COMMISSION FORCED TO CUT MORE THAN ONE-THIRD OF BUDGET FOR CRITICAL CHILDREN’S HEALTH, EDUCATION AND SAFETY NET PROGRAMS

Responds to $51.4 million Loss of Funds Due to State Raid on Prop 10 Dollars

MAY 4, 2011 (IRVINE, CA) – The Children and Families Commission of Orange County held a public hearing today to consider the annual budget for Fiscal Year 2011/12. The Commission was forced to consider two budget scenarios because of the Governor and State Legislators approval of AB 99 that takes $1 billion from Proposition 10 to help bridge the State’s budget gap. Orange County’s share is $51.4 million, or 173% of its total annual revenue.

“When considering our budget for next year, we had to assume Sacramento would strip Orange County of our Prop 10 funds that we allocate for vital health, education and safety net programs. This action will have direct, devastating, and long-lasting impacts on thousands of the county’s most vulnerable children and their families,” said Commission Chairman Bill Campbell.

The Commission is responding to this dramatic loss of funds in two ways. First, the Commission filed a lawsuit to protect existing contractual agreements for programs providing critical health and education services for young children, pregnant mothers and homeless families in Orange County. However, while litigation is pending, the Commission must assume that budget cuts be made now in order to make the $51.4 million payment to the State by June 2012. Commission staff prepared a revised budget plan to incorporate the impacts of a $51 million budget loss.

Today the Commission considered a baseline budget for Fiscal Year 2011/12 of $43.5 million, but approved a budget that is compliant with AB 99 at $35.2 million.

“We heard thoughtful testimony from a number of grantees who recognized the difficult decisions that were before our Commission because of the State’s illegal grab of Prop 10 dollars,” said Campbell.

Over the past several weeks working groups developed recommendations for each of the Commission’s main program areas – health, education and safety net services—while using the following criteria:

  • Restoring programs impacting the largest number of children in Orange County
  • Protecting critical services for the most at-risk and vulnerable children in Orange County•Ability of the program to continue absent Commission funding
  • Degree to which funding provides leverage for drawdown of additional state and federal funding.

If required, the Commission will meet the $51.4 million payment to the State by the following changes to its budget and Long Term Financial Plan:

  • Elimination of its reserve for future funding cycles – Since 2000 when the Commission adopted its first Long-Term Financial Plan, the Commission had established a fund for future funding cycles to mitigate the impact of declining tobacco tax revenue and support program sustainability. This fund will be largely eliminated and provide the bulk of funding for the payment to the State.
  • Reduction in FY 2011/12 and future year funding – The Commission budget for FY 2011/12 was reduced by more than $20 million. Future year funding will be similarly reduced for FY 2012/13 and beyond.
  • Reduction in administrative costs – The Commission is committed to minimizing to the degree possible services on children and their families. The FY 2011/12 budget includes about a 25% reduction in administrative costs from the current year administrative budget.

“California voters approved Proposition 10 in 1998 for the express purpose of helping our children,” said Campbell. “It dedicates tobacco tax revenues to fund a broad range of effective, life-changing programs and services designed to ensure that children are healthy and ready to enter school by age 5. The latest State budget proposal puts at risk any voter approved initiative. If voters tell us to direct revenue back to the State we will, but to think the legislature is attempting to go around the will of the people is troubling. In fact, 74% of the voters in Orange County rejected the ballot measure to divert Prop 10 funds less than 2 years ago. It is very difficult to ignore this mandate.”