First Things First has published its most recent annual report. The State Fiscal Year 2026 (SFY26) Annual Report, Impacting Young Lives Throughout Arizona, is an in-depth look at the impact of FTF’s investments made from July 1, 2025 to June 30, 2026. It also highlights FTF’s work in collaboration with over 80 partners statewide.
The report reflects on FTF’s 2 decades of work and looks forward to a pivotal moment to consider the future of Arizona’s early childhood system. As FTF Board Chair Steven W. Lynn and FTF CEO Melinda Morrison Gulick note in the report, “As First Things First approaches its 20th anniversary, we reflect not just on two decades of dedicated service and partnership, but on the enduring trust Arizonans have placed in us as stewards of this mission. Together, we have built a system that recognizes quality early childhood education not merely as a family concern, but as the bedrock of Arizona’s economic advancement and long-term workforce availability and productivity.”
From the report: “Efforts to build, maintain and expand relationships with business and economic development leaders are essential to First Things First’s future success. Currently, First Things First faces a plummeting tobacco tax revenue stream, the agency’s sole dedicated funding source. Tobacco tax revenues have decreased by 47% since 2008, resulting in a reduction of FTF’s annual revenues by more than $76 million compared to 2008. Urgent action is needed as critical services for children and working families continue to erode.
Dwindling tobacco taxes come from fewer people smoking, but also from consumers turning to vaping and nicotine products, which are not included in the tobacco tax. In response, this legislative session, FTF made a second attempt to modernize the tax code by closing the nicotine and vaping loophole. FTF collaborated with legislators on House Bill 4032, which did not advance this legislative session, but efforts continued to gain broader support.”
The report details the FTF state Board’s priority focus on 6 strategies across Arizona communities.
- Increasing the quality of early care and education programs.
- Increasing access to quality care.
- Providing training, professional development and support to early childhood professionals and providers.
- Building awareness of the importance of the first 5 years.
- Educating families and caregivers.
- Navigating and connecting families to resources.
Over 1,400 providers across the state have opted in to participate in Quality First, and data show the program is working. When sites were first rated in 2013, only 1 in 4 (25%) programs met or exceeded our rigorous quality standards. At the end of SFY26, 88% of quality settings serve children from birth to age 5. That means over 57,000 kids across Arizona attend quality early learning programs because of FTF.
The report details how in SFY26, FTF received approximately $102 million in revenue, with tobacco tax revenues accounting for about $89 million. Additionally, FTF received $4.2 million from investment earnings and $9.1 million from grants. About 91% of spending in SFY26 went to early childhood development and health programs and services that help prepare children for success. Administrative expenses remain low at 9%.
You can access the full State Fiscal Year 2026 Annual Report on the First Things First publications page.
