State Told to Expand Veterans’ Benefits : Courts: It is illegal to restrict eligibility for home loans and stipends to those who lived in California at the time military service began, justices rule.

The state Court of Appeal ruled this week that California must broaden eligibility for low-cost, state-financed home loans and educational stipends to include veterans who joined the armed services while living in other states.

Under California law, eligibility requirements include being a California native or having been a resident when service in the armed forces began.

But the Court of Appeal said Thursday that the law “must be seen for what it is--an attempt to treat preferentially its own citizens.” The court said this approach is unconstitutional.

As many as 1 million of California’s approximately 2.8 million veterans may become eligible for benefits under the court ruling, said Los Angeles lawyer Dan Stormer, who challenged the state’s residency restriction on behalf of veterans who had been declared ineligible.

However, it is not clear how many would meet other eligibility requirements, such as having a low income. Nor is it clear whether the state would be able to fund many additional loans.

In a unanimous opinion written by Justice Earl Johnson Jr., a three-judge appeals panel declared that the residency requirement denied equal protection to taxpaying veterans who lived in California for many years but entered the military while living in other states.

Johnson, who was joined by Justices Mildred L. Lillie and Fred Woods, noted that the ruling was in line with recent opinions of the U.S. Supreme Court, which has prohibited other states from arbitrarily limiting eligibility for benefits to people who were residents at a certain time.

Federally funded veterans benefits are not affected by the ruling.

The principal programs affected by the decision are low-interest home and farm loans to low-income veterans, according to Howell Jackson, chief counsel for the state Department of Veterans Affairs. These are funded by the state’s sale of bonds. The federal government limits states to issuing about $500 million in bonds a year. California is nearing that limit, Jackson said.

In addition, educational benefits of $50 to $100 per month are paid by California to dependents of disabled veterans or veterans killed during their service. This costs about $500,000 per year.

Stormer said the decision “is going to provide a tremendous amount of benefits for veterans.”

However, Jackson said that might not be the case.

“What this decision may very well do is to expand the number of eligible veterans,” Jackson said. “However, in all likelihood, we may not be able to lend to any greater number of veterans because we won’t have access to any greater amount of bond monies (to finance the loans.)”

Jackson said the state, which just learned of the appeals court decision, had not decided whether to file an appeal with the California Supreme Court.