PHOENIX — Board members of a voter-approved organization that funds programs to promote early-childhood development are fighting a plan by legislative leaders to raid its dollars to instead increase aid for K-12 education.
Nadine Basha, who chairs the board of First Things First, acknowledged it has more than $360 million in the bank. The proceeds come from an 80-cent-a-pack tax on cigarettes.
But Basha said the money is already spoken for. And she vowed to fight the proposed legislative raid that would have to be approved by voters.
The fight comes as Republican legislative leaders say they can add $500 million a year in funding for public education. That plan uses a combination of existing tax dollars, some money from the state land trust, and taking money from First Things First.
Senate President Andy Biggs said it makes sense to tap those dollars.
“This is an agency that has locked itself into a mission,” he said. “They’ve built themselves a fiefdom upon taxpayers’ money.
“They have a magnificent surplus because they get more money than they can spend every year.”
Because the program was approved in 2006 by voters, it can be altered only by taking the case back to the ballot. And Biggs acknowledged that two prior efforts by lawmakers to sweep the dollars were rebuffed by voters.
But he said this plan is different.
He said it would not abolish the program but simply take the dollars not currently being used. He said that would allow already-funded programs to continue.
“Why not let them vote a third time, but present it in a different way than it was the last time?” Biggs asked.
Basha did not dispute there is about $360 million in unspent dollars. But she said the legislative proposal reflects a fundamental misunderstanding of the agency and how it functions.
She said the reason there’s money in the bank is that those tobacco dollars started flowing as soon as the 2006 election results were certified. But she said it took time not only to set up her agency but also to study the best ways to use the dollars.
And she pointed out that First Things First provides the dollars to local agencies rather than trying to spend it itself.
“We knew that it would take time to do that,” she said. “And we knew that the money would accumulate.”
She said there is no surplus.
“Our money is planned for,” she said, with $141 million of that already set to go out in 2016. “The other $220 million is committed, it’s planned for.”
And Basha said there’s another reason the board opted to let the dollars accumulate: People are smoking less.
When initially approved, the levy generated as much as $170 million per year.
But anti-smoking efforts — and probably the tax itself — already has dropped that to about $121 million. And that could decline further.
“If you’re going to invest in programs for children, you need to think about sustainability,” Basha said. “Too often, we just do these harebrained ideas,” she continued, saying pouring money into a program and figuring the problem has been addressed.
Basha also said if lawmakers are looking for dollars they believe are sitting on the sideline, they don’t need to raid the First Things First account. She pointed out that the state has more than $300 million left over from last year plus another $450 million in its rainy-day fund.
“I guess we could ask them the question: Why aren’t they using their $750 million to help the kids?” she asked.
The plan by legislative leadership does use $100 million of that cash from last fiscal year. But Biggs contends that anything above that cannot be counted on in future years.
Gov. Doug Ducey has his own plan to raise $325 million solely by tapping into the principal of the state land trust, at least for five years, with half that amount for the following five years. That would require voter approval.
Democrats contend there is enough cash available now to immediately put that much into schools without going to voters. And state schools chief Diane Douglas also believes there is $400 million available that lawmakers should immediately provide to schools, either to raise teacher pay or reduce class size.
