MINUTES: Special Meeting October 21, 2002
9:00 am
Concord Hilton
1970 Diamond Blvd.
Seminar IV
Concord, CA

Item 1.0 – Call to Order.
The meeting was called to order at 9:21 a.m.

Item 2.0 – Roll Call.
Commissioners in attendance:
Maria Theresa Viramontes-Campbell, Dr. Michael Zwerdling, Cindy Wheeler, Violet Smith, Dr. Paula Moten-Tolson, Supervisor John Gioia, Dr. William Walker, Pat Stroh for Tony Colón, John Cullen

Alternates in attendance:
Susan Wittenberg, Ronda Garcia, Barbara Langsdale, Mary Foran, Danna Fabella

Item 3.0 – Welcome, purpose of the day.

Chairman Cullen informed the Commission that discussion for the meeting would focus on the changes taking place at the federal, state and local level in regards to budget cuts. The purpose of the meeting is for the Commission to gain an understanding of the changes taking place and the effects on Commission strategies and any action the Commission may want to take.

Chairman Cullen stated that public comment would be taken at 2:00 p.m.; however, the public may participate at any time during the meeting.

Item 4.0 - Budget Presentations.
Chairman Cullen informed the Commission that presenters will speak first and then the Commission will hold its discussion.

Item 4.1 – Budgetary realities and trends at the federal level.

Carol Hatch, District Director, Congressman George Miller’s office, gave the following oral presentation to the Commission:

One of the most significant budget changes is taxation of the wealthiest. The wealthiest citizens have been given a tax cut. This will result in a loss of revenue. The loss may be recovered from social security and other sources of revenue. The President has proposed another tax cut and Congressman George Miller believes this tax cut is irresponsible given the current climate. There have been many changes over the last year; September 11, 2001; a pending war; issues with Korea, among others. Our nation is facing an impasse on welfare, the President is proposing funding be set aside to promote marriage, and the white house apposes any health benefits for those who are not citizens.

In May the House of Representatives passed a bill extending TANF funding through 2007, and in June the Senate approved a different bill. The differences focus on childcare, education, what counts as work, and training. Congressman Miller feels it will be a struggle with childcare. Childcare discussions are tying the childcare funding to work requirements. The Senate, controlled by Democrats, feels the requirements are too strict. The major problem is really different fundamental beliefs between Democrats and Republicans. The groups say that the states and the counties need the assurance of funding for three years. The major alternative is a one-year extension of the law.

President Bush approved continuing food stamps, while the white house is making it harder for families to get medical coverage. Basically under the law, states will have no authority to distribute funds at the state level if the bill passes.

The upcoming elections will have a significant impact at the federal level. If there is a change in the majority, in the house, you will see significant changes in those things stated above.

Regarding the measure proposed by Mr. Arnold Swartzenager, the after school proposal, some believe that if it passes, there can be a tremendous impact on what is happening in schools now.

Item 4.2 - Budgetary realities and trends at the state level.

Christian Griffiths, Senior Consultant, Assembly Budget Committee; handed out a presentation entitled Perspectives on California’s Fiscal Challenge, Association of California School Administrators, LAO, October 2002. He reviewed the slide presentation and gave the following oral presentation to the Commission:

The state has a $101 billion dollar budget, and a $23.6 billion dollar gap in the budget. The budget was not approved until September because the Democrats and Republicans could not agree on a budget.

Christian provided the Commission with an overview of the LOA presentation. In summary he stated that much of California’s tax revenue is based on the stock market, which reflects the volatility of revenues. The amount of personal income tax was not the majority of revenue for the state in the 1980s whereas in fiscal year 2000-01 it became the majority of revenue. The wealthiest people build the base for the state’s revenues.

This budget reflects that cuts that would impact children did not happen; people did not want to cut those programs on either side of the House of Representatives and there was a concern about raising taxes. There were some very disturbing cuts that were discussed but did not end up in the final budget. A lot of the things that the Governor tried to cut were restored.

Prop. 98 was passed by the voters, which set aside a certain portion of state funding for K-12. The state has to meet a guaranteed funding level for this proposition. During state budget discussions, these funds are considered as off the table. Those funds will continue to grow every year.

