WISCONSIN LEGISLATIVE COUNCIL Terry C. Anderson, Director Laura D. Rose, Deputy Director TO: REPRESENTATIVE RICHARD SPANBAUER gS Chadwick Brown, Staff Attorney RE: Potential Impact of Changes in the Federal Post-9/1 GI Bill on Wisconsin GI Bill DATE: — March 15, 2011 This memorandum, prepared at the request of your aide Matt Pulda, addresses the potential impact of SECTION 102 of the Post-9/11 Veterans Educational Assistance Improvements Act of 2010 (P-L. 111-377; hereafter, “the Act”) on benefits to veterans and costs to the state associated with the Wisconsin GI Bill (ss. 36.27 (3p) and 38.24 (8), Stats.) SECTION 102 of the Act creates a new system for calculating limits on payments to higher education institutions on behalf of veterans participating in the Post-9/11 GI Bill. ‘The new system is two-tiered, with one tier for payments to public institutions and another for payments to private or foreign schools, and takes effect on August 1, 2011 Of particular concern is the language in the Act that reads: “[t}he amounts payable [shall equal] the actual net cost for in-State tuition and fees assessed by the institution for the program of education afier the application of any scholarship, or other Federal, State, institutional, or employer-based aid or assistance..that is provided directly to the institution and specifically designated for the sole purpose of defraving tuition and fees, . (Emphasis added; complete text from Senate Report attached.) The 2009-11 Biennial Budget Act (2009 Wisconsin Act 28) changed the relationship between federal and state veterans benefits for purposes of the Wisconsin GI Bill. Ifa veteran is eligible for federal benefits, he or she must apply for benefits provided by the Post-9/11 GI Bill before that veteran can receive benefits under the Wisconsin GI Bill. This would appear to create a conflict between the federal and state programs as to who is the payer of last resort, As the federal Act has only recently passed and has yet to take effect, there is little guidance available at this time as to the details of its implementation, At this preliminary stage, there is cause for (One Fast Main Stet, Suite 40 P.O. Box 2536 » Madivon, WI 53701-2536 (608) 266-1304 «Fax (608) 266-3830 + Erma. leg councils vss "nop eps ste weeae uncertainty as to the interaction of benefit programs at the state and federal level for both veterans who qualify for full benefits under the Post-9/11 GI Bill and veterans who qualify for fractional benefits, as described below. Veterans Qualifving for Full Federal Benefits Veterans with 36 months of qualifying service are eligible to receive 100% of benefits under the Post-9/11 GI Bill. This bencfit includes tuition payment, money for books, and a stipend equal to the housing allowance amount that would be due a service member in the E-5 pay grade. The availability of this stipend makes election of the federal Post-9/11 GI Bill more attractive than the Wisconsin GI Bil for most veterans. 2009 Wisconsin Act 28 provided that veterans must use Post-9/11 benefits before any Wisconsin G1 Bill benefit. Under a strict reading. of the federal Act, this would still be a permissible restriction, as Wisconsin GI Bill benefits that were neither applied for nor distributed would not meet the definition of “aid or assistance... provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees.” That said, there is no guarantee that the U.S. Department of Veterans Affairs DVA”) will confine itself to so strict a reading of the federal Act. There is some danger that through interpretation or rule they could deem funds available to the student as being available to offset federal benefits. ‘Though I have not found any evidence that such an interpretation is being contemplated, clarification in this area would be helpful for predicting the benefits that will be available to Wisconsin veterans and the fiscal impact to the state after implementation of the federal Act. Veterans Qualifying for Fractional Federal Benefits ‘Veterans with fewer than 36 months of qualifying service may be eligible for a benefit under the Post-9/11 GI Bill ranging from 60% to 90% of the full benefit. If the U.S. DVA determines that a student is eligible for less than 100% of the Post-9/11 GI Bill benefit, the Wisconsin GI Bill may currently be used to remit any remaining tuition amount (up to the amount that would normally be covered by the Wisconsin GI Bill). Under a strict reading of the federal Act, this contribution by the state would appear to be “aid or assistance...provided directly to the institution and. specifically