$200 Million of Calif. Taxpayer's Money Spent With No Accountability

-By Stephen Kruiser
Voter-Approved First 5 LA Program Spends $200 Million of Taxpayers Money without Oversight

As the Los Angeles Times reports, a recent independent audit of the First 5 LA Commission revealed massive problems with the agency, including lack of accountability, spending oversight or competitive bidding. First 5 LA is part of a statewide program created in 1998 by Prop 10, a measure which was supposed to use funds from a tobacco tax to promote health and education of young children. According to the audit, it’s not exactly fulfilling its mission. From the Times:

An audit by Harvey M. Rose of San Francisco found First 5 LA's commission was unable to monitor money that was being spent "since monthly programmatic expenditures are not presented relative to a budget." Auditors also concluded the agency was overstaffed while under-spending on programs for children.

So, First 5 LA is spending too much on public employees and not enough on kids. Not to mention doling out $200 million without a competitive bidding process and operating with such a lack of oversight that there’s no way to determine if the agency has signed agreements "for inappropriate purposes or with unqualified vendors or grantees”. Sounds like standard operating procedure in California, which has seen similar accountability and oversight problems with other initiative-created agencies as well.

And yet, former pro Tem and career politician Don Perata is pushing another measure – the so-called California Cancer Research Act – to create yet another unaccountable bureaucracy with six political appointees that can spend nearly a billion each year, including millions on staff salaries and pensions and overhead. With huge budget problems and public pension costs spiraling out of control, the last thing California needs is another big-spending bureaucracy with no oversight or accountability.

The measure is slated for the June 2012 ballot in California.



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  • Interesting that the farther this story travels, the less informed those writing about it are. The so-called lack of oversight claimed by the Los Angeles County Board of Supervisors? The Board of Commissioners that sets policy for First 5 LA has all 5 of the Supervisors sitting as voting members. The other 4 voting members are either appointed by the Supervisors or are county department heads who report to the Supervisors. They are the ones who have decided how business is done at First 5 LA since the beginning. The $200 million that was allocated "without a competitive bidding process" was for a universal pre-school program that First 5 LA's governing board created and approved. There was no program like it in existence at the time so there was no way to bid it competitively. They even funded the creation of a entity to run the program. The agency followed policies and procedures pertaining to the procurement of services under those conditions. The so-called underspending is actually the result of an agency "banking" funds to cover allocations that have already been made for programs through 2015. In most places we call that responsible budgeting - planning for and then saving for future commitments. First 5 LA has no borrowing or bonding authority so what it gets each year from a declining revenue stream (it drops 3-5% annually due to reduced tobacco consumption) is all it gets. If you had looked at the history of the LA County Board of Supervisors, they typically spend years serving on the boards of county commissions and agencies that explode after years of misuse of public funds, double-dealing, kickbacks, etc. or directly overseeing county departments that cannot ever seem to function effectively (see the LA County Department of Chidren and Family Services) and instead of taking responsibility (see the Los Angeles County Coliseum Commission) they point the finger at staff and everyone else around them. It is only when the horse has already left barn that they rise up in indignation and move to take over and "fix things". However, in First 5 LA's case, there is nothing to fix. The so-called "audit" (none of the "auditors" were CPA's or even have accounting degrees) was nothing more than a politically motivated exdcuse to grab even more control of the First 5 LA funds. It revealed absolutely no malfeaseance, misuse of funds or any other activity of that type.

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    Wow ! Look how worried First5 is - they sent someone all the way to Chicago to attempt damage control.

    The First 5 problems are not new - First 5 is a bad law that is structurally set up to allow self dealing to the Commissioners. I would argue that the First 5 law itself violates the conflict of interest laws. Check out my facebook page and Notes to see more of what's really been going on in this organization. 20+ negative newspaper articles can't be wrong.


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