Deeper conflicts emerge in First 5 funding Groups tied to advisers see millions in grants By Jeff McDonald Union-Tribune Staff Writer 2:00 a.m. June 4, 2009 WATCHDOG UPDATE

Background: First 5 San Diego Commissioner Charlene Tressler resigned Sunday, as questions arose about $8.3 million in agency grants paid to a charity and a private preschool run by Tressler.

What's new: The group's awarding of $67 million to organizations that employ its main advisory committee members also is raising questions.

PREVIOUSLY

Watchdog Report ♦ Member of First 5 Commission steps down: Tressler reportedly had conflict of interest First 5's fund focus of county attention  DOCUMENTS

2005-06 grants

2006-07 grants

2007-08 grants

INSIDE TRACK

Funds from First 5 San Diego awarded to organizations with ties to the commission's advisory committee, for the past three fiscal years:

2005-06: $33.76 million out of $90.93 million, or 37.1 percent of grant money given

2006-07: $10.16 million out of $22.9 million, or 44.4 percent

2007-08: $23.56 million out of $39.56 million, or 59.6 percent

FIRST 5 TIES

Some of the organizations that received First 5 San Diego funds in 2008 and the commission advisers who work for them:

St. Vincent de Paul: $7 million, Ruth Newton  San Diego County Office of Education: $6 million, Linda Scarpa  Rady Children's Hospital: $3.6 million, Kristin Gist  YMCA Childcare Resource Service: $3 million, Debbie Macdonald  Family Health Centers of San Diego: $2.3 million, Fran Butler-Cohen  Palomar Pomerado Health: $1.7 million, Annamarie Martinez  SAY San Diego: $1.7 million, Michael Carr The county's First 5 Commission has awarded at least $67 million in the past three years to nonprofits and other groups that employ people who serve on its top advisory committee, according to an analysis by The San Diego Union-Tribune.

The share of early childhood grants given to groups with ties to insiders has grown over the years, from 37.1 percent three years ago to 59.6 percent last year, the newspaper found.

The findings show that conflicts of interest at the agency go deeper than those of former Commissioner Charlene Tressler, who resigned Sunday as the newspaper prepared a report about First 5 funds granted to the charity that employs her.

Robert Fellmeth, a University of San Diego law professor and director of the Center for Public Interest Law, said public officials should know better than to steer so much money to groups with which they have close relationships.

"If you're making a decision on the allocation of public money, you or your direct employer or your personal interests should not be enriched by it," Fellmeth said.

County Board of Supervisors Chairwoman Dianne Jacob chairs the First 5 Commission by virtue of her county post. Jacob opened the monthly First 5 meeting yesterday with a reminder to county workers, committee members and commissioners that they must be mindful about even the appearance of conflicts of interest.

She directed staff to review relationships between contractors and advisory committee members and report back with recommendations.

In an interview, Jacob said the commission has not received as much attention from county officials as it should. Jacob said she began making changes in January and noted that longtime Executive Director Laura Spiegel resigned in March.

Jacob said it's time for "a complete housecleaning" within the organization.

"Even if it's legal for people who receive contracts to be on the advisory board, that needs to be changed," she said. "It's the perception of a conflict of interest, even though the advisory committee does not make decisions."

First 5 San Diego was created after California voters passed Proposition 10 in 1998. Its commission disperses tens of millions of dollars a year in tobacco tax money to fund programs that benefit children up to age 5.

Tressler cited health reasons in her letter of resignation Sunday, which the county made public Tuesday. County officials knew the Union-Tribune was planning to report about Tressler's votes in favor of a preschool program that sent more than $8 million to a charity she runs in Chula Vista.

In giving grants, Tressler and her colleagues relied on advice from a First 5 committee of experts. The newspaper, for its latest analysis, totaled three years of grants given to organizations that employ committee members.

Of $153.39 million given out, at least $67.48 million went to groups with that inside track. That's 44 percent.

Last year, the commission in part awarded $7 million to St. Vincent de Paul, $6 million to the San Diego County Office of Education and $3 million to YMCA Childcare Resource Service, all of which employ advisory committee members.

Michael Carr is the longtime executive director of SAY San Diego, which provides a variety of youth services and receives money from First 5. Carr is also a member of the First 5 Commission's advisory and finance committees.

Carr said he and other volunteers are aware of the potential for conflicting interests, but he noted that committee members are seated because of their expertise and they have no authority to spend money.

"It's a question of who's interested in this sort of public policy," said Carr, who said he would quit the committee rather than stop delivering the services he provides with First 5 revenue.

"It's not my sense the majority of folks on (the advisory committee) agree to spend that amount of time because of funding opportunities," Carr said.

Joan Zinser, interim First 5 San Diego executive director, would not directly say why so many commission grants were paid to groups with representatives on the advisory committee. Zinser said only that they are "hands-on providers, dealing directly with families we serve."

Supervisor Ron Roberts, who last served as First 5 chair in 2007, said the distributions represent "a major conflict of interest" and the system of rotating First 5 chairs based on the supervisor chairmanship needs to be re-evaluated.

"The serial chair almost guarantees you have chairs coming in that don't have a good enough grasp to effect the change you need," said Roberts, who last month publicly criticized the commission for sitting on a $200 million bank balance.

Proposition 10 deemed that there would be independent commissions in each county so that First 5 spending decisions would be local, rather than fall to state political leaders.

First 5 San Diego adopted a broad set of priorities: health, learning, family and community. Every program the commission supports is supposed to enrich children's experiences in one of these fields.

The commission also set up the advisory committee to recommend ways to invest the money.

The Technical and Professional Advisory Committee is made up of professionals from nonprofits and other organizations that serve children and their parents. Members apply or are nominated by supervisors, then are confirmed by the commission. Sixteen now serve, according to the agency's Web site.

The conflict-of-interest policy adopted by First 5 San Diego exempts members of any advisory committee or board.

Sherry Novick, who runs the First 5 Association of California trade group, said commissioners must be sensitive to complaints of favoritism and make sure contracting policies and practices are above board.

But, Novick said, early-childhood experts in any region are too valuable as resources to exclude from programs simply because they also serve as advisers.

"Frequently, the best provider is the one who's done it the most," said Novick, who offers regular training sessions for commissioners on avoiding conflicts of interest.

When the state established the county-by-county system following the passage of Proposition 10, it issued guidelines to help commissioners avoid even the appearance of impropriety.

First 5 California said counties should "create a level playing field" in their contracting and "select among a range of applicants according to public, uniform criteria."

Other First 5 commissions around the state also have been criticized for awarding contracts to groups that advise the panels.

State Sen. Dave Cox, R-Fair Oaks, said control of tobacco taxes should be returned to county supervisors.

"You and I both know where I have a vested interest, that's where my vote's going to take me," Cox said. "We have any number of First 5 commissions in the state of California that have similar problems."