A state commission founded by Hollywood filmmaker Rob Reiner is facing increased state scrutiny after lawmakers Wednesday approved a broad audit of the panel’s spending.
At the same time, the Sacramento County district attorney is reviewing a separate request for an investigation of the First 5 California Children and Families Commission.
A committee of state senators and Assembly members directed the Bureau of State Audits to perform the fiscal review of the commission. First 5’s executive director declined to answer the legislators’ questions, “at the advice of counsel.”
Auditor Elaine Howle said she expected to begin the work next month and estimated that it would take four or five months.
Seeking the audit, Sen. Dave Cox (R-Fair Oaks) and Assemblyman Dario Frommer (D-Glendale) cited press reports that First 5 spent $23 million in tax money on ads touting the benefits of preschool as Reiner was launching an initiative to fund preschool for 4-year-olds.
Additionally, they said, First 5 and its staff awarded $230 million in contracts to public relations and ad firms that had helped Reiner win the 1998 campaign for Proposition 10, which created First 5. The initiative raised cigarette taxes by 50 cents per pack to pay for the commission and its programs.
The audit “isn’t a partisan issue; it’s a good-government issue,” said Frommer, who is running for state controller in the June primary election.
Cox likened Reiner’s activities to those of former Insurance Commissioner Chuck Quackenbush and Secretary of State Kevin Shelley, both of whom resigned amid investigations into whether they used tax money to further their political goals.
“The timing of these ads, as well as the less than scrupulous relationship between Mr. Reiner and his consultants, violates the spirit if not the letter of the law,” Cox said.
Reiner has said he welcomes an audit. He recently took a leave as First 5 chairman, a post he had held since the commission’s creation in 1999. Reiner said he expects to reclaim the unpaid post on June 7, the day after voters decide on his preschool initiative, Proposition 82. The measure would raise taxes on wealthy Californians to pay for the preschool program.
“Folks involved in Proposition 82 are happy to see an audit,” said Roger Salazar, a veteran campaign spokesman retained by the Yes on 82 effort. “That’s good for the process and good for transparency of government.”
Reiner’s attorneys have said that the tax-funded preschool ads, which appeared on television and radio and in newspapers statewide, were legal.
“Maybe it was legal,” state Sen. Gloria Romero (D-Los Angeles) said Wednesday. But the commercials, she said, seemed designed to persuade the electorate that preschool was vital.
Romero said she was planning legislation, SB 740, to make such ads clearly illegal in the future.
The Proposition 10 tobacco tax has generated more than $4 billion since 1999. The money is supposed to be spent on early childhood healthcare and development. The state commission controls 20% of that money; county First 5 commissions also created by Proposition 10 spend the remainder.
The initiative earmarks 6% for public relations and advertising to promote early-childhood healthcare and development. That will total more than $250 million by the end of June, when the current fiscal year closes.
The Rogers Group of Los Angeles has won $62 million in contracts for public relations since 1999. Since 2001, GMMB, a Santa Monica-based subsidiary of Fleishman Hillard, has won contracts worth $169.5 million for ads. Both firms worked on the Yes on Proposition 10 campaign.
Howle said Wednesday that auditors would review how the state First 5 commission awards contracts and spends money on administration and consultants, and whether consulting firms properly documented expenses.
The audit also would “determine, if possible, whether there was coordination between the commission and the Proposition 82 campaign in the media purchases by the commission or expenditure of other public funds,” Howle said.
Howle last reviewed Proposition 10 money in 2004. At the time, auditors said the state commission followed accepted contracting rules. However, the review focused on five of the county commissions. As a result of the audit, the Legislature approved two bills signed into law by Gov. Arnold Schwarzenegger last year to tighten oversight of those commissions.
First 5 Director Kris Perry appeared at Wednesday’s hearing of the Joint Legislative Audit Committee and said the commission welcomed the inquiry, but added that she would not answer lawmakers’ questions “at the advice of counsel.”
Sen. Chuck Poochigian (R-Fresno), a member of the audit committee who is running for state attorney general, said Perry’s refusal “elevates my concern about charges of wrongdoing.”
Perry said Atty. Gen. Bill Lockyer sent her a letter saying that his deputies would not represent the commission in any investigation, and suggested that the commission retain private attorneys.
Lockyer, a Democrat who is running for state treasurer, last week declined a request by Poochigian to investigate the commission’s ad program. Lockyer cited a conflict due to his deputies representing the panel.
Lockyer referred the matter to Sacramento County Dist. Atty. Jan Scully, a Republican. A spokeswoman for Scully said she was evaluating the request.
Lockyer wrote to Poochigian that the referral “in no way implies that a legal violation occurred.”