Veterans trust managers say fund is falling short

DES MOINES - Despite nearly $10 million in lottery funds, investments by the Veteran Trust Fund is not generating enough interest to cover the emergency needs of Iowa veterans.

The trust fund was established by the Legislature to cover various veterans' needs, such as unemployment assistance, dental care, emergency home and vehicle repairs and reimbursement for honor guards. By law, only the interest earned on the fund may be spent. Due to falling interest rates, there was just $41,000 available last year, according to Dan Gannon of Ankeny, a member of the Iowa Commission on Veterans Affairs. In previous years, as much as $173,000 was spent.

“So we have veterans waiting to be helped,” Gannon said.

Assistance from the trust fund is the “last resort” for veterans, who must apply to their county veteran's affairs commission before seeking help from the state fund, Gannon told the Senate Veterans Affairs Committee on Thursday.

The Legislature put $5 million into the trust fund when it was created and capped it at $50 million. The principal has grown to about $14 million as a result of nearly $10 million in proceeds from Iowa Lottery games.

In this economy, however, that doesn't generate enough interest to meet veterans' needs, said Veterans Affairs Commissioner Jodi Tymeson, a former legislator.

She suggested changing the trust fund rules to allow the commission either a set amount or a percentage of the principal to spend each year on veterans' needs. Rather than spend the interest, it would be deposited into the principal fund.

That would allow the commission to address the backlog of requests and allow the fund to avoid the ups and downs of the markets, she said.

Committee members seemed to agree.Across the rotunda, House Veterans Affairs Committee Chairman Royd Chambers, R-Sheldon, said “absolutely something has to be done.”

“I don't see interest rates improving any time soon, maybe even years,” Chambers said.

He's having a bill drafted that would incorporate Tymeson's suggestion with “very strict parameters” on the use of the principal.