Senators looking to reduce the state's red-ink-soaked budget heard presentations Jan. 21 from members of the state's Early Childhood Development and Health Board – also known as First Things First (FTF) – to identify unnecessary duplications in state expenditures.

Legislators turned their sights to the board after learning of the more than $300 million stockpile it had accumulated since 2006 when voters approved Proposition 203, the initiative that led to the creation of the group.

The board is designed to provide early-development and basic health care-screening programs for the state's 600,000 children under the age of five.

Programs will not be fully phased in until July, the start of fiscal 2010, but planned programs include parental education courses, educational kits given to parents of newborn children and the establishment of measures to improve day-care quality.

Most programs would be introduced on a local level through the board's 31 regional councils, although some statewide programs are planned.

In total, the board plans to spend $133.8 million in development programs in the 2010 fiscal year.

And some legislators are hoping to add more responsibility by removing existing programs from the general fund's ledger and placing them under the control of the board.

Sen. Barbara Leff, a Republican from Paradise Valley, suggested "funding down" state-backed programs as a solution that would decrease the estimated $3 billion deficit and leave early-development programs intact. 

Chandler Republican Sen. Thayer Verschoor proposed saving money from the general fund by placing Autism-detection mandates passed by the Legislature last session under the "umbrella" of the board.

And Sen. Amanda Aguirre, a Democrat from Yuma, suggested the board could take responsibility for distribution of services provided by KidsCare,  a health care program designed for children from families earning less than twice the federal poverty limit. KidsCare would be terminated under a budget-reduction plan suggested by Joint Legislative Committee (JLBC) Chairman Rep. John Kavanagh and Sen. Russell Pearce.

But J. Elliott Hibbs, executive director of the board, said the group had intentionally built up a reserve of money because of an anticipated budget shortfall in future years. The shortfall would come sooner, he said, if the board is required to pay for additional programs in the meantime.

Prop. 203 established an 80 cents-per-pack tax on cigarettes sold in the state to pay for any programs implemented from the board. Supporters of the initiative expected revenue from the tax to provide the board with $150 million annually.

But tobacco sales have dropped consistently in recent years, partially due to the introduction of additional taxes, according to an analysis by the JLBC.            

Nadine Mathis Basha, the driving force behind Prop. 203, did anticipate diminished revenue from tobacco sales over time as more people kick the habit, but she also expected population increases would counteract the decrease in sales.

In the months before the 2006 election, Basha told the ~Arizona Capitol Times~ that revenue from the tobacco tax would be enough to cover operations for at least 10 years, but analysis from the JLBC states the board's expenditures will exceed revenue collections as early as 2012.

Board members hope to continue to save up any revenue received long enough to sustain programs till 2014 or 2015, during which time they hope to conduct a longitudinal study demonstrating the effectiveness of the programs before going to the Legislature to ask for additional funds.

"We are trying to be very frugal in our expenditures," said Hibbs. "The creators knew tobacco use would decline, in which case you have to grow revenue in the beginning to fund programs in the long run."

There are potential legal restrictions that also would prevent the implementation of Leff's proposal. The language of the initiative requires the board to implement only programs that build upon and provide greater access to the state's existing early-childhood-development efforts. The Legislature might, therefore, be unable to shift funding responsibility of early-education programs from the state to the board.

"We were not set up as the agency on early-childhood development and health care, but rather to coordinate with other programs," said Hibbs.