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First 5 LA's embarrassment of riches

First 5 LA has an $800-million surplus that could be going toward the care of infants, toddlers and preschoolers.

November 16, 2011
  • Screen shot of the First 5 LA website.
Screen shot of the First 5 LA website.

At a time when government agencies are hard-pressed to find the money to serve all the genuine needs, First 5 LA has had its own peculiar problem: a nest egg of more than $800 million that it has hoarded instead of reaching out to more babies, toddlers and preschoolers.

Funded by state cigarette taxes, First 5 LA is an independent county agency that provides various programs for children from birth to age 5, including preschool and health, safety and family literacy services. But a recent audit found that First 5 LA had been building a huge surplus over the years — close to five times its annual budget — and had been serving a smaller percentage of the county's younger residents than its counterparts statewide. It also, according to the audit, signed too many contracts without competitive bidding and failed to provide its own governing commission with basic information about the budget and its contracts. There was no evidence of malfeasance, but the audit said the record-keeping was so bad, there is no way to tell for sure.

The local agency's failure to spend more of its money could cause it trouble given the attempts by the state to take $1 billion in statewide First 5 money to help pay for children's Medi-Cal services. It's all the harder for First 5 leaders throughout the state to argue, as they have been, that they would be forced to cut needed services when the Los Angeles County agency alone has been hanging on to a surplus of more than 80% of the amount the state seeks. It's prudent for government agencies to retain a healthy reserve, but the size of First 5 LA's bank balance went beyond good stewardship; young children who need help aren't getting it while the agency holds on to an extraordinary excess.

First Five LA's executive director, Evelyn V. Martinez, resigned last week, but the agency needs more than a competent replacement. Under Martinez, the governing commission, a group of 13 people from various agencies plus a representative of each Los Angeles County supervisor, failed to ask basic questions about contracts, expenditures or bank balances. Some commissioners should be replaced, and all of them should learn about budgets and contracting rules.

What the agency doesn't need at this point is to be taken over by the county Board of Supervisors, which already has started the process for doing so. That's no cure for agency ills; the county still hasn't figured out its problems with the Department of Children and Family Services. For the most part, the system worked with First 5 LA as it was supposed to: An audit unearthed problems and the responsible manager stepped down. Supervisors can replace commissioners and require regular audits. And both the county and the commission should be working together more closely so that First 5 LA's money can be used to help plug gaps in services to the very young. Whether Martinez and the commission were aware of it or not, the need was all around them.

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