Analysis: Vet homes get money, others lose it

JEFFERSON CITY, Mo. -- Missouri Gov. Jay Nixon visited every veterans nursing home in the state this past week to proclaim the good news: A new law will provide a dedicated funding source for the state-run homes, ensuring that aging and ailing military heroes can receive the care they need for years to come.

Left unsaid was another reality. The veterans are gaining only because others are losing state money.

Missouri officials didn't hit upon a new jackpot for veterans' homes. They merely gave veterans a pot of money that had belonged to early childhood programs, then shuffled the funding for childhood programs and other initiatives on a bet that the Missouri Lottery can cover the gap by generating a record amount of money for the state.

The Lottery has yet to say how it might actually do that.

Here's a look at some of the facts and figures behind the new veterans home law:

Veterans

Missouri's seven nursing homes for military veterans have beds for 1,350 people, with a waiting list of about 1,700. Four out of every five residents are 75 or older and about half served during the World War II era, though the number of Korean and Vietnam veterans in the homes has been rising.

Veterans pay $1,800 a month to stay in the homes, typically tapping the benefits they get from the U.S. Department of Veterans Affairs. But the residents' payments cover only about one-fourth of the costs. Veterans homes also get money from the federal and state governments. During the past decade, state lawmakers repeatedly tapped into the main trust fund for the Missouri Veterans Commission to help operate the homes. As a result, the fund balance fell from a high of about $80 million in 1999 to about $17 million today.

Veterans Commission Executive Director Larry Kay warned that the trust fund could be depleted by July 2013 unless officials came up with a steady source of money. Thus the governor and lawmakers made it a priority to find funding for the homes.

Casinos

The new law enacted by Nixon relies on casino fees to finance veterans' homes.

Casinos already pay a $2 fee for every two hours that a patron spends at their facilities. Half of that money goes to local governments and the other half to the state. Until recently, veterans homes received $6.6 million annually from those casino fees, but the bulk of the money -- more than $30 million -- was earmarked by state statutes to early childhood programs.

The new law gives veterans' programs the casino fees that used to go to early childhood programs and instead says the early childhood fund will get $35 million annually from Missouri's share of a nationwide settlement with tobacco companies. The Senate Appropriations Committee has estimated that the veterans fund now could get more than $36 million annually from casino fees, though the exact amount will depend on the number of gamblers.

Children

Although the new law provided a new source of money for the state's Early Childhood Development, Education and Care Fund, it did not mandate that it be spent on specific programs. As a result, some early childhood programs got cut in the budget that takes effect July 1.

State funding was eliminated in the Department of Social Services for initiatives that provided grants to child care centers and Early Head Start programs.

Lawmakers used the money saved in those cuts to supplant general revenues in other programs. For example, public schools will get $145 million for their early childhood special education programs next academic year -- the same amount as this year. But that total now will include about $14 million from the early childhood fund that had previously gone elsewhere.

Lottery

The Missouri Lottery is the linchpin of the complicated funding transfers stemming from the new veterans' home law. Although not explicitly stated in either the budget or the veterans home legislation, Missouri officials are counting on the Lottery to generate about $35 million more than originally expected. The plan is to plug that extra lottery money into education, thus freeing up general revenues to go to programs that had received tobacco funds before they were diverted to early childhood initiatives, which lost their dedicated casino fees to the veterans homes.

Can the Lottery actually generate an extra $35 million?

"It's going to be a challenge," acknowledged Nixon's budget director, Linda Luebbering.

Added Senate President Pro Tem Rob Mayer: "I believe there is a bit of a risk."

If the lottery money never materializes? The state would have to find $35 million in cuts, which could come from almost anywhere.

A recent report by consultant Brian Schmidt, a former director of the Legislature's Joint Committee on Tax Policy, declared: "Funding Bill for Veterans' Homes Threatens to Widen Hole in State Budget."

Yet heading into an election, Missouri officials readily swapped the financial stability of other programs for the financial security of the state's veterans' home.

"Veterans are sort of a constituency group that's easy to identify that enjoys support across the board," said Peverill Squire, a political scientist at the University of Missouri-Columbia. So Missouri officials "just sort of engaged in some wishful thinking in terms of concocting a scheme to direct some money toward a group that nobody wants to be seen as opposing."