Decrease in veterans’ money explained
After a report about a 60% decrease in the Veterans Trust Fund for fiscal year 2023 was given by the director of the Navajo Veterans Administration, James Zweirlein, last week, a follow up and more detailed report was given to the Health, Education, and Human Services Committee on Monday.
The decrease can be attributed to amendments made in 2018 and 2021. Both were put in place to provide guidelines to how the trust fund could be calculated.
Since the 2021 amendment did not undo the 2018 amendment, they are both in effect.
“What you end up with is a pot of money, whichever fiscal year we’re talking about, instead of one directive about how the money is to be split up and allocated,” Adjua Adjei-Danso, an attorney in the tax unit of the Department of Justice, said.
“You now have two sets of directives but they’re both codified,” he said, in the Navajo Nation Code, “so we have to follow both.”
Adjei-Danso explained that this caused the controller’s office to come up with a revised budget schedule to take into account the directives from both amendments.
“That is why, as an end result, there is less money available as compared to previous years,” acting Controller Elizabeth Begay said.
She also said that she does not know what caused the lack of recalculation after the 2021 amendment because it should have been corrected.
However, in the years 2019 and 2020, the 2021 amendment was not in existence yet, so those years were calculated following the 2018 amendment.
“After the 2021 amendment, that’s when we enter into the situation where we have now two directives layered on top of each other,” she said.
The controller’s investment section has done recalculation to take the previous amendments into account and have arrived at the numbers that were given.
The 2018 amendment laid out directions that, once the total income earned was calculated, 75% of that plus a projected set aside was to be used as supplemental funding for programs and services to benefit veterans.
Also 2% of the total income earned was to go towards the veterans’ housing program and 5% was for administrative purposes.
However, Adjei-Danso said there was a problem with the 5% cap.
“The issue with the 5% administrative cap is the funds are being invested by an investment manager with whom the Navajo Nation has a relationship,” she said. “The method of calculating the investment manager fees is based on the income earned from the investments.”
This causes a situation where the investment manager needs to be paid for their work when the fund does well in terms of earning income which sometimes results in a fee more than 5%.
Along with this, the controller was supposed to figure out the actual allowable expenditure for the current fiscal year by using the income earned from the trust fund of the previous year and the projected set aside.
The amendment also stated any excess was to be put back into the trust fund.
In the 2021 amendment officially incorporated the Navajo Veterans Housing Program. This amendment followed the Veterans Advisory Council’s recommendation that the program be officially incorporated.
The 2021 amendment also amended a section of Title 12 by saying the projected set aside, which is 4%, half would go to the trust fund and the remainder would be allocated to the housing program.
Adjei-Danso said this is an example of dual directives because the 2018 amendment said 2% would go towards the housing program and the 2021 amendment added onto that by saying half of the 4% will also go to the program.
“At the end of the day, it’s not that there has been a loss in investment or even principal of the fund itself but that more of it is being directed to do certain things and that’s why the remaining balance is so much lower than it previously was,” Adjei-Danso said.
Due to these amendments, for fiscal year 2023, there will be a decrease of about $2.2 million in funds for veterans’ services and an increase of about $500,000 for veterans housing when compared to fiscal year 2022.
President Jonathan Nez, who is running for re-election, released a statement on Monday afternoon saying he will request support to cover the shortfall using unallocated funding for the upcoming fiscal year.
“We are putting forth logical solutions to help our veterans, but it has to be done with support from our lawmakers,” Nez said. “The Navajo Nation will be able to fund the veterans benefits for FY2023 as long as we have the support of the Council.”
As of Wednesday, no legislation had been drafted.