Network of state veterans homes in peril

KANSAS CITY, Mo. -- In a Mount Vernon ceremony last month, Missouri opened the last of its seven nursing homes for elderly war veterans -- more than in any other state except Oklahoma.

"This home is payment on the unpayable debt owed to Missouri's watch keepers," declared Anthony Principi, secretary of the Department of Veterans Affairs, who came from Washington for the event.

What was not said was that Missouri is having trouble paying for its expanded $50 million system, in part because legislators siphoned tens of millions of dollars from a trust fund set up to build and maintain the new facilities. The fund is fueled by casino admission fees.

The Veterans Commission Capital Improvement Trust Fund is projected to go broke next year, and if new revenue sources aren't tapped, the state could be forced to leave more and more beds empty in some new or refurbished facilities.

"We weren't looking to the future as far as I am concerned," said Emmett Fairfax, chairman of the Missouri Veterans Commission, which is responsible for the more than 1,000 residents of state homes.

The fund held more than $81 million just four years ago, before the state began raiding the trust fund for veterans' memorials, including $15 million to refurbish Liberty Memorial in Kansas City.

About $3 million of the money also went to cast medallions for veterans statewide, including many residents of the state homes, who now face their third cost increase in as many years to stay in the facilities.

"The legislature saw a lot of money. They took the money; they took too much money, and they took it for too long," said Sam McVay, former executive director of the commission. Now his successor, Ron Taylor, must deal with the shortfall.

Meanwhile, the federal Department of Veterans Affairs, which has been trying to shift more of the burden of nursing care to the states, will provide nearly a half-million dollars less in funding than was projected for the coming year.

But the state's general revenue has not been enough to meaningfully raise pay for nursing help. This has contributed to such high turnover rates that some homes are short of staff.

A Civil War legacy

The little-known state veterans home system, which predates the federal veterans affairs agency by 40 years, grew out of Abraham Lincoln's admonition to "care for him who shall have borne the battle É" By 1900, Missouri had two homes, one in St. James for Union soldiers and another in Higginsville for Confederates. They were open to all soldiers with an honorable discharge, save for those with an incurable or infectious disease or "any grade of insanity." Wives over 50 were eligible, "if not second or third wives." The Higginsville home was closed, but construction or expansion in the 1980s and 1990s at St. James, Mexico, St. Louis and Cape Girardeau offered hundreds of new beds as World War II veterans aged.

Washington encouraged state legislatures, offering a 65 percent matching construction grant and a per diem for each veteran served. New homes at Cameron and Warrensburg were opened in 2000, and the Mount Vernon home should be occupied in a month or two.

To be eligible to live in the homes, veterans must only live in Missouri, qualify for federal veterans' benefits and must not have been dishonorably discharged.

Many other states joined in the building spree. Kansas built one home, bringing its total to two; Texas has built four homes in the last several years.

To help pay for its expanded obligations, Jefferson City in 1994 diverted part of the casino admission fee to the veterans trust fund. By 1998, more than $58 million was collected, and an additional $30 million -- more than expected -- was coming in every year.

Collections for the fund were due to sunset in 1999. That's when Gov. Mel Carnahan "hijacked" the veterans for early-childhood development, according to former GOP legislator Carson Ross, now a member of the Veterans Commission. At that point, all but $3 million a year of the incoming casino money started flowing to other programs, including one benefiting low-income children.

"It was not a good combination of events," said Deb Scott of the Early Childhood Development Education and Care Fund. She backed the change, but said it's unfortunate that a battle developed between advocates for poor children and those representing elderly veterans. "Everybody was trying to do good things," she said.

Some of the remaining balance in the fund was tapped for home operating costs and maintaining new veterans cemeteries.

In a bipartisan free-for-all, the legislature also took $15 million to improve the Liberty Memorial, $10 million for veterans' memorials elsewhere in the state and at least $3 million for veteran medallions. Even veterans' commission official acknowledges they should have resisted more strongly at the time.

"It was hard to object, because these things seemed good for the veterans," Taylor said.

By December 2002, auditors were predicting that the fund would be drained by 2005. The legislature worked out a complex compromise that raised the veterans trust fund's income from casino admission fees. It was $6 million this year.

Veterans Commission officials still expect the fund will go broke before the end of 2005, however, because of the ever-increasing costs of running the homes.

Closing a home, which was considered briefly, would not be a solution. The state would have to repay millions in federal matching funds.

Taxpayers help make up some of the shortfall with state general revenue. If approved, the appropriation for fiscal 2005 to operate the full number of homes will be about $8.5 million next fiscal year, up from $6.5 million this year.

But that would still be shy of what the state homes need to attract nurses and nursing assistants. State home employees went with no raise for two years, then last year, those making less than $40,000 were given $50 a month.

As a result, the facilities have trouble attracting nurses in a tight job market. Half of the nursing positions in the St. Louis home in the suburb of Bellefontaine Neighbors remain vacant. The shortages mean some available beds can't be used despite a waiting list of 1,200 veterans statewide, 300 of them for the St. Louis home.

High turnover also has been a problem at Warrensburg, Cameron and other state homes. Overtime is also increasing, causing morale problems.

To help make up the difference, the commissioners believe they will have to again tap the veterans in their care, raising the top monthly fee -- currently $1,587 for those deemed able to pay it -- by a still-undetermined amount.

"It's starting to become a problem," said Bill Wolford, a World War II Coast Guard veteran who lives in the new home in Cameron.

Those fees are higher in some states and lower in others. Kansas asks its veterans for $2,432 a month, while Georgia provides care at no charge to veterans. While the state's monthly fees would be far less than the expense of a private nursing home, the same care in a federal veterans hospital would be free to some veterans.

A shifting burden

Chuck Arnold, a 78-year-old World War II veteran living at the Cameron home, frets over the increasing share that comes out of his pocket. Resident fees this year made up about $15 million of the total $50 million operating costs.

"The federal government should pay a bigger share," he said. "They should treat veterans better than they do." The Department of Veterans Affairs has saved millions by shifting some of the growing cost of care to 114 state homes that assisted 16,600 veterans last year, many of whom would otherwise have been in $300-a-day VA beds. Despite admonitions from Congress, the VA is trying to get out of the long-term care business, according to McVay and other veterans' advocates.

In 1998, state homes took 43 percent of the veterans nursing home workload and the VA had 40 percent, according to the General Accounting Office. Last year, the ratio had shifted to 50 percent handled by the states and 37 percent by Washington. Many of the remaining veterans are in private homes with VA contracts.

Meanwhile, the VA's per diem to the states, now at $57.76 per veteran, has not kept up with the rising cost of health care. In Missouri, those contributions added up to about $21 million this year, but will fall short of next year's projected amount by $440,000, Taylor said.

Veterans affairs secretary Principi says the VA knows state homes are under financial duress, but so is his department. "We are always looking at higher per diems," he said.

Also, the VA pays the states no additional money for caring for a special class of veterans, such as Bill Furia. The Vietnam veteran, who lives in the Warrensburg home, is 100 percent disabled because of exposure to Agent Orange. He and other veterans who are at least 70 percent disabled are a bargain for the VA because the agency would have to provide services at no cost if they lived in a federal facility.

"The federal government made a commitment, and they need to fund these veterans' homes at a higher level," said Lt. Gov. Joe Maxwell.