First 5

Nearly 1 in 5 children in California live in poverty, and nearly 1 in 5 drops out of high school. Sadly, a child is born into poverty every 34 seconds, and every five hours, a baby dies before his or her first birthday. First 5 county commissions served 1,006,199 children ages 0-5 in 2009-2010. First 5 SF has made San Francisco a leader in the statewide effort to make high quality preschool a reality for all children ages 0-5. First 5 SF maintains stewardship over two revenue streams including Prop 10 state tobacco tax revenues and voterapproved SF Prop H funds. First 5 SF recognizes their joint responsibility to be thoughtful stewards of public funds and is committed to being part of the solution to the state and county budget challenge. First 5 commissions operate with continually declining revenues. Since 1999-2000, the tobacco tax has declined by over 28%. Every county commission is required by law to approve a long term financial plan that indicates how its services will be sustained through a combination of new revenues and a drawdown of its fund balance. First 5 commissions leverage significant revenues like $74 million in private funds in 2009. In addition, Prop 10 accounts for nearly $650 million in revenue annually, and San Francisco receives approximately $6.5 million each year from Prop 10 funding. Proposing to eliminate Prop 10 revenues from the state budget and require compliance with AB 99, Governor Brown’s 2011-12 state budget redirects half of all First 5 future revenues. The funds being diverted to the state’s General Fund are already appropriated to existing safety-net programs like health insurance and preschool for children ages 0-5. AB 99 is a bill sweeping $1 billion from First 5 commissions ($950 million from county commissions and $50 million from the state commission). First 5 will have to reduce their own contributions to children’s health care, preschool, and child abuse prevention in order to accommodate the $950 million loss. In addition, Prop 63 mental health care funds would also be diverted. The first funding grab from First 5 was Prop 1D in 2009, which would have diverted $550 million in First 5 funding to state programs. Prior to 2009, voters twice chose to use Prop 10 tax revenues for early childhood programs. In response to the enactment of AB 99, commissions are being forced to make deep cuts in their funded programs.

According to First 5 LA, “It would be a shame to see much-needed services for the children of LA county be eliminated…by the diversion of First 5 funds. We hope (Governor Brown) and state legislators remain mindful of the important safety-net services for children that the voter-approved Prop 10 Commissions provide.” The proposed re-allocation of $1 billion in state and local Prop 10 fund balances to the state General Fund and the diversion of 50% of future revenue streams “would have a disproportionate impact on L.A County since First 5 LA receives the largest share of the revenues based on its large 0-5 population. By taking resources from First 5, the governor’s plan would penalize commissions that practice fiscal responsibility by funding long-term agreements that ensure the ongoing stability of essential services, such as doctor’s visits, immunizations, dental care, child abuse prevention efforts and early childhood education.” Currently, First 5 LA and other county commissions claim that the available amount of reserve funds is considerably less than $2 billion and are suing Governor Brown for avoiding ballot approval and illegally diverting Prop 10 funds against the voter-mandated purpose. “AB 99 unlawfully amends the (Children and Families First) Act in a manner that is inconsistent with and runs counter to its purposes. First 5 LA stands to lose $424 million already earmarked for existing safety-net programs for children 0-5 and their families.” Governor Brown’s proposal comes at a terrible time for Los Angeles County. Diminished revenues and projected state budget cuts have resulted in at least a $4 billion shortfall that threatens county services for children and families. Regarding how other counties are dealing with the possible sweep of the First 5 reserves, Contra Costa County must give California $23 million by next June and has already cut $3.1 million in funding for valuable community programs. “And more cuts will follow.” Alameda County’s strategic plan specifically states that their plan is based on the assumption that First 5 funds currently received by Alameda County will not be redirected for other purposes. A reduction in funding will force Alameda County to substantially revise their strategic plan to scale back their goals, strategies, outcomes, and programs. According to the San Diego Union-Tribune, San Diego County voted in May 2011 to reduce future spending on children’s health and education programs by 26.6%. The spending reduction was spurred by California’s plan to take half of each county’s First 5 commission

reserve funds. San Diego County must send $88.3 million to the state. Recommendations Following the example set by the First 5 LA lawsuit, direct the San Francisco City Attorney or First 5 SF to sue Governor Brown challenging AB 99. Legal challenges have been filed by 12 First 5 Commissions including Fresno, Orange, Marin, Sonoma, LA, and SD counties. Accelerate the strategic planning process of First 5 SF. Re-evaluate every First 5 funding agreement. Perhaps only fund programs and activities that take advantage of organizational and neighborhood assets. Lower the priority of projects that do not have final contracts or have not yet started offering services to the public. Reduce administrative costs. Currently, 15 people work at First 5 San Francisco. Encourage co-investment from First 5’s private funding partners. Cut home visits to families through at least 2015. Reduce supplies and services by approximately 10%. Eliminate funding for new capital projects.