VA Grants to States for Construction or Acquisition of State Veterans Homes

State veterans homes are nursing homes, domiciliaries (residential care facilities), and adult day health care programs operated by state governments specifically for veterans. They are the oldest component of the U.S. veteran care system — predating the VA by decades — and today form a network of over 150 facilities in every state. The federal government helps build and upgrade these facilities through capital construction grants governed by 38 CFR Part 59, administered by the Department of Veterans Affairs. Separately, VA pays per diem for veterans who receive care at state homes — but Part 59 covers the construction side: the one-time capital investment that allows states to build or renovate the facilities in the first place.

Current Rule (2026)

Legal Authority

• 38 U.S.C. §§ 8131–8137 — Authorize the VA to award grants to states for the construction, acquisition, and renovation of state veterans home facilities; specify the 65% federal/35% state cost-sharing ratio; require state-operated facilities to meet VA standards for nursing home, domiciliary, and adult day health care
• 38 CFR Part 59 — VA implementing regulations; governs grant applications, eligibility requirements, design and construction standards, certification of eligibility, grant agreements, and ongoing compliance monitoring for state veterans home construction

Key Mechanics

38 CFR Part 59 establishes the VA's State Home Construction Grant Program, which provides up to 65% federal funding for state construction, acquisition, or renovation of state veterans home facilities, with states contributing at least 35%. Eligible facilities provide nursing home care, domiciliary care, or adult day health care to veterans. To obtain a grant, a state submits a Priority 1 application to VA demonstrating the need for new or expanded capacity, site control, preliminary architectural plans, and evidence of the state's 35% funding commitment. VA evaluates applications against a national priority list; higher-priority states (those with fewer per-veteran state home beds) receive funding preference. Approved grants are executed via a Grant Agreement binding the state to: complete construction to VA design standards and minimum capacity requirements; obtain VA certification as a recognized state home before accepting veterans; maintain federal quality standards (CMS/VA survey and certification); accept eligible veterans regardless of service-connected status (within capacity); and maintain operational funding from state resources. VA may recover grant funds if a state home is closed, sold, or diverted from veteran care use within a specified period.

What This Rule Does

Part 59 establishes the procedural and substantive requirements for states to obtain VA capital grants to construct new state veterans home facilities or to acquire existing facilities for use as state homes. The program addresses a straightforward market failure: long-term care for veterans is expensive to build, states have limited capital budgets, and without federal construction assistance many states would lack adequate state home capacity even if they can afford ongoing operational costs. The VA's construction grant — covering up to 65% of project cost — makes new state home facilities financially feasible for states that would otherwise lack the capital to build them.

The federal investment is conditioned: to receive a grant and actually receive grant funds, a state must demonstrate not only that it will build the facility but that it will operate it in compliance with VA standards for nursing home care, domiciliary care, or adult day health care. The conditions in Part 59 (particularly §§ 59.130–59.160) function as quality standards — a state that builds with federal dollars must meet federal minimum care standards or face grant recapture. This creates an ongoing regulatory relationship between VA and state home operators that extends far beyond the construction project itself.

Facilities funded under Part 59 must serve veterans and, in some cases, their spouses and gold star parents, depending on space availability and state law. States retain ownership and operational control — state homes are state facilities, not VA facilities — but VA inspection authority and care standards apply continuously.

