Director of First 5 LA resigns following audit

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Director of First 5 LA resigns following audit
November 11, 2011
Joanna Lin
California Watch

Evelyn Martinez, executive director of First 5 LA, resigned late yesterday, less than three weeks after the Los Angeles County Board of Supervisors started the legal process to take over the independent agency that uses tobacco taxes to fund early childhood development programs.

The Board of Supervisors' 4-1 vote Oct. 25 asking the county counsel to initiate the process followed an independent audit that found First 5 lacked oversight of its expenditures, was overstaffed and failed to adequately monitor its contracts.

The agency's board of commissioners, which is led by county Supervisor Michael Antonovich and includes five members appointed by the Board of Supervisors, met in a closed session yesterday and "decided that it was time for new leadership here at First 5 LA," Martinez said to agency staff in an e-mail obtained by California Watch.

Martinez, who has been First 5 LA's top executive since its inception, could not be reached for comment.

In a statement issued to California Watch, Antonovich's staff said: "The projects and operations of First 5 will proceed uninterrupted. Existing grants, contracts, partnerships and initiatives are unaffected by this change."
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The board of commissioners will meet next week to appoint an interim CEO and has directed agency staff to continue working in its existing organizational structure under the supervision of Antonovich and First 5 LA attorney Craig Steele, the statement said.

First 5 LA is the largest of 58 county commissions established after voters approved Proposition 10 in 1998. The initiative placed a 50-cent tax on tobacco products and has generated about $7.3 billion to date. In fiscal year 2009-10, First 5 LA counted nearly $146 million in revenue, doled out more than $157 million in grants and employed 103 people, records show.

In her e-mail, Martinez said she believed she had "more than accomplished" her mission to "build a strong organization that would be staffed with the best and brightest of staff who were committed to helping those children and families in greatest need, and certainly of highest risk."

She also alluded to the agency's uncertain future. In addition to a possible county takeover, First 5 LA is at risk of losing about $450 million in a state budget raid. Lawsuits challenging the funding shift have been filed by several commissions, including First 5 LA, and are pending as a consolidated case in Fresno County Superior Court.

"I know that there is a lot of concern about the future of First 5 LA," Martinez said. "I urge each and every one of you to stay positive about the future, and to keep working as hard as you always have. I hope to stay in touch with many of you, and I am certain our paths will cross again since my interest and passion will remain in being of service to those less fortunate than ourselves."

It was the state funding diversion that prompted First 5 LA commissioners to unanimously authorize an independent audit in February. Antonovich proposed the audit to determine how much money the agency had available – a figure that state officials and commissions have disagreed on.

The audit [PDF] was delivered in two reports – the second [PDF] of which was presented Oct. 25. County supervisors said the findings were shocking.

"The current status of affairs at First 5 is unacceptable," Supervisor Zev Yaroslavsky said at the meeting. "The lack of accountability, the lack of competition in proposals, the lack of information sharing between the staff and the commission itself … any one of these things would be a bell and a whistle. And all of them together is a siren."

In a motion [PDF] introduced by Supervisors Antonovich and Mark Ridley-Thomas, supervisors instructed county staff to return to the board in 30 days with an amendment to establish First 5 LA as a county agency and a transition plan.

Supervisor Gloria Molina, First 5 LA's immediate past chairwoman, was the board's lone dissenter.

"This is clearly a takeover," she said. "It doesn't have anything to do with the audit whatsoever."

First 5 LA criticized the audit, conducted by Harvey M. Rose Associates, as employing "half-truths, faulty assumptions and misleading information to paint a captiously inaccurate picture of First 5 LA's internal financial accounting – which has been recognized with three government accounting excellence awards."

The audit, First 5 LA staff continued, "presupposes a variety of incorrect assumptions that may lead the reader and members of the public to false and damaging conclusions."

First 5 LA would not be the first county commission to go from independent to county status. The Riverside County Children & Families Commission underwent the same transition a few years ago, said Sherry Novick, executive director of the First 5 Association of California, a membership group.

"LA is a very complicated county, and it's not surprising that different people have different thoughts about what should happen," Novick said. "I think (Martinez) put together a large and vibrant organization."

Martinez was among the most highly paid First 5 directors. In 2009-10, she received a salary of $232,178, a $6,000 car allowance, a $10,000 performance bonus and $20,785 in benefits: health, dental, vision and life insurance, employee counseling and deferred compensation.