Senate Budget and Fiscal Review— SUBCOMMITTEE NO. 4

Senate Budget and Fiscal Review— SUBCOMMITTEE NO. 4

May 21st 2020


Issue 206: Closure of Barstow Veterans Home (Read Full Document)

May Proposal. The Administration proposes the closure of the Barstow Veterans Home, with a correlating $400,000 in General Fund savings and a reduction of two positions. These cuts will be triggered off if federal funds are received, and plans to close the Barstow home will be canceled. The Administration estimates that General Fund savings will be $14 million at full closure in 2022-23.
Background. The Veterans Home in Barstow opened in 1996, and is budgeted for 220 beds, with a capacity for 400 beds, with 177 beds occupied. The closest VA facility is an hour and a half away in Loma Linda. The 2019 Budget included $26.5 million for the Barstow home.
CalVet released its Master Plan 2020 for the Veterans Homes in January 2020. An assessment of the Veterans Homes based on veteran need, proximity to VA Care, appropriate levels of care, local healthcare infrastructure, and hiring compatibility found that the Barstow home met none of these criteria satisfactorily.

A conforming adjustment was also included in CalVet’s proposal for strategic realignment, which originally shifted resources at Barstow to provide higher levels of care and gradually reduce its domiciliary care.
The Administration states that the initial steps toward a closure would result in a General Fund revenue reduction of $2.4 million and consists of various sources such as federal per diem, member fees, Medicare, Medi-Cal, and Aid and Attendance using the same methodology used to currently estimate revenues. The reduction is based on a drawdown of approximately 4 residents a month beginning in September increasing to a drawdown of 8 residents a month beginning in November. The drawdown in census is an estimate based on moving a mix of the levels of care, but is subject to bed availability in the other homes and the needs of the resident. There is also an overall estimated General Fund revenue reduction from veterans of $600,000.
Additionally, the proposal requests a $400,000 budget reduction in 2020-21, which is comprised of the equivalent of two full-time positions, and correlated food, pharmaceuticals, and other costs associated with a reduction.
Staff Comment. The collective impact of the General Fund revenue reductions and the expenditure savings from the staff reductions resulting from the closure alone is a $2 million cost to the General Fund in 2020-21 – taking no action in staff or resident reduction results in a $2 million General Fund savings. Additionally, should another surge in coronavirus infections occur in the fall, transferring elderly veteran residents from one veterans home to another may be a questionable decision.
While a fiscal crisis like the one we are currently facing due to the coronavirus should not be taken lightly, staff believes that a closure of a veterans home should not be rushed, and a thoughtful approach, while working closely with legislative and community stakeholder partners, can help ensure that no harm occurs to the veteran residents. A closure plan can help address questions around resident safety, fiscal solvency, logistics and other questions that this proposal raises.
Staff Recommendation. Reject the May Revision proposal to close the Barstow home and adopt placeholder budget bill language to require CalVet to submit a closure plan to the Legislature and work with stakeholders in the coming year for contemplation in the 2021-22 budget.