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The Final Negotiations

By June 1991, the CMA's board of directors had endorsed a resolution supporting the governor's proposed reallocation from the Health Education Account to AIM, thus ending any pretense to preserve the status quo. They also supported the reallocation of money from the Physician's Services Account to AIM because those funds “would be used for insurance programs that are likely to pay much higher reimbursement levels to physicians than the maximum of 50% of amount billed that is authorized under Prop 99. There are also significant surpluses being accumulated in Prop 99 Physician Service Accounts which are dedicated to paying for emergency, pediatric and obstetrical services.”[27]

On June 13, 1991, Senator Diane Watson wrote to the Legislative Counsel, the Legislature's lawyer, asking whether Health Education Account


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monies could be used to fund the new AIM program for expanded medical care for low-income women. The Legislative Counsel replied that Proposition 99

specifically limits the use of the funds in the Health Education Account for programs for the prevention and reduction of tobacco use, primarily among children, through school and community health education programs. …These funds cannot be used for purposes other than programs for the prevention and reduction of tobacco use. A program for expanded prenatal care is not a program for the prevention and reduction of tobacco use, through school and community health education programs, except to the extent that the program might involve education to prevent or reduce the use of tobacco by prospective parents.[28] [emphasis added]

The Legislative Counsel advised that the Legislature could divert Health Education money to medical services only by returning to the voters with a new statute; a four-fifths vote of the Legislature would not suffice because such diversions were not consistent with the intent of Proposition 99.[28]

The legislative process was not disturbed by this legal opinion pronouncing the diversions illegal, nor by subsequent opinions requested by Isenberg and Elizabeth Hill, the Legislative Analyst.[29][30] The CMA, the Western Center for Law and Poverty, the California Nurses Association, and CAHHS wrote to the Conference Committee on June 30, 1991, suggesting language to strengthen the rationale for funding AIM through the Health Education Account. To make these medical programs appear to be anti-smoking education programs, the organizations wanted to add the clause “Health Education Services, smoking prevention, and where appropriate, smoking cessation services also shall be required.”[31]

The voluntaries ended up supporting the diversion into AIM. The ALA argued, as it had done with CHDP, that it would be “a one-time grant of $27 million to provide tobacco related services to this population. Authorization of AIM incorporates and specifies the services to be provided. We believe this will be a one time allocation.”[32] Both the ALA newsletter and an earlier Action Alert sent from all three voluntaries emphasized that this was a legal and appropriate compromise:

With the support of some important allies, the tri-agencies developed a counterproposal to the governor's AIM proposal. Our proposal honors the governor's desire to provide perinatal care to low-income women, yet most importantly, presents an alternative funding mechanism which does not inappropriately or illegally use Health Education Account monies. Our proposal


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provides a coordinated and integrated approach to a perinatal community-based program with an anti-tobacco health education component.[33] [emphasis in original]

In addition, the voluntary health agencies continued to support funding for CHDP. The ALA newsletter summarized their position:

Our agreement also committed us to support the full caseload of services to young children in the Child Health and Disability Program (CHDP). We have in the past, sponsored most of this service ($20 million annually) in order to provide anti-tobacco services and referrals to these children and their families. Our expanded CHDP responsibilities are expected to total $35 million a year. This is an ongoing commitment, though AB 99 required much closer auditing of the CHDP program in order to assure that needed services are being provided.[32]

The statement is noteworthy in its reference to CHDP as “an ongoing commitment” and in its reference to CHDP funding as “our expanded CHDP responsibilities,” implying an agreement that CHDP would be a Health Education Account expense.

The voluntaries agreed to the diversion on June 30.[34] John Miller later recalled that, during the negotiations, “the legislative leadership came down on me and demanded that I give up $20 million, and I looked at the program and figured, `What can I give up that's least harmful?' And I came up with Local Leads because they weren't always the wonder boys we all think of them now.”[35] The Sacramento insiders had been leery about giving money to the local level in 1989 under AB 75 and were willing to reduce their funding now to get a compromise. The tobacco industry would not have objected. The local programs were costing the industry considerable time and money, and stopping the local programs had already become an industry priority.


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Continued Erosion of the Health Education Account: 1990-1994
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