LAO 2006-07 Budget Analysis: General Government

Analysis of the 2006-07 Budget Bill

Legislative Analyst's Office
February 2006

Department of Veterans Affairs and Veteransí Homes of California (8950-8966)

The Department of Veterans Affairs (DVA) provides services to California veterans and their dependents, as well as eligible members of the California National Guard. The DVA provides home and farm loans to qualifying veterans using the proceeds from the sale of general obligation and revenue bonds. The department also helps eligible veterans and their dependents obtain federal and state benefits by providing (1) claims representation, (2) subventions to county veterans service offices, and (3)†educational assistance. The DVA operates veteransí homes in Yountville, Barstow, and Chula Vista, which provide medical care, rehabilitation services, and residential services.

The budget proposes total expenditures of $315†million in 2006-07. This is $11†million (4†percent) more than estimated current-year expenditures. Total General Fund expenditures of $79†million are proposed, which is $10†million (15†percent) more than the estimated current-year level. This includes support for a new Alzheimerís/Dementia Unit at Yountville and expanded behavioral health services at all three veteransí homes.

Salary Savings Exemption Not Justified

We recommend the Legislature reject a $1.7†million proposal to exempt direct care staff from salary savings. The administrationís proposal does not provide an adequate analysis of specific position problems and deviates from standard budgeting practices. (Reduce Item 8960-001-0001 by $1,166,000; Item 8965-001-0001 by $134,000; and Item 8966-001-0001 by $428,000.)

Background. Salary savings is the amount of reduced expenditures by a department when a position is vacant or filled at a lower salary level than the budgeted level. For example, if the salary for a position is $4,000 per month, then the department saves $4,000 (plus some salary driven benefit costs) each month that the position is vacant. Every department is expected to have some salary savings as a result of normal turnover and delays in filling positions. The Governorís budget traditionally includes an assumption of salary savings for each department, and departmental appropriations are reduced accordingly. A typical level of savings is 5†percent. The budget estimates current-year salary savings of about 4.5†percent for each of the three veteransí homes.

Department Proposes to Exempt Classifications From Salary Savings. The department proposes to exempt certain positions from estimated salary savings. This proposal results in increased costs of $1.7†million across the three veteransí homes. Specifically, the proposal exempts about 20 classifications involved in direct patient care, including (1) nursing positions that require 24 hours of coverage each day and (2) other positions that may or may not require 24-hour coverage, such as dentists, nurse instructors, occupational therapists, and radiologic technicians. According to the department, the rationale for the proposal is to ensure adequate 24-hour coverage, to accommodate absences due to vacation or illness, and to provide time off for staff members who are required to monitor patients outside of normal administrative business hours.

Exemption of Positions Not Justified. The departmentís proposal for wholesale exemption from salary savings for new and existing direct care positions is not adequately justified. Aside from providing general concerns about coverage, the request contains no analysis of specific positions that have experienced trouble with providing care. Other state hospital facilities are budgeted with standard salary savings. For example, the Department of Mental Health-which also provides 24-hour direct patient care in its hospital facilities-budgets salary savings for its staff. Departments are generally expected to use management strategies to accommodate coverage issues, such as using overtime, adjusting schedules to accommodate after-hours workload, coordinating vacation schedules, and other similar approaches. In some instances, if a department is unable to meet staffing demands with these methods, it can request additional positions based on specific workload information.

Reject Proposal for Salary Savings Exemption. We recommend the Legislature reject the proposal for wholesale exemption of direct care staff from salary savings at the veteransí homes. If the department provides evidence of coverage problems for specific positions that cannot be resolved through a management approach, it could resubmit a more refined proposal.

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