Overview

Proposition 1D:  Protects Children’s Services Funding.  Helps Balance State Budget.  Redirection of Proposition 10 Funds.

In 1998 Proposition 10 added a tax of 50 cents per pack of cigarettes and a comparable tax on other tobacco products.  Revenues from the measure are used to fund a variety of education, health and childcare programs that promote early childhood development from the prenatal stage through age 5, including preschool.

The initiative generates approximately $500 million per year statewide.  Twenty percent of these monies are available to the state California Children and Families First Commission, which has seven voting members, appointed by the Governor, Assembly Speaker, and Senate Rules Committee, plus two ex-officio members.  The Commission develops statewide program guidelines, conducts research, evaluates programs, distributes educational materials, provides funding to support programs, such as for school readiness and preschool-for-all matching grants, and offers technical assistance to county commissions.

Eighty percent of First 5 California revenues are allocated to county commissions, one in each county, established by county boards of supervisors.  Counties may collaborate to establish a commission.  County commissions receive allocations based on a formula tied to the number of births in the county.  County commissions must disburse funds in accordance with guidelines established by the state commission and their countywide strategic plans.  County commissions have the flexibility to undertake a variety of efforts, including smoking cessation programs, antismoking public education campaigns, nutrition services for pregnant women and children, parent education, health care programs for children, and other social services, as well as childcare and preschool.

Proposition 1D would temporarily redirect $1.7 billion from the California Children and Families First Commission to the State General Fund over the next five years.  The money would be used to support health and human services programs for the same children who currently benefit from the First 5 funding, including early intervention and prevention services for infants and toddlers with developmental disabilities, child welfare services, adoption assistance, kinship guardianship assistance payments (Kin-GAP), and direct healthcare services.
The money would be redirected as follows:

• Up to $340 million from the state commission reserves by July 1, 2009.
• $268 million from Proposition 10 revenues would be redirected for each of the next five years. 
  -  $54 million would come from the state commission and $214 million from local commission funds. 

The purpose of this redirection is to achieve savings for the state General Fund as these funds would be used to offset state General Fund costs, which would allow the state to reduce funding for these programs over the same period.  The $268 million annual redirection represents over half of the revenue generated each year under Proposition 10. 

In response to criticism by some in the Legislature over the use of the funds by the state commission, this initiative would eliminate the 6 percent set-aside for mass media communications and instead increase the allocation for general program purposes by that amount.  The state commission would also be required to ensure that all county commissions receive at least $400,000 each year. 

Proposition 1D would also make changes to the reporting and auditing requirements of the county commissions by requiring that their annual audits also be submitted to the county board of supervisors and county auditor.  It further requires that each county auditor serve as an ex-officio member of the county’s First 5 Commission.  Lastly, the initiative would open up county First 5 funds to borrowing by the county controller for the county’s general fund and would require repayment with interest.

Some districts and county offices of education have established partnerships with county First 5 commissions and if the counties have less resources available over the next five years, there will be an impact on schools through reduced programs and services. Failure of Proposition 1D would add $340 million to the budget deficit in 2008-09, and another $268 million in each of the next five years.