State won't appeal court ruling on First 5 funds

The state informed First 5 commissions of its decision Monday, the deadline for appeal. Its decision ends a yearlong budget battle and frees up funding for programs and services that many commissions had held in limbo. It also could result in the state having to pay hundreds of thousands of dollars in commissions' legal fees.

Lawmakers and Gov. Jerry Brown had sought First 5 funds last March to close what was then a $26 billion budget shortfall. Brown removed the $1 billion from his revised budget in May, after several commissions sued, but continued to defend the move in court.

In November, a Fresno County judge said the funding shift could be enacted only by voters, who established First 5 when they approved Proposition 10 in 1998.

Prop. 10 placed a 50-cent tax on tobacco products and has generated about $7.3 billion to date. The revenue is divided among one state and 58 county commissions that support early childhood development programs.

Brown had proposed diverting First 5 money to state health and human services for children -- services he said would otherwise go unfunded. The diversion was legal, the state argued, because it was consistent with Prop. 10's goals of supporting children up to age 5.

Superior Court Judge Debra J. Kazanjian wrote in her opinion that the state's argument was "disingenuous."

The state's decision to let Kazanjian's ruling stand is "vindication" for First 5 commissions, said Francisco Oaxaca, director of public affairs for First 5 LA. The Los Angeles commission, the largest in the state, stood to lose $424 million in the state funding shift. It had set aside the money and did not make any funding changes or new allocations. Its commission could consider how to allocate the $424 million as early as next month.

Others already have allocated their funds. First 5 Fresno County continued funding its partners, even as nearly $16.7 million was at stake, said Executive Director Kendra Rogers.

"Our commission, on a hope and a prayer and a strong bout of confidence and our attorneys, we withheld any action to make any reductions pending the verdict because we knew the consequences would be devastating," she said. "We had built a lot of capacity with our partners, we had trained a lot of people in this community to provide quality services to kids, and we knew if we made those cuts, we knew our community would not be able to rebound from them."

Last month, the Children & Families Commission of Orange County, which had $51 million tied up in litigation with the state, granted $45 million for education and community health services, including $20 million over 10 years for pediatric dental care.

Had the state appealed and prevailed in taking First 5 funds, the Orange County commission would have had to make major cuts in the future, said Assistant Executive Director Kelly Pijl. Monday's decision by the state "eliminates all of that worry," she said.

The lawsuit's resolution does not affect the state budget deficit because it was not included in Brown's budget revision in May, said H.D. Palmer, spokesman for the Department of Finance. But the state still could be liable for commissions' legal fees.

On Monday, the 10 commissions that sued the state -- Fresno, Madera, Merced, Solano, Los Angeles, Orange, Riverside, Marin, Sonoma and San Diego counties – filed for the state to reimburse an estimated $586,000 in legal fees.

Kenneth Price, an attorney representing commissions in Fresno, Madera, Merced and Sonoma counties, said the judge could approve all, none of, or more or less than that amount. That decision will not be issued for several weeks.

The resolution of the First 5 funding dispute has greater implications, Price said.

"I think the Legislature has to think twice when there is a law or statute that was passed by the voters and then is substantially amended by the Legislature," he said. "It's really more of a question of voter rights and taxpayer rights, and the First 5 case was sort of the unique combination of very diverse interests who are concerned about those very things."

Story courtesy of our media partners at California Watch (A Project of the Center for Investigative Reporting)

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