Cold War Veterans Blog

Program that offers financial aid to veterans faces bankruptcy; fund seeks $8 million

By JASON STEIN | Wisconsin State Journal

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MADISON — As Wisconsin soldiers wage war abroad, the state’s top veterans official is calling on taxpayers to prop up the faltering fund that helps care for those veterans on their return.

Punished by a shifting economy and the largest number of returning state soldiers in more than a generation, the Veterans Trust Fund will be bankrupt by as early as 2013 without new state money or serious spending cuts, said John Scocos, the secretary of the state Department of Veterans Affairs who is about to deploy to Iraq himself.
At stake are not only ongoing veterans programs such as loans, health care and education grants that are among the best in nation, but also whether new state programs will be undertaken to help soldiers returning with debilitating wounds to their bodies and minds.

A proposal passed Thursday by the board overseeing the Veterans Affairs Department calls for $8 million in taxpayer dollars for the 2009-11 budget.

That request, which has to be approved by lawmakers and Gov. Jim Doyle next year, would represent a departure for an agency that in recent years has largely funded its own operations and would also mean added strain for the already challenged state budget and taxpayers.

“Let’s not debate this for three years. We’ve got to do it now,” said Scocos, who had sought an even larger sum for the fund. “We’re going to lose a generation of veterans.”

Reckoning delayed

In 2004 and 2005, state officials made cuts to veterans programs to keep the fund out of bankruptcy and buy time until better market conditions arrived. But so far, the fund has only put off its time of reckoning.

The fund now has $62.6 million in assets as of June, less than half of the $126.6 million it had in June 1998. The cash on hand in the fund has also dropped to $23.6 million at the end of June, down 19 percent from $29 million in June 2006.

That’s because the two main sources of new money for the fund — investment earnings and interest on loans it makes to veterans — have both declined sharply in recent years because of changes in the financial markets, said Bill Kloster, a policy adviser with the agency.

In addition, a separate fund that makes home loans to veterans is also struggling and no longer has the cash to be able to help the Veterans Trust Fund, as it has done in the past.

Steve Lawrence, adjutant quartermaster for the Veterans of Foreign Wars Department of Wisconsin, said that, particularly in wartime, taxpayer money should help cover some of the cost of providing state benefits to veterans.

“That cost should be spread over all state taxpayers — not just veterans who are taking out loans,” Lawrence said. “That’s the way most veterans look at it.”

The trust fund makes personal loans to veterans as well as grants to help qualifying veterans with health care, education and emergency needs. The fund also helps veterans apply for federal benefits by covering many of the administrative expenses of the Veterans Affairs Department, which only relies on taxpayer money for 1.7 percent of its current budget, said Anthony Hardie, executive assistant at the agency.

New programs wanted

Scocos said he wants the agency to do even more by starting pilot programs to supplement federal efforts to help veterans returning from wars in Iraq and Afghanistan cope with severe injuries and post-traumatic stress disorder.

Scocos will be deployed to Iraq as a colonel with the U.S. Army Reserves later this month and is expected to be on leave from his state job until November 2009.

There are now 24,059 Wisconsin veterans of the wars in Iraq and Afghanistan, more than double the 10,400 state veterans of the First Gulf War in 1990 and 1991, Hardie said.

Marv Freedman, chairman of the board of the Department of Veterans Affairs, said he also favored searching for outside or federal money for the trust fund and looking for ways to save money on existing programs.

But Freedman said at a minimum taxpayers should take over the $1.6 million annually now paid by the trust fund to run the Wisconsin Veterans Museum.

“Veterans shouldn’t be paying to honor themselves,” Freedman said.

The budget proposed by the board now goes to Gov. Jim Doyle, who will make his own budget proposal in February.

Lee Sensenbrenner, a spokesman for the Democratic governor, said Doyle was committed to veterans but declined to say in advance whether more taxpayer money could be freed up for the fund.

“There’s been this concern of shortfalls before. We’ve always met the challenge,” Sensenbrenner said.

Aides to Senate Majority Leader Russ Decker, D-Weston, and Assembly Speaker Mike Huebsch, R-West Salem, declined comment.

Started in 1943

The trust fund’s history stretches back to 1943 when an earlier fund was set up to help World War II vets. Since then the fund has suffered recurrent bouts of near bankruptcy.

Rick deMoya, a former administrator of the agency’s Division of Veterans Services who in the past has been harshly critical of Scocos, said the trust fund could save money by eliminating the military funeral honors program and other efforts that duplicate federal services.

Kloster said that in recent years Scocos and other state officials helped the fund’s finances by cutting administrative costs and spending on education grants, as well as ending health-care grants to veterans for items the federal government was already covering.

But the yearly interest being paid on the fund’s investments has dropped from more than 6 percent in 2000 to just above 2 percent as of this summer, Hardie said.

Meanwhile, the mortgage refinancing boom allowed veterans to pay off personal loans from the department early by rolling them into their home loans, which took many loans off the agency’s books and dried up the stream of new interest money into the fund, Kloster said.

In the run-up to the current 2007-2009 budget, the Veterans Affairs department sought $14 million in taxpayer money to boost the trust fund, but only received $500,000.

Veterans also received, however, a landmark expansion of the Wisconsin GI Bill to cover 100 percent of the tuition and fees for qualifying veterans at public colleges in the state.

This time, Scocos said he had sought $24 million in taxpayer money for veterans but had the request pared back by the veterans board.