News Track: Once-depleted Iowa fund for veterans’ emergency expenses replenishing

DES MOINES — The Iowa Veterans Trust Fund is available to low-income Iowa veterans who need assistance making emergency payments for things like medical equipment, emergency room care, dental and hearing care, emergency housing and vehicle repairs, counseling, unemployment assistance and job training.

Last October, for the first time in a decade, the allowable spending from the trust fund became depleted. State officials cited a recent expansion of eligibility in the program, increased claims from 2020 due to the COVID-19 pandemic and 2020 derecho and increased costs for claims due to inflation.

The Iowa Commission on Veterans Affairs awarded $632,000 in claims in 2019 and $573,000 in 2020. During 2021, the commission awarded nearly $1.3 million in claims, according to the trust fund’s annual report.

Once the available spending from the fund was depleted, the state for months in late 2022 and early 2023 was unable to fulfill applications for financial assistance.

In January, Gov. Kim Reynolds allocated $440,000 in federal pandemic relief funding to the Iowa Veterans Trust Fund in order to fund the backlog of assistance requests.

WHAT’S HAPPENED SINCE

A fund is on its way back to good fiscal health, state officials say.

The infusion helped clear a backlog of requests for assistance, and a new investment strategy is producing greater returns and replenishing the trust fund, officials say.

The fund has been yielding greater returns on its investments thanks in part to a change in state law approved in 2022. With the investing flexibility provided by that new law, the trust fund’s monthly interest gains have increased exponentially, according to the Iowa Department of Veterans Affairs.

Previously, the trust fund would yield anywhere from $2,000 to $9,000 in monthly interest, a department spokesman said. In the first eight months of the current fiscal year, which began last July, the fund’s monthly interest has ranged between $24,000 to $115,000.

Through the first eight months of the budget year, the trust fund has accumulated nearly $530,000 in interest, enabling the department to finance new assistance applications, the spokesman said.

That increase has essentially matched a previous request from the department for lawmakers to double the state’s annual contribution to the Iowa Veterans Trust Fund from $500,000 to $1 million.

“They’ve achieved that additional amount that they requested by the reinvestment legislation that was done last year,” said Iowa Sen. Jeff Reichman, a Republican from Montrose who chairs the Senate’s committee on veterans affairs. “So we can get involved (as lawmakers), but a lot of times it’s best to just let things take their course. And that’s what’s happened: Everything has come together and worked out well.”

Earlier this legislative session, Reichman oversaw legislation that would have put into state law some requirements for eligibility and benefits caps for the trust fund. Senate File 410 would have reduced eligibility for the trust fund from 300 percent of federal poverty level back to its pre-pandemic level of 200 percent of federal poverty level, which equates to annual income of $29,160 for an individual or $60,000 for a family of four.

The bill also would have capped payouts from the trust fund at $5,000 annually and $10,000 for life, and all payouts would have been subject to final approval by the veterans affairs director instead of the Iowa Commission of Veterans Affairs within the state VA department.

Reichman said he did not feel compelled to follow through on the legislation because the department has implemented some of those measures on its own.

“Gov. Reynolds directed the department to adjust our internal accounting controls to ensure the fund would not again be over obligated. We have made these adjustments,” Iowa Veterans Affairs public affairs official Karl Lettow said in an email.

Iowa House Republicans also this session proposed increasing the state’s annual allocation to the Veterans Trust Fund from $500,000 to $800,000. That proposal, House File 142, passed the House this session for a second consecutive year, and for the second consecutive year was not taken up by the Senate.

Reichman said he felt the extra funding was unnecessary because of the recent growth in revenue from interest on the trust fund.

Rep. Chad Ingels, a Republican from Randalia who chairs the House’s committee on veterans affairs, said House Republicans continue to believe the extra state funding to the trust fund would be a worthwhile investment.

“Maybe after another year we’ll see where they’re sitting at, but our caucus thinks it’s a good idea to increase that up to $800,000,” Ingels said.

The Iowa Veterans Trust Fund has a total of nearly $39 million, according to the department. By state law, the state can spend on financial assistance requests only from interest drawn on the trust fund — plus $500,000, which comes from the state lottery fund — until the trust fund surpasses $50 million.

Comments: (515) 355-1300, erin.murphy@thegazette.com