With the White House proposing a $575 million cap on Victims of Crime Act (VOCA) spending for next fiscal year— and with more than $700 million in VOCA funding for state assistance grants already held back by virtue of caps in the two preceding years—a growing sense of confusion and unease is being felt by many of those concerned about the future of the Crime Victims Fund.

On the one hand, the President's proposal—which still must be acted on by Congress-provides for a 7% increase in VOCA spending from this year's $537.5 million cap. The increase is exactly the same amount that the cap was increased from last year.

On the other hand, new earmarks for Dept. of Justice staff positions—and rumors that more federal agencies are seeking their slice of VOCA funds—are creating some anxiety over whether cap increases actually will result in more money for state grants. Adding to the uncertainty is a new OVC-operated international compensation program that also has the potential for taking significant amounts of VOCA funds that otherwise would be available to the states. Some advocates are increasingly concerned about these new uses or Fund resources that previously had been reserved almost exclusively for states to use in compensating victims and supporting essential services.

Finally, a new potential reality exists that is almost the reverse of the situation faced in the previous two years, when Congress took money away because deposits into the Crime Victims Fund exceeded the cap. This year, deposits into the Fund are lagging behind what would be necessary to reach the spending limit proposed by the President. If collections stay low, will Congress allow money that has been held back the past two years to be used to boost up the Fund to the spending cap? (While it's too early to tell what the final total
this year will be, deposits into the Fund so far are coming in at about a $440 million annual pace.)

And if future-year's collections do remain lower than the record highs of 1999 and 2000, is a cap such a bad idea? If Congress really does reach into the $724 million held back in the past two years to beef up the Crime Victim; Fund in future years, the effect of the caps will be to protect and manage the Fund, evening out the flow of money to the states, rather than allow grants to rise and fall so dramatically each year.

With so much up in the air, what is clear is that VOCA, rather suddenly, is in uncharted territory. Victim-service professionals and advocates must look to Capitol Hill and to OVC for answers to questions that did not even exist two short years ago. And it's making some of them rather nervous.

Why a Cap?
What's driving the desire in Washington to place a cap on VOCA? Congress' expressed rationale for imposing a cap is to stabilize the Fund and protect the states from being flooded with huge increases that will be difficult to spend. The first cap, imposed on spending last year, came when annual Fund collections more than tripled, reaching a record $985 million. If all this money had been released, state VOCA assistance grants would have quadrupled from the year before. FY 2000 saw the second highest collection level of $777 million, and Congress once again held money back, while allowing a small increase in overall spending.

While it can be argued that the caps are a positive step toward stability and protection of Fund assets, few professionals in victims services agree that the money couldn't be wisely managed if the Fund was uncapped. Many also believe that substantial unmet needs exist that should be addressed now.

Theories persist among some observers that budgetary pressures and spending limits within the Department of Justice itself are the real factors forcing the Administration and Congress to put a lid on VOCA spending. At best, not spending VOCA funds allows the Department of Justice to pay for other departmental needs and still remain within its overall budgetary limit. At worst, DOJ actually is using the Crime Victims Fund as an asset to pay for other items within its budget.

Whatever the truth is, attention is now turning to the appropriations process as the annual budget drama begins. Final decisions on VOCA spending limits are not likely before autumn, when appropriations bills are signed into law.

Compensation Grants Remain Unaffected
Grants to state compensation programs for financial assistance to victims remain unaffected by these caps, at least in any direct way. Since compensation grants are limited to 40% of each state's own payout in state dollars, the total amount necessary to provide states with full compensation grants remains well below $100 million, and well within what any potential cap's limitations on those grants. Congress would have to set the cap at less than half its current level of $537.5 million before compensation grants are affected.

However, as compensation programs expand eligibility and increase benefits, the total amount available in the Fund may be a big factor in whether more money is freed up for compensation programs. When VOCA is capped—or when money from the Fund is diverted for other purposes—an increase in compensation grants means less money for assistance grants. This year, compensation grants went up $9 million as a result of increased state spending, and because the total available for the states was frozen at last year's levels, $9 million less was available for assistance grants. Had Congress not capped the Fund, or if more money had been available for state grants, both compensation and assistance grants would have increased.

