First Things First recently published its State Fiscal Year 2025 Annual Report, Impacting Young Lives Throughout Arizona. It is an in-depth look at the impact of FTF’s investments made from July 1, 2024 to June 30, 2025. It also highlights FTF’s work in collaboration with nearly 80 partners statewide.
As FTF Board Chair Steven W. Lynn and FTF CEO Melinda Morrison Gulick note in the report, Arizona saw an increased awareness of the importance of early childhood care and education e across the business community and in policymaker conversations this past year.
Increased investments in the state’s youngest children and families reflect a growing, bipartisan understanding that early childhood is foundational to Arizona’s long-term economic competitiveness, workforce productivity and public health.
“As early childhood supporters in Arizona, we must turn this growing awareness into bold action,” Lynn and Gulick wrote. They encourage community members, policymakers and business leaders to work together to secure sustainable funding for the early childhood programs that FTF funds as the agency’s revenue source – tobacco taxes – continue to plummet.
FTF is the only state funding source dedicated exclusively to the beginning of the education continuum, from birth to age 5. Services are delivered directly to children, families and professionals who work with young children through a network of about 80 community providers.
The report details how in SFY25, FTF received approximately $100 million in revenue, with tobacco tax revenues accounting for about $88.6 million. Additionally, FTF received $5.7 million from investment earnings and $6.1 million from grants. About 92% of spending in SFY25 went to early childhood development and health programs and services that help prepare children for success. Administrative expenses remain low at 8%.
Dramatic decline in tobacco taxes
While the needs of young children continue to grow, FTF faces a dramatic decline in tobacco revenue, the agency’s primary source of funding. FTF is looking at ways to address consumer shifts to alternative nicotine products like e-cigarettes and nicotine pouches, which didn’t exist when voters created FTF. The agency’s annual revenues have decreased by about 47%, which works out to more than $76 million a year, when compared to the level of funding when FTF began operations. This means less funding for quality child care, less funding for parenting education, and less funding for all of the other programs and services for Arizona’s babies, toddlers and preschoolers.
FTF-funded programs and services each year reach around 160,000 young children, families and early childhood professionals. Declining funding places core early childhood services, such as home visitation, developmental screenings and quality early care and education, at serious risk.
Closing the loophole
One promising policy to modernize revenue streams is to close the tax loophole on vaping and nicotine products, which are not currently taxed the same way as traditional tobacco.. Closing this tax loophole would honor the original voter intent behind Proposition 203, which directed a portion of tobacco taxes to support early childhood services.
Read the SFY25 Annual Report for more about the economic impact that FTF investments have on the state’s economy. The report also includes a spotlight on several of FTF’s dedicated community volunteers who are celebrating 10 and 15 years of service. Regional council members, along with FTF Board members, staff, grant partners and early childhood advocates, have been instrumental in the past year’s successes. Find the annual report on FTF’s publications page.