Chairman Cullen stated that it is important for the Commission to remember that Prop. 98 cost $46 billion dollars in the California budget as outlined in this presentation.

Supervisor Gioia stated that it means that approximately half of the state’s budget is locked in for Prop. 98.

Christian then stated that the legislature will probably make some additional cuts and generate some additional revenue. Calworks has been cut as much as possible, and some adjustments can be made in child welfare. In terms of reductions, most of the state’s money is in health care. I would urge you to consider what the state budget looks like now and in the future. Consider if the problems you see now are the worse it can get or will it get worse. That will give you a sense of what to expect in terms of public policy.

Chairman Cullen asked Christian to speak on his view of an optimistic and a pessimistic budget for fiscal years 2003-2004 and 2004-2005.

Christian stated that his optimistic view would that the stock market increases and the state gives costs increases to counties. His pessimistic view is that the stock market continues to decline, there will be a funding gap that is the same size as it currently is and in order to make reductions we have to decrease services.

Chairman Cullen asked Christian to identify the level of revenue that the $18 billion dollar deficit is projected on. Is the legislature reviewing scenarios and reviewing last year’s cut proposals. Are there revenue strategies?

Christian replied that there has not been a lot of discussion on revisiting last year’s cuts. A lot of what the committee did was react to other people’s proposals. There are a lot of ideas that did not pass that will come up again next year. We are at a point that there are not many proposals for cuts that are viable.

Brenda Blasingame stated that she has heard that there is a proposal to tax alcohol beverages 5 cents. She asked Christian if he would know if it would pass or not.

Christian stated that it would need a 2/3-majority vote to pass. There were proposals for bullet tax, cigarette tax, upper income bracket tax, etc. None of them passed.

Brenda Blasingame then handed out a presentation entitled California’s Fiscal Outlook. She stated that the presentation had been distributed at the Association meeting in Long Beach and that much of this presentation states what Christian has discussed. She then reviewed the presentation with the Commission.

Item 4.3 - Budgetary realities and trends at the local level.

John Sweeten, Contra Costa County Administrator, presented a slide show and gave the following oral presentation to the Commission:

The presentation given is a budget forecast and preliminary plans for fiscal year 2003-04. Reductions were made in the range of $34 million dollars. Reductions will continue for an additional two years and then things should improve by fiscal year 2007-08. This is largely due to the State’s budget.

In fiscal year 2003-04 the County is predicting a net shortfall of $50.3 million dollars which consists of: $26.3 million dollars for wage and benefit increases (net); $17 million dollars loss of one-time revenues for fiscal year 2002-03; $12.3 million dollars pension subsidy shortfall (net); $10 million dollars fund balance decline (at the beginning of the year we estimate revenue and expenditures, we typically over-estimate expenditures and underestimate revenue and at the end of the year they balance out, we then use that fund balance as funding for the following year); $6.7 million dollars for other new costs; and a $22 million dollar gain in general revenue growth, which is a net shortfall of $50 million dollars.

The general fund shortfall detail slide reflects Other New Costs: $2.5 million dollars for DCSS automation conversion; $1.7 million dollars loss of DCSS main frame subsidy; $1.5 million dollars WCDF full year cost increase; $500,000 for a new juvenile hall (cost is for half a year); $500,000 for human resources dept. payroll upgrade; Total is $6.7 million dollars for other new costs.

The preliminary budget gap strategy slide (without state budget impact) reflects a $50 million dollars preliminary budget gap. The following activities are being under taken to address the budget gap: $10 million dollars labor/management task force (ongoing); $6 million dollars pension obligation bond savings (ongoing); $5 million dollars retirement vacancies (ongoing); $2 million dollars dept. fund balance efforts for fiscal year 2002-03; $1 million dollars in restrictions on hiring/new positions for fiscal year 2002-03; $24 million dollars total mitigations; $26 million dollars remaining budget gap (10%). Out of the total costs, roughly $26 million dollars is our general dept costs, 10%. What that means is it shifts the costs to a small number of operations. If we did not outline these mitigating costs, then departments would need to reduce costs by 20%.