As the chart on this page shows, the 40% grant limitation has prevented compensation programs from sharing in the huge increases in Fund deposits in the past few years. VOCA assistance grants are now quadruple the amount for compensation grants, a trend that began in 1997 when the Crime Victims Fund first saw a dramatic rise in collection levels. Since 1997, state assistance grants have totaled $1.6 billion, while compensation grants have amounted to $380.6 million.

A current bill before Congress would increase compensation grants to 60% of state payouts, which would have some impact on VOCA assistance grants unless Congress frees up more money in the Fund.

Appropriations 101: How the Fund is Capped
While VOCA itself does not limit the amount of finding that can go to the states each year, Congress, through the annual appropriations bill for the Department of Justice, can place a limit on overall expenditures from the Fund. Of course this is true of other federal authorizations as well: despite what any law may authorize to be spent, Congress may appropriate what it pleases so long as it is within the authorization contained in the underlying law.

(It's interesting to note that VOCA contained limits during its first eight years, as the chart on this page shows. The original legislation adopted in 1984 curtailed deposits into the Crime Victims Fund, but Congress amended VOCA to eliminate this limit in 1994.)

The VOCA cap process begins with the President's budget proposal for the Department of Justice. Next, the Appropriations Committee in the House of Representatives draws up its own budget, through the work of its subcommittee handling DOJ spending. It then goes to the respective subcommittee in the Senate Appropriations Committee, which may come up with a different VOCA cap. Differences are resolved in a conference committee before going to the full House and Senate for passage. The Justice Department appropriations bill (usually combined with those for the Commerce and State Departments) then go to the President for signature.

Since this enactment often occurs after the beginning of the federal fiscal year, the calculation of how VOCA will be distributed under the statutory formula can be delayed while OVC awaits final budget action.

How VOCA Works With a Cap: Where Does All the Money Go?
VOCA itself directs that all the federal criminal fines and fees collected each fiscal year be made available in the next year for the purposes enumerated in the Fund. These purposes are diverse, and the Statutory distribution formula is somewhat detailed. But this much is straightforward: state compensation and assistance programs divide up what is left only after other Fund purposes are satisfied. And while more than 80% of the Fund has been left for state grants the past two years, for the first time new discretionary budget items have crept into VOCA that can impact directly the amounts remaining available for the states.

Here's how VOCA directs that the Crime Victims Fund be distributed, in the order in which various purposes must be satisfied:

1. The First Taker: Children 's Justice Act. The first $20 million in the VOCA Crime Victims Fund must go to support work under the Children's Justice Act (CJA). (Actually, CJA gets $20 million only when deposits into the Fund in the preceding year are greater than the $324 million total reached in FY 1998; otherwise, if deposits drop below $324 million, CJA gets $10 million.) The CJA slice of the Fund is divided between the Health and Human Services Department (HHS), which gets 85%, and OVC, which gets 15%. OVC has used its portion to improve investigation and prosecution of child sexual abuse in Indian country.

2. Such Sums As Necessary: U.S. Attorneys & FBI. Because of an amendment two years ago, and another similar one last year, the Crime Victims Fund now has to provide "such sums as are necessary" to support victim-witness staff in U.S. Attorneys' Offices and FBI field offices. The amounts that are "necessary" are theoretically unlimited, which is cause for considerable concern to some advocates. This year, the U.S. Attorneys' Offices took somewhat over $14 million from the Fund, and the FBI came in for a $7.4 million take, It simply is not known whether these amounts will increase in future years—or whether other federal agencies, like the Immigration and Naturalization Service, the State Department, or the Treasury Department, will seek their own funding from VOCA as well, now that this precedent has been set.

3. New Discretionary Amount: International Compensation and Emergency Reserve. Last year Congress created a new international terrorism-victim compensation program to be operated by OVC, with funding to come from an expansion of Vocal's already existing Reserve Fund. By law, eligibility for such compensation can extend back to all terrorism victims since 1989, including families of Pan Am 103 victims, African Embassy bombing victims, and service Members and their families injured or killed in the U.S.S. Cole attack.