Key Provisions

• § 59.1 — Purpose: the grant program supports construction or acquisition for three care types: (1) nursing home care for veterans who need skilled nursing or intermediate care; (2) domiciliary care for veterans who need residential support but not skilled nursing (assisted living equivalent); and (3) adult day health care, a community-based day program for veterans who can live independently but need structured daytime health services
• § 59.2 — Definitions: "acquisition" means the purchase of an existing facility for conversion to a state home; "construction" includes new construction, major renovation, and expansion of existing facilities; "state home" means a home established by a state for disabled veterans that is recognized by the VA; "completion" means physical completion of construction according to approved plans and specifications
• § 59.10 — General grant requirements: to obtain a grant, the state must have an approved initial application (§ 59.20), complete construction or acquisition within the approved timeframe, and demonstrate ongoing compliance with VA care standards; federal funds cannot pay for items not in the approved project scope
• § 59.30 — Federal share: the federal grant covers up to 65% of total project cost; the state must provide the remaining 35% from non-federal sources; the 65/35 split applies to all three care types; for major renovations of existing state homes, the same cost-sharing applies; the federal share cannot include non-federal match money — leveraging other federal grants to meet the 35% state share is prohibited
• § 59.40 — Priority system: applications are ranked and prioritized based on need — factors include the age and condition of existing state home facilities, the veteran population served, whether the state has no state home for a particular care type, geographic distribution of facilities, and matching fund availability; the VA maintains a national priority list and awards grants from it subject to annual appropriations
• § 59.60 — Approval of initial applications: VA evaluates the state's application for the proposed project, including the scope of work, cost estimates, compliance with VA design standards, and the state's financial capacity to provide the 35% match and to operate the facility once complete; VA may conduct a site visit before approving the application
• § 59.100 — Payment of grant award: grant funds are disbursed to the state (or directly to the state home) as the project progresses; draws against the grant are based on construction progress documentation; VA may withhold payment if inspections reveal non-compliance with approved plans
• § 59.110 — Recapture provisions: if a facility for which a grant was made ceases to be operated as a state home for the purpose for which the grant was made, the United States is entitled to recover a portion of the grant; the recapture amount declines over time (full recapture within the first years, declining to zero after a specified period); this provision prevents states from accepting construction grants and then converting the facility to non-veteran use
• § 59.124 — Inspections, audits, and reports: VA inspectors may conduct inspections and audits of grant-funded facilities at any time; states must maintain all project and operational records; VA may request reports on facility operations, patient census, and care quality; the inspection authority is ongoing — not limited to the construction period
• § 59.130 — General requirements for all state home facilities: all VA-grant-funded state home facilities must: maintain adequate fire and safety systems; provide medical, dental, and pharmaceutical services; have an adequate number of trained nursing staff; maintain standards of cleanliness and infection control; preserve residents' rights to dignity, privacy, and self-determination; and comply with applicable federal and state laws, including CMS Conditions of Participation for nursing facilities (where applicable)
• § 59.140 — Nursing home care requirements: nursing home state homes funded under Part 59 must meet CMS skilled nursing facility standards, including minimum staffing ratios, care planning requirements, pharmaceutical services, and therapy services; VA inspectors assess compliance separately from CMS surveys — a state home may be surveyed by both VA and CMS; VA can terminate per diem payments (but not directly revoke the construction grant) if nursing care standards fall below minimum levels
• § 59.150 — Domiciliary care requirements: state home domiciliaries (residential care without skilled nursing) must meet standards for supervisory care, recreational programming, social services, and occupational rehabilitation; domiciliary care is less medically intensive than nursing home care — residents should be ambulatory, relatively independent, and in need of residential support rather than medical management
• § 59.160 — Adult day health care requirements: adult day health care state homes must provide structured daytime programming including health monitoring, therapeutic activities, social services, and caregiver support; the facility must be accessible to veterans who live in the community and be open on a regularly scheduled basis

How It Affects You

If you are a veteran seeking long-term care: State veterans homes are often the most affordable long-term care option available to eligible veterans. VA pays a per diem to state homes for veterans who meet eligibility criteria (generally veterans with service-connected disabilities or those who cannot afford private care), which significantly offsets the cost to the veteran. Rates and eligibility for per diem are set separately from Part 59 (see 38 CFR Part 51). The quality of care varies by state and facility — VA's inspection reports for state homes are available through VA's Office of Geriatrics and Extended Care. To find state veterans homes near you, VA's website at va.gov/geriatrics maintains a state home directory. Medicaid may also pay for care in state veterans homes that participate in Medicaid — ask the facility directly.

If you are a state veterans affairs official or state administrator: The Part 59 grant program is the primary source of federal capital for new state home construction. Applications require significant preparation — project scope, architectural plans, cost estimates, environmental review, and documentation of the state match — and the priority ranking system means that well-documented applications in high-need categories advance sooner. VA's Office of Geriatrics and Extended Care manages the program and provides technical assistance to states developing applications. The current backlog of approved-but-unfunded projects (the "construction grants waiting list") reflects demand that exceeds annual appropriations; states with approved applications typically wait several years for actual grant award. The 35% state match requirement is a binding constraint — states that cannot demonstrate match availability will not advance in the priority system regardless of need. Major renovations of existing facilities are eligible as well as new construction, which may be an easier path than a new facility for states with existing but aging state home infrastructure.

If you are a resident or family member at a state veterans home: The VA's inspection authority under Part 59 and 38 CFR Part 51 means that state veterans homes are subject to both state oversight and federal VA inspection. If you have concerns about the quality of care, you can file a complaint with VA's Office of Inspector General or through the state's long-term care ombudsman program (operated under the Older Americans Act). VA's per diem payments to the facility are contingent on meeting care standards; a facility that loses VA recognition also loses VA per diem funding, which creates a strong financial incentive for facilities to maintain standards.

Statutory Authority

This rule implements:

• 38 U.S.C. §§ 8131–8137 — Grants to states for construction of state homes (authorization, federal share, priority system, conditions, recapture)
• 38 U.S.C. § 101 — Definitions (veteran, service-connected, disability)
• 38 U.S.C. § 1742 — Per diem for veterans in state homes (the separate per diem program that operates alongside the construction grant program)

Recent Rulemakings

The most significant recent change to the state veterans homes program was the expansion to include adult day health care as a funded care type — previously, Part 59 grants were limited to nursing home and domiciliary care; adult day health care was added to allow states to develop community-based options that help veterans remain in their homes rather than entering nursing facilities. This expansion reflects the broader VA policy direction toward home and community-based care as an alternative to institutional placement.

No major standalone amendments to Part 59 in recent years. Individual project approvals and grant awards are administrative actions rather than rulemakings.

Pending Action