designated for the sole purpose of defraying tuition and fees.” if the U.S. DVA interprets the federal Act in this manner, the benefits received from the state could be ofiget by a reduction in federal Post-9/11 benefits. As the federal Act has yet to take effect, there is little guidance available as to how the U.S. DVA will treat this interaction between the state and federal programs. SECTION 103 of the Act SECTION 103 of the Act applies to educational benefits for service members on active duty and inserts similar language to that addressing benefit for discharged veterans in SECTION 102. interpretation issues as those outlined above exist in that context as well.Conclusion Wisconsin may lose the ability to require veterans to use Post-9/11 benefits before accessing Wisconsin G1 Bill benefits. Further, veterans may have benefits paid under the Wisconsin GI Bill offset by corresponding reductions in federal benefits. Efforts should be made to obtain clarification from the U.S. DVA as to how the federal Act will be implemented with respect to these state benefits, If federal implementation of the Act will conflict with the changes in the Wisconsin GI Bill made in 2009 Wisconsin Act 28, further study should be pursued to determine if modifications to the Wisconsin GI Bill need to be implemented to account for these changes. If you have any questions, please feel free to contact me directly at the Legislative Council staff offices. CBawu AttachmentATTACHMENT ‘SEC. 3313. EDUCATIONAL ASSISTANCE: AMOUNT; PAYMENT @t (b) APPROVED PROGRAMS OF EDUCATION- A program of education is an approved program of education for purposes of this chapter if the program of education Sis offered by an institution of higher learning {@s that term Is defined in section 3452(f)) ands is approved for purposes of chapter 30 (including approval by the State approving agency concerned), (¢) SAMOUNT OF EDUCATIONAL ASSISTANCE.6 PROGRAMS OF EDUCATION LEADING TO A DEGREE PURSUED AT INSTITUTIONS OF HIGHER LEARNING ON MORE THAN HALF-TIME BASIS- The amounts payable under this subsection for pursuit of an approved program of education leading to a degree at an insttution of higher learning (as that term is defined in section 3452(f) are amounts as follows: (1) In the case of an individual entitled to educational assistance under this chapter by reason of section 3311(b)(1) or 3311(6)(2), amounts as follows: 8(A) An amount equal to the established charges for the program of education, except that the ‘amount payable under this subparagraph may not exceed the maximum amount of established charges regularly charged in-State students for fulltime pursuit of approved programs of education for undergraduates by the public institution of higher education offering approved programs of education for undergraduates in the State in which the individual is enrolled that has the highest rate of regularly-charged established charges for stich programs of education among all public institutions of higher education in such State offering such programs of education.6 (A) An amount equal to the following: () In the case of a program of education pursued at a public institution of higher learning, the actual net cost for in-State wition and fees assessed by the institution for the program of education after the application of () any waiver of, or reduction in, tuition and fees; and (1) any scholarship, or other Federal, State, institutional, or employer-based aid or assistance (other than loans and any funds provided under section 404 (b) of the Higher Education Act of 1965 (20 U.S.C, 1070a)) that is provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees. (i) In the case of a program of education pursued at a non-public or foreign institution of higher learning, the lesser of~ () the actual net cost for tuition and fees assessed by the institution for the rogram of education after the application of (29) any waiver of, or reduction in, tution and fees; and (bb) any scholarship, or other Federal, Stats, institutional, or employer-based aid or assistance (other than loans and eny funds provided under section 401(b) of the Higher Education Act of 1965) that is provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees; or (i) the amount equal fo (2a) for the academic year beginning on August 1, 2011, $20,000; or (bb) for an academic year beginning on any subsequent August 1, the amount for the previous academic year beginning on August 1 under this subclsuse, as increased by the percentage increase equal fo the most recent percentage increase determined under section 3015().