CalVet also states that pursuing these funds would not represent any additional revenue for the homes. However, CalVet advised our office that, even if CalVet could obtain those funds for the home, it would not do so because of its belief that the Legislature did not intend for the homes to receive these funds. Because CalVet has chosen to forego this revenue for the veterans homes, CalVet will not implement this recommendation.

6-Month Agency Response

As part of the 2019-20 budget process, the Legislature passed and Governor Newsom signed a budget trailer bill in which language in the Military and Veterans Code was updated to align with the Department's budget structure. The modifications eliminated outdated language directing certain revenues to augment the Veterans Home's budget appropriation, bringing the code in line with legislatively approved budget practices that have been observed since 2008 and meeting the State Auditor's recommendation.

California State Auditor's Assessment of 6-Month Status: Pending

CalVet has not yet provided documentation to support that it has sought a budget augmentation for the lease revenues it generated from July 2015 through June 2018. As we reported, this amount of $509,000 should have been added to the appropriation to the homes. We continue to recommend that CalVet seek this budget augmentation.

60-Day Agency Response

CalVet is currently reviewing the most appropriate action to address the statutory language.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2018-112

Agency responses received are posted verbatim.