Hoosiers pay tribute to veterans today, but their support in terms of state tax dollars is dwindling.

The two-year budget approved by the Indiana General Assembly in 2011 cut spending for the Indiana Department of Veterans’ Affairs by nearly 13 percent; the Indiana Veterans’ Home by 15 percent. In the first year of the biennium, more than 27 percent of the appropriation for Veterans’ Affairs reverted to the general fund and 100 percent of the Veterans’ Home allocation was returned. The money helped build the state’s $2.1 billion surplus.

The percentages were among the largest reversions of almost 60 executive branch agencies in fiscal year 2012, according to state budget agency data.

The Veterans’ Home used other funding streams to cover costs, but the reduction in general fund support for veterans programs would likely surprise most Hoosiers. It stands in sharp contrast to the flag-waving support elected officials like to project. Indiana is home to about 550,000 veterans.

Over the protest of some legislators, the state shut down the 144-year-old Indiana Soldiers’ and Sailors’ Children’s Home in Knights- town in 2009. The residential school for at-risk children whose parents served in the military now houses a National Guard program for at-risk teens. The line item is eliminated from the state budget.

Tom Applegate, director of veterans’ affairs for the state, said a study showed that services previously offered there could be done by other agencies at lower cost. The budget reduction for his office came from the salary and benefits for a director of health care, who resigned, he said. With a new superintendent at the Veterans’ Home, the position wasn’t needed.

“If we’re able to properly care for the Hoosier veterans without using taxpayer dollars, that’s a good thing,” said the former Huntington County veterans service officer, acknowledging that they were still federal tax dollars. “At least it’s not state taxes.”

Sen. Tom Wyss, a Fort Wayne Republican and retired lieutenant colonel in the Indiana Air National Guard, said he was confident the money reverted from veterans appropriations was covered by other sources, but he noted that some of the state program guidelines were “too much,” including unlimited college education benefits for the children of veterans with disabilities.

“It was designed to give you a four-year college degree, but we changed the law,” he said. “We had kids getting master’s and doctoral degrees on that program – we were being lax.”

Wyss was author of 2007 legislation that exempts active-duty military pay earned by National Guard and reserve members from the individual income tax and increased the military pay income tax deduction from $2,000 to $5,000. At the time, state revenue loss from the deduction was estimated at $5.5 million a year.

Of about a dozen veterans’-related bills in the last legislative session, only one was approved. It extends from one year to three years the time a service member is eligible to receive assistance from the Military Family Relief Fund. Money in the fund comes primarily from the sale of Support Our Troops license plates. Legislation that would have provided state tax credits to employers who hire returning veterans was never even called for committee hearings.

George Jarboe, who serves about 32,000 veterans as the Allen County veterans’ service officer, acknowledged that the budget cuts under Gov. Mitch Daniels’ administration have eroded benefits but said that efforts by veterans groups prevented even deeper cuts. The most significant reduction was the one Wyss noted – amending the law that allowed the children of any wartime veteran with a disability to receive free tuition at a state-supported college or university. Effective for veterans serving in wartime after June 2011, their children are eligible for fee remission only if a parent died in service or has a disability rated 80 percent service-connected.

Jarboe said he believed the previous law might have been too generous, but said the 80 percent threshold is a high one.

“In the long term, it’s really going to save the state a lot of money,” he said. “But it’s a big difference in payments for those who are serving now.”

Relying on kindness

At Shepherd’s House, a transitional housing program for veterans battling addiction, administrator Barbara Cox said she didn’t know about the state budget cuts but wasn’t surprised. Neither was Phil, an Army veteran and resident who follows Alcoholics Anonymous guidelines in not disclosing his full name.

“Doesn’t surprise me at all,” he said. “Nobody ever thanks me for my service except other veterans.”

Phil said he wasn’t very familiar with state-level benefits because he returned from the service and was earning a six-figure salary before his alcohol addiction cost him his work and family life.

“I never took advantage of them,” he said of the benefits. “I always thought those benefits should be reserved for the guys coming back without arms and legs.”

Dana O’Dell, who counsels residents at Shepherd’s House and is herself a Gulf War-era Army veteran, said she hears from colleagues that the best state-level benefits are in those states where most veterans return after they leave the service: California, Florida, Texas, Virginia and Ohio.

She said the fastest-growing need in Indiana is for housing assistance for female veterans with children.

Illinois, struggling with much greater budget problems than Indiana, not only has preserved state-level benefits but actually increased the budget for veterans affairs – the only office to see an increase, according to Louis Pukelis, public information officer for the Illinois Department of Veterans’ Affairs.

Illinois Gov. Pat Quinn, in the introduction to a directory of state benefits, writes that it is a priority to “ensure that Illinois is the most ‘veteran-friendly’ state in the nation.”

Indeed, the state has a broader complement of benefits than Indiana. A GI Loan for Heroes program provides financing substantially below market rate for veterans and active-duty personnel. Illinois also offers a $15 “bonus payment” for each month of overseas service by World War II veterans and $10 a month for domestic service. The one-time bonus payments also are available for Illinois veterans who served during the Korean, Vietnam and Gulf conflicts and the global war on terrorism. The Returning Veterans’ Homestead Exemption gives qualified Illinois vets a one-time $5,000 reduction of their home’s assessed value.

Benefits vary from state to state, but fall broadly in areas of housing, financial assistance, employment and education. The work of Indiana’s 92 county service officers, including Jarboe, is primarily helping veterans access those benefits and making them aware of them.

“I would say we get 30 to 40 calls a day,” Jarboe said. “There are a lot of folks out there who aren’t aware of their benefits. If they don’t get an American Legion magazine or something like that, they might not know about the benefits they can receive.”

Jarboe said much of his work currently is helping file claims for service-related disabilities, overwhelmingly hearing loss. Assisted living aid is a growing area, as well.

The county offices are supported by county taxpayers, but Jarboe notes that the federal benefits secured by Allen County veterans bring millions of dollars into the community. American Legion figures showed that about $13 million in federal claims work was done by the Allen County office over about the past eight years, he said. Jarboe has been the service officer for 18 years.

At Shepherd’s House, housing support comes from U.S. Veterans Administration assistance for homeless veterans, Cox said, but the faith-based organization depends heavily on donations.

“God always provides,” she said. “If we have a need, it always seems to appear.”

Applegate, the state director, noted that veterans’ organizations make a real difference, especially at the state Veterans’ Home. Groups like the American Legion and Disabled American Veterans have helped provide special equipment for the home, like a food-warming system and new televisions for residents’ rooms and common areas.

“Without their support, it would not be as nice up there,” Applegate said.