John Sweeten stated that if the state’s shortfall was only $10 billion dollars and the state was able to find another $2 billion dollars, the county would still be looking to cut $34 million dollars. If the state’s shortfall were $20 billion dollars, the county would need to cut around $70 million dollars. This will be a very challenging year.

The numbers indicated in this presentation do not reflect the states numbers. There will be a public workshop on the county’s budget constraints on December 10.

Chairman Cullen informed the Commission that they would be hearing a brief update from the Community Services Department, Employment and Human Services Department, and Health Services to end the local discussion. Each department will give a summary of current year impacts and what departments are planning for next year.

Dr. William Walker, Director, Health Services Department, stated that after the May budget revise, the department has reduced health services and mental health services in particular. Pertaining to children’s mental health, there was a $650,000 reduction in the children mental health system of care. The other major reductions in health are Medical reductions, benefits, and provider reimbursements. Los Angeles has an $850 million dollar problem, which will affect all counties. The current administration of health and human services has linked all of California’s problems together, rather than focus on each area individually. An $8 million dollar budget shortfall exists which means programs have to be cut, and any programs cut that result in a loss of state or federal match in funds means that we lose double the funding, not just the county share. Reductions will impact all services from kids through geriatrics.

John Cullen, Director, Employment & Human Services Department, stated that the primary impacts for his agency budget are adult protective services, food stamps, foster care, adoptions, and Medicare. Over the last three calendar years the state has reduced funding of about $1.2 billion dollars. This reduction has mostly caught up with counties this fiscal year. In Contra Costa with the allocations we have for this year we are seeing a 9% reduction in adult services revenue, a 6% reductions in food stamps, 8.5% reduction in Calworks revenue, 9% reduction in Medical, 21% reduction in adoptions, and 50% reduction in TANF. The Board of Supervisors proposed we cut $11 million dollars. Eighty-Eight people have been layed-off. We have cut line items such as transportation, and have cut 50% of our community based contracts and have cut contracts with other county departments. The goal for fiscal year 2003-04 is approximately $1.5 to $2 million dollars in reductions.

Pat Stroh, Director, Family and Children’s Services, Community Services Department stated that Head Start federal funding is on continuing resolution right now, but the President has proposed a $130 million dollar in increase for funding, which is in effect a reduction because it does not cover inflation. The Senate has set aside $330 million dollars, which means a reduction for us and that we may maintain mostly as status quo. From the state we anticipate that next year we will have some reductions. This comes at a time when the President is considering moving Head Start from Federal Health and Human Services to the Federal Education Department. This will reduce comprehensive services our families use and need desperately. It will impact how children thrive and in some cases survive.

Item 4.4 - How might funders react to external environmental influences.

Cheryl Polk, Executive Director, Miriam and Peter Hass Jr. Fund, stated that the Commission’s mission is very similar to private foundations. In the bay area there are thirty foundations that fund children and families that have similar interests as the Commission. Many foundations rose during the boom times, and all foundations are now cutting back because they have lost assets. The resulting budget cuts are $100,000 to $100 million dollars in the bay area alone, which was a loss of up to 60% for the Packard Foundation. Philanthropy is required by law to pay out 5% of its assets.

The Commission, and most private funders, never meets the identified needs. As a funder, the Commission is a hybrid, half community members, half county officials, and gets pulled from both sides.

The hard choices the Commission has to make are:

• If your funding were to end tomorrow, how would you want to be known?
• What difference would you have made in this county?
• Are the decisions you are making in the best interests of children and families?
• Where can you make the most impact given that you cannot fill the hole that exists?

Given limited resources, the Commission needs to figure out where is the best place to target its resources. All needs are valid, but the Commission can’t meet all needs.

• What will the Commission do?
• At what level can the Commission really support the impact of the governmental cuts?
• How can the Commission best leverage the resources it has?
• Can the Commission do it as a pool funder with government agencies?
• Given that the Commission will have to “hunker down” and how will it take the heat?

Chairman Cullen asked Cheryl how her foundation “hunkered down”. Has her agency revisited its mission? How has it been revised?