The Reserve had been created several years earlier with two legislative purposes: first, to provide supplemental grants to states to help them meet victims' needs in incidents of mass violence and terrorism, both domestic and international, such as the Oklahoma City bombing and the Columbine school shooting; and second, to serve as a "rainy day fund" when a drop in Crime Victims Fund collections otherwise would decrease overall amounts available for spending. The international compensation amendment last year doubled the allowable amount to be kept in the Reserve Fund to $100 million; however, money can be added to the Reserve only in years that Fund deposits rise from the previous year—which didn't happen last year—so the amount in the Reserve Fund stood at $46 million entering this fiscal year.

Under new budgetary rules imposed this year, OVC now must declare the amount it wants available to spend from the Reserve in the coming fiscal year for the new international compensation program as well as for grants to states to assist in incidents of domestic mass violence and international terrorism. This amount is set in OVC's discretion, taking into account any projections of current need as well as any potential for new incidents. Obviously, this is a difficult proposition: there is no way to know what disasters may await, or to know in advance what they will cost. Nevertheless, OVC can only use funds it declares in advance as the amount it wants available for whatever may occur.

The amount that OVC chooses to declare for potential expenditure comes out of whatever cap is set by Congress; the more OVC chooses to put into the annual budget for international and domestic terrorism and mass violence, the less is available for state VOCA assistance grants.

This fiscal year, OVC set aside $21.1 million from the Fund for Reserve purposes. OVC could have declared the entire $46 million Reserve as available for expenditure, but it chose not to so that more money would be available under the cap to keep VOCA assistance grants at close to the prior year's level. The $25 million that OVC did not budget for expenditure remains in the Reserve for future expenditure. OVC does not have to spend the amount it declares as available for Reserve expenditures; if OVC does not spend the amount it declares as available, the money returns to the Reserve Fund for obligation in future years.

4. Dividing What's Left: OVC, Compensation and Assistance. Once the above three items have taken their portion of the total amount available under the cap, the remainder is divided in a simple percentage formula. First, OVC gets 3%. OVC can use this 3% for two functions: at least half of the 3% must be used for services to victims of federal crimes, and the rest can be used for training and technical assistance (the OVC grants that have supported Association conferences in recent years have come from this source). OVC's 3% portion in the last two years has been approximately $14 million (in the chart on the preceding page, the $17.8 million shown for OVC in FY 2001 includes $3.8 million that was not obligated in the prior fiscal year and that must be added to this year's total).

The remaining 97% is first split in half, with one portion set aside for state compensation programs, and the other for state assistance grants. Of the half set aside for compensation, however, the states can get only an amount equal to 40% of what the states pay in benefits to victims out of their own state money. In other words, if the states as a whole pay $200 million in state dollars to compensate victims, the Crime Victims Fund will provide $80 million in grants to supplement that state money. Once each state gets a grant of 40% of its state payout, any leftover amount from the original portion set aside for compensation is added to the sum available for state assistance grants. While an increase in compensation grants directly reduces the amount available for assistance grants, since they are partaking of the same pot of money, it is all the prior reductions in the Fund—CJA, DOJ staff positions, and the Reserve projection—that determine the size of the pot that will be split.

In the past two years, assistance grants have totaled four times as much as compensation grants.

Show Me the Money: Deposits Above the Cap?
VOCA has always included language that creates a special account in the Treasury where all federal criminal fines are to be deposited, and presumably shall remain until obligated. At the request of the Association, last year Congress added language to clarify that "all sums deposited in the Fund in any fiscal year that are not made available for obligation by Congress in the subsequent fiscal year shall remain in the Fund for obligation in future fiscal years, without fiscal year limitation." Justice Department officials and Appropriations Committee staff also have provided assurances that deposits above the cap remain available for future expenditure.

This "reserve" of unobligated Crime Victims Fund collections has now reached $724 million, and it may be needed as early as this year if collections do not reach the spending limit set by Congress. According to the Department of Justice, approximately $200 million has been collected into the Crime Victims Fund in the first five months of the fiscal year, an annual pace of about $440 million. If this pace holds, and if Congress follows the President's lead and sets the cap at $575 million, the missing $135 million should be found in the "reserve" of unobligated money from the last two years.

What Happens Next
As the appropriations process now moves to the Congress, professionals and advocates in victim services will be watching developments closely. Only time will tell whether, and at what level, Congress places a cap on VOCA—or whether such caps prove to be beneficial or detrimental to efforts by states to provide as much help as possible to victims of crime. ln the meantime, the Association will try to keep its members fully informed of all developments.