The Band-Aid Measures



Propositions 1C, 1D and 1E are the quick fix. Combined, they would produce an immediate cash infusion of $6 billion to balance the state's 2009-10 budget. They would do this by diverting to the General Fund money currently allocated, per prior voters' wishes, to specific services. Props 1D and 1E would only temporarily divert their respective funds from one pot to another. But Prop 1C would dump the formerly spoken-for funds into a new pot permanently.

All three measures ask voters to fundamentally alter measures a majority of the electorate once considered dear enough to support. And, all three measures can be broadly viewed as robbing Peter to pay Paul.

Under Prop. 1C, the Lottery Modernization Act, the state could sell $5 billion in bonds secured by future lottery profits in order to balance the budget for 2009-10. It could borrow more later. The scheme hinges on significant changes to the California Lottery, created in 1984 by Prop. 37. Under Prop. 37, 50 percent of profits from lottery ticket sales goes toward prizes, up to 16 percent of sales goes toward running the lottery and the rest is paid directly to schools and colleges. Prop. 1C would raise the percentage of ticket sales that goes toward prizes, with the hope that higher payouts would boost sales. It would limit operating expenses to 13 percent of sales -- although, the Legislative Analyst notes, less than 13 percent of sales currently go toward running the whole show, anyway. The remaining profits would go to the General Fund, not schools, and be used to pay off the $5 billion-plus-interest debt, bolster a problem gambling fund, and build up a new Debt Retirement Fund to deal with other state debts.

Prop. 1C also requires the state to replace education's nabbed funds by increasing the money schools and colleges get from the General Fund -- banking on its plumping up with higher lottery ticket sales; if it doesn't, the state would have to find other ways to keep those higher payments coming.

Some critics question a measure whose success relies on California's dubious appeal to would-be creditors, and on imagined future sales of lottery tickets -- which have declined, actually, over time because of Indian gaming and, lately, the economic downturn. The San Francisco Bay Guardian finds the measure repugnant: "The idea here: increase lottery revenue through better marketing, thus taking more money from poor people ..."

As for teachers, it depends on what union they belong to. The California Teachers Association, the largest union representing teachers, supports the measure. The California Federation of Teachers opposes it -- the CFT is allied with the Service Employees International Union, which fears the props' impact on state jobs.

Garry Eagles, Humboldt County Superintendent of Schools, supports 1C. He says lottery proceeds have never been a major source of revenue for schools, anyway -- Janet Frost, Eagles' executive assistant, says county schools will get about $2.2 million in lottery funds this 2008-09 fiscal year, which amounts to less than 1 percent of total revenues coming into the schools from all sources, and comes out to about $118 per pupil.

The props promise more.

"Propositions 1A, 1B and 1C are powerful going together," Eagles said. "For the next four, five years, that would help education."

Even so, Eagles pines for a stability that even these measures don't offer.

"There has been no fund for education that educators have been able to count on for years," says Eagles. "Even when budgets are signed and approved at the beginning of the year, we don't know that that's what we're going to end up with toward the conclusion of the year. And I think [the proposition package] just continues that pattern of instability in regards to education funding.

"But, my concern is, if Props 1A, 1B and 1C don't pass, education could stand to lose as much as $35,000 a classroom."


Prop. 1D would divert, over the next five years, a total of $608 million in tobacco tax money from the California Children and Families Program -- called First 5, which provides services to pregnant women and to children from birth through age 5 -- to the General Fund to pay for other early childhood development services.

Prop. 10, passed in 1998, created First 5, devoting a portion of tobacco taxes directly to expanding early childhood development programs largely administered by counties. In Humboldt County, First 5 funds 40 programs that serve about half of the 8,702 children in the county who are 5 years old or younger, said First 5 Humboldt's executive director, Wendy Rowan -- who added that, legally, she could not opine on the proposition. But she could talk facts.

"That's a lot of kids," said Rowan. "And they're being served in a variety of ways. They're being served in childcare settings, in doctors offices, in family resource centers, in the library, in playgroups."

For instance, more than 600 kids between the ages of 3 and 5 got their teeth checked and received preventative dental care last year, said Rowan. "The evaluation results for this program show that children who participate in this program, they increase their toothbrushing time by the end of the program and they decrease the plaque level on their teeth," she said.

First 5 also supports 17 playgroups throughout the county -- something parents particularly have asked for, said Rowan. "We talk to parents a lot, we do focus groups, and regardless of their socioeconomic status, whether they are middle-class parents or some of our most at-risk parents, they say the same thing to us: 'We want family friendly gathering places, safe places to come together with our young children, so that we as parents can get some mutual support for our parenting, get some information about parenting, and then have some social and enrichment opportunities for our children.' And it's just really taken off. We're funding them from Orleans to Southern Humboldt; we have them in Eureka, Arcata, McKinleyville."

First 5 also helps fund Healthy Kids Humboldt, which provides health insurance for kids. "At this point in time, we can say that 91 percent of children that participate in a First 5 program have health insurance."

If Prop. 1D passes, said Rowan, First 5 Humboldt would lose at least half of its funding. Last year, the program received $1.3 million in tobacco taxes, of which $1,137,112 was spent on programs. Prop. 1D specifies that the funds that First 5 continues to receive must be used for direct services. "But it does not define 'direct services,'" said Rowan. "So we don't exactly know yet what impact this will have. Particularly in regard to our programs directed at building childcare capacity and healthy communities, we just don't know if we'll be able to fund those programs anymore. It's also unclear if our funds could be used to purchase health insurance premiums, or for outreach."


Prop. 1E would amend the Mental Health Services Act and, over two years, divert a total of $460 million from its programs to the General Fund to pay for other mental health services.

Voters approved the Mental Health Services Act in 2004, with Prop. 63. It imposed a tax on rich people (1 percent on the amount of a person's income over $1 million), to fund new and expanded community-based mental health services. It was spurred by the state's closure, starting in the 1960s, of mental health institutions.

"And because of the decades of underfunding, the result in local communities was really sad in terms of our ability to adequately treat the mentally ill," said Humboldt County Health and Human Service Director Phillip Crandall.

Crandall, who also legally can't take sides on the props, says he's still unclear on how Prop. 1E might affect local Mental Health Services Act programs -- of which there are many. The Hope Center, for instance, is a peer-support facility where the mentally ill can learn recovery approaches and receive training. Another, the comprehensive community treatment program, sends teams into the community to provide daily support to mentally ill people so that they can stay independent and avoid being placed in locked facilities or hospitals. There's a new program aimed at suicide prevention, and an anti-stigma campaign.

"Most of us will experience an episode of mental illness at some point, or will have family members that do," said Crandall. "We want to try to normalize it, make it comparable to a physical illness such as diabetes that may be chronic but can be managed, and make sure that people access services and don't try to deal with it on their own."

Another new program helps 16- to 25-year-olds transitioning from home, or out of foster care, retain access to mental health services they may have used in the past.

Money diverted from MHSA programs under Prop. 1D would go to the general fund to pay for the state's share of the federally mandated Early Periodic Screening Diagnosis and Treatment program, which serves children and young adults on Medi-Cal.

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