Past elections a bad omen for First Things First sweep

An early childhood development program is back in the Legislature’s crosshairs, five years after lawmakers and former Gov. Jan Brewer tried and failed to convince voters to abolish the program and use its funding to balance the state’s precarious budget.

In the wake of a breakdown in negotiations over a long-running K-12 funding lawsuit, Senate President Andy Biggs and House Speaker David Gowan proposed a four-part plan to put more money into schools. One proposal is a sweep of an undetermined amount of money from the Arizona Early Childhood Development and Health Board, more commonly known as First Things First, which provides education, health care and other services to children up to 5 years old.

The Arizona Supreme Court has ruled that the state must pay for inflation funding it withheld from K-12 schools during the Great Recession, and a Maricopa County judge said the state owes an estimated $337 million. The Legislature is appealing that figure in the Arizona Court of Appeals. If the trial court ruling holds up, the proposed sweep of First Things First could help lawmakers and Gov. Doug Ducey meet that obligation.

First Things First is no stranger to attempted sweeps of its funding, which largely comes from a tobacco tax that voters approved in 2006. In 2009, the Arizona Supreme Court overturned the Legislature’s decision to sweep about $7 million in interest that First Things First had built up, ruling that the funds were voter-protected. In 2010, voters overwhelmingly rejected a legislatively approved ballot measure that would have dismantled the program and swept about $325 million into the general fund, with 70 percent voting to keep the program.

Biggs, R-Gilbert, said the new proposal is different. He said lawmakers aren’t trying to abolish the program. They simply want to sweep some of the funds while leaving First Things First enough to keep operating.

“We’re not trying to dismantle them,” Biggs said. “If they’ve got some programs that are going, that are active, that are working, we’re not trying to damage them. And we recognize they have administrative costs. So we’re not trying to take that away either. We’re just saying, look, if you believe that K-12 needs some money and here’s a pot of money that is probably not as efficiently and effectively useful as putting it to K-12 education.”

Biggs also questioned the effectiveness or usefulness of the program, a long-running Republican critique of First Things First. He said First Things First has “missed the boat” on assisting with critical state needs, such as state-sponsored reading programs and helping the Department of Child Safety and its predecessor, Child Protective Services, eliminate a backlog of cases.

“What I see is a lot of billboards and those types of things. I do know they have some programs. I think they’re doing some child care, they’re using money to offset some child care to draw down some federal funding,” Biggs said. “Are they doing programs? I know they are, because I’ve been told they are. But I think … it’s incumbent on the Legislature to really look at that more closely.”

Liz Barker Alvarez, a spokeswoman for First Things First, strongly disagreed. She said the program provides critical services such as child abuse prevention, services to children with special needs, preschool for low-income families and early childhood reading programs. Considering that part of First Things First’s mission is education, Barker Alvarez said sweeping its money to pay for K-12 funding would be self-defeating.

“It just seems to me that taking money from one part of the education system to give it to another part of the education system actually hurts kids and ultimately doesn’t improve education,” she said.

MONEY CAN’T BE SPARED
First Things First revenue has been declining for years due to decreased tax revenue from tobacco sales, Barker Alvarez said. And with that has come a decrease in the program’s cash reserves.

At the end of fiscal year 2013, First Things First had about $421 million in the bank. That dropped to about $397 million at end of fiscal year 2014, was estimated to drop to $359 million at the end of 2015, and $345 million after the next fiscal year, according to the Joint Legislative Budget Committee. Expenditures have increased through those years, while First Things First revenue dropped from $133 million in FY13 to an estimated $129 million in FY17.

“There is blue sky between the programs and the grants they give out, and the revenue number,” Biggs said. “They’re not spending everything they’re bringing in.”

Barker Alvarez said the program’s remaining money has already been committed to services in future years and can’t be spared.

“Calling the early childhood fund a surplus is like calling a family’s college fund play money. The funds have already been committed to make sure that the services … are able to continue for years to come,” she said. “Committing those funds to allow these services to continue – that’s strategic planning.”

So far, there have been no conversations between legislative leadership and First Things First. Biggs said he wants to discuss possibilities with the agency and get a better idea of how much money is coming in, how much is being spent, and whether it’s being spent efficiently, which he questions.

Biggs said he thinks voters may be willing to reevaluate their past support for First Things First.

“First Things First had another five-year period to show what kind of value they bring to the table. And I think people, when you lift up the rock you’re going to be kind of disappointed,” he said.

VOTER APPROVAL NEEDED
Because the program and the 80-cent-per-pack cigarette tax that funds it are voter-approved, any sweep must also be passed by voters. And considering the outcome of Proposition 302 in 2010, voter approval for a new sweep could be a shaky prospect. That could be especially true if First Things First and other children’s advocacy organizations oppose the measure.

In 2010, pro-First Things First campaigns spent more than $1 million to defeat the ballot measure, compared to about $35,000 for the pro-Prop. 302 campaign. Voters roundly rejected the measure, despite supporters’ assertions that sweeping the money would benefit K-12 education.

Sen. John Kavanagh, R-Fountain Hills, an advocate of both the new proposal and Prop. 302 in 2010, said things might be different this time.

“I think it has a better chance this time because we’re earmarking the money for something that is related to children,” Kavanagh said. “I would oppose taking all their money. But I think there’s probably a reasonable amount that could be taken without jeopardizing their operations.”