Cheryl responded that the foundation is focused on early childhood education with three targets areas: program, people, and place. The Foundation asks the questions:

• How do you focus within the focus?
• How do you enhance professional development systems that are training people?
• How do you impact the place, the facility itself?
• Given what we are mandated with, where can we make the most impact with our dollars and what things are we doing to take on solely?

Item 5.0 - Interactive Discussion between Commission members and presenters.

Chairman Cullen informed the Commission that this is the section of the agenda for the Commission to hold its discussion.

Presentations were concluded and presenters were invited to stay for the discussion.

The question the Commission needs to consider how these budget cuts may impact Commission strategies?

There was a lengthy dialogue and discussion between Commission members that focused on the following key points:

1. The Commission’s development of a long-term sustainability plan was good financial management.
2. The Commission must focus on advocacy on a variety of issues relative to very young children and their families, year round at the state and federal level.
3. That the gap is widening between those who have and those who don’t with the result being that the families with the most needs are the hardest impacted.
4. The Commission must look at its ability to leverage other funds, and be realistic about what other sources of funds are available for leveraging.
5. The Commission must review its partnerships and collaborations and know what its partners are able bring to the table.
6. The Commission must have a close on-going relationship with other agencies in order to know immediately any potential impacts on our strategies.
7. The Commission must review its strategies, focus in, prioritize and determine what it needs to do to be effective with our strategies.

Item 6.0 – Commission Discussion and Outlining Next Steps.
The Commission held a focused discussion on the following two questions:

1. What are our possible solutions?
   
2. What process should we use to move forward?

Chairman Cullen asked the Commission to use the morning’s discussion to identify issues to take forward for Commission consideration and discussion.

Commissioner Smith commented that the Commission should look at strategies from several different viewpoints:

• What did the Commission assume?
• What were the Commission’s expectations for what would be in place to build off of?
• What did the Commission say was its mission/goal/purpose?
• What the Commission knows now about what is available now.
• How does the Commission make it happen in light of the new economic situation?
• How does the Commission make it happen in light of the new economic situation?

Public Comment.

Liz Callahan, Contractors Alliance, sated that she wanted to build on Violet’s point that there needs to be another angle on this issue, broadening the revenue base. It’s one thing to approach this from the standpoint of cutting. Individual contributions are going up in the community. There are lots of opportunities to build on each other’s assets and strengths. Advocacy is an area that you want to move to, there are agencies out there doing advocacy, I would want to see the Commission partner with them in its efforts not take funding from strategies for this.

John Jones, Executive Director, We Care, stated that Einstein says energy is not created or destroyed, but just changes shape. I think the Commission needs to think of itself as being energy. You are going to have to rely on your partner’s assistance in how to get to where you want to be. Let other groups participate with you as your change agents.

The Commission requested staff prepare a report for discussion on each of the major strategies to answer the questions: progress, partners, outcomes, commitments, assumptions, goals, best practices, impact of external forces on efficiency, mission.

Commissioner Gioia stated that the Commission needs to look at the dollars upon which its strategies were built. If funds are cut in programs that the Commission is partnering with, what does the Commission do about that, structurally what needs to be done?

Commissioner Viramontes-Campbell stated that the county will be doing mid-year budget changes in January and the staff needs to include that information in its report because it will give us real numbers.

The Commission agreed to have staff bring back information to the Commission at a January 24,2003 daylong meeting. A preliminary copy of the report will be discussed with the Commission at the regular January meeting on January 6, 2003.

The purpose of the information is to perform a status check on Commission strategies in order to discover whether or not the Commission needs to make adjustments.

Deputy Director Sean Casey reminded the Commission that staff does not have complete evaluation data and there will be some questions staff cannot answer in this status check.

The Commission requested that the Program and Evaluation Committee work with staff to develop the status check documents.

The following timetable was outlined:

• November / December: Staff and the Program and Evaluation Committee work on development of status check documents
  
• January 6, 2003: Commission will preview the report at the regular meeting
  
• January 24, 2003: Commission will hold a daylong retreat to review, discuss, and develop options
  
• February 3, 2003: Commission to make a final decision

Item 7.0 – Adjourn.
The meeting adjourned at 2:45 p.m.